The Future of Capitalism: Facing the New Anxieties Hardcover – December 4, 2018

Paul Colliers’ title is a poor rendering of the book it covers, it bespeaks a dusty edifice and this is a bedazzling erection of possible solutions to the troubles of modern times. Backing up to Colliers’ favorite time ‘the social democratic era from 1945 to 1970’* there were a collection of ‘wise men’ who slowly hammered out social institutions build upon the social democratic systems of western European countries and the FDR New Deal policies in America to cover the interactions of local governments for their citizens and affairs among nations. The characteristics they shared were reciprocity and generosity. For the citizen some form of support and concern from birth to death, and for nations a willingness to care for the disadvantaged – America’s Marshall Plan being one proud example. Then things changed. The institutions became dictatorial and lost their initial purpose the philosophical under-structure destroyed.Collier list Robert Putnam’s Bowling Alone as a reference but there are many noting where the collective disappeared and individualism became the ruling ideology; in the extreme case governments became agents for corporations and the financial centers and their lobbyists.The results: inequalities arising among the highly educated successful and the bulk of society, wealthy metropolitan centers and failing cities and towns, and the fracturing of such elementary units as the family. Collier is an economist and his presentation flows from utilitarian based price theory but he knows its shortcomings and aims to speak to the general citizen not to the politicians. There is a sociological undertone where he imagines the redeeming characteristic of mankind and views a way to reactivate these and use them to solve existing dystopian natures of capitalism, governments, and individuals.One can take that with a grain of salt and still find exciting ideas for communities to redo their failed states of existence bringing in core conditions for new developing industries, educational systems to turn to the child at kindergarten as the most important developmental age, link businesses and workers using the TVET** methods of Germany and Switzerland, and states recapturing economic rent seekers as major taxing possibilities. These and other are the high points of the presentation and there are many.There likely will never be a Collierism to replace other lingering ideology that he despises, but there surely will be people finding exciting notions to pursue where they can enlist like-minded individuals to good effect.*** He is right it is time for ‘Facing the New Anxieties.’ Leadership will be needed. It can happen.“We can do better: we once did so, and we can do it again.” p.2234 stars*There is not a good name for this period in America the right has hung the ungracious title of ‘Welfare Liberalism’ on it, but ‘Post-War Prosperity’ is also seen.**Technical, vocational, education and training; an idea that seems to be spreading. See: The once and Future Worker, Oren Cass.***”We have never had an ethical world, but in the period from 1945 to 1970 we made more progress towards this goal than during any other period of history, progress that has been unravelling. In restoring forward momentum we need to return to the realistic approach of prudent pragmatism. Providing effective redress for those in need of rescue is affordable and feasible; the looming global anxieties are best met not by Utilitarian moralizing, but through clubs that build new reciprocal obligations among the affluent societies to meet the duties of rescue.” p. 218

Paul Collier argues that capitalism has lost its way and he believes that things started to go wrong in the 1970s. He believes that big business and the metropolitan elites began to lose their sense of obligation to the working class. When capitalism failed in the 1930s it was saved by FDR’s New Deal and Keynesian economics. Collier argues that we have been slowly returning to the type of laissez-faire capitalism that existed before WW2. Collier believes that we should readopt the values of the early post-war era. He wants a society that behaves ethically and has greater wealth redistribution. Collier is an economics professor at Oxford University. He was raised in a steel town that lost its steel industry.FDR and Keynes saved capitalism in the 1930s. The regulations and reform adopted in the aftermath of the Great Depression worked. Capitalism took on a more human face, and market economies became more stable. Collier argues that these lessons were forgotten in the 1980s. Thatcher and Reagan ushered in a new era of deregulation, growing inequality and weakening social protection. Collier believes capitalism is losing popular support again and it might need to be saved again.Collier still believes in capitalism. He argues that “decentralized, market-based competition-the vital core of capitalism is the only way to deliver prosperity.” He argues that we need capitalism, but it needs to be reformed because great disparities in wealth are emerging. However: “capitalism needs to be managed, not defeated.” Collier doesn’t believe that greed is good or that the only purpose of business is to maximize profits and increase share prices. He believes that the gains from economic growth and productivity that capitalism is producing are not being passed onto the working class. He argues that Anglo-American capitalism has forfeited much of its economic, political and moral legitimacy.Collier believes in the ethics and philosophy of David Hume and Adam Smith. He argues that Smith is misunderstood. Collier claims that Smith believed that business also had moral responsibilities and it should behave ethically. Regulation should be about providing remedies for the public costs of capitalism, not looking to suffocate the entrepreneurial impulses of the market economy.Collier argues that globalization has become a “downward escalator” for manual workers in the West. “Globalization is good on average” but he argues that economists painted a much too idealistic picture of it. He argues that redistribution policies were also necessary to ensure that those who lost their jobs received help. Collier is worried that we are “tearing apart the fabric of our society.“London, New York, and the Bay Area have attracted a lot of educated and talented people. Their communities are affluent and possess the skills needed for the 21st century. On the other hand, there have been job losses for the unskilled in the rust belt states. He argues that modern capitalism is “morally bankrupt” and on “track for tragedy” and worries that the situation could turn nasty.Collier complains about the metropolitan elites who don't seem to care about poor, deprived, white people. Hillary Clinton has called them deplorables. The white working-class tends to be older located outside metropolitan hubs; they are employed in boring, low paying jobs, and have declining living standards. They are often culturally conservative. Collier argues that the political parties that traditionally represented the working man, are now controlled by an elite that mostly cares about racism, LGBT rights, and other popular social justice issues. It is not clear how you make them care about people they have nothing in common with.There has been considerable economic growth in the U.S. over the last 40 years. Collier wants to raise taxes on those who have benefitted the most from growth. That includes the owners of land whose value rises for reasons that have nothing to do with them and high-income workers in thriving metropolitan areas.Collier would also impose a tax on every financial transaction to capture the excessive profits earned by an oversized financial sector that misallocates scarce capital and talent. All that extra revenue he would recycle to declining industrial towns, not for higher welfare payments but to create fulfilling jobs for those being left behind. He argues that it is thanks to all citizens that the social fabric is strong, and a metropolis can survive and thrive. All deserve a piece of the pie in return.Collier argues that “in those industries where to be the biggest has come to imply the most productive, like Amazon, there is a case for differentiating rates of corporate taxation by size.” The purpose would “not be to discourage economies of scale, but to capture some of the gains for society,” he writes. After all, “the exceptional gains from scale,” like those found in Amazon, “are a form of economic rent.”Collier believes in patriotism and wants to cultivate inclusion through “a sense of belonging to the same place." He argues “we need to devise a workable strategy for rebuilding shared identity that is compatible with modernity.” In the 1950s, President Eisenhower, a Republican, promoted universal health care. He presided over government-subsidized mortgages that helped millions of Americans purchase their first home and attend college for free. Ike advocated union membership, built infrastructure like the interstate highway system, maintained a top marginal tax rate of 91% and warned about the military-industrial complex. The John Birch Society described Eisenhower as a communist. Compared to most politicians today he does seem left-wing. Ike was clearly concerned about ordinary people and what was good for America. He was not on the side of the top one percent. His generation lived through the Great Depression and WW2 together and shared a common bond. We need incorruptible leaders like Ike today.Controversially, Collier believes that it is too difficult to build a sense of common endeavor in multicultural societies. He also wishes to curtail immigration sharply. He believes that charity begins at home. Ironically, Collier made his name as a development economist in Africa.The book is well written and accessible.

This book is based on clear premises. First, capitalism is the only economic system that can generate mass prosperity. Second, it worked best in 1945-70, when there was a consensus in favor of a welfare state/social democratic model, where reciprocal obligations moderated our excesses, in the process sharing wealth and including almost everyone in the prosperity. Third, this was disrupted by a) an arrogant utilitarian calculation by economists; b) a Rawlsian search for rights in favor of disadvantaged minorities; c) bitter ideological divides; d) populist demagogues.The solution he posits is for the nation-state to cultivate new narratives that would return us to the ethics of the earlier golden age that ended in 1970. It would be inclusive, preferring the "us" to political division and a shared responsibility rather than rampant individualism or the neo-liberal faith that markets can solve all problems with the greatest efficiency and optimality. The principle means to do so is to tax "rents", which are the "excess" profits that accrue to those in cities and certain industries (lately silicon valley entrepreneurs).I must admit that, for all the rationality of these suggestions, I find them politically unrealistic. That means we would have to fight for them, not as arguments to convince, but as brutal political campaigns. It also neglects that factor of capitalist saturation, whereby developed economies have less room to grow, hence begin to stagnate (as we have seen in Japan, Western Europe, and the US).This is a useful read with a lot of great ideas, well worth the price of admission. I found it a bit of a slog to read, especially a second time to take notes. But I liked the ideas even as I felt skeptical. Recommended.

An important read, both enjoyable and infuriating. I disagreed with many of the assertions, which conflict with both my own readings and lived experience of the world, and most of which were unreferenced by Collier. I absolutely !oved the writing style and really wish I could sit down with Paul Collier and debate the arguments, understand how he formed some of his views, and agree adjustments to the thesis post-coronavirus. Like the author, I am also an educated Northerner - I was at Sheffield Uni 87-90 before working on global finance for 15 years. I have worked for NGOs in Africa India China and was Learning Manager for UNDP in Kabul. Most recently, back home in Merseyside, I retrained and established a childcare business, which I ran for 6 years, then I trained as a Secondary teacher. Lockdown is so frustrating - I really want to debate this book!

I read this book on holiday and would really need to read it again to follow fully some of the more subtle arguments. For example economic rent seems to be a concept where if it is taxed it should not be a disincentive to the person taxed, that is to say they would do the activity anyway regardless of the tax. True in theory perhaps. Basically the book is about mutual and reciprocal obligation and ethical behaviour. Despite what we see around us I believe these core values still persist but have been somehow shoved underground, its the Governments job to bring them to the fore again. Companies must be encouraged to train, research and invest (in staff and assets), not cut these long term costs for quarterly profits, to which CEO and other's remuneration is often linked. It has now been proven by hard science (and not just soft science) that children do better in two parent families (bad starts affect DNA telomore length and therefore ongoing health and life expectancy). Firms and individuals need to learn that that tax is what provides the pump priming required to provide the social and physical infrastructure which, in the long term, benefits us all. I read the book in Berlin and observed mutual obligation everywhere, for example everyone wore their masks and paid their fare on the bus. Coming back to London I counted eight fare dodgers on a short bus trip and around 50% adherence to face masking. I feel the time for public education adverts on television may be a step forwards. Also the standard of politician has fallen (arguably because voting for leaders has been pushed out to members resulting in idealogues getting into leadership positions and crowding out the pragmatic centre). I'm still optimistic things can be turned around from short term me me individualism to a more collective and responsible identity but as things stand someone of stature has to come to the fore. This is a massive opportunity for someone to do the Chirchill thing and become the man or woman of the time, rescue the nation The press vilify any politician who tries anything radical so that discourages good quality candidates (is it just me or does the Guardian just whinge about everything?) Public procurement has an opportunity to place contracts only with firms who train, invest and fund their pensions. Incentives for families to stay together are possible (secure jobs with prospects and not zero hours would help). Its well known that the gap between rich and poor is a barometer of societal stability, we need to close that gap otherwise we are committing mass hari kari in the long run. Please, someone step up to the plate...

The book discusses a very wide range of interesting topics(social and economic divergence, education, immigration) but is unlikely to convince readers unless they already agree. It starts with a reading of history and the problems of modern society that are questionable at best. Collier seems to have chosen his preferred outcome and than cherry picked the evidence and narratives that support his solution. Opposing ideas aren't properly engaged with but instead left ill defined and branded as ideological.The book is spread too thin and thereby loses any depth. Most of the subjects of the book are discussed better and in more detail in other books but a more focused book on the divide between the metropolis and broken cities could have been quite interesting (although the author seems somewhat biased in his allegiance to the broken cities).

You've heard of 'hard left' and 'hard right' in politics. Well, here's 'hard centre.'I sometimes feel that opinions belonging to the political party I don't favour, are actually fair. Conversely, some of my party's views seem a bit off. This book explains why that's ok.Rather than rigidly adhering to ideologies, or staunchly defending an identity, Paul Collier invites us to be pragmatic, and choose what will actually make things better. There are even some suggestions which seemed outlandish to me at first, but made sense the more I considered them.Recommended.

For anyone interested in the pre-Covid politics and the rise of populism this book is a must read. It provides a clear unbiased analysis of current politics and an optimistic view of the future of capitalism. It stands head and shoulders above the other texts written about the same topic, and unlike many of them is not unidimensional. It is packed with so much interesting analysis that you have to really concentrate to make the most of it.