CORPORATISM – CAN IT BE DEFEATED?
Thus far in this mini-series on British governance and politics, we’ve seen that the real issue isn’t “Right” versus “Left”, but “Corporatism” versus what I’ve called “Libertarianism”. I’ve examined the nature of Corporatism in articles about the private sector, and the public services and government. This article concludes the series by examining what, if anything, might be done about it.
I’ll cut to the chase here. The rise of Corporatism has been bad for Britain. It has weakened our economy, undermined the living standards of the vast majority, driven Britain ever further into debt, corroded trust in the political system, and created a widening gap between “us” and “them”.
Relentless though the rise of Corporatism has been, it is by no means unstoppable.
Reversing the trend would require two things – organisation, and people-power. Later in this article, I’ll explain what this means.
First, though, I’d like to stress how bad the drift towards Corporatism has been for Britain. Once we understand this we’ll be better equipped to assess some solutions.
In economics, Corporatists favour both a low-wage economy (usually called “a flexible labour market”) and an economic system driven by consumption. The inevitable result of this is the escalation in debt that we’ve witnessed over the last decade and more.
If people are encouraged to consume, but at the same time the real value of their wages is held down, the only way of squaring the circle is to make debt easily and cheaply available, and that’s precisely what’s happened. In Britain, our dysfunctional housing market has been the preferred conduit for channelling debt into consumption.
In the public services, the hallmark of Corporatism is a system in which the organisation takes precedence over the public, and this is reflected in an almost total absence of accountability, especially at higher levels and even when things go horribly wrong.
Politics, meanwhile, has become centralised, such that two (or occasionally three) lookalike parties control everything from candidate selection to policy and presentation. Historic checks to centralised executive power (such as the Cabinet, the senior civil service, local government, party conferences, and local party organisations) have been eroded.
In the preceding article I described the power elite as “the directorate”, and the inter-linking of this directorate goes far beyond the “revolving doors” which enable individuals to move between government and business.
The State all too often looks the other way when major scandals occur, rather than imposing accountability on the officials involved. Activities which at a lower level would count as fraud become the more innocuous “miss-selling” when practised by large companies. Sanctions may be inflicted on companies (meaning their largely innocent shareholders), but are seldom if ever imposed on the decision-makers at the top of the Corporate structure.
The rescue of the banks became, unnecessarily and almost seamlessly, the rescue of the bankers. An estimated £85bn is handed out annually to big business in “corporate welfare”, and a further £28bn of taxpayers’ money is spent boosting the incomes of workers whose wages are too low. A Corporate-friendly low-wage agenda is given official sanction, and a policy of easy access to cheap borrowing is maintained.
Big business does tend to keep out of party politics – which has become almost irrelevant anyway – but the Corporate interest is evident in non-party issues, such as the recent referendum in Scotland. We should expect weighty Corporate lobbying in favour of continued EU membership if the public is indeed offered a referendum on the issue.
I wouldn’t want you to think that this is some kind of conspiracy, because it isn’t. Rather, the system has evolved in ways which favour Corporatism, and changes of this sort tend to become cumulative.
It does not require much imagination to work out where this process could end. Despite a rather tepid recovery, Britain’s economic viability is threatened by a dependence on borrowing which is most evident in property markets, in the fiscal deficit and in Britain’s dire financial relationship with the rest of the world. Her enormous debts, no less than her on-going dependency on borrowing, mean that Britain is very poorly positioned to confront the new financial crisis that I, for one, regard as highly likely. Politically, the combination of widening inequalities and the breakdown of trust in government has, historically, almost always ended badly.
What is required, then, is a process of reform which harnesses public opinion to roll back the Corporatist tide in ways that matter. The catalyst for this needs to be an organisation dedicated to channelling public opinion in constructive directions.
There are some pretty obvious chinks in the armour of the Corporatist system. First, and as recent events have shown, the public are quite capable of voting “none of the above” when what they are offered is the same old choice between two or three established Corporatist parties.
Second, there is justifiable public anger over a range of issues including inequality, low (and falling) real wages, immigration, scandals (like Stafford and Rotherham) and membership of the European Union.
An economic campaign against Corporatism should focus on the issue of low wages. Essentially, the case for the living wage needs to be supported. An independent, reputable organisation needs to award a “fair wage” kite-mark to any large or medium-sized business which undertakes to ensure that no employee is paid less than, say, £10 per hour. The critical issue is that the public should be persuaded not to give their custom to businesses which do not have this fair-wage mark of approval.
The political corollary of the fair-wage initiative is that candidates at Parliamentary elections should be asked to commit to a simple “public contract” or “charter” (I would have called this a “pledge”, but that reeks of prohibition!). The contract idea is not new but, perhaps surprisingly, has not been used in any significant way for about 100 years.
This way this works is that, in each constituency, each candidate is asked if he or she is willing to make a four-point commitment.
The four points would be:
– A promise to support an in-out referendum on EU membership.
– A guarantee of support for legislation limiting net immigration to, say, 50,000 per year.
– A willingness to vote for legislation making the living wage mandatory for all large and medium-sized businesses.
– A promise to vote for an anti-profiteering law capping the earnings of former politicians and civil servants.
Of course, it would be up to each individual candidate to decide whether or not to sign up to the contract. The critical point then would be for voters to support those who did sign up to it, and ask pointed questions of those who, at least by implication, favour EU membership, high levels of immigration, a low-wage economy and the ability of individuals to move from government into ultra-lucrative private sector positions.
The proposed commitments on the EU and immigration would be designed to require candidates to support clear public preferences on these issues. In both cases, the obvious public preferences – withdrawal from the EU, and a strict limit on immigration – would be significant blows to Corporatism, which favours both EU membership and high levels of immigration.
The point about the living wage is that Britain’s established parties all, to a greater or lesser extent, support a low-wage economic model that cannot succeed. If a low-wage economy was the route to prosperity, Ghana would be richer than Germany, and Somalia more prosperous than Switzerland.
The reason why the low-wage economy is a mistake is simple – without well-paid workers, demand is weak. Combining a low-wage economy with pressure to consume leads directly to dangerous levels of indebtedness. The model that Britain should be pursuing is a high-skilled, high-wage, high-productivity entrepreneurial economy, not a form of “lowest common denominator” race to the bottom.
The restriction on the movement between government and business would be to ensure that government is not seen by the public as a road to riches. As envisaged here, a new law would cap the annual earnings of former ministers and government administrators at £200,000 annually for a decade after leaving post.
Such a limit can hardly be called onerous, and would leave former ministers and civil servants free to earn a very substantial income in the private sector. Set at such a level, this limit would be largely symbolic for the vast majority of those affected, but would send a decisive signal that government service is not a route to wealth.
To set the ball rolling, two forms of organisation are required.
One of these would have the simple task of awarding recognition to businesses committed to the living wage.
The second would organise the charter, giving each and every candidate for Parliament the opportunity to sign up to an avowedly populist agenda.
At the end of the day, there’s nothing very revolutionary about any of this.
It’s called democracy.