“Is this reactionary radicalism the way to rebuild economies in the fierce crucible of 21st century global competition?”
The quotation above, from Gerard Baker’s The Times article on 30 April, correctly identifies the problem with President Biden’s return to the economics of Franklin Roosevelt’s comprehensive interventionism. He calls for a genuine 21st century radicalism, but his article omits to define what that might be.
The answer to that question has been set out in some depth in these commentaries over the past four years. The egalitarian capitalism for which we have called has at its core a recognition that disintermediation is the yardstick against which we should measure solutions based on big government and generous welfare.
So in this commentary we explain why this approach provides that genuine 21st century solution, built on sharing the ownership benefits of automation rather than simply relying on a jobs plan, and on empowering the disadvantaged young to meet the challenges of tomorrow.
It was 35 years ago that I established Barclayshare - now Barclays Investment - as the retail stockbroker which could serve that bank’s huge customer base. A colleague from the bank’s management team kindly introduced me at the time to an Oxford economics professor, who listened carefully to our plans before responding:
“What you are talking about”, he said, “is disintermediation”.
People often talk about ownership as a purely economic phenomenon, but I realised some 12 years before that visit to Oxford that it is also deeply psychological. It's the sense of individual ownership which brings its real meaning, and as that sense grows stronger it brings with it a greater responsibility. In the 1970s there was a deep divide between ‘us and them’ as society was polarised into the ‘haves’ and the ‘have nots’, and industrial strife demonstrated the resultant abdication of responsibility.
In current times, the contrast between home ownership and rental also shows vividly the contrast in a sense of responsibility for the property in which people live.
The Brexit campaign played on this yearning with its ‘take back control’ message: but neither politicians nor financiers have understood that the sense of ownership only becomes real if it applies to the individual, rather than being assumed by the state or the City.
So, President Biden may introduce great advances in social welfare and economic activity but, unless he accompanies it with disintermediated ownership, it will not resonate with the deep American yearning for the freedom of the individual.
The trick is to hold fast to that ideal while at the same time transforming capitalism to work for everyone - that's the 21st century radicalism that Gerard Baker should be looking for. And it must contain checks and balances to resist the persistent pressure of the rich and powerful to re-instal intermediation: that's why inter-generational rebalancing must be an integral element.
The technological revolution gives us a great opportunity to introduce this 21st century radicalism. Automation will reduce the aggregate quantum of human labour, however hard President Biden tries to put jobs on a pedestal. At the same time, automation generates huge wealth for its owners: so the opportunity is to make everyone owners of that automation.
As we proposed on 10th August last year, there is a mechanism for achieving this, in front of our eyes: to require tech giants to repay data storage and harvesting with stock in their equity, enabling all to benefit from its dividends and capital gain and gradually filling the holes left behind by a wilting supply of jobs.
Meanwhile inter-generational rebalancing can be achieved through individual starter capital accounts, boosted by incentivised learning. In the UK, the Child Trust Fund provides a great model for these, being individually-owned accounts set up at birth.
So, disintermediation can be achieved in our 21st century radicalism - it neither needs to, nor should it be, driven by big government or big finance. With it can come a sense of ownership for all which will be accompanied by a sense of responsibility shared right across society.
But we'd also all do well to remember that even individual ownership is really only stewardship in our transitory lives. We're not invited to enter the next world with our pockets stuffed with cash. So, once we've done our bit on this mortal coil, a significant part of our individual inheritance should be used to fuel inter-generational rebalancing, thus progressing egalitarian capitalism in the future: so that it does not just benefit our own descendants, nor add fuel for future government intermediation.
In so doing, we will ensure a more stable, fairer society for all.
Gavin Oldham OBE