Big business under New Labour

BARBARA HARRISS-WHITE

Captive State: The Corporate Take-over of Britain by George Monbiot; Macmillan, London, 2000; pages 430, 12.99.

GEORGE MONBIOT'S Captive State: The Corporate Take-over of Britain is an appalling book which, although its subject is the British state under New Labour, must be read by anyone concerned with the modern state anywhere. Or anyone concerned with 'p olicy making' by economic units which are now so large that there are only 20 states in the world with a gross domestic product (GDP) larger than the gross output of the biggest of these corporations. For the theme of this book is the acute tension betwe en corporate capital, with fiduciary duties to shareholders, and the democratic state, with its duty to the electorate and its public.

British Prime Minister Tony Blair has declared that his political project is "about active government working with the grain of the market to ensure a highly adaptable workforce, good education, high levels of technology, decent infrastructure and right conditions for high investment and non-inflationary growth... securing the flexibility that the market offers with the 'pluses' that only an active government can add".

George Monbiot, originally a zoologist and environmentalist, whose weekly column in The Guardian has brought fame to his environmental activism and appreciation for his critical investigative skills, reveals through a series of quite scandalous ca se studies (which he alleges are but the tip of the iceberg) how the object of the British state's duty has become corporate welfare. The 'pluses' and the 'active government' are by, with and for corporates. Monbiot covers 'development' (which in Britain actually means putting land use planning into practice); the private finance initiative as applied to public sector infrastructure, hospitals and prisons; the conquest of retailing by superstores; the regulation of the food chain; the perversion of univ ersities and the corporate sector's role in Britain's part in shaping the new rules of trade 'regulation' and global governance.

It is not only that behind the procedure of democratic accountability - inside one of those minority of states which is larger than a multinational corporation - corrupt, criminal and secret relations of accommodation between business and government subv ert the state's duty to its citizens/'subjects' to their great cost; it is that a great range of perfectly legal institutional means are also systematically worked on by corporate capital and its agents and that 'genius' is used by corporates to exploit the ambiguities and the deliberate or accidental loopholes that pepper the law. He shows how this process has intensified under 'New Labour' and how active resistance has been controlled, worn down and crushed. He accuses 'New Labour' of betrayal, coward ice, duplicity, irresponsibility and more besides. He concludes with a charter for trouble-makers. The book is not just a rant, it is the result of three 'stressful years' of careful investigation by the author and four part-time assistants, piecing toge ther a complex and murky jigsaw puzzle. The sooner it is in paperback and distributed cheaply worldwide the better.

WHAT I want to do in this review is draw from the case studies some more general conclusions about the politics of corporate capital which may be of interest to Indian readers. The Indian intelligentsia is well-seasoned to the relations between business and political party funding, between that funding and the purchase of votes on the one hand and post-election concessions to funders on the other. The New Labour Party still receives only 20 per cent of its funds from 'major donors', so corporate finance might be thought not to be part of a party political quid pro quo. We learn from Captive State that a little goes a long way in the Labour Party. But the politics of capital has much more to it than that.

In Britain, corporate capital is rapidly invading those spheres hitherto protected by public service. (The Canadian scholar of U.K. politics, Colin Leys, is about to publish an analysis of the way this works politically: how and why services are commodit ised, public servants are converted into labour forces, need is transfigured into demand and the state subsidises the entire process.1) Then, even as corporates subcontract to flexible production in client firms, they are simultaneously invadi ng spheres hitherto dominated by small (family) firms and individual self-employed people. In so doing, total employment is cut, so are wages and certain rights to social protection, so is the quality of services and even of goods (see Monbiot's cases of the regulation of food standards and the supermarkets' collective obsession with shelf life). Social cohesion and the quality of life are also threatened.

Further, it is in its very logic that corporate capital seeks to minimise the taxes it pays and to maximise the subsidies it receives from taxpayers. In so doing, profits are made and risks are eliminated in socially inefficient ways and using public mon ey. How can such damaging outcomes be presented as being in the public interest? Monbiot does not simply demonstrate the outcomes and infer the beneficiaries, he explains with detailed material how capital operates politically.

LET us first take what Monbiot's cases tell us about the state. First, the British state operates behind a wall (or several walls) of secrecy which it has no intention of dismantling. These walls may hide premature decisions and/or ones based on inadequa te evidence or arrived at using data apparently presented dispassionately but are in fact selective and misleading. All well known, but that is just the start.

Second, there are entrenched conflicts of interest within many departments between their regulative and their promotive roles. Corporates even provide payments to departments which regulate them. Semi-autonomous boards and groups mandated with the promot ion of corporate interests and packed with business representatives operate inside government departments. The government also gives regular briefings to organised lobbies, which helps them to be more effective as lobbyists and simultaneously helps lobby ists brief government.

Third, policy is shaped ex ante by task forces and advisory boards dominated by corporate interests and ex post by regulatory bodies in which independence from business is a rare attribute. Monbiot reveals for Britain what has long been known in t he United States: the powerful influence of networks that link university research with corporate funding, corporates with their client management consultancies (which do dirty work such as advising on downsizing within these firms and intermediation wit h the outside world) and public relations firms, and all of these with the advisory bodies which shape policy, law and public sector resource allocation. In this purchase of influence it is not only networks but also individuals within them who have cruc ial roles in shaping outcomes.

Fourth, there is an intense cross movement of senior corporate managers into government and of senior civil servants into industry, reinforcing the structural conflicts of interest with personal ones. More junior corporate employees are also being second ed into government. In this set of contra-flows, competence is seen repeatedly not to relate to reward. In the flow to government, poachers are turned gamekeepers. Corporate migrants are very precisely transferred to positions in which they have expertis e. Monbiot has lists of people whose past history in the private sector is in flagrant opposition to the policy they are subsequently publicly paid to promote.

Fifth, tendering is frequently characterised both by gluts of inside information, by deficits of information about the competence, criminal records and ultimate intentions of potential bidders and by the bidders' refusal to bid on a level playing field a ccording to a comparable set of criteria. Sixth, judicial appointments have been politicised and judicial decisions shown to be arbitrary, biased and deliberately delayed politically. The state is exposed as being capable of criminal disregard of law and procedure.

NOW let us turn to the corporate sector. According to Monbiot's evidence, the government's private finance initiative (PFI), which really means 'private finance, construction and maintenance', transfers critical infrastructure to interests different from that of the public. It is revealed as being shrouded in secrecy. It has already led to the reformulation of development projects in the direction of very large scales, often with the loss of employment, accessibility, quality of service, effectiveness a nd cost-efficiency. The PFI has led to project cycles far longer than that are guaranteeable as being in the public interest. Once contracted either in PFI or in a 'regular' development contract, corporates are in a monopoly position in relation to the s tate contracting body. From there they can and do raise costs, delay implementation, reinvent terms and conditions and enforce them, extort extra-contractual subsidies out of the state and require the state to underwrite risk. They can and do benefit fro m externalities such as land sales on development sites and have been allowed to create monopoly rents extracting resources from local people which benefit shareholders abroad. The corporates are able to outprice and outwait opposition and appeals agains t abuse of the planning law by civil society and by local government.

Capital also makes private strategic corporate payments to (local) government for advisory representation and for apparently unrelated public infrastructure, for the direct promotion of its interests and active de-promotion of conflicting interests. Paym ents to local private interests are exchanged for permissions to develop, or for 'no objection' to development, sometimes involving the creative bending of planning rules. And formal public consultation is ignored or subverted. Through the resourceful de fence of local spatial monopolies, a certain amount of collusive activity is possible even when national market shares do not qualify individual corporates as monopolies. Inside large retail units, of course, huge mark-ups more than compensate the loss-l eaders which both entrap custom and in so doing destroy small, independent competition.

BUSINESS interference in education is pervasive, beginning at the top with the funding of university departments, all the way from the direct sponsorship of research or teaching posts to control over the management of departments. University managers hav e had pressure put on them to suppress work critical of corporate practice. Corporate research funders routinely suppress the publication of results. Superficially independent research funding bodies are ordered to make research subject to the short-term interests of the corporate sector. Networks of mutual interest are consolidated among universities, the corporate sector and government. These have a long-term impact on research agendas (even on critical ones) and on the content of knowledge transferre d through universities. Through sponsorship, the provision of equipment and advertising in schools and on television, British children are being socialised into corporate citizenship.

The corporate sector has developed an unrivalled wizardry in the exploitation of ambiguities in the law. It has developed means of controlling evidence used for public regulative policy: compromised evaluations of evidence and pressure through expert com mittees and the funding of lobbies to relax regulations. Individual lobbying has succeeded in capturing subsidies to sustain unregulated and dangerous levels of production. Collective lobbying is carried out by industry groupings before and after policy formulation. (It needs more research to find out whether collective action by corporate capital is as fractured and fissile as it is in India. It is doubtful whether collective corporate politics operates so openly at two levels in Britain as it does in India - one legal and open and the other using black money.) The almost complete corporate control over sections of the media and the public presentation of information and the self censorship of criticism by media employees hardly need recapitulation.

But there is something that is not mentioned by Monbiot. His case that democracy is threatened because corporate conglomerates are run for a "handful of remote billionaires" (page 15) is only part of the story. It wafts aside the comprehensive compromise of all present and future pensioners concerned about increasingly vulnerable, uncertain and lengthy retirements. Their/your/my future well-being is inextricably linked to the shareholder values of the companies invested in by the fund managers running t he private or occupational pensions. (The fund for university employees in Britain has now become 'ethically invested' but that is another story.) The public is not a set of apathetic ostriches. Its lack of response, its tacit support, is profoundly self -interested and short-term rational. Monbiot outlines a charter for resistance and regulation; but a minimum condition for resistance backed by social force is that the state provide decent pensions, healthcare and social support for retired people. And the British state is hell-bent on doing the opposite.

So there is a nexus of interests between the 'actually existing' British state and the corporates. "Going with the grain of the market" means corporate intermediation without or with payment such that politicians who are the object of lobbies actually wo rk for lobbies. At the same time, departments of state pay industry through joint public relations initiatives which industries then use to lobby against department policy. It means public-private partnerships dominated by private interest. It means stat e protection of (local) corporate monopolies. It means state funding of corporates: relocation and development grants, direct and indirect research funds and training costs and industry subsidies. It has famously meant privatisation at undervalued prices of public assets. Corporate taxes form an inexorably lower proportion of total revenue. Dissent is monitored and democratic accountability subverted.

The mechanisms by which this profound accommodation is unfolding are many and various. Networks, friendship, obligation and 'trust' can lead to appeasement. It is not illegal to fund the government directly or to fund the electoral process. Persuasion an d lobbying are perfectly legal. Economic threats are legal parts of the cut and thrust of negotiating contracts - but with such disastrous potential consequences that bluffs cannot be called. Outpricing opposition is legitimate competition. Blind trusts to avoid conflicts of interest on the part of public officials are both desirable and necessary. It has to be emphasised that such means are not to be assumed to be 'corrupt' in the narrow legalistic sense of that word.

One of the strengths of the Captive State is its descriptions of constructive movements in response and resistance, about which Monbiot is sometimes sanguine. But he makes telling critical points about the 'politics of scale' - the thumping lack o f symmetry between the power of the units of production and that of the units of consumption. Workers both as consumers and producers find organisation increasingly stymied by competing demands on time (especially that of women), by being increasingly sc attered in space and by being process-specialised in small units. The space- and time-denying web offers information but not the real physical sites in which politics has to take place. Further, resistance is almost always ex post, even in long-dr awn-out cases because of lack of information and secrecy at the start. Counter-tactics include delay, persecution, the impoverishment of opposition, individual vilification and the discrediting and ignoring of dissenting expert opinion and of activists.

The state is shown as not only 'a channel for corporate power' (pace page 251). It is not so simple. There are of course built-in institutional checks and balances: Senate committees, the General Accounting Office in the U.S. and Commissions of In quiry, Official Audits and the Competition Commission in the U.K. (all after the event). I missed an exposure of the politics behind first, the institutionalised investigation of abuse and wrong and second, the protection (or the lack of it) of whistlebl owers.

HOW does this kind of politics map onto India? Is the corporate sector as politically coherent as it is shown to be in Britain? It certainly has a smaller role in GDP. How different is the behaviour of multinational corporations in India where the nation al economy does not tower over large corporates the way Britain's does? Are Indian corporates successfully privatising state assets at knock-down prices? Are they making rapid inroads into small-scale and family business? Would that be a go od or a bad thing? Monbiot's model is of the (global) corporation but there is also a politics of coalitions of small capital in industrial clusters and districts. Will it differ fundamentally or be a fractal scaling of big corporate politics?

Further, in India, informalisation and casualisation accentuate the disadvantages of the 'politics of scale'. How will the 'charter for trouble-makers' differ? The power relations which link the corporate sector and the Indian state to the black economy and to offshore financial centres will be yet another additional complexity because the share of the British black economy is much smaller, estimated at about a third that of India's and reputed to be dominated by small players. Add to this the complex relationships of both the Indian corporate sector and its industrial districts with the very large informal sector (83 per cent of the workforce, 60 per cent of GDP): as casualised labour, as subcontractors and suppliers, as intermediate and final markets and even as a source of finance. Spike with the fact that India's electoral democracy depends on black industrial money as well as legal donations. Shake and stir, and the heady c ocktail of the politics of capital in India may well be very distinctively different.

The International Labour Office in Geneva is currently running a global programme for Decent Work2 involving full employment (and 'making markets work for everyone'), decent terms and conditions of work, the rights to collective bargain ing and to social protection. Apart from the fact that markets cannot work for everyone - it is not their function to do so - the politics of capital as exposed in Monbiot's book make the chances of this campaign's success very slight. But to make market s work for more people than they do, to see whether and how much room for manoeuvre there is, we need to know much more about the politics of capital or 'market politics' in specific countries.

Who out there is going to write the companion volume for India?

Barbara Harriss-White is Professor of Development Studies at Queen Elizabeth House, Oxford University, but writes here in a personal capacity. 1. Market-Driven Politics: Britain in 2000, Colin Leys, forthcoming 2001, Verso, London. 2. See the programmatic statement - ILO, Decent Work, International Labour Office, Geneva, 1999.