Review of Corruption of Capitalism by Guy Standing

This book is well worth reading by members of Compass and follows his earlier works on the precariat culture in the work place.  This is about rent which, in economics, has a wider meaning than just the rent you pay for a flat or shop.  It is any kind of payment to the owner of assets.

Standing traces the now familiar history of neoliberalism from the Mont Pelerin Society and the ‘Chicago boys’ to the present day who set out the economic policies of free markets, low public ownership, strict deregulation of labour, elevation of the private sector and the selling off of state assets.  This has been continued since the time of Mrs Thatcher and is now a seemingly fixed part of our political culture.  It has led to the ‘gig’ economy we have today where people have little security in the workplace.  Assets on the other hand are free to go wherever they can get the best return.  It was a contributory factor in banking crash of 2008.

Rentiers are the winners of the globalisation era.  Massively wealthy and paying few taxes, they can move their enterprises and assets around the world seeking the best returns, untroubled by trades unions or worries about child labour or safety or the environment.  Their activities have created huge inequalities which are steadily and dangerously growing.  Cuts to the poorest in society – under the guise of austerity – have been fiercely imposed either directly or via cuts to local government services leading to increased hardship and poverty.  Indeed, the selling of austerity has been one of the major success stories of recent times.

One of the truly astonishing chapters in the book on the other hand, is the substantial level of subsidies which are going to owners of capital.  These can be tax concessions, grants and subsidies, employment subsidies, guarantees and so on and so on.  This corporate welfare amounts to a staggering £93 billion a year and dwarfs the subsidies received by the poorest in society.  Yet it receives almost no coverage in the media.  A study of corporate welfare by York University puts the figure considerably higher.  Most people one meets are fully aware of scrounger and skiver stories: they all seem to know of someone who is on benefits of some kind but are seen working or running half marathons (when they are supposed to be disabled that is).  But ask them about corporate welfare …

Alongside massive corporate welfare, there is substantial tax avoidance and evasion which is beginning to get some coverage and increasing public awareness.  What is much less known is the influence of the plutocrats through a vast network of think tanks.  These organisations frequently pop up on the TV or radio pushing various ideas and the impression given is of some brainy types pondering great thoughts and sharing these with the rest of us.  What is not revealed is where the money comes from.  So organisations like the Institute of Economic Affairs, the Adam Smith Institute and the Centre for Policy Studies get regular air time and their views are influential.  Many are funded by fossil fuel companies and free market idealists.  Fortunately, there is a web site called Transparify which has analysed who it is who funds these so-called think tanks and has given them a transparency rating.  It makes interesting reading as many of the most vociferous are the most opaque.  Those I have listed (from the examples in the book) are utterly opaque.  You can draw your own conclusions but next time you hear one of them pontificating on the BBC just ask yourself ‘who’s paying that guy?’ and note how the interviewer doesn’t ask.

The chapter on the corruption of democracy is of most interest to us I suspect.  It is extraordinary the amount of time devoted to the election process – especially during a general election – and the excitement about who gets in and who is going to form a government.  Yet behind the scenes, it is money interests – or the rentiers as Standing calls them – who are the funders of the Conservative party in particular.

Today’s plutocracy, since it is dominated by rentiers, will favour candidates, agendas and media that promote their interests.  Consider a few facts about Britain.  No political party has won a general election since 1974 without the support of Rupert Murdoch and his media empire, which includes Sky television channels, the Sun, Britain’s biggest selling tabloid, and the Times, the establishment newspaper.  Murdoch is not British; he does not live in Britain; several of his employees and their associated have been convicted of illegally hacking mobile phones an bribing police officers for information.  Yet Murdoch is still given quasi-royal treatment by the country’s politicians.  (p257)

Indeed, it interesting to note that Theresa May on a swift visit to the UN after her appointment as Prime minister, found time to visit Murdoch for an interview.  She drove across town to see him.  What was said?  We do not know.  What was promised?  We do not know.  That is power.

There is also a lengthy discussion of Goldman Sachs and their baleful influence on economies around the world.  The revolving door also gets a section.  This is the increasing practice of ministers and civil servants leaving office and popping up as advisors or directors of the very companies they were dealing with in office.  The question is, was some of their decision making influenced by a promise of a lucrative directorship once they left office?

Standing also discusses solutions of which a basic income is one such.  This is a challenging book and one is left with an overriding sense of the huge mountain to be climbed.  The entire democratic process is so mired in corruption, money and corporate influence, media oligarchs and so on that it seems a hopeless task.  Yet the recent revolts around Europe and in USA suggest that things are stirring.  There is a pressing need however for a coherent alternative narrative to neoliberalism and the power of free markets (which are not free but heavily subsidised).  That is the challenge before us.

Peter Curbishley

The Corruption of Capitalism, 2016, Guy Standing, Biteback Publishing Ltd, London