One of the best presentations at the recent Alliance for Responsible Citizenship conference held in London was given by Paul Marshall. He is a wealthy hedge-fund owner who is also providing invaluable financial support to the fledging ARC, an important centre-right group promoting rational debate on important topics. Hopefully, ARC can develop into a powerful antidote to Davos.

Marshall started by praising the system of capitalism based on free markets. He made the point that the expansion of capitalism has been associated with a dramatic decline in the incidence of extreme poverty in the world, falling from around 90 per cent a century ago to 10 per cent now. By facilitating voluntary exchange between buyers and sellers and connecting markets around the world, capitalism has generated massive benefits overall.

But he went on to utter some important words of caution, as well as pointing to a significant loss of belief on the part of young people in the virtues of capitalism and, indeed, democracy. He maintained that too often capitalism has morphed into three pernicious forms: monopoly capitalism, crony capitalism and woke capitalism.

All economics graduates understand the harm that monopolies do. They restrict output and increase prices, thereby hurting ordinary consumers who often have no choice but to buy the products of monopolistic firms. Over time, they are less likely to innovate. It’s why governments in developed economies enact anti-trust laws to ensure that monopolies are constrained in their behaviour, particularly in respect of mergers and acquisitions.

Of course, no one believes these laws are a perfect solution. Marshall points the finger at the dominance of some of the tech companies and the fact that 90 per cent of global digital advertising is dominated by just two firms. We can all see where this is heading, although it may actually be more about free speech than economics. When these firms have the scope to silence individuals and groups with which they disagree, including by refusing to accept their advertising/promotion money, we are surely heading towards the rocks.

When it comes to crony capitalism, we see it everywhere, including in Australia. Mutually beneficial deals done between businesses and politicians leading to expensive and inefficient government investments are far too common. One example is the explosion in the use of the big consulting firms under the previous Coalition government. The revenue generated from government sources by these firms increased by at least five-fold over the nine years of Coalition rule.

Needless to say, there was a lot of smoke and mirrors going on, with the government claiming to be reducing the number of public servants and enforcing efficiency dividends on departments while all the time showering money on mates in the consulting firms. Post-political career prospects were always top of mind for some ministers.

Green crony capitalism is almost a category of its own, as climate-focused rent seekers gouge taxpayers to underwrite their latest investment proposals. There is taxpayer money flying out the door to subsidise new renewable energy projects, to provide concessional financing for batteries and new transmission lines, to underwrite the development of green hydrogen and the list goes on. And it’s not just from the federal government; there are great slabs of money being provided by state governments.

One of the advantages for green crony capitalists is their ability to catch two birds with one stone, so to speak – to claim to be doing good while hoovering up government dollars. They are saving the planet. They are trying to offset the malign impact of climate change.

Without their efforts, the planet will boil – well, according to that mug-in-chief, Antonia Gutteras, head of the United Nations. They can do all this while becoming billionaires. How good does it get?

Woke capitalism is surely the worst embodiment of capitalism, adding other considerations to the list of the objectives firms must meet aside from providing good value products/services to willing consumers. It’s axiomatic that the more objectives a firm is expected to meet, the less is the accountability. ‘We’re sorry we didn’t meet our profit target and there will be no dividends paid to the shareholders but we did a great job meeting our social contributions’ is a typical response from a woke-imbued CEO.

The ESG – environment, social, governance – movement is the embodiment of woke capitalism. It makes no real sense but was given a serious kick-along by the years of extremely cheap money with close to zero interest rates. (The three letters are a curious mix: governance is generally a tick-the-box issue and has little in common with E and S. It’s why Tesla never gets the ESG tick of approval because it fails the G test.)

Consider the father of ESG, Larry Fink, chairman and CEO of Blackrock, the largest funds manager in the world, and a billionaire. He was wont to write nauseating annual letters telling investors and everyone else that the firm has worthy ambitions well beyond making money. He was worried about climate change, in particular, and Blackrock’s asset allocation would take this into account.

Well that was until a number of state governments in the US decided to boycott ESG funds for their pensions funds. At that point, Fink started telling everyone that ESG was not a helpful term and his firm wouldn’t be using it anymore. A number of other US firms have now followed the Blackrock example.

Sadly, in Australia, there are no defiant state governments to shift the investment dial to a more sensible setting. ESG is still rampant in many large listed companies. We only have to think back to the recent experience of these companies jumping on the Yes campaign with large donations. Virtually all large listed companies have substantial climate change departments, including the big banks.

So where does this leave the young’uns?  Confused and perplexed would be my guess. There are the Larry Finks of this world amassing massive fortunes and flitting around the world in corporate jets while preaching faux messages full of concern for the environment and social issues. Where are the dividends for them? Will a decent education (difficult to obtain these days) and hard work lead to a good life, including owning a home?

It is hardly surprising that the impact of this blatant hypocrisy should manifest itself in young people’s declining belief in the virtues of capitalism. And if capitalism goes hand-in-hand with democracy, is it any wonder that young people are not fully on board with the democratic model? Those of us with grey hair understand that it’s the best of a bad lot, but this needs to be demonstrated over and over again.