Hamish McRae: Don't listen to Alexandria Ocasio-Cortez, it's time to reform capitalism not wreck it

Hamish McRae
Hamish McRae: Don't listen to Alexandria Ocasio-Cortez, it's time to reform capitalism not wreck it

It is a strange juxtaposition. Politics are in meltdown and we’ll get a taste of that on Thursday with the European elections. Yet the economy, for the time being at least, is growing at a decent clip.

But now consider another equally strange contrast. Workplaces, to go by the low levels of strike action, are more harmonious than they have been for more than a century. Yet faith in the capitalist economic model has plunged, and is under attack from both the Left and the Right. What’s up?

Last Friday ONS figures showed that the number of workplace stoppages was the second-lowest since records began in 1930 and the number of working days lost the sixth-lowest since 1891. Two-thirds of those lost days were in education, mostly in universities. Had it not been for our university lecturers protesting against cuts to their pension, the number of days lost would, on my quick tally, have been the lowest ever.

There are all sorts of possible explanations for this: more fragmented workplaces and working patterns, relatively low inflation, rising numbers of part-timers and older workers, more self-employed, a general sense of insecurity, falling union membership, and so on. It may largely be a function of the very strong demand for labour, with unemployment down to a 45-year low of 3.8%. If you feel you are underpaid, you find another job — though actually labour churn has fallen in recent years.

But however you try to explain it, it does suggest that at a personal level most of us feel reasonably content with our working life. Or at least content enough not to strike or “work to rule” as we used to in the Seventies and Eighties.

It is capitalism, or rather our regulated form of it, that has delivered those jobs. Yet capitalism is under the cosh. Jeremy Corbyn wants to renationalise the electricity grid. The part-privatised probation service is to be taken back to state control. Over in America prominent Democrats, including Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez, have joined in a call to break up the high-tech giants.

Back here there is a sustained effort to challenge the power of the big banks by creating challengers — not wholly successfully to judge from Metro Bank’s woes. And shareholders are increasingly attacking — again not wholly successfully — the pay packets of chief executives. Even natural supporters of our market economy, such as the big institutional investors, feel that there are excesses that have to be tackled.

These tensions are not going to go away, any more than the tensions over our relationship with Europe will suddenly evaporate.

So the question is how best to manage them: how to reform capitalism without wrecking it.

Maybe there is a path forward in the way we have managed to transform our labour market: lots of small changes to the employment system that have enabled us to create so many jobs and make for less fractious labour relations. Reforming capitalism is a huge task; but reforming strike-ridden Britain was a daunting challenge too.