After two decades in which it was assumed that the argument was over, capitalism has resurged at the top of the political agenda. Is it the key to prosperity or the solvent of communities? Is it the source of inequalities or the cure for them, the path to stability or the sure way to a crisis? And is there, given what we know of the old ‘socialist economies’, a real alternative?

The term ‘capitalism’ was introduced by Saint-Simon to describe any economy in which privately owned firms compete in a market, the owners take the profits and the workers take a wage. But the owner-worker distinction has been eroded, and wages are now only one aspect of the deal between them. Marx depicted ruthless capitalists driving down wages to the lowest level while competing for the largest possible market share. But that picture was never accurate. Wages were rising throughout the first half of the 19th century; factory legislation governing the hours of work, and the provision of healthcare and education, changed the structure of the wage contract, while employers began to accept what Disraeli called ‘the feudal principle’; that the relation between employer and employee is a fiduciary one, in which the parties are tied by reciprocal duties — hence, among many other things, the model towns of Saltaire and Bournville.

Share-holding and cooperative ownership have transformed the hierarchical structure on which that culture depended; service industries have driven manufacturing to the sidelines, and the workforce of a major industry may now be scattered across the globe. Those who own the capital may make none of the crucial decisions and enjoy few of the day-to-day rewards. Employees may receive health insurance as well as housing and pensions as part of their wage. They may even get shares in the firm.

Capitalism has adapted to the plans of those who have a stake in it, and is now regulated in ways that change the relation between workers and employers (who, in the larger businesses, are unlikely to be human individuals). The owner-worker relationship painted by Dickens and Zola has little place in a modern economy, and those who sniff in search of the old forms of cruel exploitation will be hard pressed to find them. Far easier to find them in the last remaining socialist economies like North Korea and Cuba, which illustrate that the alternative to the free economy is not ‘social ownership’ but slavery.

For all that, the critics of capitalism have a point. The separation of ownership from control, which seemed to spread the benefits of ownership beyond a small capitalist class, has also introduced new ways of taking the profits while handing on the cost. Members of a board can borrow against the capital, pay themselves bonuses, sell off all marketable assets, escape to their luxury yachts then file for bankruptcy. Those who acquire a firm may have no knowledge of where it is, what it is or whom it employs; they can freely ignore the pain of those whose livelihood they take away when they strip the assets and run.

The old fiduciary relationship means less and less in this debt-funded economy, which allows the easy sale and purchase of assets across frontiers, and the easy escape from duties (tax included) that come from being rooted in a place. Whether this is a fault of capitalism itself, rather than an abuse of it by global predators, is disputable. But it is clear that the free movement of capital and labour across frontiers, fundamental to the European treaties, has done much to undermine fiduciary relations. A humane capitalism retains its workforce through downturns, offers apprenticeships to local people and acts as a responsible citizen in places that depend upon it for prosperity and survival. But these obligations are easily ignored in favour of shareholder value when a firm’s administrative heart is located nowhere in particular, rather than in the somewhere of those who work for it.

In short, modern capitalism is a system devised for the benefit of absentees, which shields them from many of the real moral challenges. Victorian capitalists usually belonged to the same country, the same town and the same faith as those who worked for them, and could not escape, as their successors can, the demands of neighbourhood. Those who defend the new globalised capitalism must show how it might come down to earth, among the real people who depend on it.

Sir Roger Scruton is a senior fellow at the Ethics and Public Policy Center.