Capitalism doesn't work - official!

So, Vince Cable has let the cat out of the bag and has highlighted something most (?) of us have known for some time - capitalism doesn't work - or at least it doesn't do what its proponents claim it does. As a "trainee" economist in the early 1970s at Birmingham University I came to this conclusion a bit late (having studied the subject for three years and swallowed the mantra of "perfect competition" and "free market forces" it was only in the last few months of the course that the penny dropped and I began to approach the subject more critically).

The myth of free market forces was, well, just that. In the real world the driving force of business and financial institutions is to eliminate competition, not enhance it. Even the free market model ,within its own logic, fails to deliver a range of essential goods and services. Even if the "market" is operating "perfectly" within theoretical models such things, for example, as public goods (e.g. public parks and open spaces), housing for poor people and a range of other goods and services, currently taken for granted are not delivered. An intervention by the state (either through local or national government) is required to deliver these essential goods. Or (in the context of wages - the price of "labour") the free market results in people being paid at or below minimum subsistence (poverty) wages - hardly something that any of us would really like to see (would we?).

There is a huge amount of ignorance about economics and about how our economic system works in the real world and the underpinning ideologies. Vince Cable has, perhaps unintentionally, done us all a favour. He has opened up a debate that places economics not in the arena of a science and object truth, but very firmly in the realm of society, politics and human agency. Economic systems are not God-given and/or driven by hidden forces beyond human intervention and influence. Rather the reverse. We can intervene and change the way our economy is run and this can be done through political interventions and the collective action of all of us. We can, if we wish and have the inclination, either change or abolish capitalism. Personally I prefer the latter, but in the short to medium term I am prepared to accept the former - if it makes for a fairer and more just way of running things!

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