Vince Cable’s closing speech to the Lib-Dem’s first in-government conference has been greeted by City and business types as ‘intemperate’, as ‘emotional language’ and ‘playing to the gallery’. But he is surely right to suggest that good real economy businesses are being destroyed for the short term gain of City speculators and their ‘accomplices’ who make fat fees from takeover deals. Cable is merely making a statement of truth, which has been highlighted several times on this site regarding particular situations such as the Kraft takeover of Cadbury.
Moreover, he is also right to suggest that, left to its own devices, capitalism tends to the establishment of monopolistic positions. Again, as is highlighted elsewhere on this site, you can have free markets, or you can have competitive markets. But you can’t have both. Competition has to be protected, or it will be destroyed by those same speculators and their accomplices.
Who are these people? Sadly, they are the sort of people who David Cameron invited to join his advisory committee on economic strategy. So Cable has a serious fight on his hands. If he fails, the financial sector will carry on business as usual, British manufacturing will receive further massive hits, and the days of full employment will become a distant memory for a continually increasing proportion of the population.
Cable’s intention to give shareholders a greater chance to influence a company’s strategy, is not so apposite. Around 80% of quoted shareholdings are now controlled by professional fund managers and traders whose object is to perform on various league tables – these are people with an inevitably short term focus, taking decisions which are often against the interests of the ultimate shareholders, the members of pension funds and the like. A more effective protection would be provided by giving employees some say in strategic issues such as changes of ownership.
Sadly, the unions are unlikely to support such a strategy. That is, if their response to Cable’s proposed allocation of 10% of privatised Royal Mail shares to its employees is any guide. And it probably is. They rejected the 1977 Bullock Report on industrial democracy on the grounds that it might compromise their freedom to take industrial action. If Vince Cable is able to achieve some successes, he might yet lift industry and business above that rather dismal history.