“When given word association options, capitalism is linked most often to ‘the rich, corporations, exploitation and unfairness’. Socialism, in contrast, gets most associated with the terms ‘workers, people, equality, fairness, opportunity, and community.”
Ryan Bourne, quoting from IEA report ‘Left Turn Ahead?’
In the Telegraph Business section on Friday 25th September, Ryan Bourne helpfully drew attention to the Institute of Economic Affair’s (IEA) July survey ‘Left Turn Ahead?’, which surveyed young people’s attitudes towards capitalism and socialism. Their conclusions should worry everyone who believes in free market democracies.
The fact is that ‘capitalism’ has become so heavily intermediated, controlled by financial institutions and the elite, that younger generations simply don't recognise how it can offer them participation.
So in this commentary, conscious that we are in the middle of Party Conference season here in the UK, we set out the urgent case for overhauling our approach to economics.
A sense of ownership starts with where you live, and that’s almost out of reach now for young people with generations born after 1970 having significantly lower levels of home ownership. The average first time buyer age was 24 in 1970, 28 in 2000 and 37 in 2013; and this BBC clip from Edinburgh shows that it’s got more difficult throughout the UK during the pandemic.
Rock bottom interest rates have inflated asset values massively, and they have given a further massive twist to the polarisation of wealth.
Nearly thirty years ago, The Share Centre launched the Mail on Sunday Share Service, with the following encouragement to get involved:
‘SHARE OWNERSHIP - The essence of investment
Shares - at times they may delight you, at times confuse you, but very rarely will they fail to fire your imagination.
PEOPLE own shares for all sorts of reasons: almost always capital gain, either looking for the quick turn or the long-term, often for the interest in owning a share of British business, often because the charges are lower than other forms of investment. A share portfolio is indeed the essence of investment.
COMPANIES want people to own their shares too: personal investors take a wider interest in the company than investment institutions, and shareholder customers and employees build that interest into all areas of the company’s business.
It's good for our COUNTRY too that people should own their share of British business: shareownership knits a free enterprise economy together by bringing the power of ownership, the surge of the market, and the ingenuity of the workforce together under the same head’.
It was the start of a radical new approach to provide share ownership for all, and The Share Centre went on to provide unprecedented access to participation through new issue distribution, providing free shares in its own business to its customers, being the first mover in a new all-employee share ownership plan, getting Company Law changed to enfranchise nominee shareowners, and providing a huge range of investment and financial education services for young people.
However, the sheer weight of financial domination by institutions and the City elite weighed the scales heavily against providing such a radical commercial alternative as a single initiative to achieve change, and I have learned that it's necessary to employ a number of different strategies to turn the proverbial oil tanker round.
There's an old adage that, if you're not a socialist when you're young, you don't have a heart; but if you're not a capitalist when you're old, you don't have a head. The IEA survey suggests that this is wishful thinking. Heavyweight intermediation is taken for granted so deeply that the choices presented to young people did not include the alternative of global individual participation, through schemes such as ‘Shares for Data’ or inter-generational rebalancing.
The problem is that capitalism is dressed up as a free market activity, but in fact it's got very little to do with ordinary individuals – and therefore that old generational adage no longer applies.
Egalitarian Capitalism is the radical alternative but, as with re-aligning our energy usage to address climate change, it's going to take time and effort to change the system. During the ‘Global Citizens Live’ concert on Saturday, BBC science editor David Shukman remarked that it takes systemic change to resolve both global poverty and global warming, not just political gestures and donations, however substantial. That is so true.
The SHARE research fellowship at Cambridge University will hopefully provide the necessary academic rigour for Egalitarian Capitalism, and meanwhile there's a number of enlightened initiatives seeking to change the mindset of politicians and business. One such is The Kauffman Foundation, and I warmly recommend taking a look at their YouTube videos.
Egalitarian Capitalism is also one of the headline policy areas in the Conservative Policy Forum and, while this year's Conference will no doubt be overshadowed by continuing COVID precautions, I hope Boris’s re-invigorated Cabinet will come to realise that it is the only way to bring the true meaning of levelling-up through to individual citizens.
Meanwhile The Share Foundation's efforts to bring the benefits of the Child Trust Fund scheme through to young adults continue. The unclaimed rate for 18 year-olds has fallen from 58½% to 53½%, and on Friday ITV News drew attention to this opportunity for young people. They also included a report of about a young person who plans to use the £1,900 in her account on driving lessons.
We need a new starter capital account scheme such as the CTF to start changing the outlook for young people, particularly those from disadvantaged backgrounds: not just in the UK, but globally. Ewing Kauffman, the 105th anniversary of whose birth was celebrated last week, had a vision of a whole society of economically-empowered individuals contributing to the improvement of their communities.
It is only such a vision of a more egalitarian form of capitalism that can bring hope and opportunity to the young people surveyed by the IEA.
Gavin Oldham OBE
Share Radio (& founder, and former chief executive & chair of The Share Centre)