4 March 2022

Time to ditch centrism and reclaim capitalism for the people

By Mark Brolin

If you’re left-wing, you probably think all of society’s ills are the fault of big business and call it capitalism. Right-wingers decry state intervention and trade unions and call it socialism. Centrists, on the other hand, blame both capitalists and socialists while claiming to represent a balanced middle way. 

In recent decades, centrists have dominated the scene in just about every developed country. You might, therefore, expect that their governments would be wary of both the lobbying attempts of major corporations and the advances of the big state. In fact, corporate lobbyists and state interventionists have joined forces. As a consequence, vested interests influence policy to a degree unprecedented in the democratic era at the same time as we have seen massive expansion of the public sector.

So today the government is larger, more costly for taxpayers and more important as both an employer and as a buyer of goods and services. Especially if you add in the massively growing influence of supranationalist bureaucracies like the EU. In addition, public servants have accrued a greater regulatory mandate than ever before. This in turn, makes it even more important for major lobbyists to stay close to political power.

What then about the role of today’s trade unions? In most private sector industries the overall balance of power between corporations and workers has clearly shifted in the direction of the big corporations. This is due to the relative decline of the typically more unionised manufacturing industries. In the public sector, however, individual trade unions continue to make waves. 

Meaning in practice that the state and the giants on both sides of the labour market are today forming a formidable pact. Numerous interest groups with a big purse are – even if in different ways in different industries – significantly influencing legislation. This has led to a de facto triumvirate of a sort very close to an economic order that used to go under the name ‘corporatism’. 

In other words, in seeking to avoid economic tribalism, politicians have created a centrist economic echo-chamber where neither public servants nor the corporate lobby can criticise each other. Commitment-to-nothing statements like ‘I am neither for nor against capitalism’ or ‘worker’s rights need to be protected but it also important to think about the flexibility of the economy’ might be useful in promoting an individual career, but they do not raise the quality of economic debate.

Instead they lead to unclear legislation and a profusion of Quangos with blurry mandates that only add to the problem. These are often created to make it look as if politicians are achieving at least something, but the reality is additional complication and costs which only benefit lobbyists and lawyers, while making it even harder to identify real irregularities.

So what’s the answer? In his book A Capitalism for the People: Recapturing the Lost Genius of American Prosperity Luigi Zingales, offers a uniquely clear critical analysis of this kind of groupthink. Crucially, the solutions he offers rise above traditional political divides. On the one hand Zingales is openly in favour of free markets rather than big business. He also acknowledges that markets not reined in will never be truly free. On the other hand he argues that the negative effects of big business over-reach are particularly felt by people without capital and connections.

Zingales demonstrates that today’s close relationship between legislators and the labour market giants has not, contrary to what centrists claim, ended up with the state making sure that the interests of workers and the economy are balanced in a prudent way. Instead he argues that the intimate relationship between the state and big employers has led to a reintroduction of crony capitalism.

He shows that the way forward is not to uncritically buy into the centrist economic order. The economic order that, over recent decades, has dominated the economic landscape both in the US and Europe.

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Mark Brolin is a Political Analyst, Economist and Author. ‘Healing Broken Democracies: All you need to know about Populism’ is his most recent book.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.