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Blue or red – now it matters Why the swing towards socialism cannot last

The Guest Essay

Tug of war with hands pulling rope in opposite directions

For some 30 years, since the implicit defeat of socialism in the UK, there has been a relatively fine differentiating line between the policies of the Tory blues and the Labour reds, both encircling the capitalist centre ground. When one of the parties has threatened to move too far away from this hallowed centre they have been mercilessly knocked back into place by the voting public. So what’s happened in a few short months that has meant capitalism is currently being seriously challenged by socialism – as socialism is way off centre?

Prior to the general election you would have been laughed into an embarrassed silence by the majority if you had predicted that the current policies of the Labour Party would be taken seriously – and you will notice that I have avoided naming Corbyn as he is simply the current figure head of the socialist resurrection (albeit he was also considered an unelectable individual in the very recent past). So for now let’s not get personal with Corbyn or May as neither should be in their leadership seats at the time of the next election, and also (despite my headline) let’s avoid thinking of this as the red or blue party politics that we have known for the last 30 years with the connotations of rich versus poor – but instead let’s debate it as capitalism versus socialism.

Here are the first paragraphs on Wikipedia for each:

Capitalism is an economic system and an ideology based on private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system and competitive markets. In a capitalist market economy, decision-making and investment are determined by the owners of the factors of production in financial and capital markets, whereas prices and the distribution of goods are mainly determined by competition in the market.

Socialism is a range of economic and social systems characterised by social ownership and democratic control of the means of production, as well as the political theories and movements associated with them. Social ownership may refer to forms of public, collective or cooperative ownership, or to citizen ownership of equity. There are many varieties of socialism and there is no single definition encapsulating all of them, though social ownership is the common element shared by its various forms.

And here is a simple and quick summary of the perceived differences:

Capitalism and socialism are somewhat opposing schools of thought in economics. The central arguments in the socialism vs. capitalism debate are about economic equality and the role of government. Socialists believe economic inequality is bad for society, and the government is responsible for reducing it via programs that benefit the poor (e.g., free public education, free or subsidized healthcare, social security for the elderly, higher taxes on the rich). On the other hand, capitalists believe that the government does not use economic resources as efficiently as private enterprises do, and therefore society is better off with the free market determining economic winners and losers.

Possibly too simple in summary definition I accept (as in fact every developed capitalist country rightly has some programs that are socialist, under the definition above) but it’s a reasonable reminder and I am troubled by what I read and hear at present on the subject. Bluntly, the current political landscape is not one I believed we would experience again in my lifetime – and, if we are not alive to the dangers, we could be heading back into days of nationalisation, unionisation, state intervention and economic crisis! I realise that anyone under c.50 years of age may now be raising their eyes in despair. ‘Here we go,’ they will be thinking, ‘there’s a history lesson on the way about the bad old days of the 1970s’. And perhaps there should be! Isn’t there a lot to be learnt from the past so the same mistakes are not repeated? How oddly myopic are those not interested in these lessons? I certainly want to be reminded as by most accounts and from my own memories it was not a good experience! However, I will spare you the statistics and my interpretation of them as you can Google away and make your own mind up – but what I will do is point you in the direction of inflation, interest rates, economic performance, social hostility and strikes. It was these that principally brought socialism to its knees and has stopped it even trying to meaningfully re-emerge until now. Of course, some countries still pursue the socialist ideology today, Venezuela does, as does Zimbabwe, and you should ask what present day story they tell you if history is not your thing?

The Guest Essay

About Marc Gilbard

Marc Gilbard

Marc Gilbard has been the CEO of Moorfield since 1996 and has led Moorfield’s transformation from a small company listed on the London Stock Exchange into one of the leading UK real estate private equity fund managers. Marc initially specialised in investment and development finance and then became a top-rated real estate equity analyst and advisor prior to becoming a private equity investor. In October 2011, the Howard de Walden Estate appointed Marc to its Board as a Non-Executive Director and in April 2016 Marc became Chairman of Audley Retirement Villages. Marc is a Policy Committee Member of the British Property Federation, a Member of the Property Advisory Group to the Bank of England, a Member of the British Venture Capital Association, a Member of the Investment Property Forum and a Member of the Royal Institution of Chartered Surveyors.

Articles by Marc Gilbard

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