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Compassionate capitalism: A contradiction in terms?

ResPublica’s Caroline Macfarland concludes the Disraeli Room’s finance and economy week by exploring the potential for a community-based capitalism

More than ever, front page news stories deplore the modern economy and its consequences. Indeed ResPublica’s own Disraeli room has published repeated observations of an economic climate which devalues morals and ethics and the loss of social purpose, an analysis as much as ease with conservatives as the Left.

The Occupy movement, met in its early days in both Wall Street and LSX by general disinterest and even pity from the wider public, was nebulous, impotent even, until it was boosted by the comments and actions of clergy at St Paul’s.  With no forward-strategy to date, it is still not clear whether the movement represents any coherent narrative, or whether people both in London and across the pond in Wall Street are showing solidarity for a hybrid of everything wrong with their individual circumstances. Concurrently, the Eurozone crisis, whilst its implications are very real, has no serious emotional connection with the ordinary man on the street, and seen as part and parcel of a beleaguered model of financial services.

It is not remarkable that people feel the need to protest about something, with a generation facing uncertainty in their job insecurity, financial capabilities, housing affordability, pensions, and rising prices of commodities. However, whilst it was clear what the protesters were against, what were they in favour of? Where are the solutions and the recommendations? And what demands would a sympathetic listener be able to support and be involved with? I’m not sure any of these questions were answered, and this points to a potential paradox whereby grievances on the nature of the modern economy are voiced by many, whilst there remains only a few on the fringe who would call themselves anti-capitalist, and even fewer who are able to articulate suggested solutions to the problem at hand.

These people - normal people - are disappointed by tired systems and impersonal structures. But what if a 'compassionate capitalism' is the solution, what does this entail?  This would be a capitalism for communities, the benefits of which are not just restricted to numerical and monetary terms, but focus on the everyday experiences of individuals in their localities, and the power of the markets to contribute to and enrich these.

Is the crisis which we are witnessing a market failure? This is increasingly the consensus.  But is this solely a problem with the financial crisis or has meaning and purpose been lost behind the blame-the-banker culture?  Whilst Ed Miliband has remarked on responsible financial services and distribution, and Tobin tax supporters would seek to address the issues from the top-down, I am not convinced that the holistic picture is addressed through such a narrow focus on the financial markets.  The Archbishop of Canterbury has emphasised investing in the ‘real economy’ – and of course SMEs, jobs and growth are unquestionably relevant to the public – but for many individuals and communities who make up the wider population outside the financial and professional markets, the ‘real’ economy is the direct effect on their everyday social lives and wellbeing in the context of their immediate space, place and community.

Values and ethics in the city is by no means something to be sidelined.  And arguments such as Francesco Seghezzi’s call for an economy which "rediscovers its ties to society and to individuals" point to future economic perspectives which will no doubt increase in popularity and serious consideration.  What is needed is a cultural change, shifting attitudes and addressing a question not just around how all in society can benefit financially from modern markets, how individuals, their peers, and wider communities may benefit on a wider basis.

And how can they benefit?  ResPublica’s work on community ownership of renewable energy assets is one example of market benefit with social purpose and value.  Similarly, through innovation in the social finance market, individuals are increasingly encouraged not just to donate or support the causes they relate to, but to invest in the future of projects and causes which will produce financial returns and impact on their everyday lives.  (And not necessarily in addition to usual habits or expenditure, but through statutory pensions investments for example.) Another forthcoming ResPublica project will examine the potential to capture and distribute the profits of land value increase from regeneration and urbanisation to local residents. These are very tangible outcomes to aim for and which will be recognisable by the man quite literally on the street.

In his recent article, Adrian Pabst regrets the subordination of social to commercial purpose, and this may hint at future solutions. Consumerist culture is based on the benefit to the individual and his or her direct space, place, and peer circle.  The same priorities still exist and in this way the commercial should move towards a values-based understanding of people’s priorities.

Whether economic underclass or squeezed middle, we should be widening the net for open, innovative, purposeful markets so that everyone can reap indirect benefits interlinked with, but not limited to, the financial.  Questioning market values requires analysis of the latent potential for the social.  And in addressing these concerns, we can also achieve clarity on the age-old question of fairness and social justice.  That’s a topic for another day.

Comments on: Compassionate capitalism: A contradiction in terms?

Gravatar Ralph Waldo Emerson 20 November 2011
"Every Stoic was a Stoic. But in Christendom where is the Christian?"r/>r/>Its not going to happen Caroline. It is cloud cuckoo thinking. Just look at Camerons giving of Northern Rock to Branson.
Gravatar Malcolm Rasala 20 November 2011
O Caroline what planet are you living on? In the week that Big Society Cameron gave the mutual assets owned by we the people of Northern Rock to a handful of his conservative friends you platitudinize the above.r/>r/>Indeed, we learn from the FT yesterday that £250 million of the price actually comes from the assets within Northern Rock. So in essence we are paying towards rich bankers owning what was our mutual bank. This is Mr Blonds Big Society in reality. The poor can volunteer while the super-rich grab to themselves even more of the nations wealth. r/>r/>Dear Caroline if you think the present Conservative party and its Lib Dem puppies are going to introduce "fairness and social justice" look no farther than Northern Rock. You are cloud-cuckoo land thinking. Maybe not surprising on this Christian blog. As Emerson put it "Every Stoic was a Stoic. But in Christendom where is the Christian?"r/>r/>

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Detailed Summary

Date Published
18 November 2011

New Economies, Innovative Markets

About The Authors

Caroline Macfarland

Caroline was the Managing Director of  the ResPublica Trust from January 2012 until March 2013. She joined Re...