Criticism of Rory Sutherland's comments about capitalism

If he's stepping out beyond advertising, there's a question to be answered. Update: 24 Feb 2025: Sutherland is now addressing inequality etc - scroll for the update.

Rory Sutherland is a purveyor of popular useful ideas - which is why I’m mentioning him here.

He’s an ad-man, Vice Chairman at Ogilvy UK and self-proclaimed conservative. He’s also an entertaining anecdotalist and conversationalist. Within the marketing industry he has a useful function. For many years, he’s encouraged that sector to be more mischievous, to be more thoughtful. His talks are peppered with counter-intuitive stories about how the world really works.

His themes, broadly, are: humans are weird, irrationality is important and traditional economics is insufficient. Eye-opening stuff for the boardroom. Ruffles some feathers, but doesn’t scare the horses (in the field next to the duck pond).

In a recent interview with the influential music producer Rick Rubin, Sutherland is reaching a wider audience.

In the interview, Sutherland is more expansive than I’ve heard him before. He makes his points about reductionist mainstream economics then touches on his concerns about free market capitalism.

He outlines a “useful idea”. He says:

”What worries me about free market capitalism is that economists and management consultants like it for entirely the wrong reason… I would argue that most of the appreciation of capitalism is driven by the idea of its efficiency, not its inventiveness… What we should have been doing is optimising capitalism for inventiveness.”

and:

“It's exactly that point about I make about capitalism, which is that we've been encouraged to view it as an efficiency mechanism where it's really an exploration mechanism.”

But. Rubin doesn’t ask: “Rory, why is capitalism being driven by the idea of its efficiency, not its inventiveness?”

Maybe I’ve missed it, but nobody ever seems to ask Sutherland why capitalist efficiency is being prized over inventiveness. Sutherland’s statements are just accepted. And it slightly irritates me.

What would happen if conservative Rory did join the dots?

Would he conclude that the idea of capitalist efficiency is politically expedient for the rich and powerful (when expressed as austerity, for example), as it helps to maintain inequality, social hierarchy, social control and elite status quo?

That a capitalist system that emphasised inventiveness is not broadly encouraged as it might lead to more social mobility?

Perhaps we’ll never know.

Update: 24 February 2025… we do (partly) know!

Sutherland is now addressing inequality and its impact in many of his public talks. He doesn’t answer my question directly, but he does recognise that the current system is flawed.

In the example below, he makes the inequality issue palatable to his audience by approaching it from the perspective of a hard working manager being undermined by a rich junior.

Talking to Chris Williamson (53 minutes in), he says:

”I think a lot of people know that there is fundamental intergenerational inequity, which is because salaries are taxed very highly, while wealth—particularly capital gains from your main property—is barely taxed at all. That leads to, I think, a kind of absurdity. One piece written about this argues that it's not actually intergenerational inequality that's the problem; it's going to be intragenerational inequality when people start inheriting houses or not inheriting houses.

“You can literally have a situation where someone works incredibly hard for 30 years and reaches a position of eminence in a business or institution, yet, because their parents lived in an area with low house prices or didn’t own a house at all, they are still living somewhere subpar. Meanwhile, their underlings, whose parents lived in Surbiton or Kensington or wherever, are essentially swanning around in palaces and going on cruises all the time. That strikes me as a fundamental flaw. We’ve created a system where unearned income, which is neither particularly meritocratic nor earned, is treated incredibly generously, whereas earned income is taxed heavily…

”One idea I found extraordinarily interesting comes from Gary Stevenson, who makes a very valid point—whatever else you may think of him. Nearly all economic models use single representative agents, meaning they assume that the person they are optimising for is an average of everybody. As a consequence, inequality doesn’t feature in those models because they only deal with averages. If Bill Gates walks into a football stadium, then on average, everyone in the stadium is a millionaire. Obviously, that’s not a reliable way to model reality.”

See also

Rick Rubin and Rory Sutherland - Tetragrammaton podcast

UK social mobility at its worst in over 50 years, report finds

Paul Collier: UK is not a meritocracy, social mobility is a lie (12 mins in)

This website has a page on Rory Sutherland, it says: “Sutherland is one of the founding members of the The Common Sense Alliance, a lobby group for the tobacco industry.” The Common Sense Alliance was funded by British American Tobacco.