Cable to attack capitalism

Business Secretary Vince Cable (pictured) is expected to launch an aggressive attack on capitalism in his speech at the Liberal Democrat conference today.

According to reports in the Guardian, Cable will say the present system “takes no prisoners and kills competition where it can”.

It is expected that Cable will launch a major consultation on takeovers and executive pay, with the intent of ending “corporate short-termism”.

He will say the consultation will “shine a harsh light into the murky world of corporate behaviour”.

It will consider how shareholders can have a greater chance to influence a company’s direction, the way pay incentives are drawn up and whether directors should have to provide far more information about takeovers.

The speech will come a day after Cable said banks could face heavy taxes if they pay “outrageously large” bonuses while constraining credit to small and medium enterprises.

Senior Liberal Democrats attempted to qualify the comments.

Speaking on BBC’s Newsnight, Energy and Climate Change Secretary Chris Huhne suggested that Cable was talking about “unbridled capitalism” not capitalism which is heavily regulated.

Some of Cable’s speech will chime with that analysis.

He will say: “Let me be quite clear. The Government’s agenda is not one of laissez-faire. Markets are often irrational or rigged.”

However, other passages will clearly take aim at current practices, not capitalism without constraints.

He will say: “Why should good companies be destroyed by short-term investors looking for a speculative killing, while their accomplices in the City make fat fees?”

The Financial Times reports Cable will say: “Short term investors and financial gamblers value a quick buck above all else, for example by driving company boards into accepting takeover bids that make no economic sense.

“We need shareholders that act like long-term owners, alive to the risks of instability and the broader consequences of how the companies they own behave.”

Confederation of British Industry director general Richard Lambert says: “It is odd that he thinks it is sensible to use such emotive language. Mr Cable has harsh things to say about the capitalist system. It will be interesting to hear his ideas for an alternative.”

FSA chairman Lord Turner used his Mansion House speech yesterday to ask that the debate “move beyond the demonisation of over paid traders.”

He said: “In finance and economics, ill-designed policy is a more powerful force for harm than individual greed or error.”

He said what was needed was to “ensure that we address the fundamentals of what went wrong”.