The Good, the Bad and the Greedy E-Book

Martin Vander Weyer

• Herausgeber: Biteback Publishing
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 524

Veröffentlichungsjahr: 2021

Beschreibung

"Timely, thoughtful and witty" – Merryn Somerset Webb From the Industrial Revolution to the internet, capitalism has been a great engine of human progress. But now it stands accused of allowing the greedy few to run riot over the rest of society, exploiting workers and suppliers and recklessly damaging the planet in pursuit of profit. Where did these accusations come from – and are they true? In this lively critique, Spectator business editor Martin Vander Weyer argues that capitalism has indeed lost its moral compass, has lost public trust and is in urgent need of repair. But this is no far-left analysis seeking to champion a thinly veiled Marxist platform. Written from the point of view of a deep admirer of entrepreneurship and private-sector investment as a proven path to innovation and prosperity, The Good, the Bad and the Greedy argues that businesses always operate in a social context and that a 'good' business in a moral sense can also, in a perfect world, be a business that richly rewards its creators and backers. From the writer whom Boris Johnson called 'the most oracular and entertaining business commentator' in London, this thoughtful critique of 21st-century capitalism formulates core principles that separate the good from the bad and the greedy and warns that the system must be reformed and faith in it restored – before the next generation commit the ultimate act of self-harm by rejecting capitalism in favour of something worse.

Leseprobe

“We have a problem: we know capitalism works, but we also know most people think it doesn’t. Being pro-capitalism isn’t fashionable but it is right. How do we sort this out? This timely, thoughtful and witty book offers some excellent answers.”

Merryn Somerset Webb, editor-in-chief of MoneyWeek and Financial Times columnist

“Martin Vander Weyer has written a magisterial analysis of how modern capitalism has lost its soul. With public support for free-market capitalism evaporating, we need to restore the sense of purpose and obligation that the greatest companies once possessed but which has been lost in a jumble of management-speak, mission statements and cost controls. The Good, the Bad and the Greedy is essential reading for anyone who wants to understand why a system that has delivered unprecedented prosperity has also become so unpopular – and who wants to start figuring out what we might do about it.”

Matthew Lynn, Daily Telegraph columnist

“Martin Vander Weyer makes a clear case that capitalism is not dead – but is often broken by broken people.”

Lord Browne of Madingley, former chief executive of BP

“This book is a highly engaging combination of economic history, finance and philosophy. It tries to answer the really important questions about business and markets. Whom do companies serve? Can they be more ethical and remain successful? Is reform needed? It covers the critical subjects of tax, executive pay and philanthropy in a balanced and brilliantly readable way. It should be recommended reading for investors, managers, entrepreneurs and politicians – or indeed anyone interested in debating the strengths and weaknesses of the free-enterprise system.”

Luke Johnson, entrepreneur and former chairman of Channel 4 and the Royal Society of Arts

“Timely, insightful and beautifully written.”

Rupert Younger, director, Oxford University Centre for Corporate Reputation

“The Good, the Bad and the Greedy explains clearly, with humour and in an easily readable form, how financial markets work, how they affect us all and how from time to time a few greedy undesirables find ways of misleading the public and swindling them. Regulations to prevent fraud exist, but regulators are always slow to catch up. Many firms with decent directors are often too big for top management to supervise effectively what is happening at street level. The result is that public trust in the system gets damaged. Martin Vander Weyer proposes changes to repair that damage and, in particular, to reestablish the City of London’s reputation. Even if you feel you have no stake in capitalism, you still ought to know its pros and cons. This is a good way to find out.”

Sir Martin Jacomb, former chairman of Prudential and Canary Wharf Group and former deputy chairman of Barclays

“Capitalism works best when it enables, through ownership, citizens to have a stake in the nation. It fails when it adulates the making of money without a social or moral purpose. Martin Vander Weyer’s laser mind shows the way out of our present turbulence.”

Lord Vinson, industrial entrepreneur and founder-director of the Centre for Policy Studies

“A handbook for a new start: a thoughtful analysis of what has gone wrong in the financial world, and the history of how that has come about.”

Jonathan Ruffer, investment manager and philanthropist

CONTENTS

Foreword by Lord Young of Graffham

Prologue EPIPHANY IN SEATTLE

Introduction PROSPERITY’S ENGINE

How capitalism drives progress and responds to shocks

Chapter 1 BRITS DON’T LOVE CAPITALISM

Why are we innately hostile to trade, profit and wealth?

Chapter 2 BIG BANG RUINED THE CITY

Did 1980s reforms cause the 2008 crisis and all that followed?

Chapter 3 THE DEATH OF POPULAR CAPITALISM

How did citizen-capitalists become fund-fodder and scam victims?

Chapter 4 NOT NICER BUT NASTIER STILL

Why hasn’t capitalism reformed in response to protest?

Chapter 5 SO WHAT’S THE ALTERNATIVE?

Why is there only one John Lewis Partnership?

Chapter 6 PAYING THE TAXMAN

Why won’t companies pay ‘fair taxes’ wherever they operate?

Chapter 7 THE GREAT PAY SPIRAL

Are top executives paid far more than they deserve?

Chapter 8 GIVING IT AWAY

Why philanthropy should always be personal

Chapter 9 THE JOURNEY OF PURPOSE

Is there ever a higher corporate objective than profit?

Chapter 10 THE INHUMAN CORPORATION

Is it really any wonder that multinationals are so distrusted?

Epilogue

An echo of Gekko… and an outbreak of post-pandemic optimism

Acknowledgements

About the Author

Index

FOREWORD

In this timely and important book, Martin Vander Weyer has given us an entertaining but credible warning that all is not well in the City and the corporate world. Relying upon his many years of experience, both as a banker and as a respected financial journalist, this book will raise serious concerns in both the City of London and the corridors of Westminster.

The problems of modern capitalism he writes about so convincingly had their origin a long time ago – though I am old enough to have been a spectator at the time. I left school to start work in 1948 and discovered that the economic stimuli offered by the Labour government of the day – excessive regulation and confiscatory taxation on top of an exhausted post-war economy – were rapidly turning Britain into the sick man of Europe.

It took me some years to understand why, in fact, taxes came to be so high. But I never understood why they were kept there, as they were by both parties: to be fair, Conservatives in that era were little better than Labour. The war had been a desperate fight for survival in which the entire economy had to be marshalled to support our armed forces. In a world where many were risking and losing their lives, it was not seen as fair that some should profit – so the tax system was one that focused on levelling down to make sure, to coin a phrase, that we were all in it together. That the wartime taxation system put an effective limit on how much any individual could earn at a time of national and individual peril was seen as eminently fair.

The first Labour post-war government retained wartime confiscatory tax rates, again in the interest of fairness. Unfortunately, what had been seen as fair at a time of national emergency was not regarded the same way by a post-war society, a few years later, of people who were anxious to rebuild their lives. I find it difficult to believe today that I actually spent the first thirty-one years of my working life in a world where the top rate of income tax was 83 per cent, with an additional 15 per cent surcharge on any interest and dividends.

Even worse, the prevailing ethos of the time was that profit was theft, that one person’s profit was another’s loss, for the economy was regarded as a zero-sum game. This was so universal that, after starting my first business in the early 1960s, I would be reluctant, on meeting people socially, to say I worked for myself for fear of being regarded as disreputable!

The result was a flourishing black economy. There was also an abundance of what were known as ‘lifestyle’ companies – providing comfortable perks for family owners who (unlike Germany’s Mittelstand) had no incentive to develop and expand businesses which would often end up being sold to pay death duties.

We were rescued from all this by the Thatcher revolution of the 1980s and by the Big Bang reform of the City. Once tax rates came down and people saw there was a reason to work, then we started to promote start-ups and self-employment and we slowly began to rebuild the economy. The initial reduction of the top rate of tax to 60 per cent in 1980 and to 40 per cent a few years later transformed our economy and the lifetime prospects of a whole generation.

But it did far more than that. For the first time in decades, it became possible to accumulate wealth out of earnings and, suddenly, how much you earned became more important than status – which had been the principal reward for success for all the post-war years. As banks and other financial institutions from the United States and Europe expanded their operations in London, competition for talent started in earnest and top salaries rose disproportionally.

From the 1990s onwards, we saw a steady acceleration of rewards for those at the top of companies. In the first half of that decade, I was executive chairman of Cable & Wireless, a company near the top of the FTSE 100, at what I thought a handsome salary. My successor received twice my salary and after three years or so he was replaced by two people, costing twice his! It is one thing to reward entrepreneurs who take personal risks to create new businesses or services and whose wealth is founded on the equity they themselves helped to create, but it is quite another to reward someone in the same way who has merely had the stewardship of an existing business for a few years. This executive pay spiral has now risen to a level where a CEO can take home a hundred times or more the shopfloor wage, often irrespective of results achieved. But we still live in a democracy and if the government tolerates such glaring inequalities for long, the voter may well not.

Then we have the other side of the coin, again brought out very clearly by Martin, of large corporations organising their affairs to pay the minimum of tax where they trade. I live in the heart of the countryside and I am very grateful to the Amazon man or woman who delivers everything so promptly to my door. I order everything from my home, it is delivered from a local warehouse and yet it is invoiced from Luxembourg, not for any reason of business efficiency, but because Amazon has been able to negotiate a minimal rate of tax.

We have all been living through a terrible pandemic – but many of us once lived through far worse, in the form of a plague that escaped from the Reading Room of the British Museum in London in the second half of the nineteenth century, infected much of the world and caused uncountable deaths. That virus was, of course, Das Kapital by Karl Marx with its entrancing idea that we could logically reorder the economy to make it a fairer place. But that left out the essential ingredient that is human nature: the basic human instinct to look after your own. As a result, communism or even socialism, in which the state took over so much of personal responsibility, never produced the wealth that capitalism did. And in the end, it was probably just as inequitable.

But it remains an entrancing idea because it seems so logical. And despite all the evidence to the contrary, if capitalism continues with such obvious inequalities, people may be tempted once more towards socialism, if not its red-blooded cousin.

Our standard of living depends foremost on a successful enterprise economy that has the support of the people. If we lose that support we put our future in jeopardy and we risk returning to the chaos of decades of old. This book is a timely reminder and I hope the government takes note.

David Young

Rt Hon. Lord Young of Graffham CH was Secretary of State for Employment and subsequently for Trade and Industry in Margaret Thatcher’s Conservative government. An entrepreneur and venture capitalist in his own right, he was also chairman of Cable & Wireless plc.

PROLOGUE

EPIPHANY IN SEATTLE

In November 2018 – in that carefree, pre-pandemic era of frequent international travel – I had the great pleasure of visiting the handsome city of Seattle in the American north-west. I was attending the annual conference of a fellowship which brings talkative Britons and Americans together to debate topics of mutual interest, and of which I’m a long-standing member. Before arrival, conference participants were asked to select one of a choice of tours that would take place during the first afternoon.

There were several possibilities attractive to anyone like me who thinks deeply about the pros and cons of capitalism. The list included a visit to the headquarters of the software giant Microsoft, one of the great change-making corporations of the digital age. Alternative destinations included the medical laboratories of a charity called PATH that is richly funded by the foundation endowed by Microsoft founder Bill Gates and his now ex-wife Melinda. Or the Allen Institute for Artificial Intelligence founded by Gates’s original business partner, Paul Allen. Or Boeing Field, home of the great aircraft manufacturer that symbolises an earlier era of American global corporate power. Or the headquarters of Amazon, the world’s biggest and most influential online retailer, for a discussion of ‘e-commerce and the digital future’.

From this panorama of capitalism and its societal effects, I chose the Amazon option because as both a regular customer and a frequent journalistic critic of this extraordinary business, I was, to use a modern term, ‘conflicted’ about it. I wanted to understand more about its ethos – a vitally important concept to which I shall return later in this book, as my analysis of modern capitalism crystallises, I hope, into a relatively simple set of conclusions.

What was it that intrigued me, then and now, about Amazon as a business model? On the positive side, I love the convenience of being able to buy almost anything, including just about every book ever published, via Amazon’s trustworthy one-click payment and Prime delivery system. Rarely a week goes by when I don’t buy something on the site, sometimes within a few seconds of first thinking of doing so.

Rare also would be the week, especially during the lockdowns of 2020 and 2021 that none of us ever imagined were coming, when I did not watch films and television shows on Amazon’s Prime Video service, which felt like a free bonus on top of this new mode of ultra-convenient armchair consumerism. And I see other things to admire about Amazon beyond my personal experience of it, including the fact that it has nurtured thousands of smaller online businesses by allowing third-party vendors to use its Marketplace platform. Though I’m no one’s idea of a serious techie, I’m also aware that Amazon’s web services arm provides cloud computing capacity for a vast number of other businesses, and I assume that must be a good thing.

On the negative side, I have long disapproved of Amazon’s much-headlined practice of paying as little tax as it could, within the applicable law, wherever it operated. I found something distasteful about reports, current in 2019, that it had obliged cities competing to be the site of its second US headquarters (the eventual winner was Arlington, Virginia) to outbid each other in terms of tax and regulatory breaks. I worried that its competitive strength and discounted prices had ruined many small booksellers and other bricks-and-mortar retailers that used to be part of the social fabric of every town and suburb. I didn’t much like what I’d heard about its hollowed-out employment practices or its secretive and authoritarian internal culture.

And having read a great deal about its founder Jeff Bezos (who at that time had recently challenged Bill Gates for the title of the richest man in the world, with a net worth of more than $100 billion), I did not think I would warm to him in the unlikely event that I was offered an interview as part of my tour. In that pre-judgement I was influenced by Brad Stone’s 2013 history of Amazon, The Everything Store: Jeff Bezos and the Age of Amazon, which paints Bezos as a difficult boss, a perfectionist obsessed with technical detail who deals harshly with underperformers, who is not notably generous to loyal and efficient staff, and who is prone to tantrums known in the company as ‘nutters’.

‘If I have to choose between agreement and conflict, I’ll take conflict every time,’ he has famously declared. ‘It always yields a better result.’

Though in February 2020 Bezos would commit to giving $10 billion to climate change causes, he had not previously begun to establish a reputation as a Gates-style world-scale philanthropist to counterbalance his first public image as, to put it crudely, a capitalist monster. Rather, he gave the impression in that earlier phase of not really knowing what to do with the humungous fortune that was daily accruing to him as a result of the upward trajectory of Amazon’s share price. Given the complexity and expense of the parting he had recently announced from his wife of twenty-five years, MacKenzie Scott, he did not even particularly seem to enjoy the possession of it. Nevertheless, it might have been fun to glimpse his gleaming bald head in the executive elevator.

All was well set for the visit. The conference badge on a lanyard round my neck said ‘Amazon Tour’ below my name. When the moment came, after our opening plenary session in Seattle’s landmark Space Needle, I formed up alongside the member of our fellowship who announced herself as the leader of the Amazon visit. Her day job was as one of Amazon’s army of intellectual property lawyers and in her defence, it’s fair to say that tour-guiding was probably not a task she was often asked to do, or to which she was naturally suited.

But she had equipped herself with a clipboard for the occasion and was briskly calling out the names of fellows who had signed on for her tour. I realised later that she had not called my name – but I was standing right next to her wearing my badge, I’m a well-known face in our fellowship, and I must have assumed, if I thought about it at all, that she had already ticked me off.

Whatever. Chatting amiably, we strolled several blocks in autumn sunshine to the Amazon campus at South Lake Union, where (I later read) more than 45,000 employees occupy some 13 million square feet of office space in multiple tower blocks. At the reception desk we were required to show our passports before being ushered into what are properly known as the Amazon Spheres but locally referred to, in honour of the founder, as ‘Jeff’s Balls’. Reflecting Bezos’s almost superhuman reputation as a business-builder, there are three of these structures rather than the big pair you might expect: a trio of geodesic domes at the centre of the campus, heavily planted with exotic vegetation and providing a flexible workspace-cum-meetingarea for employees and their visitors.

Here we were handed over to a ‘Sphere hostess’ – plump, heavily made-up and neatly uniformed – who had committed her script to memory and who might, if this had been a movie, have unzipped her head to reveal that she was a robot.

‘You may photograph the foliage but you may not touch it,’ was her first pronouncement.

Mischievously I said, ‘Thank you – but which way is the tax department? And can you tell me how many people work there?’

To which she replied robotically, ‘I cannot give you that information, sir.’

‘OK, but is Mr Bezos in the building today? Might we have an opportunity to ask him some questions?’

She was evidently programmed – like Amazon’s Alexa, the hot-selling voice-activated ‘virtual assistant’ home entertainment system – to duck that one too. ‘I cannot give you that information, sir.’

And on we went. There were about fifteen of us in my group, while other groups from our conference took different routes round the tour. Our next stop, in another part of the complex, was the prototype Amazon Go mini-supermarket. This was a vision of the future of shopping with no checkouts, manned or automated, because sensors and cameras track which goods the customer takes off the shelves, charging them via a phone app to a credit card account if the goods then leave the premises. Its first UK example, by now branded Amazon Fresh, would open to national media attention in the London borough of Ealing in March 2021.

‘You have to download the app before entering the store,’ our colleague turned tour leader instructed. I’ll call her Angela, though that’s not her real name. Rather laboriously we did as we were told. Within seconds, I noticed Angela looking anxiously at her own phone. Then she was buzzing round the group, asking: ‘Which one’s Martin?’

Several fingers pointed at me, doing my best to show interest in the store’s limited range of branded groceries.

‘You are not authorised to be on this tour,’ was her opening gambit, back in corporate lawyer mode, her pale face uncomfortably close to mine.

‘I most certainly am. Look – it says “Amazon Tour” on my badge.’

‘You have peeled off the label that was concealing the name of Amazon.’

‘I have done what? Are you kidding?’

‘No, I am not kidding. You cannot continue on this tour. You have to leave immediately.’

At which point she rather forcefully unclipped from my breast pocket the additional ‘Visitor’ badge I had been given at reception after the passport scrutiny.

‘Angela, you do know I’m a journalist, don’t you?’

‘Yes, I do know that.’

‘…and that I’m the business editor of The Spectator, the oldest newspaper in the English language?’ Pomposity felt like a valid weapon at this juncture. ‘And you do realise I’m certainly going to write an article describing every detail of this episode?’

‘Yes, I do realise that…’

‘I mean, come on. Amazon’s a retailer, for Chrissake. This is a grocery store, not a nuclear weapons facility…’

‘You have to leave immediately. You cannot continue on this tour…’

It was explained later, on Angela’s behalf, that a list of wouldbe tour participants had been submitted to Amazon’s PR department some days beforehand and my name had been crossed out by them. But if any message had come back to our conference organisers to that effect, it had not done so in time for them to alter my badge and reassign me to a different tour. My rejection was either because the company’s bunker-mentality media policy was to exclude all journalists from campus tours or because someone in one of those multiple tower blocks had Googled what I had previously written about Amazon’s tax policies and about the personality of Jeff Bezos, and did not like it.

More sinisterly, I never did discover whether my ejection was triggered by a message from reception saying they had belatedly spotted an unauthorised name among the passport details they had recorded – or whether the very act of downloading the Amazon Go shopping app had triggered an alarm in the corporation’s vast database when it clocked my name. That really would have been science-fiction scary.

Either way, there was clearly little point in standing my ground after a brief eyeball-to-eyeball with Angela in the shop doorway. She was in no sense personally responsible for what was happening – and she no longer works for Amazon, though I hasten to add that’s not because of this incident, so far as I know. There was some talk at the time that if she carried the can internally for such a heinous breach of security, she was at risk of losing her job. But she and I have subsequently re-established friendly relations.

What I missed on the remainder of the tour, I was told, were several more servings of robotic propaganda and a carefully staged encounter with women residents of the Mary’s Place homeless hostel that Amazon had recently funded and accommodated within the campus and was promoting heavily as an example of its corporate social conscience. Members of our group were not permitted to put questions to the women, who were eloquent (tearfully so, one attendee told me) in their gratitude to the company. Homelessness is said to be a particularly acute problem in Seattle because the wealth generated by Amazon, Microsoft and other booming businesses has driven local housing costs sky high.

In a half-hour nutshell, this had been a perfect encapsulation of the good, the bad and the greedy in modern capitalism. A glimpse of a brilliant, disruptive venture that has made every digitally connected consumer’s life easier and given us one-click access to an unimaginable range of goods. But also a business that crushes competitors, reportedly offers minimal staff welfare in its giant warehouses and has accumulated a vast reservoir of personal data about its customers’ habits and preferences, the use or abuse of which is almost impossible to police from outside.

It is a business so powerful that it can effectively choose where and when it pays tax, and how little. It can make cities and national governments jump at the click of its finger. It is capable of treating mildly inquisitive members of the media like me rather as maverick National Security Agency operatives treated Will Smith’s innocent lawyer character Bobby Dean in the 1998 conspiracy thriller Enemy of the State.

And it is a company that is so enormously valued by stock market investors as to make its creator and major shareholder one of the wealthiest human beings of all time – alongside Bill Gates and latterly in competition with the Tesla electric car entrepreneur Elon Musk, followed by the French luxury goods tycoon Bernard Arnault, and comparable with gilded historical figures from Cosimo de’ Medici to Andrew Carnegie and John D. Rockefeller.

Whatever his position in that exclusive league table, Bezos is incontestably rich beyond his own wildest dreams of what he might ever do with the loot, recently resorting to the ultraexpensive folly of sending himself into space in his own rocket. But at least he had also been able, by the time of my visit, to offer a little charity to some of Seattle’s poorest women.

Food for thought, indeed. So is Amazon ‘good’ or ‘bad’ at heart? Or both? Or neither, in the sense that its heart is nothing but a piece of shopping software that must be, in essence, morally neutral. Isn’t it the individuals involved – investors, executives, wily tax lawyers and accountants, complacent legislators, eager shoppers like you and me – whose consciences we should seek to examine?

And what’s greed got to do with it, if the urge to possess or consume more than you need, or more than is obviously good for you, is a basic instinct and economic driving force in almost all of us who have not opted for a life of monastic or survivalist self-denial? In what sense does the accumulation of a great fortune by your own entrepreneurial effort, boosted by the arithmetic of the stock market, equate automatically to the biblical deadly sin of ‘greed’?

I have no difficulty in saying that Jeff Bezos is greatly to be admired for having created such a world-changing business and for remaining focused on its continuing technological development long after he could have eased back into the sybaritic self-indulgences of the ultra-rich. He finally announced that he would shift from chief executive to executive chairman at the end of 2021, but no one really expected him to let go of the controls.

Is he also to be despised for his ruthless capitalist spirit, and for sitting sulkily on his mountain of gold? Or is it OK to express a sneaking admiration for the spirit and the mountain too?

And if the moral of my Amazon anecdote is that capitalism always has rough edges but is capable of changing human experience for the better, shouldn’t writers like me be standing up for it?

‘I can call an Uber and have it take you to join one of the other tour groups,’ was Angela’s conciliatory parting gesture. ‘Maybe Microsoft? Or the medical research lab?’

She had reminded me that Uber – the San Francisco-based, libertarian ride-sharing service that provides low-cost urban journeys at the tap of an app in some 900 metropolitan areas around the world, generating incomes for more than 3 million drivers – is another example of the double-edged sword of disruptive capitalism, having been accused of exploiting those drivers’ willingness to work for ultra-low pay without employee rights, and of driving many local taxi firms out of business.

Likewise, Microsoft in earlier days was accused of ruthlessly seeking unfair domination of its markets when its software was conquering the world and Gates himself was behaving like Andrew Carnegie and his cohort of late-nineteenth-century industrial monopolists, of whom more later. But just look at all the philanthropy in fields of life-saving medical research that Bill and Melinda now fund.

Amazon offers us a particularly vivid parable of all these opening questions. But they apply equally across the universe of large companies, including so many of the great names founded and built up at home in the United Kingdom such as ICI, Marks & Spencer, BP and Barclays, or multinationals such as Unilever and Nestlé.

And they invite comparison with lesser-known but intriguing contemporary examples such as Danone, the French food products group, which in June 2020 made a great show of declaring itself to be a ‘purpose-driven company’ (in French, enterprise à mission), which would henceforth put social and environmental goals ahead of rewards for shareholders. But just nine months later, those shareholders ousted the chief executive responsible, Emmanuel Faber, for the simple reason that he was not generating returns comparable with those of Unilever and Nestlé.

The mechanisms of exploitation of resources, perfection of products, distribution of profit and rewards for leaders of those businesses are perpetually fraught with moral dilemmas. Those dilemmas, far from clear-cut, have been resolved or left unresolved in many different ways. In due course I shall talk about all of them – and I shall conclude that in many cases, companies can be both good and bad at the same time.

But in turning my thoughts back to the British business scene (which will become the primary focus of this book, though I’ll make frequent comparisons with the rest of the world), I was also reminded that – for reasons deeply embedded in our class system and cultural history – we Britons are ever ready to criticise business in general, and to accuse it of ill-motives. We are ready to turn against big business and accuse entrepreneurs of malevolence at the drop of a hat and the turn of the economic tide. We do that far more often, and with more venom, than our American friends ever do.

Over there, profit and wealth are seen as good until they prove themselves criminally bad, in which case it is the job of the US justice system to mete out punishment, starting with the humiliation of the notorious ‘perp walk’ for the chained accused – but even then, the alternatives to capitalism are barely thought of as worth discussing. Over here, business is disparaged in bien pensant circles and portrayed in popular entertainment as habitually wicked. Even when it demonstrates itself to be socially useful and satisfactory to its customers, it continues to be treated with suspicion. Why is that? And who’s right?

Angela was still waiting for my answer, as the rest of our tour group ranged in a tense semi-circle around us awaiting a denouement of the confrontation. I began to compose an impassioned closing speech in my head, but thought better of it.

‘That’s OK,’ I said. ‘Thanks for the offer but I think I’ll just walk around the city for a while…’ And so I did, and began to think about writing this book.

INTRODUCTION

PROSPERITY’S ENGINE

HOW CAPITALISM DRIVES PROGRESSAND RESPONDS TO SHOCKS

I have continued thinking about the good, bad and greedy characteristics of capitalism over the three tumultuous years since that visit to Seattle – a period in which (amid many other dramas) the way business behaves now, and how it stands accused of having behaved in the past, has been under scrutiny more than ever before.

There have been, arguably, three particular strands to that scrutiny. In the chronological order in which they came to prominence, they can be simply encapsulated.

In 2019, the question most frequently and aggressively asked was: ‘What is your company doing to rectify the harm it has done to the planet – and why isn’t it doing more of it, and faster?’

In 2020, out of the blue, the question suddenly became: ‘How is your company contributing to the battle against Covid-19?’

And in 2021, as the beginning of the end of the pandemic created new space for fashionable concerns, capitalism encountered the culture war that was changing politics and disrupting educational institutions on both sides of the Atlantic: ‘Are your company or its founders and owners tainted by connections to colonial exploitation?’

That trio of challenges will rank high among the measures I’ll apply in this anecdotal analysis – which will draw much more on personal observation of business over almost fifty years, and on themes I have written about in The Spectator and elsewhere as a journalist, than on the kind of research you might find in a business-school textbook.

And in case you’re wondering which way I’m heading, I should warn readers hoping for a head-on assault on the wickedness of the boardroom world that they will find me, on balance, a critical friend of the capitalist monster.

I happen to believe that most human beings are fundamentally good, or striving to be so, rather than fundamentally evil. I believe also that a company is a device for harnessing collective human effort, rather than an entity with a brain, will or conscience of its own. And with those two beliefs as my starting point, I think I have discerned over these three years of observing, reading and talking about business a trend towards the better rather than the worse – following a couple of decades in which the trend really was in the wrong direction.

Greed, the third element of my title, is of course always capable of leading human nature astray, and I shall not hold back in my condemnation of that ancient sin – though I shall try to distinguish sheer greed for money and luxury from a more admirable drive to achieve capitalist success, which is of course often measured in money.

But in relation to the major 21st-century corporate misdeeds of climate damage and of failure to comply with expected governance norms, and in response to the pandemic, I believe very many companies have latterly reformed themselves in a positive direction; some have indeed behaved very well. And in relation to past history? Well, that can’t be changed even if it can be reviewed through changing filters of modern opinion. But what I will say upfront, without equivocation, is this: capitalism is the greatest engine of human progress ever invented.

That’s a strong statement, but one that would have been largely unchallenged in the western world for at least 120 years, from the zenith of late-nineteenth-century industrialisation on both sides of the Atlantic to the advent of the digital age at the end of the twentieth century. Yes, there have been moments of popular doubt and abiding pockets of ideological opposition. But in broad terms, the advance of the corporation, the manufacturer, the commercial bank and the mass-market retailer is recognised to have served the developed and developing worlds astonishingly well.

Two decades into the twenty-first century, however, capitalism has acquired lecture halls (and online communities) full of critics who say it is failing to fulfil its promise. It is still the global locomotive of prosperity, but in ways which enrich some people and some nations far more than others, and which sometimes seem to cause a great deal of collateral damage. Capitalism – by which, to be clear, I chiefly mean the arena of shareholder-owned corporations and the financial mechanisms that support them, rather than the activity of individual entrepreneurs and small businesses – stands accused of losing its moral compass, of over-rewarding owners and senior executives while exploiting workers and suppliers, and of recklessly damaging the planet in pursuit of profit.

Where did these accusations come from, and when did they begin? It so happens that the changing tide of perceptions I’m alluding to here has coincided largely with my own working life, which began in the City of London in the mid-1970s – a time which was, in this context, perhaps the twentieth century’s last major ‘moment of doubt’: certainly so in Britain, where the economy was moribund, a socialist Labour government was in power, militant trade unions were rampant and strikes widespread, and state intervention was the conventional response to industrial failure.

But by the mid-1980s, when I had grown up to be a globetrotting young investment banker, capitalism was riding as high as ever. After the inflation and recession of the beginning of that decade, the unfettered American economy was booming again under Ronald Reagan. With that boom came widespread faith in the ‘trickle down’ of prosperity from the rich to the rest of society and the stimulative merits of low taxes, illuminated by the celebrated ‘Laffer curve’ which I’ll revisit in Chapter 6.

The UK economy, meanwhile, was likewise being transformed by Margaret Thatcher’s embrace of free market principles, smaller government and lower taxes. In particular, her privatisation programme, selling off industries and utilities that had performed woefully under state ownership, was winning the admiration of the whole non-communist world. I was myself an embodiment of the export potential of that concept, having been posted for a year in Kuala Lumpur to work on the privatisation of the Malaysian state airline in 1985. Frequently asked by everyone from taxi drivers to senior government officials to explain what Thatcherism meant and why it was so successful, I discovered at first hand just how eager the emerging Asian Tiger economies were to learn from what was happening in my home country.

Meanwhile, the world’s most serious competitor to capitalism, the Soviet model of state ownership and central planning, was in irretrievable geriatric collapse – gradually revealing itself, despite decades of state propaganda to the contrary, as an utter economic failure. Inefficient, corrupt, backward in most technologies – yet still investing heavily in missiles that would never in the end be fired at the West – the ruthless regime seated behind the walls of the Kremlin fortress had failed to convert Russia’s ample natural resources into higher living standards for its oppressed people.

In China, by contrast, the paramount leader Deng Xiaoping had embarked on radical economic reforms that would eventually create a more potent competitor to free-wheeling western democratic capitalism – but what that turned out to be was rampant capitalism in a different form, essentially state-directed under continuing autocratic Communist Party rule.

The eyes of the world were not yet looking towards Beijing and Shanghai, however. They were more focused on Tokyo, where I worked for two years after my stint in Malaysia and where powerful groups of inter-related shareholder-owned companies (zaibatsu with deep cultural roots and names such as Mitsubishi and Sumitomo) were driving relentless export success, feeding western consumer and industrial demand while Japanese citizens themselves still accepted the relatively austere lifestyle of post-war recovery.

If there was a single product that summed up Japanese technological prowess in that era, it was the Sony Walkman cassette player, a personal stereo with headphones that revolutionised the way young people listened to music, more than twenty years ahead of the Apple iPod. Meanwhile, the Tokyo stock market soared ever upwards on a cloud of western analysts’ hyperbole about the power of Japanese companies to stay ahead in every aspect of manufacturing and technology. And everyone learned this factoid: Tokyo real estate values were so inflated that the Emperor’s Palace and its grounds were theoretically worth more than the whole of California.

And when the Berlin Wall came down in 1989, the spirit of the decade was finally encapsulated in news footage of Germans from the grey communist east staring in wonder at the vast range of household appliances, designer clothing and other consumer luxuries in the shop windows of the west.

Some scholars said the argument about how to organise the economic world was over: capitalism, quite simply, had won. Yet in the 1990s, that certainty was shaken and undermined – in some ways that were evident at the time, in others that have become apparent only with hindsight.

A VIEW FROM THE CITY

As for me, I left the financial world at the beginning of 1992 to become a journalist. And the subjects I was asked to write about in those first years in my new métier – editors who noticed me tending to assume that after fifteen years in banking, I had an insider’s grasp of all forms of misbehaviour and folly in the business world – constituted a portfolio of evidence for the argument that something had gone wrong, or was about to go wrong, with capitalism itself.

It turned out, for example, that hundreds of thousands of Britons had been ‘mis-sold’ (by respectable life insurance companies such as Prudential) personal pension plans, supposedly a landmark advance in the financial independence that was at the heart of the Thatcherite ideal of ‘people’s capitalism’. I was also asked to write about several large-scale fraud cases – notably the ‘Guinness scandal’, a complex saga of share price manipulation during a takeover bid by the Irish brewery business for the Distillers Company in 1986 – that were the hangover of the 1980s boom in the City of London, where behavioural standards seemed to have slipped as the prospects of multi-million-pound personal rewards rose.

And those prospects were becoming a matter of public controversy well beyond the City. In particular, as public dissatisfaction with the performance of privatised companies rose, so did resentment of the huge pay rises awarded to their bosses to ‘bring them into line’ with private-sector peers. Cedric Brown, an otherwise forgettable senior executive of British Gas, became a cause célèbre in this respect – and my own cover article in The Spectator in May 1993 entitled ‘Snouts in the Trough’ was probably the first full-length analysis in the London press of the issue of ‘fairness’ in top people’s pay, including the difference in entitlements between entrepreneur company-builders and salaried functionaries, and comparabilities between private- and public-sector office holders. Nearly thirty years later, those same arguments still go round and round while blatant excesses are still approved by boardroom remuneration committees on a variety of tenuous and tendentious pretexts.

But greed was not, apparently, confined to privileged insiders: another topic for the keyboard of my first clunky Apple computer was the demutualisation of Britain’s building societies. These were benign and mostly localised institutions that had been formed in the late eighteenth century so that workers in the new industrial cities could help each other to buy their first homes, and they were one of the most successful of all the examples of alternative capitalism that I will examine in Chapter 5.

But by ‘demutualising’ – abandoning their mutual roots to become shareholder-owned and stock market-listed businesses – they could deliver cash windfalls to their member-savers, who were often recently arrived ‘carpetbaggers’ looking for a quick payout. Given the choice, that is what most member-savers voted for. It seemed at the time to be a valid modernising idea and a catalyst for a more competitive mortgage-lending market. But it also demolished a historic pillar of the financial system that had been constructed around positive principles of caution and prudence: among those to demutualise were Northern Rock, Halifax and Bradford & Bingley, all of which would crash spectacularly in the crisis of 2007–08.

A VIEW FROM ABROAD

And when I looked further afield for subject matter, I found many other disappointments and harbingers. Travelling to Moscow and St Petersburg in 1996, I saw how the collapse of the Soviet economic system had led not to the blooming of a thousand entrepreneurial flowers but to ‘cowboy capitalism’ – a euphemism for vicious, even murderous, competition to control Russia’s most valuable natural resources among a small circle of corrupt oligarchs with close links to Boris Yeltsin’s Kremlin. The rule of commercial law and contract was brutally ignored as the oligarchs became billionaires in no time at all, some of them then coming to live in England, where they could flaunt their wealth behind guarded gates in relative security – while investing little or nothing in new technologies and consumer-facing businesses back in Russia, where long-suffering ordinary people gained almost nothing material from the demise of the ancien régime.

The Japanese economic miracle also turned out to have been a mirage. After the Tokyo stock market peaked and began a long dive at the end of 1989, pundits stopped talking about Japan as the next great power. Instead they talked about an ageing Japanese population in need of increasingly costly care, an erosion of the country’s formidable post-war-reconstruction work ethic, and an industrial economy that was too top-down in its fixed management hierarchies to encourage the flexibility and innovation required to exploit next-generation technologies. The real action, we all wrote, was to be found next on the west coast of America, where a new cohort of technology pioneers and consumer brands were emerging as the next global leaders. Airport bestsellers had once predicted ‘the Japanese Century’ ahead; but it turned out to be California’s Millennium – and if the ‘Asia-Pacific Century’ still had some resonance, it was almost entirely in reference to China and its increasing use of economic clout to build greater geopolitical influence in its region.

SEEDS OF REBELLION

It may well have been the new economic power and surging prosperity of west-coast America that in turn gave rise to an adverse reaction in the form of the first ‘anti-globalisation’ movement – springing from what seemed to some of us to be the guilt of the young, highly educated North American middle class at their own rampant good fortune and propensity to buy the very brands they now found reason to resent. Their movement flourished briefly as an expression of incoherent anger against the perceived unfairness of world trade arrangements and the rising power of global corporations. Its successor in spirit, but with a much clearer manifesto, is the Extinction Rebellion movement that attacks capitalism for its contributions to today’s ‘climate emergency’.

The anti-globalisation uprising, in Seattle and elsewhere, happened to coincide with the ‘dot-com’ boom, when investors became irrationally exuberant (to half-quote US Federal Reserve chairman Alan Greenspan) about the get-rich-quick potential of a galaxy of new internet-based ventures – no matter how unconvincing their business propositions and how distant their prospect of turning a profit. New and essentially fictitious formulae (usually based on multiples of sales revenues, however intractable the company’s running losses) were invented to justify billion-dollar valuations accorded to the flimsiest of prospectuses. And when that boom turned to bust in the early 2000s, what was most apparent was the cynical willingness of global capital markets, led by some of Wall Street’s most famous investment banks, to exploit gullible investors by pushing them to buy shares that the promoters and their analysts knew to be at best very high-risk and at worst likely to prove worthless.

Yet somehow the firms that had sold the dot-com snake oil shrugged off that scandal and moved seamlessly towards the next one. Hardly anyone in the financial world ever seemed to lose their job for the sin of promoting misleading, dangerously ill-designed or borderline dishonest financial schemes; the only sin that mattered was the more worldly one of failing to make money for your firm and yourself.

And what came next was an explosive growth in the US market for mortgage-backed securities, which turned ‘toxic’ when the bubble burst. Interestingly, this was a boom that was an unintended consequence of a vote-seeking but (let’s assume) fundamentally well-intended social policy: Bill Clinton’s administration in the 1990s had encouraged greater access to mortgage finance for underprivileged and often ethnic minority population groups – thereby creating a stratum of no-income or low-income borrowers who were never going to be able to pay their mortgages back. This ticking time bomb became a pass-the-parcel game as the mortgages were repackaged into issues of securities that were sold to investors the world over – including institutions such as regional German savings banks that should never have touched them – and led in the end to apocalyptic financial crisis in which a roll call of the world’s proudest banks had to be bailed out with taxpayers’ money.

Many of those banks, it turned out, had been involved in the widespread ‘mis-selling’ of these and other over-sophisticated financial products to their customers. Yet almost none of the people who took the decisions that ran the banks into the ground and did such damage to their reputations were ever brought to justice and punished, either by loss of personal wealth or by criminal sanctions; once again, few even lost their jobs.

SPOTTING THE PATTERN

The reader may already begin to see a pattern here – or to suspect a prejudice on my part. In summary, as capitalism constantly evolves, entrepreneurs and innovators develop new products and markets that generally add to the sum of human well-being, solve problems and expand the range of consumer choices. But when investors climb on the bandwagon en masse, financial intermediaries seek a slice of the action, and multiple market participants compete to offer sophisticated variations of the same innovation, things inevitably start to go wrong.

And when the rewards available to the individuals in the thick of the financial action become life-changingly large, human behaviour changes too. Decent, sensible people get dollar and pound signs in their eyes and succumb to delusion or dishonesty, miscalculating the risks involved for themselves and others, and making or accepting excuses for the inequitable distribution of those rewards.

This pattern has recurred over and over again in the period and the territories covered by this book. And it happened in a particularly shocking way in the aftermath of the 2008 financial crisis that became known as ‘the great recession’. The response to that emergency was led by central banks, which resorted to ‘unconventional’ monetary measures of quantitative easing and ultra-low interest rates to stimulate economies as best they could – while governments deployed ‘austerity’, in the form of welfare and public service cuts, to restrain public borrowing as recession-hit tax receipts diminished.

The hard medicine generally worked, and the economies stricken by the crisis found paths to recovery: Ireland and Greece were among the hardest hit but the most ebullient in their recovery a decade later. Meanwhile, quantitative easing and cheap money also had the effect of boosting the value of investment assets, which made the rich richer. Typically, those rich were older and had already lived their adult lives in comfort while the austerity measures afflicted the poor and, in a variety of ways, the young – who began to feel that their elders had in some way stolen or blighted their future, adding to a sense of generalised resentment against the capitalist status quo.

‘The bankers’ who were directly blamed for causing the crisis were not worse off as result of it in any visible way – and it did not help their image if they complained that they had in fact lost millions worth of potential value in the packages of share options their bank employers had awarded them in better times. The effect of all this was an even uglier public mood of distrust towards corporations.

That distrust has lately turned towards digital giants such as Facebook and Google, which have attracted billions of users and created extraordinary advances in communication and knowledge distribution but stand accused of using personal data gathered from their users in sinister ways – and of a gamut of other amoral practices, including the promulgation of fake news and extremist propaganda.

INEQUALITY FEEDS DISTRUST

Resentment of perceived inequalities and distrust of elites, both corporate and political, became two of the three prevailing public sentiments of what will now come to be called the pre-pandemic era. The third – most prevalent among the young and driven by the quasi-messianic rhetoric of the Swedish teenage activist Greta Thunberg combined with the street activism of Extinction Rebellion – was concern about the man-made effects on the planet that are now commonly referred to as the climate emergency.

Governments were routinely accused of being too passive in this respect: of being slow to legislate for a net-zero-carbon future and reluctant to enforce necessary change on businesses that are potential political funders and on consumers who are also floating voters. Business was seen as the most active and persistent wrongdoer in everything from the use of plastic packaging material to the clearance of rain forests for the planting of soya; from the mining of coal to sell to Chinese power stations to the offer of low-cost flights for cheap holidays.

When challenged to talk about their wider role in society, all major companies began to default to the language of ‘sustainability’ and the catalogue of steps they were taking to reduce their carbon footprint – often to the exclusion of talking about their practices as employers, data users, taxpayers and centres of research and development. New debates about ‘purpose’, the ultra-fashionable buzzword that has overtaken previous sloganising around business citizenship, tended to revert immediately to discussions about how quickly and sincerely companies were cleaning up their carbon acts.

No one could sensibly argue (though President Donald Trump refused to admit it) that theme wasn’t important. But the clamour for climate action was for a while – I’m talking about 2016 to 2019 – drowning out sensible debate about what makes a good or bad corporate citizen in the round.

Insufficient distinction was made between those companies that merely voiced modern platitudes on the subject through their PR and comms people, and those for which sustainability became a core strategy driven from the chief executive’s desk as part of a wider set of principles conceived both as the path to happier customers and higher rewards and as the right thing to do.

Institutional investors, obliged to ride this bandwagon because their ultimate retail customers and pension holders told them it was important to do so, embraced with varying degrees of insincerity and vagueness the new demands of ‘ESG compliance’ – that is, ticking boxes for whatever level of correctness in environmental and social behaviour and governance seemed to pass muster. ESG, in that first phase, was generally reckoned to be at worst a smokescreen and at best a muddle. But a movement was beginning, and gathering momentum, to shift ESG into the forefront of genuine investor concerns and boardroom priorities, and to codify it with elaborate sets of metrics.

THEN CAME COVID

The pandemic caused demand to crash and many businesses to close, temporarily or permanently, throwing themselves and their workforce on the mercy of rapidly deployed government loan support and furlough schemes. No one in the business world had ever seen anything so cataclysmic.

The scale and pace with which this disaster struck was terrifying. In the Spectator issue of 28 March 2020, one week into the first UK national lockdown, I was moved to make comparisons with the Black Death of 1348–49 and the great influenza epidemic of 1918. ‘We should brace for inflation,’ I wrote,

But also for real wage increases at the bottom of the scale, probably boosted by universal basic income schemes. We should expect much greater pressure on governments to address perceived inequalities – and when the rescue cost has been totted up, that will probably mean wealth taxes. We should expect large parts of the economy to be under state control, led by aviation and rail, and some essential goods to be rationed. The new normal will be a form of socialism.

Given those threats, I added, chief executives would be well advised to cut their own pay now, before a ‘bitter public mood’ turns even nastier.

At that moment, it has to be said, government looked masterful and capitalism looked helpless. Ministers were able to command the setting-up in a matter of days of ‘Nightingale’ field hospitals sited in temporarily disused exhibition centres.* The Chancellor of the Exchequer, borrowing unimaginable sums from a still-willing bond market, was able to pay the wages of one-third of the nation’s private-sector workforce at a stroke of his pen. The Prime Minister could impose unheard-of restrictions on our personal liberty, with barely a whimper of opposition.

And that situation lasted, by my reckoning, all of three weeks – from the first lockdown order until Prime Minister Johnson’s debilitated emergence from hospital after his own bout of Covid. It was in the days immediately after that personal drama (which won him high levels of public sympathy) that signs became apparent of his government failing to source adequate supplies of personal protection equipment for healthcare workers, or organise a test-and trace system akin to those in place in the best-managed countries, or indeed to take any firm and clear decisions at all.

But as the state’s masterful pose began to evaporate, so capitalism began to find its feet again. Businesses went back to work as best they could, staff in many cases working from home but proving surprisingly productive as they did so. Products were adapted, assembly lines turned rapidly to the making of visors and screens for hospitals. Village pubs became busy takeaways. Running a competition for ‘economic innovators’ in The Spectator, I spoke to dozens of young entrepreneurs who were coping with changed circumstances and markets, looking with optimism beyond the end of the pandemic – and touchingly concerned to make the best social contribution they could while the crisis endured.

And finally news began to come through of vaccine developments by pharma businesses around the world – by the Anglo-Swedish giant AstraZeneca, working with scientists from Oxford University; by the US giant Pfizer working with a German company called BioNTech; by a smaller US company called Moderna and later by another larger one, Johnson & Johnson. Capitalism had leapt forward, organised vast scientific resources and trials and broken all speed records for the development of effective vaccines for a previously unknown disease. Manufacturing on a scale that would enable billons of people to be vaccinated within 2021, combined with at least the beginning of an international co-operation that would enable vaccines to reach poor countries at accessible cost, was rapidly put in place.

AstraZeneca distinguished itself by saying it would do all this on a not-for-profit basis for the duration of the crisis. But that was not an indicator that for-profit capitalism was the wrong mechanism for addressing the Covid crisis: on the contrary, only a financially strong and well-diversified giant of the pharma sector could have made the not-for-profit gesture. The crisis had, arguably, vindicated the system of deployment of private-sector capital and resources that had previously been struggling to mount its own moral defence.

RESTORING THE BALANCE

And so, with this new perspective, I will seek to restore the balance of the debate about capitalism.

I will argue unequivocally that the mechanisms of shareholder ownership and the use and distribution of private capital are urgently in need of repair and moral reinvigoration.

I will also argue in passing that the socialist vision of state ownership of vital industries combined with a forced shift of power and reward from owners to workers represented by trade unions – all of which were given a new airing in the British Labour Party’s 2019 election campaign under the leadership of the veteran left-winger Jeremy Corbyn – needs fresh rebuttal every time it renews its appeal to idealistic youth and those who think the system is loaded against them.