Opinion: Let’s rid our political economy of inequalities of power

LIBOR-fixing, ineffective banks, corrupt Parliamentarians and the Murdoch press may not appear to have much in common with the fact that median earnings have become decoupled from growth in economic productivity – signifying rewards accumulating to a few at the very top. To my eyes, however, they are all symptoms of the same phenomenon: that the concentration of economic and political power in the hands of a few, hidden from adequate scrutiny and the power to affect change, impinges on our freedom to live lives free from poverty, ignorance and conformity.

To any liberal with a sense history this is hardly a striking insight. From Mill and Smith to Beveridge and Keynes, great liberal thinkers have recognised that the exercise of power by third parties can infringe our basic liberties. Indeed, liberalism can be seen as political movement dedicated to eradicating the abuse of power – witness our (almost) unified rejection of State surveillance or of arbitrary detention.

Liberals’ vigilance against the abuse of power sometimes misses the role of the capture of it – in theory, who owns companies and services shouldn’t matter, as long as they’re well regulated. More on that later. We also focus on the State and its encroachment onto our fundamental rights and liberties – but too often the modern political discourse doesn’t recognise that the State isn’t the only entity capable of hoarding and abusing power.

We see financial capitalism in disarray, electoral politics captured by vested interests, corporations failing to pay their dues while living standards fall for so many – and we reach for technocratic, tinkering remedies that leave the underlying relationships between the powerful and the powerless unreformed. Trusting markets or the state to deliver what we need, when imperfections in how each is framed hand power to a tiny minority, is naïve at best – yet there’s little discussion on how to democratise either.

We seek to regulate or tax more, or better, without asking if concentrated ownership and effective monopoly renders regulation and taxation ineffective. Too often we attempt to patch up the institutional failings that underpin inequalities of power and capability with eye-catching initiatives or by falling back on discretionary spending, too often to no avail.

These questions of ownership and democracy – and the key issue of where power lies – are the theme for this year’s Social Liberal Forum conference, which takes place on July 13th in Manchester. Political traditions on the left and right have shied away from this basic debate, but as liberals we can no longer afford to do so– an electorate let down by a sterile austerity-versus-borrowing Westminster narrative demands that we address it. And when I say liberals, I mean all of us, wherever we stand within our party’s spectrum of views or indeed outwith the Lib Dem family – you may not be an Social Liberal Forum member, but if you’re interested in a fair society in which we’re free to pursue our aims as individuals and as a community, we hope you will join us in addressing the following:

If freedom is the capability to live the life I have reason to value, and I don’t have the power to exercise that freedom, nor to secure said power from those who hold it, where do I turn?

* Prateek Buch is Director of the Social Liberal Forum and serves on the Liberal Democrat Federal Policy Committee

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9 Comments

  • Charles Beaumont 13th Jun '13 - 1:39pm

    Bravo Prateek. I think this is one o f the most important and least understood issues in modern UK politics. We have a situation where a narrow corporate oligarchy controls huge areas of our economy and through that has huge control over the state. We have allowed classical liberal ideas such as removal of the state’s role in certain forms of activity (which in principle I support) to be replaced by state-protected monopolies that reinforce the interests of the oligarchs (think water, rail, roads). What is interesting is how these companies and entities succeed in maintaining their grip on power in spite of changes of government. This is an anti-capitalist phenomenon: companies such as First Group or Capita operate on the basis that the state removes competition and subsidises their activities. It is also an anti-social liberal phenomenon: having lost the concept of a public good (such as increased mobility through affordable transport) we consign large parts of the population to a form of protected serfdom, giving them just enough to survive without giving them the opportunity to thrive.

  • Excellent. Power has a kind of gravitational attraction about it which gives it a natural tendency to accrete, with larger agglomerations growing faster than small ones. This applies to government power but also to corporate power and in our ‘capitalist’ economy that is primarily what has got out of control. Eventually, the largest agglomerations of corporate power become so big that they dominate everything within range, including government. Then, just as the normal laws of physics are suspended in a black hole, so the normal rules of competition fail as the political establishment is sucked into its orbit.

    The implications is that, contrary to libertarians’ fantasy of the economy as a self-regulating mechanism, it is in fact unstable and will collapse into tyranny unless an external force – which in this context means regulation – intervenes. But the regulation required is not someone looking over company shoulders as it were and occasionally intervening at the margin. That is the sort of regulation we have had in recent decades and it has always failed. What we should instead have is regulation that prevents companies accumulating too much power in the first place and sets the ground rules for their activity with severe penalties for those overstepping the mark.

    That is a radically different concept of regulation with direct policy implications.

  • Michael Parsons 13th Jun '13 - 10:07pm

    Absolutely right! Congratulations!
    I suggest we attempt to secure immunity for whistle-blowers (even or especially mistaken ones) and strain every nerve to turn democratic politics into an extension of investigative journalism: and study James Fishkin’s ‘Deliberative Democracy’ carefully.

  • Bill le Breton 14th Jun '13 - 11:27am

    We must dismantle the so called ‘meritocracy’. “It’s elites, stupid,” should be our watch words.

    This country today has much in common with the C15th century where magnates trampled across the country from St Albans to Bosworth Field pursuing their fortunes, and with the first half of the C19th with its pernicious Corn Laws.

    There are so many abuses of monopoly power for Liberals to campaign against.

    This should be a time of Brights and Cobdens.

  • Robert Wootton 14th Jun '13 - 12:06pm

    Re GF ” fantasy of the economy as a self-regulating mechanism, it is in fact unstable and will collapse into tyranny unless an external force ”
    This is what I am working on. However, regulation should part of the internal mechanisms of control. Not an external “big stick” wielded by a Big Brother government.
    Democracy is idealised as “government of the people, by the people, for the people”. However, the institutions of power (government and corporations, were and are designed by the powerful, for the powerful in order to maintain their power.
    It is these institutions that needs must be re designed in such a way as to enable the people they have power over to effectively challenge the use of that power whenever necessary or desirable.

  • Nigel Jones 14th Jun '13 - 2:56pm

    Well done Prateek. You remind me of a broadcaster in Wales decades ago complaining about the undue influence of advertising and how it attempted to interfere in his life. He was extreme in his views on this, but certainly alerted many of us to the growing power of private companies; the subtlety of their ways to influence our lives has increased since then.
    While it does not matter fundamentally which brand of products we buy, what does matter is how much we buy and whether we have the power to carefully decide our own balance on the type of goods and services we buy. We have seen this recently in the extent to which people have got excessively into debt and the consequences for everyone of the excessive boom in house prices (for example).
    Then there is the power and influence that big shareholders and directors get as a result of their company’s manipulation of people; for example, those who have influence on the Tory party, like the man who runs the paydayloans company.
    We Liberal Democrats need to see this issue as one that opposes both the traditional Labour party attitude of power for the state and Tory attitude of power in the hands of private companies. That is simplistic, but should be a basic guide for our policy-making.

  • Paul in twickenham 14th Jun '13 - 3:43pm

    This dovetails nicely with the today’s press reports detailing the fall in inflation adjusted income of median earners over the last few years: the DWP reports that median household inflation adjusted income is now £427 per week now – slightly less than in 2001-02. And yet incomes in the top decile have risen sharply during this period.

    The Labour Government comforted itself with the fiction that “a rising tide lifts all boats”. That is now exposed for the fiction that it always was. We are absolutely not “all in this together”.

    Liberal Democrats in government have an opportunity to help reverse the growing inequality that is turning a large number of our fellow citizens into serfs serving a self selecting elite. Do they have the will to take that opportunity? With the best will in the world I see little evidence to convince me that the current leadership have the will – or indeed the desire – for that fight.

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