Capitalism is certainly far from perfect, but most of us believe that -- like democracy -- it's better than the alternatives. However, that doesn't mean we have to accept it as is: indeed this conference is taking place because many of us believe we need to do something about the current state of capitalism for it to survive, let alone thrive.
This is an important debate because the progress of society depends on capitalism being effective and inclusive. For that to be the case, capitalism has to have a social purpose. On average, an employed person will spend more of their waking hours at work than in any other activity. The workplace is therefore a crucial arena for individual progress. It's where the meritocracy that sustains every democracy is most often played out.
The promise that individuals can determine their destiny through their own efforts doesn't guarantee success, nor that life is equal or even fair. But for capitalism to be inclusive, the workplace must be a vector for social mobility. That's its social purpose.
Technology has spurred human progress in the workplace for millennia. Its effect has been overwhelmingly positive in everything from agriculture and health through to transport and communications. This provides grounds for considerable optimism about the future. However, there are signs that technology might now be weakening the effectiveness of the workplace when it comes to social mobility.
A conversation I had recently with a Sky News reporter illustrates my point. His profession is communication; he can now file news reports in virtually any media from pretty much anywhere in the world with the swipe of a touchscreen. Whereas 10 years ago he might have needed a sound engineer and a cameraman, now all he needs is an enhanced iPhone and a broadband connection. But he still needs a driver.
This example points towards a big shift that's taking place in the anatomy of the workplace. For some people, technology greatly enhances their contribution. For others it may replace their oncevalued roles.
The numbers provide the evidence. There has been a dramatic increase in demand for higher skilled, technology-enabled roles. Employers are crying out for more designers, more engineers, more architects. In the UK alone there are 2.3 million more of these kinds of jobs available today than there were 20 years ago.
But over the same period there are 1.2 million fewer jobs for midtier, routine or clerical type roles. And at the same time there has been an increase in demand for lower-skill roles - there are 1.8 million more care, leisure and sales jobs. Exactly the same pattern has been seen in the US and most other developed economies and forecasts suggest that this trend will only accelerate over the coming decade.
This has been described as the 'hollowing out' of the workplace. It matters for many reasons, but critically for its effect on social mobility in the workplace. The scenario is one in which there are growing numbers of high-skilled, well-paid workers, as well as more low-skill and low-paid roles. What is missing are the midlevel roles, so there is less to aspire to and less opportunity for people from the bottom tier to reach the middle, let alone the top. In other words, the workplace may be becoming less effective in performing its key social purpose.
The last time we saw such shifts was at the start of the 20th Century. Technology transformed productivity during the Industrial Revolution. Globalisation, then in the form of colonialism, expanded the market dramatically. Wealth became increasingly concentrated in the hands of a few and, by the early 1900s, inequality in the UK, and most western economies, was greater than at any point in history.
Two World Wars, the Great Depression, progressive taxation and hyper-inflation combined to reduce inequality to the lowest level seen in modern times, by around 1950. Since then it has risen and, in the last few years, inequality has once again reached the levels of the early 20th century. This time, as last, technology and globalisation have played key roles. It may be unpalatable, but the momentum behind this means that inequality is almost certain to increase, and with it the risk to capitalism.
So how can we mitigate that risk? There are no simple answers, but rethinking the way businesses conduct capitalism, focusing on how education supports it and encouraging a greater plurality of ownership within it would make a difference. These are the 'C.E.O.' of a more inclusive capitalism. For capitalism to be inclusive we have to look at its conduct.
Consider two scenarios. In the first, a business deploys technology in a way that reduces the skills required of its employees. In the second, a business deploys technology to enhance employees' capability and contribution. The first may commoditise labour and increase returns in the short term. But the second is the more inclusive and almost certainly the more sustainable.
As any growth business will tell you, skilled labour is typically the main constraint. And in most instances they're not talking about entry-level skills, but the 'new' middle skills required to compete.
Eighty eight percent of those who will be working in 10 years' time are already in employment. This means that the required skills can't simply be recruited or left to schools and colleges, they have to be built and many businesses need look no further than their current employees. For the sake of both competitiveness and social mobility, more businesses must choose to conduct capitalism in a way that prioritises their progression. This shift must be reflected explicitly in job design and pay.
Second, we need to take a long, hard look at education. Academic standards remain vital, but the application of education has never been more important than it is today. In a world in which theworking lifetime has increased by 20%, where technology cycles re much shorter, and where it is harder to progress up the career ladder, it is more important than ever that 'work' and 'education' are connected over the course of a working lifetime.
Though most businesses have radically changed how they serve customers, we persist with the notion that education is what you 'do' largely before the age of 21. And, with over 40 percent of young people now going to university, we should be deeply concerned that many are taking three years or more to do degrees that are often not well aligned with employers' needs. We wouldn't invent this system. Instead, we should be insisting on collaboration at every level between our schools, academic institutions and business, on a scale that makes a real difference to attainment, careers, competitiveness and social mobility.
And finally, a greater plurality of ownership could certainly help to make capitalism more inclusive. It was 100 years ago that Spedan Lewis developed the ideas that led to his creation of the John Lewis Partnership as an employee-owned business. His timing was no accident. He had become convinced that capitalism was unsustainable because of the inequality it created, and yet he saw communism as a worse alternative. His answer was to establish a business where 'labour employs capital' rather than the other way around.
Employee ownership is certainly no panacea, but it has been shown to outperform other forms of ownership, especially in knowledge-intensive businesses, which are forecast to be the biggest creators of new jobs over the next decade. The plc has become the dominant form of ownership in the UK and US, more so than in other markets; it would be good for the economy and good for capitalism if there were more companies owned in ways that are, by their nature, inclusive. Capitalism is worth fighting for - it is a force for good and for social mobility. Sustaining that may require some difficult choices. One hundred years ago Spedan Lewis could not have known that it would take war, depression and hyperinflation to defer the risk he feared of capitalism's demise. Today it is our responsibility to find better ways to avoid it.
Find out more at inc-cap.com.