The Lib Dem conference has so far produced few memorable speeches, but Vince Cable’s widely trailed address should prove an exception. He will warn that the current system “takes no prisoners and kills competition where it can” and that markets are “often irrational and rigged”, and he will promise to shine a “harsh light into the murky world of corporate behaviour”.
Inevitably, the free-market right has interpreted Cable’s speech as an attack not on unfettered markets, but on capitalism tout court. Richard Lambert of the CBI criticised Cable’s “odd” and “emotional” language, and Lambert’s predecessor Digby Jones accused the Business Secretary of “rabble-rousing”.
Yet Cable’s arguments owe more to Adam Smith than they do to Karl Marx. His words reflect the centuries-old awareness that the free market is not synonymous with competition, or with the public interest.
As Smith, that great apostle of capitalism, argued:
The interest of the dealers, in any particular branch and trade or manufactures, is always in some respects different from, and even opposite to, that of the public.
Which now looks like a rather prescient comment on the British banking sector. Elsewhere, on the self-interested nature of industry, he pointed out:
Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent in regard to the pernicious effects of their own gains. They complain only of those of other people.
What Cable’s critics are too intellectually barren to acknowledge is that there are alternatives to the finance-dominated, Anglo-Saxon model beyond that of state socialism. The Swedes do capitalism, the Americans do capitalism, the French do capitalism, even the Chinese do capitalism. But they all do it in very different ways.
When Richard Lambert sneers that it “will be interesting to hear [Cable’s] ideas for an alternative”, he fails to acknowledge this reality. But at least some of our political class may be about to.
UPDATE: Cable left in his attack on capitalism, but added a reference to Adam Smith that wasn’t in the text last night. Perhaps the Business Secretary read The Staggers over breakfast?
His words: “Capitalism takes no prisoners and kills competition where it can, as Adam Smith explained over 200 years ago.”