In the UK, the opposition leader Ed Miliband has caused a stir by promising controls on energy prices for households; with much support but also criticism that there are insufficient proposals to ensure cheap supply. In one response, economist Roger Bootle criticized the policy as little more than a gesture. But this article also revealed a gaping hole at the heart of standard economic thinking that he shares with Mr Miliband and his advisers, for example with the observation that:
The contrast between democracy at the ballot box and massive inequality in the market for employment is a huge problem for modern capitalism.
Both he and Mr Miliband assume that ‘capitalism’ is a single entity, with a natural tendency towards inequality. This glides over the fact that some profit-making corporations are massively more equal than others, and that many of the more equitable ones are among the most profitable, as our case studies show.
Roger Bootle counters Mr Miliband with a list of five measures for the UK economy:
- Conservative macro-economic stewardship to ensure stability,
- Investing in infrastructure and encouraging private investment,
- Minimizing costs to starting businesses and employing people,
- Reforming the welfare system to encourage work,
- Ensuring that young people have good education.
Little to object to, but the problem is what’s missing. Completely absent is any discussion of the framework and beliefs that shape the way in which private and public sector organizations are run, and the personnel charged with this responsibility. Much of our recent economic problems stem from a failure in the dominant business model, but there is no appetite for fixing it. In conventional left-right economic thinking, it’s not even on the agenda.
As we state in New Normal, Radical Shift: why are there calls for labour market reform, but never management reform?’
We’ve no wish to single out Roger Bootle, who is one of the more thoughtful and valuable commentators on many macro-economic issues. The point is to draw attention to this massive, gaping hole at the heart of pretty much all economic analysis, left-wing, right-wing, Keynesian, neo-liberal, the lot: the pretence that management and leadership don’t matter.
Just how likely is that?
- The Chartered Management Institute is starting to raise the profile of management and leadership, and illustrate its economic contribution, within the media and the UK Parliament. For more information, click on this link.
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