Remodel capitalism to fight inequality

The growing concern around inequality made the agenda at the World Economic Forum annual meeting at Davos, though that does not signal a willingness to challenge the world’s status quo.

Neither does it equate with making capitalism a more socially responsible way of managing our affairs. Pope Francis has made consistent and challenging statements on the issue, though his arguments will probably fall on deaf ears just as most of the magnificent, empowering, and justice-based ambitions of Christianity — or any other religion — usually do.

Oxfam brought the issue to the forefront of public consciousness by pointing out that the world’s richest 85 individuals own as much — £1tn (€1.21tn) — as the poorest 3.5bn people, half of the world’s population. That comparison, weeks after it was made, still shocks. This is especially so if you imagine the divide in terms of unequal opportunity, of unequal security or health, of simple dignity or the possibility of being optimistic than something as nebulous as stocks and shares or a figure on a bank statement.

On the domestic front, though none of the world’s poorest 3.5bn live in Ireland, the issue is playing out on several levels. People trapped in unsustainable mortgage deals — even if they are working. Families caught in a multi-generation culture of unemployment where the opportunity, the escape from circumstance, offered by education is not always recognised or supported. There is a generation of workers forced to accept conditions, poor job security and all of the implications of that for families, that would have been rejected by their parents. Employers enjoy buyers’ market conditions and, if you’re a certain type of capitalist, you take full advantage of that.

The looming electricians’ strike, the debate around burning bondholders, the showdown over the ESB pension scheme, the huge shift on pension provision and responsibilities in the private sector, attempts to cut social protection or health service funding, the concentration of so much of the EU budget — 40% — on one sector, bonuses for bankers and the debate about the sustainability of restricted pay levels are all part of the never-ending tug-o’-war between either end of capitalism’s spectrum. So too was our decision to cut aid to the developing world.

As the economic cycle continues and as it is just possible to be cautiously optimistic about modest growth ambitions it might be prudent to try to manage this divide in a way that recognises enterprise, risk taking, and creativity while recognising that the pendulum has swung too far towards the winner-takes-all wing of capitalism.

The old model of pay-up-or-we-strike seems unsustainable and self-destructive. Our last attempt at social partnership was irrelevant outside the public sector and ultimately contributed to our collapse. At the other end of the scale, where the world’s 85 richest people purr and millions more want to live, greed and callousness were the driving forces far too often. Indifference to social responsibility was commonplace.

How this dilemma is resolved will define our future, challenge or threaten social stability, and honour or abandon the social contract that has sustained the West for a century. It must be hoped, as the storms refuse to relinquish their grip, that we are beginning to understand what happens if we again brush obvious, powerful warnings under the carpet.