Jesse Norman, Tory MP and the intellectual of the Big Society (see the review of his book here))was described as brilliant by the Guardian newspaper this week. Anyone interested in the more imaginative aspects of modern Conservatism should follow him closely, writer John Harris recommends. The second part is true.
is certainly brilliant in that he shines a light, but the connections with that word end there. Here are three reasons why. Norman
1 Businesses do not spring out of “human affection”
“What kind of association is a family? Or a football supporters’ club? Or a company? … in very different ways they are based in and constituted in human affection.” Spotted the odd one out yet? The words are
’s in his book The Big Society: Anatomy of the New Politics. The kind of thinking that can equate renting yourself to a profit-making machine because you need the money to survive, with joining the Ipswich Town Supporters’ Club, is not brilliant, but intensely ideological. Norman
It is a necessary fiction. It comes from the required belief that choosing between which employer to work for, is no different from selling your car in Exchange & Mart. They are both transactions that, in Milton Friedman words, are “bilaterally voluntary and fully informed”
That it isn’t voluntary, that the process is based on the coercion of material need, must be forever denied. But it is a fiction on which the whole of neoliberal and modern conservative thought, rests. Believe it and suddenly the only “concentration of power” you can see, is that of the state.
2 Ownership of corporations by corporate directors and pension funds won’t make them won’t make them serve the public good
, government only granted corporate charters if the purpose served the public good. But now corporations have owners that regard their shares as “betting slips”. The problem, like everything that comes under the microscope in the Big Society, is the result of ideas gone awry. The answer, in Norman ’s eyes, is “independent” share ownership. I’ve no idea what he means by independent, but what he envisages, is share ownership by pensions funds, institutional bodies, and corporate directors. Quite how they would represent the public good is a mystery. Even an institutional shareholder like a charity is after the best financial returns for its own beneficiaries. Norman
Even if shareholders interested in the public good could be located, why would corporate managers take notice of them and not the inevitably more numerous shareholders interested in maximum yield? In any case, the Anglo-American form of corporate governance of “shareholder primacy” is, according to author Joel Bakan, gradually replacing other forms of capitalism across the world.
Like everything else in The Big Society,
comes up with a spurious solution to a real problem, while history calmly trots off in the other direction. Brilliant, it’s not. Norman
3 Banks need more political interference, not less
UK government, as we know, has an 84 per cent stake in The Royal Bank of and 41 per cent in Lloyds/HBOS. But, according to Scotland , the banks are vulnerable to pressure from politicians, interest groups and the media, to make “politically helpful” decisions on repossessions and credit. They need to be protected from this political interference. Norman
Actually Jesse, the political interference already happened when the government bailed them out and recapitalised them, costing, according to the Office for National Statistics, £1.5 trillion. That was a massive, unprecedented interference with the supposedly free market. If we had genuine capitalism, these banks should be in the dustbin of history.
As it is, the notable thing is how they’ve been nationalised without political interference, which if we lived in anything resembling a democracy, wouldn’t have happened. We should have got a quid pro quo – workers and consumers represented on banks boards – instead we got a quid pro nil.
As the explicitly not anti-capitalist economist Ha-Joon Chang has said, having taken over these banks using taxpayer money, the UK government should have the legal right and political duty to instruct them how to serve the interests of the electorate – by, for example, paying their managers less and lending to small businesses.
Even under pure capitalist terms, the government, as the dominant shareholder, should have the power to tell managers what to do. It should exercise shareholder sovereignty, of which
is such a strong supporter (see point 2). But it doesn’t. Norman
“This is not even capitalism any more,” says Chang. “What is the point of owning a bank, when you have to negotiate hard, or (one suspects) even beg, in order to set the pay of your employees or make it lend more in the way you want?”
The nationalised banks do suffer from political interference. But it is not the interference of government, the electorate or interest groups. It is the undue political power of their managers and finance in general.
But if like Jesse Norman MP you are a former director of Barclays this must be hard to see. Especially if you believe the banks, like companies in general, owe their existence to human affection.