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6 January 2017

What George Osborne thinks Karl Marx got right

The former Chancellor called for the "democratising" of capital. 

By Julia Rampen

As Chancellor, George Osborne was a political animal who used every occasion to parody his left-wing opponents on the opposite bench.  For many in austerity Britain, by contrast, he was the face of the preening, moneyed elite.

But it turns out he also found the time to read his Karl Marx.

In a BBC interview with a former member of his team, the economist Jim O’Neill, Osborne brought up the father of socialism:

“The famous book was called Das Kapital, and his point was in a modern capitalist country, the people who owned the money, the capital would get more and more of the rewards,  and the people who provided the labour would get less and less of a share. 

“You could argue that’s something you’re seeing in globalisation.”

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Where Osborne differs from Marx, it seems, is how you resolve the situation. “The answer doesn’t have to be Marx’s answer,” he said. 

“You can make sure people have a bigger stake in society, more generous pensions, easier to get on the housing ladder, more access to shares and savings over their life, more stake in the company they work for. You can democratise capital, if you like.”

Osborne’s concept of “democratising capital” may be enticing to those trying to make sense of the globalised economy, but in practice his record is patchy, if not downright controversial. 

His “shares for rights” scheme gave employers a stake in their company, but also less job security. His Help to Buy schemes focused on demand rather than supply. While auto-enrolment has widened pension participation, pensions themselves are becoming less generous as companies shift the investment responsibilities towards the savers.

The Austerity Chancellor also continues to deny his prolonged cuts had anything to do with Brexit, despite the way Leave rhetoric successfully linked struggling public services with immigration, and his successor’s attempts to move on from Osbornomics. 

Where Osborne has left a concrete legacy is in the minimum wage. Raising it to £7.20 an hour – a £910 annual pay rise for minimum wage workers – was, he acknowledged, not “in the classic Conservative playbook” but an attempt to make sure “the returns on labour are worth it”. 

However, it marks an acknowledgement that the government can intervene to prevent a race to the bottom on labour. 

As he put it to O’Neill: 

“It proves you can find answers to these things – answers that are not tearing down capitalism, getting rid of free markets, erecting walls,  stopping anyone coming into the country.”

Since being summarily dismissed from the Treasury, Osborne has kept himself busy by turning his “Northern Powerhouse” mantra into a think-tank, not to mention building his own power base in the north. 

Whether or not social liberals and anti-protectionists find common cause in Brexit Britain is yet to be seen. But if they do, Osborne will be on the back benches, waiting.