The ‘good company’ is a good aim, but let’s not get too distracted

By Luke Bozier /@lukebozier

Yesterday, John Denham set out Labour’s stall on creating ‘the good company’. The shadow business team’s aim to re-jig Britain’s economy in favour of companies who pursue not just profit but sustainability, high-value jobs and a real contribution to the society they operate in is of course a noble aim.

However, the tone that Denham is setting is indicative of a Labour Party attitude toward enterprise which is still heavily skewed toward state activism in the private sector, and one which misses a number of important points. Whilst of course it is good and proper to suggest that the state should do whatever it can to help Britain’s businesses flourish (as I set out in this article today asking if UK Trade and Industry could do more to help small and micro enterprises to tap into valuable foreign markets), we have to recognise that the real innovation toward ‘good’ companies has come from the market itself, not the state.

Britain is today awash with companies who take the happiness of their staff, the provenance of the goods they sell, and the ethical impact they have on the world seriously. Companies like Pret a Manger, Waitrose, Virgin, and (as Denham mentioned) Co-op, as well as big American giants like Starbucks, realised in the 1990s and 2000s that being a ‘good company’ has huge commercial dividends; many people started taking more seriously the quality and origin of the goods and services they bought, and that meant companies had to change.

In fact, new companies were born during that era based solely on providing a high-quality, happy work environment for their staff, and quality products and brands which their customers would come to love. This happened not because of the state but despite it.

I can’t help but feel that if we as a party bet the house on building ‘the good company’ in the UK, we will miss the opportunity to look and sound serious on enterprise. Yes it is important to set the right tone when it comes to business, and it is in Labour’s interest to encourage a type of enterprise which is higher quality, more sustainable and more productive than raw profit-driven enterprise, but that’s not all we need to do. We mustn’t get distracted from the wider enterprise culture by becoming too sanctimonious about creating an ethical economy. We can’t think for a moment that it’s the state that will produce those ‘good’ companies and that ethical economy – it’s the market, the creative people who are starting businesses and the savvy and informed consumers that are creating that economy.

The attitude that ‘we’, ‘the state’, ‘the party’ is in any position whatsoever to radically change the economy is erroneous. This quote for example sets the wrong tone: ‘If we want good companies we need to encourage the institutions which promote them’. Companies and innovators do not need more institutions, they need less. They don’t need to be lectured on creating good workplaces and high-quality products and services, they need government to get out of the way, to cut red tape, to bring the tax burden on small companies down, to make it easy for companies to hire employees and to enable wherever possible through the networks the country is linked into, British businesses to tap into foreign markets which are growing.

So let’s not focus all of our efforts on something which the market and the country seems to be quite capable of creating all by itself. The ‘good economy’ is a good aim, but let’s not get distracted. We need to hammer the coalition day in and day out on unemployment and growth. Those are two very solid messages which will resonate with the population. For all its noble aims, pushing the agenda of creating ‘good’ companies won’t win us many votes at the next election.