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The International Writers Magazine: Finance:
'communications technology is widely used to avoid communicating with the customer'

• Tom Kilcourse
Critics of the present economic system are often called ‘anti-capitalists’, and perhaps socialists or Marxists. Most do not deserve such labels. Capitalism, like socialism, is a generic term covering widely varying systems.


What we now call capitalism differs significantly from what we understood by that label prior to the nineteen-eighties. Writing in the Daily Telegraph, Charles Moore tells us that whereas socialism is a ‘belief system’, capitalism is not. I disagree. Although his distinction was perhaps valid before 1980, that is no longer the case.

Before the eighties the capitalist system was subject to government regulation, covering trade, employment and finance. Financial services in particular operated under long standing rules, introduced after the great depression, that were intended as safeguards against abuse. During the eighties, however, governments in the USA and Britain began dismantling the regulatory system. The driving force was ideology rather than pragmatism. In other words, it was based on a belief system.

So began a process of deregulation that was to fundamentally change the capitalist system. Behind these changes lay a philosophical view that governments should not interfere in a market economy. This prevailed despite evidence that the theory was flawed. The three most successful economies of the late twentieth century, in terms of growth, were Japan, South Korea and China. All three demonstrated the importance of government involvement, direction indeed, in the economy. The first two at least were never considered anything other than capitalist, though they differed greatly from the model we see operating today.

It is easy for someone of my age to forget that Britons under the age of forty-five have no adult experience of the capitalist model that operated prior to deregulation, so cannot appreciate the impact it had on our society at all levels. British high streets have been transformed. Where one once found a number of competing building societies and bank branches, we now see charity shops.

Building societies were mutually owned by their customers. Their function was specialised, providing a link between small savers and home buyers. Millions of ordinary people deposited their savings with a society of their choice, which, in turn, would use the funds to provide mortgages. Building societies were not alone in being specialised. Until the eighties the financial services industry was segmented, with high street banks being confined in the scope of their activities, as was the investment market.

This situation changed with demutualisation of most building societies, and the elimination of specialisation in what is known in Britain as the ‘Big bang’. Demutualisation came about when owners of shares in societies were offered financial incentives to vote in favour of changing their organisations’ status. Subsequently many of the societies disappeared, some having stepped beyond the specialisms that they understood and burned their fingers. A client of mine, Abbey National, was one the largest building society in the country with a branch on most high streets. I worked for several years with Abbey National managers who knew intimately the business they were in. After demutualisation Abbey National became a bank, moving into areas for which their branch managers were barely equipped. The organisation no longer exists.

I choose building societies as an example where change impacted directly on the high street and on ordinary savers and home buyers. Other equally profound changes took place in which safeguards were removed from bank operations and the way investments are managed. As a result, capitalism post-eighties is a quite different beast from the model that prevailed before. Capitalism today is much more speculative and unstable than was its predecessor.

Along with deregulation in the domestic economy, international trade saw a return to the free-markets ideology. Government ‘interference’ in trade was seen as entirely negative, again despite the evidence from Asia, and the historical evidence that no major economy has ever grown on a free-trade basis. Deregulation was the watchword, in trade, finance and employment. If only government would stand aside, competition could be relied upon to deliver the good life in which all would benefit. So what happened?

Manufacturing fled to Asia to take advantage of an abundance of cheap labour, while old manufacturing countries were expected to metamorphose smoothly into service economies. The inevitable restructuring difficulties were grossly underestimated, and some predictable outcomes were unseen or consciously ignored. A well trained workforce found its skills made redundant in a very short period, and re-training arrangements were haphazard, if they existed at all. Youngsters who would previously have left school in their early teens to take up apprenticeships with major companies found themselves advised to go to university. The education and training infrastructure in Britain never fully recovered and we now find ourselves having to import skilled labour.

Writing in the ‘Leadership & Organisation Development Journal in 1996 I predicted that “We could see the white collar equivalent of the old tally system used on the docks whereby workers reported for duty in the morning with no guarantee of work that day.” The insecurity of employment that we see today is far removed from the world of work in which I was raised, and attitudes of many managers towards labour have been transformed.

Attitudes to customers have also changed, with ‘customer service’ becoming no more than a slogan in many organisations, while communications technology is widely used to avoid communicating with the customer. As a young man I could go into my high street bank to have a heart-to-heart chat with the manager. Today, such possibilities are dim memories. When our bank made a serious mistake with our account recently we found it impossible to telephone our nearest branch, so we drove in to town. We got to see the manager only by being insistent, but she was unable to explain what had happened. She would have to ask ‘customer services’. To our astonishment she was unable to telephone them and her only way to communicate with this unit of her own bank was via e-mail. When it comes to communicating with other service providers, energy companies for instance, customers often give up in frustration.

Has deregulation delivered the goods? On balance, the answer is probably ‘no’ for a great number of people. As well as the problems I have mentioned, today’s model of capitalism has created greater insecurity, greater inequality, and a culture in which money defines relationships. Private debt now stands at an all-time high, with people in work having to borrow for consumption. Moreover, the capitalism of today threatens democracy on two levels. Elected government is threatened by growing corporate power, while democracy within corporations has also diminished. Long gone are the days when small shareholders could influence an outfit’s direction at an AGM. Now, a corporation’s shares are held largely by other corporate bodies and fund managers. Small shareholders are consequently powerless to block some of the enormous hikes in executive salaries.

Objection to this system is not anti-capitalism. On the contrary, it is concern for the future of both capitalism and democracy that stimulates opposition. Until 1985 the USA was a creditor country, but today it is a debtor, mainly to China. That’s progress?

© Tom Kilcourse September 2015
kilcoursetom at

Tom Kilcourse

a philosophical shift that took place in teacher training in the nineteen-sixties when new ‘learning theories’ were swallowed whole by teacher training colleges

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