The Guardian recently released an investigation into how Theresa May’s compassionate conservativism can be put into practice within modern Britain. In this report, journalist Kate Allen claims to have uncovered five ways to “pull off a genuine revamp” in the way that capitalism works to ensure that “it works for everyone, not just the privileged few.”
These reforms include putting workers on company boards; publishing pay ratios; forcing businesses to look beyond shareholder value to the preferences of all stakeholders; tougher standards for company directors; and finally, tackling living costs and economic security.
The theme of moving beyond the shareholder value boundary is arguably one of the essential realisations of Adam Smith’s Wealth of Nations. Through his analysis of the free market as working on the principles of supply and demand, he argued that where there is a decent level of demand, entrepreneurs will be motivated to increase the level of supply to meet the requests of consumers. The effect of such would increase employment, as well as inward investment, with the potential to draw positive opportunities to local communities.
One of the most popular examples of such social investment was the creation of model villages, such as Bournville which was established by the Cadbury brothers in Birmingham. Recognising the need for local chocolate production, the Cadburys set their sights on the construction of a ‘factory in a garden’ in the middle of Birmingham. At the same time, they sought to invest in local infrastructure and services, opening schools, hospitals, and community centres which were accessible to the local workforce.
The result of this level of social investment, it was at least thought, was that workers would become incentivised to internalise a sense of shared ownership. Subsequently, they would be encouraged to unleash their creative potential, with the result of inventing new confectionary and therefore increasing profits.
Although the Cadbury story is perhaps the most famous, it is not a unique thought. Indeed, the wider theme of corporate social responsibility was prevalent in much Victorian philosophy, and is still very much on the agenda today.
Indeed, a number of national institutions which sought to bring about a fundamental change in circumstances are of Victorian derivation. Royal Holloway, the first university exclusively for girls, was founded by a Victorian merchant, Thomas Holloway. Similarly, the Boys’ Brigade, the world’s first uniformed youth organisation, was founded by a Victorian, Sir William Alexander Smith in 1883.
Modern day examples, including Google’s famous ‘play room’ are orientated towards inducing similar creative juices from their employees.
Whilst this One Nation narrative has its roots in Benjamin Disraeli’s Crystal Palace Speech of 1872, and was launched to bridge the polarisation between the industrialists and their workers, the theoretical boundaries have expanded quite enormously.
One Nation politics is now presented as a challenge to geopolitical polarity, and the rise of nationalist sentiment in countries such as Scotland. As such, it could be argued that Theresa May’s rethinking of altruistic capitalism is nothing more than a simple reconfiguration of 18th century paternalistic conservative philosophy.
It would be a mistake, however, to equate today’s economic situation with that of what the nation faced in years gone by. Indeed, to dismiss Theresa May’s reconfiguration of One Nation politics as nothing more than a superficial gesture would undermine the practical actions that the Prime Minister has taken since assuming office. For example, May’s plan to incorporate worker’s representatives on company boards could have the potential to embed stakeholders more deeply in the strategic direction of Britain’s prominent industries.
Furthermore, these tangible reforms also have the potential to address some of Britain’s deepest economic challenges. The macro-level economic challenge which currently faces post-EU Britain is one of rediscovering a unique selling point that goes beyond the tertiary sectors of financial, legal, and retail services, that supported Britain’s economy since the globalisation of the 1970’s.
Whilst we must protect Britain’s status as the world’s capital for legal and financial services, we must also find a manufacturing niche that makes the most out of Britain’s strides on energy and technology.
Simultaneously, Britain’s leaders ought to swap the pressure to compete with mass industrial countries such as China with a vision to make the best out of what Anthony Giddens referred to as Britain’s economy in an age of ‘high modernity’, characterised by economic versatility and technological specialism.
At the same time, we must seek to extend life chances, spread opportunity, and ensure that going to work truly rewards. This is the micro side of the economic challenge, and recognises that without individual contribution, the economy would not be able to function.
It is this acknowledgement of stakeholder value that creates incentive for employers to live up to the expectations of their stakeholders. This can be achieved by both extending democratic expression in the form of strategic inclusion on company boards, as well as pressing towards greater levels of transparency as a result of increased scrutiny over the actions of company directors and economic leaders.
These combined challenges of developing manufacturing excellence and internalising corporate social responsibility will require an ethical, as well as an economic response, and will invariably alter the way in which businesses interact with local communities. Nonetheless, this can help Britain to realise it’s place in this transition towards a more altruistic and rewarding capitalism.