Corporate power has become a governing institution in its own right

Corporations once lobbied politicians to win approval for their pet policies - now it's the other way round.

Corporations once lobbied politicians to win approval for their pet policies – now it’s the other way round

Political parties now operate within parameters defined by big business. In a globalised economy, democratically-elected governments are comparatively powerless to curb the excesses of multi-national companies that have grown larger than many countries.

The market value of Shell, the UK’s biggest company, is slightly higher than the GDP of Portugal.

Big business is also afforded a generous platform for its views by the UK media. Most of the newspapers through which people access political news are part of corporations controlled by super-rich individuals with their own economic interests and agendas.

These outlets provide a willing platform for the views of ‘business leaders’, who are usually posited as all-knowing economic sages whose personal interests are at one with those of wider society, rather than self-serving millionaires seeking to preserve their opulent lifestyles in the face of rising concern about inequality and social justice.

Corporations have successfully gained undue influence over the UK state through party funding, lobbying, the increased outsourcing of public services to private sector management and the colonisation of key government jobs by managers with corporate backgrounds.

In 2011, research found that more than half of the Conservative Party’s funding came from firms and individuals working in the financial services industry. Labour also receives substantial funding from City donors.

The UK has the third-largest lobbying industry in the world, behind only the US and Brussels, agitating behind closed doors on behalf of major corporations.

While the lobbyists recruit from the ranks of politicians and civil servants, an increasing number of policy-makers are hired from international private-sector consultancies and professional services firms, imbued with the political and economic orthodoxies of these organisations.

In many cases they don’t even have to formally change employer. A recent study found that, in the five UK Government departments analysed, fees paid to external consultants amounted to 40 per cent of staff costs.

As a result, corporate power can no longer be considered as merely the most powerful of a series of different lobbying interests, including charities and trade unions, but a governing institution in its own right.

It is possible to find evidence of the influence wielded by big business in almost every policy area. The IPSOS Mori issues tracker lists immigration, the NHS, the economy, unemployment, defence/foreign affairs, and poverty/inequality as the most important issues facing the UK as ranked by members of the public.

On each issue, key policies reflect the interests of corporations and conflict with the will of the public. For example, popular demand for reduction in immigration levels or measures to cut the gap between rich and poor remains unfulfilled.

At the same time, increased provision of NHS services by the private sector and the cut in the top rate of tax go ahead at the behest of big business with little public support.

Whether or not these policies are any good (many on the left have a similar position on immigration to big business, albeit for different reasons) is not the issue, so much as the power of unelected corporations to exercise huge influence in the interests of the tiny number of people who control them and the powerlessness of democratically elected politicians to do anything about it.

At the High Pay Centre we have seen this first-hand in meetings with MPs who have told us that they personally support a particular policy but couldn’t endorse it without the support of ‘business.’

Corporations once lobbied politicians to win approval for their pet policies. Now it is the other way round.

This sense of corporate impunity has enabled the pervasion of anti-politics sentiment and the rise in support for new parties on the left and right, in the UK and other parts of Europe.

Politicians’ deference to business interests in cases such as the failure to reform the banking industry, address the culture of executive pay or tackle tax avoidance – allied to an economy plagued by falling wages – helps to reinforce the impression of a self-serving establishment subject to a different set of standards to the rest of society.

Even the most timid challenge to business is subject to unrelentingly hostile attacks in the media – such as with the characterisation of Ed Miliband as ‘Red Ed’. It would be legitimate to argue that we need to bring energy companies back into public ownership and end private education.

Yet Miliband’s comparatively tame proposals to temporarily cap energy prices and scrap tax breaks for private schools are attacked in the media for being ‘anti-business’ or ‘class war’. So compiling a policy programme that might address people’s cynicism is a near impossible task.

This raises profound implications about the interests in which corporate power is exercised and the processes that make it accountable. But these questions are rarely discussed in UK public life.

A Princeton University study from earlier this year, observing the growth of corporate power in America, compared nearly 1,800 policies enacted over 20 years to opinion poll data and the stated policy position of major business groups.

The authors recorded the striking but somewhat under-reported conclusion that the US could no longer be considered a ‘majoritarian democracy’ in light of the success of big business in ensuring policy reflected its own interests, regardless of public opinion. Is the UK any different?

Luke Hildyard is a contributing editor at Left Foot Forward. Follow him on Twitter

You can read more about big business in politics in an essay collection from the High Pay centre, available to download here

11 Responses to “Corporate power has become a governing institution in its own right”

  1. Guest

    Look at the music and film business in America and the identikit bills introduced in multiple states, often by lawmakers who haven’t even read them.

  2. JohnRich

    And the EU’s TTIP policy will give global companies even more power.

  3. madasafish

    It’s simple.

    Modern business can set up where it likes.
    If they don’t like it here they can go elsewhere.

    And of course once they go, you lose the tax revenues.

    And the energy price curb has only served to ensure that prices will not fall before teh next GE.. Really clever that.

  4. Chris Kitcher

    Hang on, the EU are looking again at this. It’s Camerons Tories that are falling over to sign the UK into it.

  5. Leon Wolfeson

    He’s not going to admit the fact it’s his right who are so slobberingly keen on TTIP now is he?

  6. Guest

    Great, and they can then not do business here, fine. If they don’t want to follow some basic laws, then they are not and should not be welcome here.

    Energy prices were never going to fall either, got more transparent lies to make?

  7. Chris Kitcher

    Just another Tory truth denier then.

  8. madasafish

    Look at oil prices, Then apologise for “Energy prices were never going to fall either” and calling me a liar. Oil prices HAVE fallen since the Energy statement of Miliband.
    FACT>

  9. nodbod

    Once they go, you stop paying the subsidies that they get paid to stay here. They don’t pay tax or have you not been paying attention.

  10. Brendan Caffrey

    Galbraith said that corporations could be a good servant, but a bad master.
    In Russia corporations are managed in the sense that they must stay out of national politics. Disobedience can lead to prison and freezing of bank balances. In China corporations must operate within changing Government policies.
    These examples show at least that control over corporations is possible.
    See my website at :
    whyworktoday2967

  11. davidhill

    Inequality in the long term destroys sustainability and that is no good for the rich as eventually because there are less and less people who can afford to purchase goods, the corporations that the rich own decline. Therefore the rich should be worried in the long term for the ever-growing inequality situation and especially in the ‘West’. This also increases social unrest and builds eventually to a critical mass through the chain-reaction that is the outcome from the growth in the numbers of the poor and the vast majority getting poorer by the year. Indeed unless a redistribution of wealth is not orchestrated, there will be continuous and severe civil unrest by the mid-21st century that will have the potential to change into the people’s uprising that even governments can control – ‘Inequality and the top 10% getting Richer and Richer by the year will Destroy the UK Economy, Democracy and even the NHS – Time has come to Create New Ways of Running and Managing our Economy or the nation will Never Recover and Provide a Meaningful Future for the Majority of our People’ – http://worldinnovationfoundation.blogspot.co.uk/2014/08/inequality-and-top-10-getting-richer.html

    We simply have to start using our intelligence before things really get out of control as when you analyse social unrest around the world, it is increasing proportional to the growth in human inequality that affects up to 90% of the world’s population now.

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