Capitalism in need of rethink, Bank of England chief economist says

Capitalism is in need of a rethink as the model's “success story” in the last Two centuries has begun to stall, the Bank of England's chief economist has warned.

Andy Haldane said that while every generation since 1776 was 50 per cent better off than its predecessor, areas such as happiness, wealth and health were now starting to “fray a bit”.

Speaking at Bloomberg's offices in manchester on Monday, Mr Haldane said the task was now to establish how capitalism might be “rethought and reframed”.

Rethought and reframed

Asked what his concerns were with capitalism in 2021 when compared with previous decades, Mr Haldane said: “One is the proof of the increasing separation of fortunes of our companies. Of these around the productivity high road and those stuck around the low road.

“Second may be the separation of workers around the skills high road, which go to university, and the 50% that do not.”

He said the 3rd was the fortunes of the UK's regions, with a few “steaming ahead” in regard to income and rate of growth while some were being “left behind”.

“In each of those cases there has been divergence, not convergence”, Mr Haldane said.

Wealth, Health insurance and Happiness of Nations

As a part of his lecture, entitled The Wealth, Health insurance and Happiness of Nations, he said there have been now greater incidents of “in-work poverty” when compared with out-of-work poverty because of “less secure” employment.

Speaking about what should change, he said one element could be the way public limited companies (PLC) are run in the united kingdom.

“We have moved to one where the shareholder is offered a position of real primacy and also the question is, is that the way it ought to be?

“Should there be a case for a broader feeling of what companies were placed on earth to complete, that move beyond this singular shareholder perspective towards the plural stakeholder perspective.

“A way to greater extend the views of consumers, creditors, clients, of workers.”

Not fit for purpose

In other locations, he said britain's education model also needs to change as it is “not fit for purpose for the following 50 years”.

He said: “Our education type of future will have to invest a minimum of just as much in educating and re-educating adults as it does young people.”