Monday, 11 July 2011

The Crisis Of Capitalism

The problem with a single word covering a very wide range of activity and belief, for example “religion” is that if you are not careful it is implied that all its variants are somehow the same. This applies to “capitalism”.

In my own family there are those who have been self employed, some running small firms and others employed by a variety of companies whose work and financial structures have been very different.

Clearly, a way of functioning, financing and managing all this also varies and it is sensible to assume that ways of doing things that are appropriate in one part may differ, perhaps greatly, from another.

The crisis of capitalism of the present to a great extent arises because a limited single set of ideas is being applied regardless of its effect on the actual work to be done or what is being provided in terms of either production or services.

The debacle of Southern Cross is a good example. What kind of capitalism makes sense in the provision and running of care homes? Essentially, a relatively localised provision with limited layers and management, with strong moral and care elements and a responsiveness to the changing needs and clients.

What is not appropriate is that a huge combine be created which although providing care is essentially a mechanism for delivering reliable income streams into a highly financially engineered conglomerate which uses this as security for highly leveraged speculative trading and related operations.

As has been demonstrated, nor is this model right to be the dominating force in the leasehold housing and rentals sector management which is now having serious problems. Nor, I believe is it right for running essentially public utilities, water, drains, refuse etc. etc.

When one looks are areas of physical production and other service activity which are having problems it is often the case that this limited financial model is at the heart of many of the issues and damaging consequences of decisions that are almost inexplicable in any sensible sense in terms of what the firms are really for.

A more difficult area is in banking. Our bankers largely tell us that their work would be compromised if retail banking were to be detached from all the rest. Well, they would wouldn’t they? They need the income streams and deposits for the security for the leverage etc. etc.

So in the last generation we have virtually wiped out the mutual sector and a range of many other types of organisation and provision in favour of the financial model. Capitalism has lost its personal, local and even regional forms and come to be seen as a purely financial exercise to be conducted on a global basis.

And, like the Care Homes and many other things it will not work. Ask the engineers at Derby Railway Works.

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