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Unelected Oligarchy: corporate and financial power in Britain under the spotlight

Corporate and financial power has always influenced governments. But in Britain, reflecting a global trend, the balance is now grossly in favour of big business. A new Democratic Audit paper analyses the contemporary reality of UK governance

In his prescient valedictory address to the American people, President Eisenhower warned of the ascendancy of “the military-industrial elite” that would dictate much of the public agenda. George Bush jnr’s Vice-President, Dick Cheney, personified that elite and the power it wields. But Eisenhower didn’t know the half of it: the intrusion of corporate power into the labyrinths of the governments in liberal democracies observes no bounds and has extended into almost all areas of policy well beyond defence and foreign affairs.

In his incisive 21-page paper, Unelected Oligarchy: Corporate and Financial Dominance in Britain’s Democracy, David Beetham provides a definitive analysis of the extent of the influence that the business lobby enjoys in the Westminster/Whitehall complex, how this penetration has come about and the means employed to maximise its effect. It is by far the best account so far of the contemporary governance of the UK and its politico-economic character.

He traces the developments since the 1980s that have contributed to our current arrangements. Four major causes are identified. First, the shift in the dominant ideological paradigm that has led to the near -intellectual monopoly of neo-liberalism that is the main legacy of Thatcherism.  The power of its momentum has meant it has continued to be the main operational principle guiding the successive governments of both New Labour and the current Coalition.

Secondly, the influence of developments in the international economy that are manifested in globalisation in general and universal “financialisation” in particular.

Thirdly, the effects of an increasingly porous nature in the fiscal rules that enable widespread tax avoidance on the part of conglomerates through a myriad of questionable but ingenious ruses.

Finally, Beetham points to the emergence of an operational milieu that has disempowered the public bureaucracy to the advantage of the private sector; the “hollowing out” of the civil service has afforded management consultants and other such sources to fill the policy-making void resulting from the impairment of Whitehall capacity.

These four causes, Beetham argues, have spawned correspondingly four modes of influence employed by the agents of corporate power. First, there is the buying of informal influence through the financing of policy-making thinks tanks, major donations to the two main political parties and financing the constituency activities of individual MPs. Thatcher, Blair and Cameron, in turn, established a plethora of thinks tanks to propose policies that accord with their creators’ political predilections. Added to these are the remorseless pressures that come from lobbyists that include trade associations, like the CBI and the British Bankers’ Association, as well as the many firms of specialist public relations agencies that continue to mushroom.

Secondly there is the phenomenon of “revolving doors”. These are of two kinds. “Revolving out” whereby former civil servants and ministers become company board directors, consultants to major firms being hired for their previous experience and knowledge of the inner-workings of government. There is only very light touch regulation of such highly lucrative jobs despite the public interest concerns that are implicit in this practice.  Equally alarming, is the conduit  afforded by “revolving in” from business and becoming ministers, advisers, tsars, members of task forces, advisory boards or joint public/private partnerships and the like. The appointment of ministers from outside of the world of conventional politics was a feature of the Wilson, Heath and Thatcher administrations but it has grown apace with Blair, Brown and Cameron. These so-called GOAT ministers have, with very few exceptions, have performed abjectly: business skills are not readily transferable into politics though, it would seem, political skills are more easily deployed in the private sector. Both types of door have created the formation of a British version of the nomenklatura.

Thirdly, the importation of business expertise into government has been furthered by the creation of Departmental Boards to oversee the running of Whitehall ministries in which businessman act as non-executive directors. The former BP CEO, Lord Browne, advises on such external appointments. Departmental Boards were invented by New Labour but have been enthusiastically embraced and enhanced by the Coalition.

Finally, the use of private/public partnerships, of which PFI schemes, begun under Major but massively extended by Brown as Chancellor and PM, are the most striking, have  injected corporate power further into the intertecesties of government.

Beetham accepts the inevitably of close relations between government and business, between polity and economy, but thinks, and on this analysis positively proves, they are now grossly out of kilter and the balance is now far too great in favour of big business. Thus our democracy is seriously compromised. The latest revelations regarding the operations of Rupert Murdoch and his mighty News International Corporation is a further illustration of how things have come to pass. The democratic injunction for eternal vigilance has been replaced by the corporate imperative of eternal surveillance!

About the author
Trevor Smith is a retiring Lib Dem life peer and a former director and chair of the JRRT Ltd.


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