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And now the hard part

And now the hard part

There is a crisis in capitalism. Even those who’ve been its most vocal proponents admit that. But while the analyses of the problems are largely correct, the detail of the solutions will prove tricky


One of the thrills of being a journalist is the moment that you discover not the answer, but the question. When you suddenly see what you should be asking.

I was on a call with Ivo Daalder, America’s former ambassador to Nato last week, and he now runs the Chicago Council on Global Affairs. We were talking about the Integrated Review, the UK’s national security strategy that, among other things, increased the cap on the number of Britain’s nuclear warheads. And at that point, Susan Glasser, who’s a writer for the New Yorker, described a trip that she’d recently taken to Colorado Springs, which is the current home of US Space Command.

She mentioned that she’d travelled in the company of one of the US military’s top brass, and had been struck by the fact that when the US used to talk about a “strategic ally”, the “strategic” was really a byword, or perhaps a euphemism for “nuclear” – a nuclear ally. 

But that had changed. Now, the “strategic” capabilities that the US is looking for in an ally are cyber, bio and even space. And I thought at that moment: that is hugely interesting and significant. And I also thought: I’ve no idea, really, what any of those things are. I can see it’s important. I can see that we are in the throes of a revolution in hard power. But, here’s the question: what is military strength now?

I’m James Harding, I’m the editor and co-founder of Tortoise, and, first off, I should apologise for dropping off the Editor’s Voicemail radar for a couple of weeks. But this week, I wanted to catch up by talking about another “aha” moment. Again, one that got me a step closer, if not to the answer, at least to the question.

It came as I was scribbling notes in the margin of Value(s), that’s Mark Carney’s new book, because I was preparing to talk to him, the former Governor of the Bank of England, at our ThinkIn on Wednesday night. It is, by the way, an exceptionally impressive book. It devours difficult issues and it regurgitates practical solutions. If you’re trying to wrap your head around Bitcoin and cryptocurrencies, for example, well, Mark Carney’s got a plan: he makes the persuasive case that, in the end, private money never works as a currency – and nor will Bitcoin, nor will stablecoins. 

But, he says, a central bank digital currency could and should. Likewise, if you’re fretting about climate change, well, Mark Carney has a to-do list: a $100 a tonne carbon price, mandatory emissions reporting on companies and a risk register on transition that really could harness the power of the markets to deliver net zero emissions by 2050. 

But the animating mission of the book is to put morality back into the markets, to reunite value and our human values, to understand how we moved from a market economy to a market society – and what to do about it. 

In this, as in everything else, Carney’s dissection of the problem is refreshingly unequivocal. He argues that the market society is undermining the social contract. And that the social contract hinges on three things: relative equality of outcomes; absolute equality of opportunity; and intergenerational equity – aka fairness across the generations. And I scribbled in the margins: “a manifesto for social capitalism”.

There is something extraordinary happening these days. The high priests of the world economic order are having second thoughts. Ray Dalio, the hedge fund billionaire, Larry Fink, who runs the world’s largest asset manager, and Mark Carney, too, have all, in their own ways, been shouting that the capitalist house is on fire. 

But the profiteers-turned-prophets and the establishment guardians-turned-radicals are much clearer about the ailment than the remedy. The rising stack of books on the crisis of capitalism tend to have one thing in common: the first half tends to be better than the second; the analysis is strong, the prescription weak. And, to be honest, Carney, too, struggles in the second half. His answer is a “Magnificent Seven” of values – dynamism, resilience, sustainability, fairness, responsibility, solidarity and humility. Admirable, no doubt. But an airy laundry list in the face of the one hard problem of inequality.

And this is where I felt that excitement, that sense of the question becoming clear. Because it seems as though the question is this: what is the small print in a manifesto for social capitalism today? In other words, if relative equality of outcomes, if absolute equality of opportunity and intergenerational fairness are the destination, then how, in detail, do we get there? 

What, for example, does relative equality of outcomes demand in terms of mandated limits on pay differentials, new inheritance and property taxes and investment in housing? What, in concrete terms, does absolute equality of opportunity mean, say, for private schools, for education and childcare, for connectivity, transport and green spaces? What does fairness across the generations require in terms, say, of a carbon price, or of reparations, or of social care reform?

The fairness trinity – relative equality of outcomes, absolute equality of opportunity, intergenerational equity – is a theoretical formula for the crisis of our times. How do we turn the idea into fact? That’s the question.