While much of the Conservative Party Conference in early October was preoccupied with Brexit and the suggestion that cabinet disagreements were undermining the stability of the Government, there was a second anxiety, just as significant in the longer term, about how we will promote free markets, capitalism and globalisation.  After the shock of a general election which did not deliver the result Theresa May had been hoping for, the question haunting Conservatives is how to prevent Jeremy Corbyn’s Labour Party winning people over by promising to reverse many of the Thatcher reforms of the 1980s, such as privatisation and market liberalisation.

Our prime minister has at times seemed to say contradictory things.  On the one hand, she has proposed putting worker representatives on the boards of major companies.  She has just announced an energy price cap, which others say flies in the face of the doctrine of competition and free markets.  Conservatives are very divided about such measures.  On the other hand, her conference speech extolled the virtues of “the free-market economy – for so long the basis of our prosperity and security. An idea that has lifted millions around the world out of poverty.”  She attacked those who “would imperil our future by adopting the failed experiments of the past.”

This tension reflects a real anxiety that Mr Corbyn is tapping into deep sentiments and hostility to the way that Mrs Thatcher and her ministers reformed the economy, and to Tony Blair’s New Labour, who not only accepted and consolidated the Thatcher reforms, but continued reforming in the same way.  Mrs May finished up saying, “So while we will never hesitate to act where businesses aren’t operating as they should, let this party celebrate the wealth creators, the risk takers, the innovators and entrepreneurs – the businesses large and small.” However, this does look as though we are trying to face in two directions at once.  Nobody seems to have found a convincing approach that will restore public confidence in the wealth creators and risk takers.

This dichotomy will not be resolved by facing both ways, or by proposing regulatory actions which punish the wealth creators whom we are also trying to celebrate. First, we need to understand why public confidence in banks, privatised utilities, supermarkets, multinationals and global capitalism has declined.  This is because of what the public sees and experiences.  For example, they see the directors of privatised utilities massively enriching themselves as their customers experience a domestic energy market in which the less fortunate are often paying most for their energy.  Those who cannot understand how to switch suppliers or to find the right tariff seem to be losers, while the company’s directors are the winners.  Or look at the banks.  Many banks are trying hard to recover the confidence of the public, but the banking crisis was as much driven by the efforts of the few who were massively enriching themselves as by failures of regulation.  There are other examples.  How on earth did Tesco finish up lying about its profits so that now some of its executives are being prosecuted for fraud?  Why do internet companies, or coffee shop chains pay so little tax?  Who is accountable for Uber?  Why should we trust Ryanair when even their own pilots seem to hate the boss?

These are all examples of failures of effective corporate governance, and poor leadership by those at the top.  And no amount of government intervention or new regulations can substitute for poor governance and bad leadership.  So, we need to change the nature of the conversation about why capitalism and free markets have lost public confidence and support.  Regulation and rules cannot make bad company directors into better people or leaders.  It is companies themselves who need to recognise that leadership which is over-preoccupied with just obeying the rules and maximising profits and bonuses has not got a sustainable business model.

The best companies also have the best values.  Their leaders promote the best attitudes and the best forms of behaviour in their employees.  The best businesses understand that the confidence and respect of their customers, the quality of their product of service, their reputation as good employers and good corporate citizenship all come before profits, because without all these things, sooner or later, the company will be found wanting and profits will suffer.

So, it is not directly in the power of government to restore confidence in capitalism and free markets. The real burden of this task must be placed squarely on the shoulders of business leaders, who must recognise perhaps more than they have in the past that to be a business leader is to take responsibility for the reputation of the whole enterprise. For without reputation, a business has nothing.  It is entirely misguided to see good corporate governance as merely compliance.  Governance and the maintenance of reputation are intrinsically intertwined.  And in turn this bears on the values and principles by which leaders will run their business.  These values are personal, about what attitudes business leaders demonstrate, and how they behave.  They must understand – and choose – the values by which they operate personally and must be seen to live by those values.  If the public were to see that the directors of big capitalism regarded their stewardship of large companies more as a matter of public service rather than self-enrichment, there would be far less cynicism and hostility for dangerous Marxists populists like Jeremy Corbyn to exploit.