Welcome to The Money. We’ll be sending you regular content in this format. It’s important to note upfront that this is not a partisan exercise, though we may mention real-world examples from time to time, The Money is about political and economic theory.
The goal here is to proudly defend the strengths of capitalism, show readers why the free market works in their best interests, and can still be harnessed to do even more, and above all discuss the concept of The Money, which is explained below.
Our intention isn’t to teach Economics 101 through your inbox, but to explore popular capitalism while charting a course to better public policy decisions based on this framework.
It’s possible to find a wide variety of definitions for capitalism itself, but for these purposes, the simplest meaning is a system in which the economy is owned and controlled by individuals and firms rather than the state. “Popular capitalism” in turn refers to a capitalist system in which the goal is for everyone to benefit from the economic growth capitalism creates, primarily through ownership of capital being more widely shared.
A deep discussion on this subject could not be timelier. Countless studies over the past few years have shown that unlike their parents and grandparents, younger people across the western world find socialism at least as appealing as capitalism - in some cases much more appealing. My generation, which is just now beginning to take on more and more leadership roles in the corporate and government worlds, have not been convinced that the capitalist model works for them.
The impacts of the COVID-19 pandemic will only compound the resulting challenges. The level of government borrowing, spending, and control over our lives has increased dramatically - in most cases without any electoral mandate. I know I’m not alone in being extremely concerned when I hear socialist politicians say “we will build back better”, as we know what it really means - more taxes, more spending, more state control.
Free-market thinkers are facing a unique generational challenge. How do we rebound from the economic challenges of the pandemic, push back against the current socialist narrative, and do so in a way that changes the views of a whole generation who are drifting towards a collectivist model?
The answer must include a robust set of new policies based on popular capitalism. A free-market model that shows younger generations how it will work for them and does more to include them in all the benefits of economic growth and prosperity. These ideas can’t just be abstractions or philosophical ideas - they must be rooted in the practical reality of today’s economy, and take tangible, measurable steps to make people’s lives better.
It’s important to note from the outset that the free market predates the nation-state, and is the natural state of affairs when free people exchange value. Thus, no government activities beyond the protection of private property and a judicial system that upholds it are required for capitalism to take hold. The inherent competition among participants in this free market is what keeps the others honest - a check on rent-seeking behaviour - and ultimately benefits both the consumer and broader society as a whole.
Popular capitalism is a more moral and fairer framework for solving public policy problems than any others currently devised. All free-market-oriented political parties would do well to look at policy through this lens, not only because of the sound policy rationale for doing so, but politically as well as it offers the opportunity to counteract many policy areas to which socialist policy responses are perceived as being the only solutions.
Popular capitalism completes the picture for people advocating for the free market. It’s the fairest and best system for prosperity, but today’s version of capitalism can leave people out. It’s no wonder that the younger generation flirts with socialism when the gap between this generation and the ones before it in terms of wealth and opportunity is widening every day. How political parties respond to this will determine both the political and public policy landscape for the next few decades.
As opposed to the socialist “share the wealth” mantra, popular capitalism aims to have all of society “share in the wealth creation”. A classic example of this comes from Margaret Thatcher’s Britain, where she implemented a program to let people living in public housing to purchase their residences over time, with a view to - in her words - further develop “ a property-owning democracy”. 30 years later, a generation of formerly low-income citizens now have valuable equity in the housing market and the wealth to propel them into the middle class.
When David Cameron privatized the Royal Mail in 2013, 10% of the floated shares were reserved for employees. Again, the goal was to bring a wider range of citizens into the benefits of the market - not through redistribution or wealth transfer, but by structuring the interactions between the state and its citizens in a more free-market way. As with Thatcher’s public housing purchase option, those employee shares have been worth as much as GBP800 million.
So where does that leave us today? What is the popular capitalism response to housing policy? To environmental regulation? To the role of Crown Corporations and state-owned assets? How do we ensure that shares in companies - the backbone of much of the capital owned in society - confers appropriate rights on shareholders?
As noted above, socialist political parties have well-developed talking points on these issues. They’re almost always wrong and based on flawed assumptions, but in most cases, free-market parties have ceded the territory to these parties and allowed them to trumpet these big-state answers to problems the market can address in a better way. Winning back the public starts with winning the battle of ideas and answering these questions in a way that will make ordinary people’s lives better.
The answers to these questions are not simple, but by approaching the problem through this less explored lens, this newsletter will seek to show how these philosophical underpinnings can form the basis for a robust policy response that will have both political and public policy impact.
We hope you’ll subscribe to this newsletter and share it with like-minded friends and colleagues. You can expect more depth on what popular capitalism means in today’s policy landscape, views on how political parties can build sustainable voter coalitions based on these ideas, and a road map to a sustainable economic and political future that seeks not to “build back better” but to “build back freer”.