Capitalism has served us so well

Dec 30 2008 by Bill Midgley, The Journal

THE collapse of yet another major financial institution will heighten the debate as to whether we are witnessing the last days of Capitalism as the economic base of Western Society.

Karl Marx held the view there was no need to fight capitalism as it would inevitably destroy itself and, in the 1960s, the Russian leader Nikita Kruschev held a similar view.

His threat, at the United Nations in 1963, that the Soviets would “bury the West” was based on economic arguments rather than military might.

However he had not reckoned on the true economic strength of the United States and particularly President Ronald Regan, who forced the Russians into an arms race which broke that economy.

History apart, is this really the end of capitalism, a system which has seen the creation of the wealth of the European and ultimately the whole of the Western-based economies throughout the 20th Century, and well copied by the tiger economies of the Far East? And if so, then what will take it's place?

There is no evidence that a Marxist economy works, although perhaps some historians would argue that we have never seen true Marxism in practice. Is it however capitalism that is the problem or is the people that operate it?

A stronger argument is that the Western economic system has been destroyed by greed, indolence, lethargy, complacency and crime.

Greed, so far as far too many people have thought money could be made without producing anything meaningful or of value, and certainly complacency on the part of Governments who seem incapable of putting in place or enforcing rigid means of supervision.

In our own country, where regulation still grows at an alarming rate and impacts on all parts of our life, the inability or unwillingness to impose tight financial controls and supervision have been a major factor in creating current problems.

Not that the whole of the blame should be placed on the UK or even the USA, as other countries again seem to be in awe of the so-called Masters of the Universe who control vast financial empires.

Capitalism has served us well in the past and there is no reason why it should not be the means of our economic recovery, even if it does require some help from governments in the meantime.

If we are to learn from the 1930s recession, then ultimately it was capitalism that brought about the recovery just as it did in the 1950s.

We may be in for a painful period but if we learn the lessons then the system that has served us well could yet be the basis for our future growth and wealth.

Bill Midgley is a North East executive and former chairman of the British Chambers of Commerce.