The free market works, Johnson told an audience of politicians, policy-makers, and business people: it has increased income and raised life expectancy among the poorest. It has offered individuals the opportunity to fulfil themselves. He spoke of "the absolute primacy of wealth creation if we are going to deliver these objectives." Wealth creation, he said, "actually has a moral purpose."
Montgomerie, Senior Fellow at the Legatum Institute and a columnist for The Times, defended capitalism as a ''philosophy rooted in human creativity". It must be seen as a system where "every person can profit from human innovation. Where consumers have the upper hand, not producers. Where the rich can get poorer as well as the poor get richer—where no institution, because it has crony relations with the state, is too big to fail…
"And capitalism must be a system where the wealthy understand that wealth brings responsibilities as well as rights—that the ideal citizen will do as Wesley encouraged: earn as much as they can, save as much as they can but also give as much as they can."
Montgomerie paid tribute to the intellectual founder of capitalism, Adam Smith: he was a moral philosopher who saw capitalism "in its social context—as the Legatum Institute does with its annual Prosperity Index. An Index that measures the prosperity of a society in terms of its social strength, its security and its public services as well as its material riches."
The speakers were introduced by Sian Hansen, Executive Director at the Legatum Institute.
Event kindly sponsored by the British Private Equity & Venture Capital Association
Prosperity for All, Speech by Tim Montgomerie, 30 March 2015
Let me start with a question for you:
Where in the world is belief in capitalism and its capacity for future wealth creation highest?
Great Britain? America?
No. It’s the “Socialist Republic of Vietnam”!
The Pew Research Center found that you have to go the developing world and often to the former communist countries to find the greatest confidence in the likelihood of wealth cascading down the generations. America—and to a much greater extent, Europe—have become pessimistic places.
And it’s little wonder. In every bookshop there are tomes attacking capitalism—for the inequality it allegedly causes and the beautiful environments it rapes. These authors have forgotten the Soviet Union and the real extremes of income and the pollution it created. The arts are no better with Hollywood regularly portraying business people as rapacious wolves.
It’s time for friends of capitalism to fight back. Time to say that loss and bankruptcy are the dirty words, not profit. That stagnation and unemployment—rather than growth and enterprise are the things we should fear. But it’s also essential for us to be critical friends of capitalism. Not everything is right about how capitalism operates today.
Capitalism has many names in popular discourse and they’re used interchangeably, sometimes sloppily. Its friends will think about markets, free enterprise. Its enemies will think of big business and a system that serves the rich.
My answer would be to think of capitalism as a philosophy rooted in human creativity. It’s the system that enables us to be what God the Creator intended us to be. All made in his image we are here on earth to continue the creative mission he finished on the sixth day. To build. To invent. To craft.
You don’t have to have any religious faith to know that creativity is part of who we are and it is a great regret that we don’t celebrate creativity as we should.
Lord Hailsham got it right twenty years ago when, in 1992, he came and spoke at a conference I organised on the creation of wealth. I’ve been at this task of defending capitalism for some time! He said:
"The great advances which have been made in human happiness have been just as much due to the spinning jenny, the internal combustion engine, and the generation of steam as to the moral sublimity of a Shaftesbury, a Florence Nightingale, an Elizabeth Fry, or a Mother Teresa… A Henry Ford or a George Stephenson are just as much worthy of admiration as the great social reformers, and benefactors of their day.”
The world, of course, doesn’t think like this. The most revered people are the wealth distributors rather than its creators. They are the people who proclaim their good intentions at every turn but good intentions aren’t enough.
Societies are at their best when they are led by Adam Smith’s invisible hand. We wake up only wanting to provide for our families and perhaps to become wealthier but in doing so we create the goods and services that benefit all of humanity. "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner,” said Smith, “but from their regard to their own interest."
Smith, the intellectual father of capitalism, was so much more than an economic philosopher. Fundamentally - he was a moral philosopher. He saw capitalism in its social context—as the Legatum Institute does with its annual Prosperity Index. An Index that measures the prosperity of a society in terms of its social strength, its security and its public services as well as its material riches.
Adam Smith saw the role that social institutions play in preparing people for capitalism. He understood that the virtuous, industrious citizens that capitalism needs were formed in families and communities. That government and law were necessary to stop businesses conspiring against the public interest. Read Smith and you know that economics must be more than graphs and equations and numbers. It’s not the dismal science—it is a moral philosophy. Capitalism must be seen to be a system where every person can profit from innovation… Where consumers have the upper hand, not producers… Where the rich can get poorer as well as the poor get richer—where no institution, because it has crony relations with the state, is too big to fail…
And capitalism must be a system where the wealthy understand that wealth brings responsibilities as well as rights—that the ideal citizen will do as Wesley encouraged: earn as much as they can, save as much as they can but also give as much as they can.
Capitalism needs virtuous citizens to flourish. Adam Smith understood that. So must we if we are to ensure that British, American and other people in advanced countries are as optimistic about the future as the people of the “Socialist Republic of Vietnam”.
About the Speakers
Boris Johnson was educated at Eton and Balliol College, Oxford, where he was a Brackenbury Scholar in Classics. As Mayor of London since 2008, Boris was responsible for the London Olympic Games, the most successful Games on record. He was MP for Henley-on-Thames (2001-8) and Shadow Minister for Education (2005-7). A columnist for The Daily Telegraph, he has published six books, including Friends, Voters, Countrymen and The Dream of Rome. Last year, Boris was voted England’s most patriotic politician in an ICM poll.
Tim Montgomerie is Senior Fellow. He leads the Legatum Institute’s ‘Prosperity for All’ project, launched in January 2015. Montgomerie is a weekly columnist for The Times and writes regularly for other publications including the CapX website. In 2005 he founded ConservativeHome.com and edited it until 2013. His forthcoming book, The Good Right, explores the future of international conservatism and builds on the work of the Centre for Social Justice, the think tank he established with Iain Duncan Smith in 2004. He began his career at the Bank of England and worked for the Conservative Christian Fellowship from 1998 to 2003.
About Prosperity for All
The Prosperity for All project will convene leaders of the Anglosphere, whose shared heritage of common law and parliamentary democracy provide a firm foundation for the project, to discuss these proposals. The project builds on the substantial body of work already produced by the Institute.
About the Sponsors
The British Private Equity & Venture Capital Association (BVCA) is the industry body and public policy advocate for the private equity and venture capital industry in the UK. Its aim is to aid understanding around the activities of its members, promote its industry to entrepreneurs and investors as well as to Government, the EU, trade unions, international media and the general public. The BVCA communicates the industry's impact and reinforce the crucial role its members play in the global economy as a catalyst for change and growth. Its membership comprises more than 500 influential firms, including over 230 private equity and venture capital houses, as well as institutional investors, professional advisers, service providers and international associations. The BVCA works together to provide capital and expertise to growing businesses, to unlock potential and to deliver enhanced returns to the millions who directly and indirectly invest in its industry.