Book Tip No. 44 (2020): Paul Collier: Social Capitalism. My Manifesto Against the Decay of Society.

Munich 3rd ed. 2019

By Hans-Christian Riekhof

Paul Collier writes from an interesting perspective. He argues as a renowned economics professor teaching in Oxford, and many autobiographical events with their social implications run through his work.

At first glance, one might think: Social Capitalism – this is an irreconcilable contradiction. A classic contradictio in adiecto, as one might also call it. Ultimately, this is exactly what Paul Collier is aiming for: On the one hand, he sees a massive need for action with regard to the current manifestations of capitalism. On the other hand, like many others after the failure of real socialism, he considers this system to be largely without alternative.

Pragmatically shaped further development of capitalism

Collier relies on a pragmatically shaped approach to the further development of capitalism. He distinguishes this position on the one hand from the attempt to create the necessary social balance with a paternalistic state and an over-care. On the other hand, he consistently opposes considerations to let market forces operate largely undisturbed with a libertarian (some say: neo-liberal) approach. One of his core theses: we must oppose the rights of the individual again (mutual) obligations.

A new orientation of capitalist principles

Paul Collier analyzes various social levels at which he recommends a new orientation of capitalist principles: the level of the family, the level of companies and the level of the state. In all areas, Collier advocates a new adjustment of rights and obligations: there should be no right without obligation, so one of his ethical considerations. Here are some very concrete examples and derivations:

• Interesting is Collier’s proposal to have party leaders elected not by party congresses and party members, but by elected deputies. Deputies are legitimized by voters, and as insiders they can better assess the competence, intentions and assertiveness of the candidates than the “party people”.
• Paul Collier suggests thinking about the earning power resulting from economies of scale alone the size of the company and aligning corporate tax rates also with the size of companies.
• Furthermore, in his estimation, the duty should be anchored in the supervisory bodies of companies to include the public interest in decisions and to document this process in the protocols. This could ensure that corporate decisions that run diametrically opposed to the public interest become more difficult.

Incentives for entrepreneurial engagements in development regions

• Gross negligence should, according to Collier, be established as a (criminal) legal fact when it comes to bankruptcies of companies as in the banking crisis.
• The state should create a balance between the prosperous and highly productive as well as creative cities and the left-behind regions that now exist in all regions of the world. This will not work without a consistent redistribution, so Collier.
• Consideration should also be given to how regional innovative clusters can be promoted and how agglomeration gains should be distributed. Also, what role banks could play that only have a regional license and would therefore be forced to focus on regional activities.
• Collier advocates “luring” ethically correct working companies with appropriate incentives into development regions. Because “fragile countries urgently need the jobs that modern companies can provide” (p. 172).

Principles against divisions between winners and losers

With the considerations and principles presented by Paul Collier, it should be possible to

• reduce or perhaps even overcome the geographical division between the boom regions and the declining cities
• the social division between some privileged and the broad population
• and the global division between winners and disadvantaged countries

These are the main economic issues that determine political discussion. And many proposed solutions seem worth considering, even if they have not yet found their way into ongoing political debates.

However, the crucial question remains where the social forces are that carry such solutions into political reality.