Don’t knock capitalism

The world of business and finance is far from perfect. But let's not forget that it has made possible some of our greatest achievements.

I chaired a session at the Just Banking conference at Edinburgh University last week. The speakers were good. The audience was intelligent. The panel answered their questions nicely. I was pleased.

Then afterwards a woman came up to me, and said that she wanted me to know that she had cancelled her subscription to this magazine. Why? Because we don't write enough about how to help others. And there isn't enough on ethical or community investing. She doesn't want to invest in ordinary' companies. She wants to invest in those that do good and that do so locally. She also didn't want to hear so much about making money: she wanted to help other people with her money.

I nodded, had a slug of wine and explained that our aim is to help our readers to grow and protect their wealth. It seems clear to us that one of the best ways to help the poor is not to be one of them. If you can establish your own financial security to the point where you will never be a burden to the rest of the nation's taxpayers or to your children, you've already helped a whole load of people. If you want to help more by giving to charity, or by volunteering, you can do so from a stable core. She nodded nicely, we agreed that perhaps she should find another magazine to read, and that was that.

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But as I mulled this conversation over later I found myself getting increasingly irritated. It is nonsense to attribute ill will to all companies that don't explicitly claim to be helping communities. Almost by definition companies help people. How? They give them jobs. They make things and provide services. They create the stability and growth that keep us all going. That's the beauty of capitalism.

Bad apples? Of course there are. But the idea that the corporate world is inherently bad is childish. The same goes for the demonisation of finance. Yes, our system of financial capitalism needs to distribute its takings more fairly. And yes, it needs to be, as Robert Shiller puts it in his new book Finance and the Good Society, "expanded, democratised and humanised".

But finance has also facilitated "some of our greatest achievements". Finance is necessary for "managing the risks that enable society to transform creative impulses into vital products and services". So while it makes sense to be angry about management pay and the dangerous incentives it creates, being hostile to finance as a whole is stupidly Luddite.

As for localism, I'm all for supporting local businesses. But let's not forget that it is globalisation that has got us where we are today. Comparative advantage and the prosperity offered by mostly free trade have taken us to the point where we can have one of the greatest financial crises of all time and yet still all have TVs, cars, roofs and clothes. Let's not knock it.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.