- 27 октября 2013, 01:04
- Natural Gas Europe
Yes. The market is dysfunctional. We need to shape dynamic capitalism for the good of society, argues Will Hutton
Capitalism is the best and worst of systems. Left to itself, it will embrace the new and relentlessly follow the logic of prices and profit, a revolutionary catalyst for necessary change. But it can only ever react to today's prices, which cannot capture what will happen tomorrow. So, left to itself, capitalism will neglect both the future and the cohesion of the society in which it trades.
What we know, especially after the financial crisis of 2008, is that we can't leave capitalism to itself. If we want it to work at its best, combining its dynamism with public and social objectives, there is no alternative but to design the markets in which it operates. We also need to try to embed into its calculus wider obligations than the simple pursuit of economic logic. Otherwise, there lies disaster.
If this is now obvious in banking, it has just become so in energy. Since 2004, consumers' energy bills have nearly trebled, far more than the rise in energy prices. The energy companies demand returns nearly double those in mass retailing for a good that is essential to life.
No. Far from a return to nationalisation, more liberalisation is what is required, argues Philip Booth
The British energy industry has gone from nationalisation to privatisation and back to government control in the space of 25 years. Although the energy industry is nominally in private hands, we have exactly the same approach of government picking winners and dictating investment plans that was followed with disastrous consequences from the second world war to the mid 1980s.
In the 1970s and early 1980s, the consumer got a raw deal because long-term investment plans and contracts promoted by the government required electricity companies to use expensive indigenous coal. Government planning also dictated the development of a nuclear programme that is probably one of the most expensive government project disasters in history, losing £32bn.
The energy industry is, once again, controlled by the state. The same underlying drivers dictate policy in the new world of state control. It is not rational economic thinking and public-interested civil servants that determine policy, but interest groups. Going back 30 years, it was the coal industry – both management and unions – and the nuclear industry that dictated policy. Tony Benn said he had "never known such a well-organised scientific, industrial and technical lobby". Today, it is green pressure groups, EU parliamentarians and commissioners and, often, the energy industry itself that are loading burdens on to consumers. When the state controls the energy industry, whether through the back or the front door, it is vested interests that get their way and the consumer who pays.