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Wealth creation is good, says Welby, but it has to flow not trickle

06 February 2015


THE market is a "hugely liberating" mechanism, and alternatives have always led to "inhumanity or even tyranny", the Archbishop of Canterbury said on Wednesday.

Archbishop Welby, having been portrayed as a critic of capitalism after the publication of On Rock or Sand? ( News, 16 January), attempted to correct this impression. "Making things, and for that matter, making money, is good. Wealth creation is a good thing."

He was speaking on "The Good Economy", at an event organised by the All Party Parliamentary Group on Inclusive Growth, at Church House.

"The market is an extraordinarily efficient mechanism of distribution in a complex society, and hugely liberating of human creativity," he said. "No better form of allocation of resources has been found, and the alternatives have always led to inhumanity or even tyranny."

The Archbishop expressed regret that the concept of solidarity had been "somewhat unfairly appropriated by political ideology", and that a "somewhat bland idea of solidarity" was now pervasive, measured by "the volume of public transfers". It was therefore regarded as "a threat to economic efficiency".

He also warned of the limitations of the state: "Given too much power to shape our society or economy, it will stifle personal responsibility, and damage the development of strong communities."

But the market did not escape his censure. The financial crash of 2008 had shown that "the complexity of human motivation and greed can never be left to the market to deal with. There is no such thing as a level playing field if human beings are involved, and there is no such thing as a fully fair and free market. It doesn't exist."    

Neither the state, nor the market, were the answer, he concluded: "More dependency on cash injected on the basis of some grand political plan or strategy, or dependency on the collateral  benefits of a free market, are not sufficient answers to how to build a Good Economy."

A "careful balance" must be struck, to build an economy "built on the belief that we all have a role to play".

He concluded on a hopeful, and patriotic, note: "There is a possibility, a great potential, for wealth to act as life-giving water, spreading through all the channels of our economy, through the benefits of a well-functioning market economy, for the benefit of all and the advancement of a truly common good. . .

"[We] need for a narrative that reflects the nature of our country, that is creative, generous, imaginative, responsible and communal. At our best we are all those things and at our best we are unbeatable in our virtues."

In an interview with the BBC before the debate, Archbishop Welby was asked about tax avoidance. "There's always been a principle that you pay tax where you earn the money," he said.

"If you earn the money in a particular country, the revenue service of that country needs to get a fair share of what you've earned."

But he was critical of the "unbelievably complex" tax system - guides ran to many times the length of the Bible, he suggested - and called for simplification.

The Archbishop was joined on a stage at Church House by a panel which, despite diverse ideologies, landed on some areas of consensus.

Sir Michael Rake, President of the Confederation of British Industry, acknowledged that "the gap between rich and poor, the haves and the have-nots has grown very, very large". But he warned against a knee-jerk reaction. Britain was dogged by low productivity, he said: "We've been getting skills wrong for a very long time." Institutional investors also required education, if they were to get on board with a more long-term approach.            

Xavier Roland, chief executive of the London Stock Exchange Group, spoke of growing up on a sink estate in Paris, and of the "creativity and entrepreneurial spirit" to be found in such areas. He called for risk capital to be distributed at all levels of society, enabling the creation of "a new generation of young entrepreneurs" from all backgrounds.

An uncomfortable truth that MPs and union leaders probably didn't want to hear, he said, was that businesses were facing "absolutely ruthless competition" in a global environment. "Four hundred million destitute Chinese in the last 10 years now are able to eat, perhaps buy a car, have an apartment. . . Five billion people who were looking at one billion wealthy people consuming and enjoying good lives and sending their kids to good schools are now competing and want the same."

Frances O'Grady, general secretary of the Trades Union Congress, expressed frustration at the pace of change. It was "crazy", she said, that, while young people had no chance of buying a house in London, people were paying for swimming pools and cinemas to be constructed in the basements of their homes in Chelsea.               

"It's not rocket science," she said. "We know what it takes to build a more equal society." Good jobs and fair pay would come about through collective bargaining.

"We do need stronger rights for workers, you can't get around that. We need to reverse some of those changes that have seen workers' power in the workplace massively decline."

While welcoming the contributions from her co-panellists, she said: "We haven't seen the beef have we? We now have this increasingly large low-paid army. . . Fantastic though I think it is that we do have thought leaders in the business community, that voluntary self-reform ain't going to happen in my book. . . It can't just be words, we've got to start seeing some action now and demonstrating that there is a better way and we can do it."

Agreement broke out on the need to invest in skills and training for young people, particularly through apprenticeships.  

Archbishop Welby expressed a desire for the Church, which was spending "nine-figure sums" on the upkeep of it buildings, to hire more apprentices.

Read Lord Maurice Glasman's prescription for a Good Economy here 

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