Democracy and the Corporation

Recently Shout Out UK and Democracy Matters held their very first Forum on Economic Democracy at the Houses of Parliament. The event was an immense success although regrettably one of the speakers, Professor Paddy Ireland of the University of Bristol, was not able to make the event. He did however offer us this brief statement:

‘Forty years ago there was much talk about extending democratic processes beyond the political sphere into the economic. Worker participation and industrial democracy were at the forefront of political debates. In the UK, the Bullock Report recommended the introduction of worker directors; the EU was proposing the extension German-style co-determination across Europe. Such extensions of democratic and participatory processes, it was argued, were not central to improving efficiency, but central to enhancing human well-being and dignity.

How things have changed!

We should all be concerned about the state of UK democracy. Indeed, it would not be inappropriate to ask how democratic our society really is. The dramatic increases in wealth inequality which have occurred in the last thirty to forty years have been well documented. Can a country which combines growing levels of poverty, increasing concentrations of wealth, and declining levels of social mobility really be called democratic?

The growing inequalities are in many ways reflections of the gradual erosion and weakening of the democratic elements of our political system. In recent decades, we have seen the combining of formal political democracy with de facto economic oligarchy – a growing concentration of economic and material power. This oligarchy increasingly controls both public opinion and the levers of political power. What has emerged is oligarchy within democracy.

For this economic oligarchy, democracy even in the limited forms found in western societies inevitably poses a threat: for them, democracy needs to be tempered, tamed, limited.

The successes that they have enjoyed in recent decades in this regard is reflected in the convergence between the political left and right and in the growing and deeply unhealthy cynicism towards politics and politicians. Increasingly, ‘economic’ processes have been presented as beyond political/democratic reach and control: ‘You can’t buck the market’; ‘There is no alternative’. To resist these alleged economic realities is seen as weak-minded and foolish. States can’t challenge or change them, only adapt to them.

And why would we want to change them anyway? In recent decades, we have been repeatedly told that, left to operate without interference, ‘free’ markets will operate for the benefit of us all. Insulating markets and ‘the economy’ from politics and democracy is a good thing.

Well, if there is one thing we should have learned from the financial crisis – though it’s not clear that we have – it is that this is simply not true. In fact, it would make more sense if these contexts we substituted the word ‘property’ for ‘markets’. What are commonly presented to us as the essentially unalterable, impersonal, natural, purely economic imperatives of ‘the market’ are in reality the imperatives of property owners seeking to preserve their power and privileges.

What we have seen in recent decades is the economic oligarchy successfully insulating their property, wealth and power from democratic interference. They have established mechanisms to shield their property – and especially their financial property – from democratic processes. These efforts have taken place at both the national and international levels.

They have entailed putting constitutional and other legal protections put in place for property interests; and the deployment of an army of accountants, lawyers, institutional investors, lobbyists and think tanks whose principal goal is wealth defence. Off-shore tax havens, façade corporations, tailor-made tax instruments and evasive trusts have proliferated. One result, of course, is that tax burdens have been shifted downwards and our collective ability to maintain infrastructure, provide support and relief to the young, old and poor has been undermined.

The economic oligarchy now possesses something resembling a power of veto on threats to their concentrated wealth. Whatever governments do, they mustn’t offend the very wealthy, for fear they will flee. In short, these growing concentrations of wealth have further compromised our already deeply imperfect democracy.

What we now face, therefore, is not only growing inequality and injustice, but a dangerously depleted and shrinking democracy. Ordinary people have less and less input into the key economic decision-making processes governing their lives. This is not only serving to perpetuate injustice, to foster increasing alienation from politics in particular and society as a whole, but to hinder our ability collectively to find solutions to the problems we face.

We need to remind ourselves that there is no separate economic realm which is capable of being depoliticised. The economic’ realm is inherently political. We shaped it and we can reshape it. It is something that can and should be subject to democratic regulation and control in the interest of us all.’