How powerful corporate interests transferred the costs of the crash onto others
Democratic Audit has published an important – and timely – report on the "unelected oligarchy" at the heart of government. We asked its author, Professor David Beetham, to introduce its main themes.
This summer we have witnessed a series of public crises following one another in quick succession: the News International scandal, the European sovereign debt crisis and now the widespread looting in England’s major cities. They all bear witness, albeit in very different ways, to the long-standing dominance of corporate and financial interests over politicians and public policy, and to the insertion of their doctrines of market supremacy and private gain into all areas of the public sphere and social consciousness alike.
This dominance is the subject of Democratic Audit’s latest report, Unelected Oligarchy: Corporate and Financial Dominance in Britain’s Democracy, part of a wide-ranging audit of democracy in the UK due out next month. The report asks how have we arrived at a situation where governments:
- proved unable to prevent a near-terminal crisis of the banking system from taking place, with a subsequent recession affecting all sectors of the economy including the public finances?
- were only able to prevent a total collapse of financial markets by using enormous sums of taxpayers’ money to bail out the banking sector?
- expect the burden of resolving the crisis to be borne by ordinary taxpayers, service users, welfare dependents, the young and other vulnerable groups, rather than by the banks which were mainly responsible for the crisis?
- are seemingly unable to control the bonus culture in the financial sector, or to get credit flowing to the businesses on which economic revival depends?
Simply put, the cost of the financial crisis has been successfully transferred onto taxpayers, and public anger displaced from the bankers onto the governments which have slavishly followed their favoured prescriptions for addressing the public deficit.
This relative impotence of governments is partly due to well-documented processes of globalisation and financialisation which have led governments everywhere to lose control of key aspects of their economic policy to international markets, transnational corporations, ratings agencies, shadow banking entities, offshore tax havens and a host of economic agents operating beyond the reach of national regulations.
In the case of the UK, it is also due to the deep penetration which the corporate sector has achieved into government through a variety of ways. One is the purchase of influence through the financing of political parties, think tanks and individual MPs, not to mention corporate hospitality at all levels. Then there is the direct lobbying of ministers and senior civil servants through increasingly professionalised and expensive agencies as well as trade associations.
Third is the revolving door, which includes both ‘revolving out’ by former ministers, civil servants and military personnel to lucrative positions in the corporate sector; and ‘revolving in’, whereby key figures from the private sector are appointed as ministers, advisors, policy tsars or members of government departmental boards with key strategic roles. Finally are the many joint partnerships between government and the corporate sector, which have served to open up the public sector to private business and promote UK business overseas.
This implantation of the corporate sector at the very heart of government, to which potential countervailing powers of the trade unions, political parties, civil society associations and public media have at best provided only a limited check and exposure, seriously compromises the democratic process, and skews policy in favour of the already wealthy and powerful.
David Beetham is Professor Emeritus, University of Leeds, and Associate Director of Democratic Audit.
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