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Liberal Democrat News 20th January 2012

January 20, 2012 9:06 AM
Originally published by UK Liberal Democrats

A more liberal capitalism

In a major speech on the economy at the Mansion House on Monday, Nick Clegg set out a "liberal diagnosis of what's wrong; and then a liberal remedy."

The UK's capitalism is in crisis, Nick argued, because there is a crisis of power. "We now have an economy driven by immensely powerful vested interests that politicians have abjectly failed to stand up to. The remedy, put most simply, is a redistribution of power."

"It's easy to throw rhetorical rocks at directors, bankers and businesses. But, if we are honest, this is as much a failure of politicians and regulators, the authorities too often cowed by corporate power.

"There's nothing new about it. The agricultural landlords of the 19th Century and early 20th Century were happy for working people to pay more for their food because of protective tariffs. What Lloyd George in 1906 memorably called 'stomach taxes'. So long as their own profits were protected.

"For liberals - from Gladstone to Grimond - the role of the state has always been to break up unaccountable, opaque concentrations of power. To protect the national interest from those vested interests. That is why, as well as the moves the Coalition government is making to bring greater transparency to government contracting and lobbying, we need real reform of party funding to reduce the influence of those interests in politics. We need tougher border controls between the political class and the corporate world. And we also need a better distribution of power within our economy.

"In an open society, a liberal society, people don't just hold more power in politics, but in the economy too. And, over time, empowering workers can have a hugely transformative effect over corporate culture.

"Employee ownership has been a touchstone of liberal economic thought for a century and a half. Because we don't believe our problem is too much capitalism: we think it's that too few people have capital. We need more individuals to have a real stake in their firms - more of a John Lewis economy, if you like.

"Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better: lower absenteeism, less staff turnover, lower production costs. In general, higher productivity and higher wages, they weathered the economic downturn better than other companies.

"Is employee ownership a panacea? No. Does it guarantee a company will thrive? Of course not. But the evidence and success stories cannot be ignored, and we have to tap this well if we are serious about growth. It won't happen at all without government taking a lead, so I am kickstarting a drive in government to get employee ownership into the bloodstream of the British economy.

"As the debate on a more responsible capitalism moves forward, Liberals will remain set on that goal: an end to crony capitalism, where vested interests trump the national interest; a better balance of power, in the economy - and between politics and business.

"That is the route to a safer, more stable, more prosperous economic future. This is how we will spread wealth and share rewards - a more responsible capitalism, a more liberal capitalism."

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