The long view on the moral crisis in capitalism

https://www.theguardian.com/business/2016/jun/15/the-long-view-on-the-moral-crisis-in-capitalism

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This week we learned that the directors of the housebuilding company Persimmon are to share a bonus of £600m (Executive pay is obscene – restructuring the economy is the only way to curb it, G2, 14 June). This revelation was greeted with calls for these executives to “show restraint”, given the ongoing shortage of affordable housing. After all, as the Conservative party tells us, “we’re all in this together”.

I was reminded of an earlier campaign to encourage the rich to show restraint and demonstrate solidarity with the people disadvantaged by government policy. I’m thinking of events in 1795, when wheat prices in England rose precipitously. Working people relied on bread, and spent a significant percentage of household income on it. Concerned that the high cost of bread would cause hardship, and that hardship might lead to unrest, MPs called on the wealthy to show restraint. Gentlemen up and down the country signed pledges and issued public statements affirming that until prices fell they and their households would eat more economical wholegrain breads, and would not use scarce grain for non-essential purposes such as in hair powder.

The artist James Gillray illustrated the effect of this policy in his cartoon “Substitutes for Bread”. It depicts the prime minister William Pitt, together with other politicians, showing restraint. On the wall is a sign calling for “a general fast in order to avert the impending famine”. Another lists suitable substitutes for bread: venison, roast beef, champagne, turtle soup… Outside the window, a hungry crowd waves placards denouncing the government’s hypocritical claims of solidarity. Gillray’s critique from two centuries ago seems dismayingly relevant.Professor Rebecca EarleDepartment of history, University of Warwick

• Aditya Chakrabortty’s article (Less free market, more freeloaders. How Britain bails out the business chiefs, 14 June) is an awful indictment of the way some “company executives are rewarded for cannibalising their businesses and bilking their staff”.

The Companies Act of 2006 states in paragraph 172 (1) that “A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to (a) the likely consequences of any decision in the long term; (b) the interests of the company’s employees … (e) the desirability of the company maintaining a reputation for high standards of business conduct, and (f) the need to act fairly as between members of the company.”

Clearly some company executives have violated these principles. Is there no redress in law? Michael BasseyCoddington, Nottinghamshire

• We must stop idolising business owners who are relying on taxpayers, driving down wages, and pushing people and families into poverty. The real business superheroes are those leading the 70,000 social enterprises across the UK.

Research shows that 74% of social enterprises pay the living wage, as accredited by the Living Wage Foundation – not the lower “national living wage” introduced more recently by the government. Social enterprises reduce the need for wages to be topped up by the public purse. They also pay their taxes and reinvest their profits. Last week Welsh Water announced that it will offer a £32m windfall to its customers, reducing their bills. This is what is possible when companies are free of the shackles of profit-hungry shareholders.

These businesses are not too good to be true. They have the promise to make capitalism great again, and to reduce the gulf between rich and poor. Britain’s future business leaders are choosing social enterprise, which has three times the startup rate of mainstream SMEs. But their entrepreneurial efforts will be stifled unless our policymakers take great strides to nurture and support their growth.Peter HolbrookChief executive, Social Enterprise UK

• I’m not sure the moral crisis in capitalism is new (Editorial, 13 June). Businesses have been buying organisations and extracting their value for generations – it used to be called “asset stripping”. Today we are seeing the same behaviour in the public education sector. We are frequently told by businessmen that their sole duty is to maximise shareholder value (except by moderating their own salaries). As marketing departments will tell you, the only reason for appearing to be socially responsible is if it will increase profits, and then only with the minimum investment. Similarly, for the company, donating to politicians and political parties is only for the purpose of having laws changed to their benefit – ideally legalising what is unethical.

There used to be the idea that the difference between the public and private sectors is that, because it is providing a socially essential service, if the former fails it will need to be rescued, therefore the risk of failure is not a motivation to meet the needs of the customer.

The whole point of social democratic government is to keep the excesses of capitalism under control while maximising the benefits. Let’s forget the political pragmatism of recent governments and go back to the principles of democracy. Michael Peel Winscombe, Somerset

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