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  May 18, 2017

UK Corruption, the Election, and Austerity


David Whyte of Liverpool University explains how the Conservatives' election slogans are bound to deliver the opposite of what they are promising
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UK Corruption, the Election, and AusterityDAVID WHYTE: I'm David Whyte, and I teach and research at the University of Liverpool.

Theresa May and the Conservatives, going into this election, keep repeating the words "stability," "strong and stable," "stability," and so on. It's absolutely farcical to hear that kind of rhetoric, because it's the policies that they promote that lead to economic instability. The re-regulation of the economy, in ways in which it makes us less able to control what happens in the economy, leads to profound instabilities. The most obvious outcome of that is in the precarious labor market. Now, we're counting the number of people who are on either zero hours contracts or who are on very short-term contracts in the millions in this country. Our economy is now largely based upon a level of precariousness and instability that we wouldn't have thought possible 30 years ago. It's precisely the policies that the Conservative Party follow which create that instability for all of us.

In this country, I think we are affected quite deeply by a form of corruption that we don't normally regard, in popular discussion, as corruption, and that is collusive corruption. We have a high degree of collusion between the public and the private sector. We have a high degree of collusion actually within those sectors, which benefit institutions, which benefit organizations. They don't necessarily lead to individuals having a huge amount of money placed in their bank accounts, although that might happen. We don't tend to have bribery. The corruption that is normally talked about in mainstream economic discourse is extortive corruption, where one individual will bribe another individual for private gain. If we think about collusive corruption then it becomes much more complex and much more difficult to contemplate, but the revolving door, and the speed at which the revolving door operates in this country now, we have to say there's a level of collusive corruption.

The question of legality is another one. Very often, some of the things that we are told are not corrupt actually are illegal, but there is some discretion held within the authorities, so those tax sweetheart deals that we read a lot about that HMRC are involved in very often do involve some level of illegality, but the enforcement doesn't recognize that, and so there's a way of reaching a settlement with companies. If you look at the financial sector right now, actually fines of companies are going up quite significantly, but they very rarely reach the courts, or they very rarely reach any kind of judicial process.

I think bribery and election rigging are good examples of that kind of collusive corruption. We don't necessarily see the individuals that benefit, and maybe individuals don't benefit financially, but they may benefit because they're promoted or because their reputation is enhanced and so on. I do think we have a very high tolerance of collusive corruption in this country, so that breaches of electoral rules, for example, are not taken particularly seriously. I think the most recent example we have, where there are very, very serious questions about a slightly different issue, not electoral fraud, but the funding of political parties, where you have HSBC, apparently and allegedly, being involved in laundering money that ends up in the Conservative Party's coffers, and a senior MP, and also some senior journalists, are asking why this isn't being discussed, then clearly that's an indication of a very high level of tolerance of corruption in this country. That HSBC case, by the way, needs to be investigated. We're moving toward a general election where one of the political parties has big questions over their head, not only from the last election, but also through those most recent revelations, and we simply can't tolerate this without an inquiry.

We can address this, I think, by first of all recognizing that, although Britain prides itself on being the mother of all democracies and kind of squeaky clean in terms of its reputation for corruption, we have to rethink that, actually, and think, "Well, if things are happening in Britain that we would question in other countries, then we have to question those." That takes a bit of a leap because one of the problems we've got is we have a media that clearly is not reporting these things, so I think one of the things we need to do is rethink how we rebuild the public sphere and, particularly, the way in which we debate things in public. I think a strong, alternative media that's independently controlled and not necessarily controlled either by corporate interests, or isn't cowed by being frightened about what the party in government might say about them, would be a big step forward. I also think we have to recognize that we don't have a particularly strong democracy at the moment, and that democracy does not allow us to question, or to raise questions in public, in that way. So, the answer to the question is: We need to rebuild the way in which we debate things in public, and the media's part of that. It's not the whole story, but it's part of that.

In terms of really dealing with the problem of collusive corruption, we need to deal with corporate economy in this country and, of course, we have really ... We're in a period of unprecedented concentration of power in private corporations, private companies, and one of the features of private companies is that they have a collective identity, an identity as a company, which is separate from their owners or the directors, so when things do happen, when there is corruption or when there is crime or even when workers are killed in the workplace, very often, if it is prosecuted, it's the company that ends up being prosecuted or the company that ends up being fined. That's quite an easy way out for companies because the money comes from costs that are then redistributed. It's actually typical for workers to be killed and, if there's any payout, they suffer again because their wages are cut or prices to consumers go up.

So, we need to find a way of piercing what lawyers call the "corporate veil". We need to find a way of saying, "Well, the corporation is not an entity that we should be holding accountable." Of course, they have to be held accountable at one level, but we also have to hold the directors and the owners accountable. At the moment, if you invest in a company, you're not really risking anything. You're risking losing your investment. We have to contemplate a different economy where you have to be accountable for the activities that you benefit from, and I think, in terms of dealing with corruption and fraud in a real way, we need to think about how we dismantle the legal and political basis for corporate power, and that means thinking about how, in law and in politics, corporations are given their power.

Shareholders are simply not responsible, at the moment, for anything, if anything goes wrong. Occasionally, the corporate veil is lifted, in very extreme cases, but largely shareholders ... and, in most large companies, shareholding now is through institutions ... they are anonymous, and they're not held accountable. Yes, the shareholder needs to be accountable, but also the senior managers and directors, who, at the moment, are experiencing record levels of remuneration, even when things go wrong, they need to be held accountable.

One of the things that we need to contemplate, in terms of the relationship between governments and corporations, is that we trust corporations too much. I don't say that as someone who is a naturally mistrusting person, but I just mean that we have a completely wrong idea of how we think about private companies, about corporations. We think of them as citizens in their own right, with responsibilities, and the whole corporate social responsibility debate is all about how potentially companies can make our lives better. We forget, actually, that the bottom line is always the bottom line. We forget that companies are there, primarily, and are under a legal obligation, to maximize returns, financial returns, for their shareholders.

If we take that legal fact seriously, then we have to say, "Well, we can't trust them, necessarily, to control the things that affect our lives and our livelihoods the most." We can't trust them to supply energy. We can't trust them to run prisons or to ... the ATOS case, and Maximus, of course, are doing very similar things now ... to assess people as fit for work, because they get profits from doing that, and what we end up with is an economy in which we forget about the human impact of corporate activities because we trust companies. We have to stop trusting companies, and we have to stop seeing the interests of governments and the people and companies as being one and the same, because they're not. We have to sever that relationship.



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