Apr 13 2012

Economia: an essay on responsible capitalism

Posted by: Nick Shaxson in: Thoughts

Economia, the magazine of the Institute of Chartered Accountants in England and Wales (ICAEW,) asked me to write the flagship article for their series on responsible capitalism.

Writing it forced me to think through some things in an organised way, and I am very pleased with the result. You can read the article here (shift the cursor to the right of the page to scroll through it.) It also contains a sidebar with some nice quotes.

I would be interested to hear if anyone has any disagreements. This covers some very fundamental issues that concern individuals’ and corporations’ relationships with society.

3 comments so far

eddie torres 4th April, 2012 7.59 pm

The article has an interesting choice of Martin Wolf quotes (Financial Times, 2007):

“So capitalism is for poor people and socialism is for capitalists. This view is not just offensive. It is catastrophic.”

Reminded me of this from Martin Wolf’s famous 2010 column:

“…I have long considered the US the advanced world’s most Keynesian nation – the one in which government (including the Federal Reserve) is most expected to generate healthy demand at all times, largely because jobs are, in the US, the only safety net for those of working age.”

(http://blogs.ft.com/martin-wolf-exchange/2010/07/25/the-political-genius-of-supply-side-economics/)

Which then reminded me of the quote oft-attributed to Jay Gould, financier and railroad monopolist, during or near the Great Southwest Railroad Strike of 1886 in the US:

“I can hire one half of the working class to kill the other half.”

Strategist 4th April, 2012 9.13 am

Excellent stuff, I like the article very much.
You actively seek constructive criticism, so here’s a try, for future reference. Early on in the article you talk about the flawed economic orthodoxy of only seeking to reduce the friction of transactions, but the first analogy you deploy to back up this argument appears to defend “particular petty regulations” that may hold up a container at a port. I think this is unfortunate, because in the responsible capitalism that you seek, there would remain a duty on government to avoid unnecessary petty regulation and to levy tax in a non-wasteful way. I know you know this, but an opponent looking for ammunition against your case might seek to exploit the lack of clarity here. There are other analogies you could use to argue that a bit of friction does some good, eg preventing the computerised buying & selling of shares in a split second?

Nick Shaxson 4th April, 2012 8.14 am

You are right. that was careless wording, thanks. Sometimes terms (“petty regulations”) become so pervasive that your fingers on the keypad go into automatic mode, and these things appear unthinkingly.

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