Business Week: Will Hutton reveals the route from bad capitalism to good capitalism
Will Hutton, Principal of Hertford College and Chair of the Big Innovation Centre, warned about the depths of the economic “crisis” and...
Will Hutton, Principal of Hertford College, Oxford, and Chair of the Big Innovation Centre, warned about the depths of the economic “crisis” and set out a blueprint for recovery during Business Week at Birkbeck.
At the third annual Business Week organised by Birkbeck’s School of Business, Economics and Informatics (BEI) on 28 June, he explained the rise of “bad capitalism” – more lending underpinned by less capital – and how it can be overcome by “good capitalism” – fairness, transparency and proportionate rewards.
Speaking to an audience of 250, Hutton began by emphasising the magnitude of today’s economic woes and their consequences. He said he expects the Coalition Government to fall before 2015 because of its mistaken policies, and he claimed the current situation is the most severe since the 1870s-80s.
Hutton declared that “good capitalism” is dependent upon fairness, due desert and proportionality, productive entrepreneurship, collaboration, transparency, and a democratic process. He said unproductive entrepreneurship was bad for capitalism while productive entrepreneurship is indicative of good capitalism. The future, he said, lies in the knowledge economy, and he urged universities to be better networked with the business community.
21st century social contract
The need for a 21st century social contract was also mentioned and is dependent upon:
- The socialisation of risk through intermediate institutions
- New trade unions to serve as employment shock absorbers and enterprise partners
- Social insurance to re-legitimise social security (payments more directly linked to benefits)
- A new workplace bargain: acceptance of less job security in exchange for more training plus lifelong learning
The author of Them and Us – Why we need a fair society and former Chief Executive of the Work Foundation said that risk must be mitigated by a “smart, agile enterprising state” to bring about more optimal levels of innovation and investment.
He said: “To lift innovation and investment to optimal levels requires mechanisms for companies to lay off and socialise risk – and address co-ordination failures which are embedded in the market economy.” He believes new ‘general purpose technologies’ are responsible for big bundles of change.
He explained the importance of the ecosystem that underpins capitalism – co-created between public and private, is a means of underwriting risk but which needs an attendant value system: equity. Hutton concluded by reinforcing the message that good capitalism, commitment to innovation, new social contract and vibrant civil society will underpin 21st-century growth.
Commenting on the discussion, Philip Powell, Executive Dean and Professor of Management at Birkbeck, said: “We are delighted to have Will Hutton with us to discuss the pertinent issues in business today. Will‘s expertise will help drive debate and original thinking in order to challenge current practice and Birkbeck Business Week is a great platform for our students to share their thoughts and engage with speakers.”
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