This afternoon, David Cameron gave a speech condemning what he called “anti-business snobbery”. This comes after months of self-pity in the business community over rescinded bonuses and the ‘responsible capitalism’ agenda.
This is likely to find a receptive audience in parts of the Labour right, many of whom have spent much of the past 18 months trudging around assorted conferences and events wearily rolling their eyes and waving uninspiring documents that urge the Labour party to match George Osborne every step of the away in his quest to be “relentlessly pro-business”.
The trouble with all this, and with the Prime Minister’s speech, is that in modern day parlance ‘pro-business’ is more often than not a proxy for the total abdication of critical faculties in the face of anyone with a bit of money.
Running through Cameron’s speech is the familiar premise that what is good for business elites and profits is always and inherently good for social progress and the economy at large. This logic has run through the approach politics has taken to economics over the past 30 years, as successive governments went weak at the knees at the sight of anyone calling themselves a ‘business leader’. The corollary is that all the state can do is remove countervailing forces to the ‘creative destruction’ of capital and just shadow it in awe – skill workers up appropriately, provide a basic safety net, and so on.
But all this is just not true. Three different phenomena that have emerged in the past ten years prove it so. Firstly, the unchecked growth and detachment of the financial sector from the real economy, leading directly to the financial crisis, deficit and drying up of credit for small businesses. Secondly, the separation between ‘wealth creation’ and wage growth, and the resulting explosion in inequality and damage to domestic demand. Thirdly, the slow polarisation of the labour market whereby middle income jobs are increasingly outsourced or replaced, leaving a bulk of low-paid, un-unionised jobs at the bottom and a tiny professional-managerial elite at the top; in short, a ‘social mobility’ ladder with the middle rungs knocked out of it. On top of all this, energy and train companies have turned their respective markets into effective cartels.
Some of this is the result of technological change it would have been hard to prevent. But much of it is a result of decades of deference to ‘business leaders’, an unshakeable faith that what is good for them is eventually good for the rest of us, and the hands-off approach to the private sector and globalisation which flows from it.
But none of the resulting damage should even come as a surprise to any progressive. It is in capitalism’s DNA to maximise profit and short-term ‘shareholder value’ by pushing down labour costs and wages. While there remains no coherent alternative to capitalism, this profit motive is regrettably necessary – but it should not be allowed to go unchecked or unquestioned. The business community is an interest group like all the rest. If we let their leading lights dictate economic policy, we’d be reducing the top rate of tax and abolishing the minimum wage. Does anyone outside of top two tax brackets think this is really the route back to prosperity?
It is the job of the CBI to scaremonger and threaten – on the rare occasion the left has the confidence to persevere we find it is a rouse, as it was with the minimum wage in the 1990s. It’s only an outburst of ‘anti-business snobbery’ which forced Tesco to pay a wage and offer a job to the unemployed – I haven’t noticed their business model collapsing overnight. Similarly, the austerity agenda (complete with cuts in corporation tax) endorsed by our business establishment has proven a total failure.
A fair and functioning economy needs entrepreneurs, yes, but it also needs workers on decent wages with decent security and job prospects. This is a caveat we too often neglect when we fetishise ‘wealth creators’. Real wealth creation should be a collaboration. If someone wants to found the next Apple or Dyson, fine – good for them – but it is the role of the state and organised communities to ensure they pay tax, good wages and don’t try to monopolise the meaning of public good. If that makes me a snob, then sign me up.