While the May Day protests achieve little, it would be remiss of economists to ignore what lurks beneath the dreadlocks and violence, says George Pitcher
I was mildly irritated last Thursday night to be stuck in a cab in Trafalgar Square as riot police charged up the Strand to quell a hot-spot of May Day anti-capitalist demonstrators. I was trying to get home and, fuelled by rather too much white Burgundy at the Garrick Club, my irritation turned to whimsy as I contemplated the irrationality of what was going on. These people are presumably anti-car and supporters of the congestion charge, so it made me smile that the traffic was backed up to Cambridge Circus by their own form of congestion.
Then it occurred to me that I was probably precisely the kind of fat-cat boss (in their eyes) that they were looking to inconvenience. But London taxi drivers must also be examples of free-market economics, not to mention financial greed and environment-damaging carbon fuels.
And here was my driver, ratcheting up his fare on the clock as we sat in gridlock, courtesy of the anti-capitalist demonstrators. That might have qualified as irony, if my cabbie had done irony, which he didn’t. He didn’t think it was funny at all, but then he was sober.
So was I by the time I got home. Newsnight was on and an articulate and radical economist was doing a package about the anti-capitalist case. She was from the New Economics Foundation (NEF) and the gist of it was that industry and its investors are obsessed with growth, which is actually an inefficient way to run an economy.
It set me thinking that the alternative, sensible wing of the anti-capitalist movement has been gaining ground since the May Day demonstrations were revitalised three years ago.
This faction’s problem is that the overall movement’s image is prescribed by the “crusties” with dreadlocks and dogs on strings.
But the shabby element, high profile as it is, shouldn’t detract from the quality of the ideological case of those who offer an alternative methodology for business.
The NEF is far from alone in dissenting from the orthodox way of running businesses. Nor is dissent the exclusive preserve of intellectual, leftie organisations. While damaging property and low standards of personal hygiene can’t be condoned, the protesters may have a point when it comes to the weaknesses of globalisation in addressing social ills and the narrow, short-termism of business investment strategies.
I commend the work of John Kay in this regard. His new book, The Truth About Markets, identifies the New Right doctrines of what he calls the American Business Model, and concludes that the economic success of the world’s richest nations results from the quality of their institutions rather than the abilities of those who exercise authority over them.
The West’s prosperity is therefore not because of any inherent virtue within its economic system, which allows short-term earnings for institutional shareholders to prevail. It is merely due to markets and financial institutions making the best of a bad job.
Indeed, according to Kay, the impoverished systems of places such as Nigeria and Haiti most closely resemble the prescription of the American Business Model, which could be defined as individualism under weak government.
This theme is increasingly being picked up by more enlightened multinationals, which recognise that, while their overriding priority is making satisfactory returns for shareholders, doing business in a global economy is more complicated than serving that priority to the exclusion of all others.
Similarly, non-governmental organisations (NGOs), such as Greenpeace and Friends of the Earth, are for their part recognising that confrontation with businesses is less productive than working alongside them to achieve social and environmental aims.
You could have fooled me last week in Trafalgar Square. Yet indications exist that a new approach to global markets is unfolding. One of these indications is the World Development Corporation, a federation of multinationals which looks to implement social programmes in developing economies. Not just because it’s the right thing to do, but because, in the long run, they’ll make more money that way.
This movement makes for some odd bedfellows. Prince Charles has just written a foreword to a compilation of essays from the likes of Gordon Brown, Dr Jonathan Sacks and Baroness Williams, called Making Globalisation Good.
Much of this effort will amount to little more than the feeble attempts by the Corporate Social Responsibility (CSR) community to make business look “nice”. But, at the more radical end, efforts to alter the priorities of capitalism in order to make it more efficient will gain ground.
It’s a slow process. Oddly enough, at least some of it can be traced to Brian Griffiths, who advised Margaret Thatcher in the Eighties and who deduced principles such as the imperatives of wealth creation and private property – and probably gave Thatcher her horrible observation that the Good Samaritan had money – but distanced government from the determinist capitalism of Friedrich Hayek and Milton Friedman.
It’s a movement worth watching. And we shouldn’t be sidetracked by those who try to make Trafalgar Square look like Tiananmen Square. Just because their methods are wrong doesn’t make our business methods right.
George Pitcher is a partner at communications management consultancy Luther Pendragon