Cable on capitalism and competition
In his speech this afternoon to the Liberal Democrats’ conference, the Business Secretary, Vince Cable, will assert: “Capitalism kills competition”.
It is arguable that such may be what big business would like to happen (as Adam Smith pointed out); but most business people will find more realistic Schumpeter’s notion of “creative destruction”.
In any event, we should bear in mind that for at least half of the post-war period in the UK it was the State, not “capitalism”, that killed competition. A (partial) list of the nationalised industry monopolies is quite long:
Airlines, Airports, the Bank of England, Broadcasting, Buses, Coal, Docks, Electricity, Forestry, Gas, Nuclear Energy, the Post Office, Railways, Road Haulage, Shipbuilding, Steel, Telephones, the Underground, Waterways.
It is true that many of these formerly nationalised industries have now been privatised thanks mainly to the Thatcher government. What a boon for consumers (and taxpayers!) that policy has turned out to be! Some of us can still remember having to queue for months waiting for (black only) telephones.
I forget which Labour minister it was in 1946 (probably Herbert Morrison) who made the hilarious remark that “from now on the British Transport Commission will be free to go for sheer efficiency!”
Nor should we be too quick to suggest that that’s all history now. Apart from a significant role in housing and pensions, the State still has an effective monopoly in schooling and health. (Though on etymological grounds I prefer to talk about a monoparechy (single supplier) rather than a monopoly (single seller).) I’ve no idea what my health services actually cost, since the State has chosen to do without the enormous benefits of the price system. We could do with a good deal more competition in those very important areas.
The fact is, it’s not capitalism but socialism that kills competition. Vince should know: he used to be a member of the Labour Party.