This space is not habitually given to expressing party political views, but occasionally it is unavoidable. Political parties inevitably, from time to time, address head on, topics which are of prime concern here. And sometimes their approach is either so right, or so wrong, that comment is necessary if these postings are not to appear totally disconnected from the real world. Today is such an occasion.
The seemingly ever increasing numbers of innocent followers of Mises, Hayek and Friedman, in their devoted pursuit of the free market ideal, have overlooked the fact that markets, which typically start out as competitive, naturally tend to become monopolistic.
The announcement that Gordon Brown is to put mutualism and co-operatives, such as John Lewis Partnership, at the heart of Labour’s election manifesto is surely welcome after twelve years of the rape and pillage resulting from New Labour’s unquestioning support for free market deregulation and the maximising of shareholder wealth. But what does it mean? Is it just the sentimental swan-song of the Labour government? Or does it have substance as the foundation for real action?
The disposal of Cadbury is some kind of a marker. It was still a successful company and could have continued independently with no problem. It had a proud history which doesn’t need to be repeated here, but it also had a price. And that price was agreed by its board of directors who gained prodigiously from the sale. Cadbury’s loss of autonomy is surely the precursor of many cost reducing decisions taken at its new American headquarters without regard to the old Cadbury stakeholders, notably including its employees. Doubtless, in the end, Cadbury’s Bournville heritage will be preserved merely as yet another industrial museum, the dead remains of the once thriving industrial community. Such relics are strewn across the British landscape, commemorating our once pioneering roles in wool, cotton and silk textiles, machine tools, iron and steel, cycles, motor cycles, motor cars, trucks and buses, china and pottery and hundreds of other sectors where Britain was successful and achieved a strong position but then sold it off for the financial gain of the few and the bitter disadvantage of the many.
The Cadbury board have the legal duty, according to the Companies Act of 2006, “to promote the success of the company for the benefit of all its members and in doing so have regard (amongst other matters) to a) the likely consequences of any decision in the long term, b) the interests of the company’s employees” as well as the interests of other stakeholders. The board appear to have ignored these legal duties in accepting the bid on the apparent grounds that the share price offered is probably higher then the company would be likely to achieve in the next two or three years if it continued its independent existence.
Every day the media reports movements that have occurred in the stock markets and pundits and commentators explain to the people the reasons for those changes. And every day, millions of viewers, listeners and readers think to themselves “If you’re so smart, why didn’t you tell me before it happened?”
The juxtaposition of two editorials in a mainstream broadsheet makes interesting reading. The one argues that Gordon Brown’s advocacy of a tax on global financial transactions, the so called Tobin tax, suggests that the British government has, at long last, given up its slavish adherence to ‘the ideology that believes in deregulated, untaxed, ever-expanding global capital markets as an end in themselves’. The other argues that ‘China must be held to account for its political repression’. The connection between these two lies deep within the aforementioned ideology.