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The Future of Capitalism, Paul Collier,
Penguin Random House UK, 2018, 248 pages,
hardback £20, ISBN 978-0-241-33388-4
The author describes this as a personal testament; certainly it is not an economics textbook. His 2007 best seller, The Bottom Billion, examined the reasons why so many countries still had large numbers of people whose incomes had not increased. With this book, the focus is on the way inequality is increasing, and what could be done to redress this. The author looks back at the country Britain was in the post war period up to the 1970s. He explores the impact of increasing knowledge and rising productivity and addresses the consequences of recent developments that show that capitalism is increasingly based on greed. His writing draws on his accumulated understanding of economic problems but also digs deeply into political and sociological issues.
Collier’s wide view takes in capitalism and populism, the marginalised whose skills have lost value, the left-behind and the process of “bulldozing communities which had given meaning to lives”. He refers frequently to reciprocal obligations, those customary habits whereby friends, neighbours and families supported each other in times of difficulty. He sets out to demonstrate that a culture of moral purpose is needed in order to steer our society towards an ‘ethical capitalism’ based on values.
Part 1 of the book starts with The New Anxieties, set out above. Part 2, Restoring Ethics, covers the potential changes that states, businesses, families and the world could implement so as to create significantly improved lives for the disadvantaged. Collier has a vision of a world in which “moral purpose” is at the heart of policy making.
Part 3, Restoring the Inclusive Society, addresses the causes of inequality, the growth of the very big, prosperous cities and their impact on those cities and towns that have lost out in the globalization process. He explores the case for taxing the metropolises and those who have benefitted from the appreciation of urban land. He considers the way in which the deskilling of many jobs has left many employees without self-respect and with few sources of pride in their work. The way the housing situation has developed, and the many possible ways forward, figure here.
This section of the book concludes with a survey of the effects of globalization. “The net effects are positive, but globalization is not a unified phenomenon that has to be adopted wholesale or rejected in its entirety. It is a ragbag of economic and social changes… the task of public policy is to encourage…what is unambiguously beneficial”. Policies can be devised to compensate identifiable groups facing significant losses and to discourage global activities that will redistribute income in ways that cannot be compensated.
Part 4, Restoring Inclusive Policies, suggests political changes that will appeal to some but not others. It addresses the problems associated with polarized politics, suggesting that UK leaders should be elected by MPs rather than party members; MPs are more likely to select the ablest leaders and this will tend to shift parties back to the centre. Again, this chapter stresses the importance of shared identities and a shared sense of belonging, as essential elements in the creation of a humane society that ultimately benefits all.
Throughout the book, the author cites the big thinkers of the past and recent times as well as referring to current research – the five pages of bibliography attest to the careful construction of the author’s views. He perceives both Marxism and “capitalism driven only by greed” as equally mistaken. He sees the fruits of capitalism as increasingly beneficial to a relatively small group of people, so “generating humiliation and division but not mass prosperity”. The conclusions draw on a very wide range of sources; few thinkers range so freely across the available research. One thing is puzzling – the absence of any reference to corruption, surely a major factor in our failure to prevent rising inequality.
The Future of Capitalism got into the FT’s list of Books of the Year, last December. Martin Wolf selected the Economics books. Perhaps he should have the last word. “Rejecting the illusions of the ideologues and the populists, he (Collier) puts forward pragmatic, provocative and perceptive ways to deliver widely shared prosperity, by restoring an ethical basis to our national politics, companies and families.”
Nancy Wall has stopped teaching and writing textbooks but is still a trustee of the EBEA and the Reviews Editor for this journal.
Meltdown, Chris Clearfield and András Tilcsik,
Penguin Press, £14.99, 2018, ISBN 9781786492241
When I picked up this book, with its tagline of ‘why our systems fail and what we can do about it’, I was unsure of what to expect. There are plenty of ‘failures’ and potential disasters in the world, so this book should be particularly relevant.
Sadly I found it anything but.
In the prologue, the authors state that this is a book of two parts. The first to investigate why systems fail and the second to look at solutions. I found many of the case studies of system failure interesting, but eventually repetitive. Many of these ‘failures’ have been covered in much more detail by other books and media (the Challenger disaster, the Enron scandal to name but two). I found the authors’ slightly dramatised version of these failures to be irritating and too basic. The end of most of these stories usually led to a pronouncement that they were ‘complex and tightly coupled’ and this had led to the failure. Well, yes – I agree, but I would have agreed before I read this book.
Despite this I found myself looking forward to the second part of the book, the solutions. This should be where the book comes into its own. How disappointed I was. Instead of a series of solutions that might be applied to a number of these issues, what we get are many, smaller solutions, that are quite specific to the scenarios described. I found little that was universally applicable and far too many occasions when I was shaking my head as I came upon yet another vague pronouncement about complexity.
So did I get anything out of this book? Surprisingly yes.
I had been hoping for some material I could use with my economics students – or some case studies about poor management to use with my business students, but I have better case material for both of these groups without this book. The section that I found interesting was to do with management and leadership. In the middle of the book, there are some interesting references to studies about communication, power and management. Admittedly this could have been condensed into a good magazine article, but it piqued my interest and I took from it some further reading material (from the 35 pages of notes and references at the end of the book!).
Overall this book contains some interesting stories, but only as a jumping off point for learning more. If, like me, you enjoy a good business failure case study, then you will already know more than this book gives you. As for the solutions, I took nothing away except the inevitability of the failures. Many of the solutions seemed contradictory and all very specific to the scenarios discussed. How then does one take any lesson from this and apply it to the potential ‘meltdowns’ in the world today? I do not think you can and, sadly, the authors never try.
Simon Dyer teaches at The Peterborough School in Peterborough.
Editor’s comment: Simon is a very knowledgeable teacher who has read widely and used his powers of observation to excellent effect. If you are early on in your career there may still be something you can pick up from this book. It was one of the FT’s Books of the Year in November 2018. However, it is definitely true that a lot of very pedestrian business books find their way into what is already a very big market. Watch out!