20 Sep Socialistic Capitalism
I had a heated debate with one of my best friends the other day over David Cameron’s tax affairs following on from the revelations from the Panama Papers scandal.
The revelations had caused David to publish his tax return. He had paid his taxes and had done nothing illegal, but two points split opinions:
- David had received shares from his father when died, some of which had been invested by his father in an offshore Panama account for a period before being moved to Ireland.
- His Mother had also gifted him money for which he might not have to pay inheritance tax on.
The point of our debate was one of the morality. You could argue that it is morally wrong to order your affairs to take advantage of rules set to allow people to pay less tax. You could argue that the system needs to change if you wanted people to pay more tax, as people play the system.
Considering the high division of wealth in the UK between the wealthy and the have-nots, you can see how this point of morality arises. My point, however, is not to discuss the morality or the decisions of an individual, but look at the system as a whole. To look at this system is to look at capitalism in general.
Capitalism or the drivers behind capitalism are simple; everything is financial. Capitalism is an economic system, not a political system. That means that there is no moral code attached to the model.
An economic focused system drives behaviours. One of the most publicised definitions of success is wealth. A lot of people are motivated by money, and you can see why. In a highly commercialised world, happiness is projected to us as the amassment of things, which means making more money. People such as Kim Kardashian optimise this within a single tweet (https://twitter.com/kimkardashian/status/707077609964699648). It’s much cooler to be rich than poor!
Companies move tax to where they pay the least. Countries attract such companies to their country by offering such tax arrangements. You might not like it, but some would argue that’s the beauty of a free global market, especially if you are a shareholder of that business.
Companies are also seen as success or failure based on their profitability. Tesco, a large food retailer, is currently regarded as a failure because it is not making the profits it did in 2013. It highlights that companies are driven to continuously grow, again dictated by the only thing that matters to the shareholder: profit.
But the world where this behaviour has been accepted seems to be slowly changing. A younger generation appears to be different from their parents, with an increased focus on global responsibilities, the environment and the wanting of companies to do good.
But is this new direction enough, and I will this change how we operate. More importantly, will this next generation be more ‘moral’ than their elders?
A bigger question could be, is it possible for companies to be driven by both profit and social responsibility? I would argue that if companies started applying their vast resources into both, then surely many our world problems such as poverty and the environment could be solved that much quicker? A sort of socialistic capitalism you could say.
Would we want to do such a thing? I would argue that there is a place for such a movement and it could be done just by giving away a little more of our wealth. We might even feel a little better for going to work every day.
So we are now sitting in a quandary: Capitalism creates profit, how do we ensure that profit does good and benefits the many. More importantly, how do we influence people to be more ‘moral’ and to give more to their environment.
Change often means bucking a trend and trying to do something differently and then trying to influence others to do the same. So that’s what I am going to do, give 20% of my profits after tax every year to charity. It is still early days for me, but if I can make it work and create my company, then I want it to do good.
This blog article started with a debate about the morality of people’s tax affairs. I don’t blame David at all for his tax arrangements, and I think a lot of people would do the same if they were in his position. After all, the UK tax law isn’t moral, and never will be.
I would argue that morality is less to do with how you choose to do your taxes, rather what you choose to do with your time and effort. If you want to have a more ‘moral’ society, then you need to lead with affirmative action rather than point the finger at others.
Do I expect anybody else to make a similar business decision to me? No, as who am I to tell people what to do or how to spend their money. I am not here to gain a moral high ground of anybody. I only think that I am potentially in a position to make a positive impact and if I can, I will.