British fascist Oswald Mosley has been dead for 19 years, but his spirit must be spinning for joy in its tight little grave at the report published recently by The British Academy, which calls for businesses to “place purpose at the heart of the corporation” instead of profit. The BA busybodies’ goal is to have corporations do good for the “wider community” instead of maximizing shareholder wealth. Puh-lese—or per favore, as they said in Mussolini’s Italy.
However much they dress it up, the proposal is just black-tie fascism: pro-experts, anti-people. It’s anti-people because it says that the people (think “the little people” in Imelda Marcos’s memorable phrase) don’t know how to spend their own wealth—the dividends they get from holding shares in corporations—as well as the experts do. The experts seem to want an economy no longer aiming at individual profit, but one concerned with collective interest.
Colin Mayer, the professor who wrote the report, claims that the corporation has failed to deliver benefits to the wider community. “It is only over the last half century that corporate purpose has come to be equated solely with profit” the report claims. Exactly how to define the “wider community” may be up for grabs, but it’s undeniable that over the last half century or so billions of people have been lifted out of poverty. If that isn’t the “wider community” what is? The faculty club at Cambridge University?
Who or what do the authors of this paper think did the heavy lifting of those billions out of poverty: British foreign aid? Lord Peter Bauer described foreign aid as poor people in rich countries giving aid to rich people in poor countries. Foreign aid is the kind of nonsense only bureaucrats and university professors—and those on their payrolls—could believe in.
Now the same kind of people who push foreign aid are hoping to divert corporate energies into similar nonsense: having the state—“l’état:” see, Louis XIV—direct corporate wealth to their favorite programs and pastimes. As they see it, the object of the regime in the economic field is to ensure higher social justice for the whole of the people.
“Profit is a product of the corporate purpose. It is not the corporate purpose. In some, but by no means all, cases, corporate purposes should include public purposes that relate to the firm’s wider contribution to public interests and societal goals.” Himmler/Goring may not have said, “When I hear the word ‘culture’ I reach for my gun,” but when you hear bureaucrats and professors utter the words “public interests” and “societal goals” you should head to the nearest ballot box and take your plebeian friends with you.
Try this one on for size: “Corporate ownership is currently equated with shareholders. Instead it should be associated with defining and implementing corporate purpose. The rights and responsibilities associated with corporate purpose should replace property right views of ownership. Different types of owners are suited to different types of corporate purposes and activities. This points to the need for diversity in corporate ownership.”
A true cynic would assume the authors of the report planned to sell (or perhaps had already sold) the market short before issuing the report. The mind reels trying to think of other ways to do as much damage to the market, and to the wealth of millions of hard-working British workers and savers: (1) uncontrollable bubonic plague; (2) a hydrogen bomb exploding in Oxford; or (3) a direct hit by an asteroid.
None of this is to imply that corporations behave perfectly. Corporate managers—in place because of the managerial revolution that James Burnham wrote about in 1941—too often manipulate corporate practices to benefit their own compensation packages. Better governance is needed in the board room. In Sweden the top five shareholders are part of the nominating committee for directors. Those top five are likely to care about corporate profits rather than directors’ salaries. They can dissuade the managers from finagling with buy-backs and other stratagems that do no good for the corporation, or do actual harm, but line the top managers’ pockets with gold. That kind of “reform” is not what the authors of this report have in mind.
We are told that “the report is primarily diagnostic in identifying the nature and source of the problems rather than prescriptive in proposing detailed policy recommendations. These will be the focus of phase two of the research programme, which will start in 2019.” OMG! Do I hear 3019? How about 4019?
As Mussolini said years ago, the Italian economy was no longer an economy aiming at individual profit, but an economy concerned with collective interest. And the object of the regime in the economic field is to ensure higher social justice for the whole of the people.
After reading far too many pages of fascist gobbledygook, one realizes that the most dispiriting sentence appeared on the very first page: “This report from the British Academy sets out a new framework for business in the 21st century, drawing on the finest minds in the UK and beyond” (my italics). If it was really the finest minds in the UK that produced this document, Britain’s only hope now is rampant, plebiscitary democracy. And one-way tickets to Davos for all of the report’s authors. And their children. And grandchildren.