Below you can read a copy of the speech I gave at Birkbeck on how we renew our entrepreneurial democracy.
After the Referendum:
How We Renew Our Entrepreneurial Democracy
Remarks to Birkbeck College on Dragons: Ten Entrepreneurs Who Built
Thursday 30 June 2016
Rt Hon Liam Byrne MP
I can’t tell you what a relief it is to take an hour out of the heat of Westminster, to come to the calm of your campus. As we say these days, 12 hours is a lifetime in politics, and, I’m going to do my best to describe some lessons from 600 years of capitalism. But, I’m here, not just as writer but as a politician, who wants to understand how the tides of history have just turned; how they’ve just dumped us on a lonely beach, and how if we don’t learn some lessons of history, and adjust accordingly then, quite frankly we’re going to end up marooned, stranded, isolated in a world defined by its inter-connection.
Why write Dragons?
But let me start my story at the beginning. Nearly 20 years ago, I was innocently sitting in an auditorium like this, blissfully unaware that my life was about to change forever. I was just about to start at the Harvard Business School, and begin study with a class on the ‘Making of America’ Over the months that followed, I listened in awe tom some of the most amazing stories I had ever heard. It wasn’t like any history I’d heard before,full of facts and figures; these were stories full of flesh and blood - of the entrepreneurs who helped build America.
I was hooked.
Within a year, I’d persuaded my wife, Sarah, who was six months pregnant, that it’d be a good idea if I turned down the lucrative job offers from consultancies and banks - and live on our credit card while I wrote a business plan for a start-up.
And I decided one thing more.
That one day I would write the book about the Making of Britain - not with loads of dry facts and figures, but with flesh and blood of the stories of our greatest entrepreneurs from Dick Whittington to John Spedan Lewis.
So: here’s the book I’ve been trying to write for 16 years
It’s not quite Horrible Histories meets the Apprentice - though at times it gets quite close - but it offers a simple truth: this amazing country, still today home to world’s fifth biggest economy, was built not simply by sovereigns, and soldiers, and scientists and statesman - but by some of the greatest entrepreneurs in history
It wasn't an easy book to write.
It is, simply put, a one volume economic history of our country since the days when William de la Pole, and the wool merchants of the day, wrestled back control of the country’s fleece and finance business, back from the Flemish and the Italians, setting the stage for the great mercer, Dick Whittington, and the generations of merchants, described so beautifully by Chaucer in the Canterbury Tales, as the men who:
‘In parti-coloured clothes he sat, Beneath a Flemish beaver hat,
He told of his opinions and pursuits…
He was an expert at dabbling in exchanges.
He was so stately in administration,
In loans and bargains and negotiation.'
Within two centuries, these merchants were superseded by the extraordinary exploits of buccaneers like Lord Robert Rich, masters of the broadside and the balance sheet who created the first colonies and companies in America, winning along the way rights and freedoms not just to trade but to keep their profits safe from despotic kings.
The profits of those growing firms, created the foundation for traders like Thomas ‘Diamond’ Pitt who built great trading empires amid the giant old economies of the East, recycling their fortunes in the City of London, newly equipped with great banking institutions, on models imported from the Continent, in the wake of the Glorious Revolution. They were followed, by pioneers like Matthew Boulton who mastered the steam engines that revolutionized power for the factories and forges of the Industrial Revolution
Alongside them, came great capitalists like Nathan Rothschild who helped build the world’s greatest capital market in London, in the years after victory of Waterloo, creating in London, on the foundation laid during the days of William III, the world’s first global bond market, the place where European governments went to raise the finance for the industrialisation of Europe in the long 19th century.
The breakthroughs of both, Boulton and Rothschild helped equip two of the rogues in this story - George Hudson, and William Jardine - to leave their mark; Hudson was known as the Railway Napoleon; at his height, he was helping build a third of the English railway system, and founding a long the way the Enron of 19th century England.
Jardine, founder of Jardine Matheson, harnessed the ambitions of the Manchester cotton traders, to press the case for free trade, an end to the old East India Company’s monopolies, and the right to traffic freely with the East - in his case trafficking opium, triggering the Opium War, and the destruction of the Imperial Regime in China.
It was a similar story to men like Cecil Rhodes, who rode on a tidal wave of outbound British investment, much organised in Rhodes’ case by Lord Rothschild to build murderous empires in Africa, armed with Maxim machines guns.
And then we have visionaries like George Cadbury and William Lever who brought mass production to new consumer products, from chocolate to soap, while tycoons like John Spedan Lewis created new
giants of the great British high street for the new middle class that emerged between the wars.
They have been amazing stories to write - and I hope they’re amazing stories to read - not least because they taught me such a lesson about politics - and such a lesson about life.
As a former entrepreneur, I am of course interested in illustrating the stories of people, who audacity of hope, matched their tenacity of hope. All the characters, illustrate the virtues of sheer guts and determination: Robert Rich, nearly lost everything in his battle with the king, and was
almost forced to emigrate before his fortune turned; Pitt, made a fortune and then lost a fortune fighting the French, and had to start over again; Boulton was constantly on the brink of bankruptcy - and when the millers; burned down his great factory, Albion Mill, he had to find a way to pick
up the pieces; The Cadbury brothers spent years nearly going under until they found a
way to thrive; and Spedan Lewis nearly lost his life as a young man, and was in constant
battles with his dad, until he found a way to prevail.
All of these entrepreneurs lived out the truth of that line of Samuel Beckett’s : ’Ever tried. Ever failed. No matter. Fail again. Fail better.’
And of course, in their stories comes both the best and worst of human endeavour.
Slavers, Fraudsters, War-mongers, sit side by side in this story, with ethical giants, like George Cadbury. But, perhaps the biggest lesson is not so much about people, and more about what people do together. The things they build together. The ways they work together, in things that we have come to call institutions.
These are stories about individuals, but what emerges in the pattern of
their lives is the critical importance of -
• The Royal Navy
• The Royal Exchange
• The Royal Mint, and our money supply
• The Royal Society, our engine for science and innovation
• The Bank of England, and the capital markets around it.
• The new institutions of the first welfare state built in places like
Bournville, and Port Sunlight, and the board-rooms of John Lewis. Institutions matter - and when they fail, progress gets harder.
Which is precisely what happened last week.
THE POLITICAL LESSON
Here is the basic lesson that we’ve been taught; we know how to globalise, but we lack the institutions that ensured that globalisations works for the majority of voters. And last week, they told us that they were sick of a world of very rich elites, and very remote elites, running the show in a way that no longer worked for them.
Since 2008, a multi-trillion merger wave has created huge new giants of the global economy. Giant corporations, bigger than countries, now dominate the commanding heights of the global economy. Half of global research and development is in the hands of just 1400 companies: from aeroplanes, to drink cans, industry after industry is dominated by just a handful of firms.
Yet these companies do not serve us well
They are not investing in the jobs of the future: big companies in Britain are sitting on an unbelievable £522 billion in cash - sitting there, doing very little. Even Larry Fink, head of Black Rock, the world’s largest investment firm, says the world’s mega-corps are failing to invest in new jobs and new
They are driving down wages.
In Britain, ordinary workers are producing more – but they’re not getting paid for it. Since the turn of the millennium output per hour increased by 14.7% - yet medium wages are up just 8.4% from April 2000 to April 2014. Yet, they are rewarding those at the top with unprecedented prizes, which is in part why, the top 1% now own half of global wealth
But our democracy is little better.
In Peter Mair's extraordinary book Ruling the Void he opens with a bold declaration:
"The age of party democracy has passed…parties …no longer
seem capable of sustaining democracy in its present form"
Many people in our country today, feel that is true.
Think about the way that voter turnout and has fallen all across the west; think about how new parties like the far right Peoples or Progress parties have emerged in Denmark, Norway, Austria, the Netherlands, Switzerland and Italy. Think about the advent of the Five Star party in Italy, or Podermos in Spain.
Across Europe in the 1990s average turn-outs were well over 80%, but by the first decade of the new century nearly a quarter of people were staying at home. In the first election of the 21st-century Britain, turn out collapsed to just 59%. Across Europe, electoral volatility has soared to a record high while membership of traditional parties has collapsed: over the course of the last three decades in the UK and France parties have lost around 1 million members. Quite simply citizens are withdrawing and disengaging from the arena of conventional politics.
Because both parties have taken the big decisions out of politics.
• We passed interest rate setting to the bank of England.
• We took steps to ensure the NHS was much more independent.
• Like, the Conservatives before us we passed more and more power to
the European Union.
• All of these changes made sense – but after our ambitious devolution
of power to Scotland, to Wales, to London and to Northern Ireland we
simply stopped renewing reinventing and revitalising the way out
democracy worked and is the way our party democracy worked.
So what’s the answer?
Surely, as Prof Stiglitz and indeed myself, have argued we have to rewrite the rules of our institutions to create a more entrepreneurial democracy, and a more equal country. I’ve suggested some places to get started:
1. Monetary policy focused on full employment and financial markets
focused on the long term, with corporate governance that listens to
2. Stronger Parliamentary oversight of fiscal policy – especially how we
close the tax gap;
3. A renewed science policy better funded to explore blue skies and
encourage investment in innovation;
4. A sharper focus on encouraging entrepreneurs who down the
centuries have made history by inventing the future;
5. Social security reform to restore the contributory principle and enable
workers who’ve paid in to reskill and reskill again over the course of
their long careers.
But, above all we need new institutions to encourage a new generation of entrepreneurs to power an entrepreneurial surge that creates new industries - in big data, cyber-security, genetic science, and the internet of things - creating new jobs, new wealth and new possibilities. We like to think we’re an entrepreneurial island - but the truth is we need to be doing much, much better:
1. A million people have left entrepreneurial activity in the last three
2. Globally, we’re only 48th out of 60 in the global enterprise league
table - and of the top 300 companies created in the last thirty years,
only a handful are British.
3. The only two British websites in the global 100 were actually founded
in America - google.co.uk and amazon.co.uk.
But just as we need a more entrepreneurial economy, we need an more entire entrepreneurial democracy. Look at the lessons from abroad: what some call ‘open source local government’ is creating a new way of transforming the way citizens shape the work of the people who serve
them. Look at the way Wikipolitica emerged out of Mexico's version of Occupy Wall Street; last June it won its first member of Parliament. Look at the way Podermos has emerged from the 15 M Indignados movement to now govern the cities of Madrid, Barcelona and Zaragoza.
Often inspired by an ambition to develop new ways to cooperate or to build an economy for the common good, citizens across Europe are building new parties and now new governments to change the way we work together in cities.
We need to learn from that in the wake of last week’s shock.
So look let me finish with the simplest lesson of all: the lesson of the last six hundred years. Great entrepreneurs change history - by inventing the future: and if we want a great future, we need to help them, not only fail better.
We need to help to succeed.