Conventional economic history has it that capitalism was a product of the sixteenth and seventeenth centuries, when the economic environment allowed the speculative investment of surplus money and the legal vehicles for joint enterprise became recognised. Long ago I debunked this in a paper that showed such investment and joint enterprise was flourishing as early as the thirteenth century - in charter boroughs. Boroughs such as Dunwich that lived outside the feudal system, governed by their merchants, developed an economy based on the exchange of money rather than on obligations of goods and labour. Sending a ship across the North Sea to trade was a risky business; the value of the ship, and of the goods she carried, was huge. So merchant ship owners spread the risk between them; they invested in their competitors, reducing their reward but also reducing their risk. In the words of Adam Smith, 'sober and frugal', and 'solid and profitable'. And the reason capitalism flourished in these little hothouses of commerce was that the charter boroughs operated free markets.
David Green in today's Telegraph defends Vince Cable's condemnation of the unacceptable face of capitalism ; Cable's comments were entirely in line with positions taken by both Hayek and Adam Smith. And he has a point.
The banks and large institutional investors have been acting like irresponsible spendthrifts, greedy for the fast buck, utterly careless, morally feckless, drunk on zeros. A shipowner in Dunwich who spent his last penny loading his cog with his own trade goods to send across the North Sea, only to lose her to the waves, or pirates, lost all. He went overnight from affluence to penury, from merchant to beggar. Any suggestion that the Town should bail him out, should maintain him in his former state, would be met with derision. Yet this is exactly what we've done for the banks.
'Sober and frugal' and 'solid and profitable' are good for us all. The City spivs do us no favours; they destroy by their greed that which we have so painfully built. If they won't change, we must make them.