From mogul to muddle in 200 pages

Capitalism is Dead
November 14, 2003

Why do business moguls write books? Other authors write for money, for fame, or perhaps because they have always had the itch to write. To moguls these motives are relatively unimportant. They do not need the royalties; their business reputations sell the books rather than the books enhancing their reputations; and they are unlikely to have dreamed since childhood of being great authors.

Instead they write to burnish their egos, to proffer the world the benefit of their wisdom, or perhaps to promote their businesses. In Alec Reed's new book all three motives are manifest. He has no qualms about blowing his own trumpet, nor about offering us his wisdom. And he plugs his own organisation, Reed Executive plc and its subsidiaries, without a scintilla of embarrassment.

However, if you wish to polish your ego, to put the world right and to build your business, it is not enough to write a book: you have to write a good one. Capitalism is Dead: Peoplism Rules is, unfortunately, not a good book. Considering the author's eminence as a businessman, it is surprisingly silly.

One of life's little dangers for powerful business tycoons is that people rarely contradict them. Power makes them confident, absolute power makes them absolutely confident. For tycoons this is an occupational hazard, as is often evident in their books. Here, the author tosses around banal dicta with the insouciance of an over-confident juggler. For example:

"Inequalities in wealth, and the opportunities to create wealth, still exist domestically and globally"; "Multinational corporations may soon be a thing of the past, as the sloth of the supertanker is superseded by the speed of the jet-ski"; and "The state is breaking down. Corporations are failing...".

The daftest banality of all is the title, with its catchpenny homage to populist graffiti - and the title is the relentless theme throughout.

Because Reed is fond of inventing jargon he provides readers with a helpful glossary. There he defines "peoplism" as "an economic state where individuals own and control the most important factors of production: their human ability". One of the author's other neologisms is "co-member", defined as "the word used within Reed to represent everyone who works for the company, as an internal client rather than an employee". Personally, I would sooner be a plain old-fashioned employee than a pretentious co-member. At least then I would know my legal rights.

In any event, the author's glossary definition of peoplism does not truly reflect the way he uses the word. Peoplism, as Reed himself uses it, is not an economic state. It is an attitude, a management philosophy. As Reed writes in his introduction: "Peoplism defines the overwhelming importance of (some) people in the modern economy." The book's thesis is that economies and businesses used to be dominated by the ownership of capital, but all that matters now is (some) people - to whit, talented, creative, intelligent people. Isn't that a startling thought from a chap who runs a recruitment company?

But capitalism as an economic system is not predicated simply on the ownership of capital. Capitalism has come to mean many different things in different economies, but nobody has ever suggested capitalism works without human intervention. All definitions of capitalism involve free enterprise, and there can be no enterprise without human beings. Lumps of flint became knuckle-dusters only when creative Palaeolithic chaps chipped them that way. Capital is a latent resource until human beings exploit it.

Of course Reed is right to insist that people, rather than the ownership of inanimate capital, make organisations succeed or fail. Nobody has ever thought otherwise. Businesses have always known their success depends on the quality of the people they employ. But none of this means capital is unimportant. That is what the dotcom entrepreneurs thought: then they discovered they needed capital to get their businesses up and running.

Those who failed to raise the capital - or to employ their capital profitably - failed to survive.

It is understandable that somebody who has spent a lifetime in personnel recruitment should believe capital has passed its use-by date, and insist that (some) people are all that matters. It is understandable - but it is naive.

Winston Fletcher is chairman, The Royal Institution.

Capitalism is Dead: Peoplism Rules

Author - Alec Reed
Publisher - McGraw-Hill
Pages - 194
Price - £19.99
ISBN - 0 07 710369 6

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