The failed culture of our capitalism

Responsible capitalism can be innovative and profitable. Britain's businesses must lead the change.

Almost everyone is suddenly talking about the culture of capitalism. It is not just those camped out at St Paul's who are worried about the behaviour of the corporate elite. The right wing press is hounding the big six energy companies. Westminster insiders are turning on industry lobbyists. Even Ed Balls has found a moral voice.

Far more comfortable talking about systems than values, the Shadow Chancellor has now laid the blame of Britain's economic woes on a culture of irresponsibility. It is a message "coming from people up and down the country", Balls told the Evening Standard recently. "They want the economy to be based on proper standards."

For some critics, this talk of culture and standards agenda is a moralizing distraction. Our focus, these more traditional voices argue, should be on the structural shortcomings of our economy; not on its culture. It is only once we have tackled youth unemployment and the squeeze on living standards that we should turn our attention to business ethics.

But that is to make a crucial mistake, for it was the failed culture of our capitalism that helped to get us into our economic mess in the first place. Understanding and improving that culture is not a distraction. It is central to working out how we get out of the crisis.

The relationship between culture and economics is straightforward. It is the culture of "grab-all-you-can" that encourages CEOs to press for salary packages that far outstrip their contribution. It is the culture of "profit-by-any-means" that leads some unscrupulous employers to lay off their workforce at the earliest opportunity. It is the culture of "care-only-for-the short-run" that starves Britain's businesses of the investment they needed to compete globally. It was all of these cultural failings combined that brought us the crash of 2008 and its devastating consequences.

Just as there are cultural causes of our economic malaise, so there are cultural solutions, too. We don't need to occupy public squares or wait until Labour is back in government. We can play our part right away by quietly insisting that we will not stand for the destructive irresponsibility that has blighted parts of our economy for far too long. As the Management Professor Harry Mintzberg says, it is up to all of us to show that the economic culture of the "short run has run out."

Crucially, that goes for those of us in business at least as much for the rest of the public. We have some truly great firms in Britain. We have imaginative entrepreneurs and committed workforces. These businesses already have a clear interest in rejecting the kind of practices that have led to economic ruin. More importantly, they increasingly realise how innovative, dynamic and profitable a more responsible capitalism can be.

To create a sustainable economic recovery, the culture of Britain's businesses must change. That much is already clear. We need also to acknowledge that it is business itself that will change it.

Marc Stears is Professor of Political Theory at the University of Oxford and a Visiting Fellow of the Institute for Public Policy Research.

Marc Stears is fellow in politics, University College, Oxford and visiting fellow at IPPR.

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Emily Thornberry heckled by Labour MPs as tensions over Trident erupt

Shadow defence secretary's performance at PLP meeting described as "risible" and "cringeworthy". 

"There's no point trying to shout me down" shadow defence secretary Emily Thornberry declared midway through tonight's Parliamentary Labour Party meeting. Even by recent standards, the 70-minute gathering was remarkably fractious (with PLP chair John Cryer at one point threatening to halt it). Addressing MPs and peers for the first time since replacing Maria Eagle, Thornberry's performance did nothing to reassure Trident supporters. 

The Islington South MP, who voted against renewal in 2007, said that the defence review would be "wide-ranging" and did not take a position on the nuclear question (though she emphasised it was right to "question" renewal). She vowed to listen to colleagues as well as taking "expert advice" and promised to soon visit the Barrow construction site. But MPs' anger was remorseless. Former shadow defence minister Kevan Jones was one of the first to emerge from Committee Room 14. "Waffly and incoherent, cringeworthy" was his verdict. Another Labour MP told me: "Risible. Appalling. She compared Trident to patrolling the skies with spitfires ... It was embarrassing." A party source said afterwards that Thornberry's "spitfire" remark was merely an observation on changing technology. 

"She was talking originally in that whole section about drones. She'd been talking to some people about drones and it was apparent that it was absolutely possible, with improving technology, that large submarines could easily be tracked, detected and attacked by drones. She said it is a question of keeping your eye on new technology ... We don't have the spitfires of the 21st century but we do have some quite old planes, Tornadoes, but they've been updated with modern technology and modern weaponry." 

Former first sea lord and security minister Alan West complained, however, that she had failed to understand how nuclear submarines worked. "Physics, basic physics!" he cried as he left. Asked how the meeting went, Neil Kinnock, who as leader reversed Labour's unilateralist position in 1989, simply let out a belly laugh. Thornberry herself stoically insisted that it went "alright". But a shadow minister told me: "Emily just evidently hadn't put in the work required to be able to credibly address the PLP - totally humiliated. Not by the noise of the hecklers but by the silence of any defenders, no one speaking up for her." 

Labour has long awaited the Europe split currently unfolding among the Tories. But its divide on Trident is far worse. The majority of its MPs are opposed to unilateral disarmament and just seven of the shadow cabinet's 31 members share Jeremy Corbyn's position. While Labour MPs will be given a free vote when the Commons votes on Trident renewal later this year (a fait accompli), the real battle is to determine the party's manifesto stance. 

Thornberry will tomorrow address the shadow cabinet and, for the first time this year, Corbyn will attend the next PLP meeting on 22 February. Both will have to contend with a divide which appears unbridgeable. 

George Eaton is political editor of the New Statesman.