Wake Up, Business! You Could Be a Week Away from Socialist Disaster

This article appeared on UK Telegraph on December 5, 2019.
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Wading into election campaigns is fraught with danger for business people. “We are concerned by the direction of things, but won’t raise our head just to get it blown off,” an executive of a popular multinational explained to me this week.

When even Bill Gates, a massive philanthropist, can be media‐​massacred for critiquing a US presidential candidate’s wealth tax plans, no business sees itself safe from the blowback of opposing populist Left‐​wing policies. Customer bases comprising all political persuasions make any electoral statement from individual companies highly risky.

No such excuses, however, can be made for organisations purporting to represent business interests, who have actively chosen to remain neutered. These groups have the licence to take the heat in defending members’ long‐​term economic interests. Yet in this campaign, the Institute of Directors (IoD), the Federation of Small Businesses (FSB), and the Confederation of British Industry (CBI) have been utterly supine in the face of Jeremy Corbyn’s socialist threat.

Here is a Labour Party wanting to confiscate shares in large companies, overhaul corporate governance, nationalise whole industries at prices set by politicians, impose rapid and destructive decarbonisation, reverse the Eighties’ trade union reforms and jack up all major taxes on capital.

Business groups, though, have reacted with unjustified political evenhandedness, passing up on highlighting the destructiveness of socialism to instead hang‐​wring about smaller policy gripes from both parties.

Consider the IoD. Last week, the organisation issued a robust defence of EU‐​style state aid laws. Conservative plans to change them to assist certain struggling industries and oblige public bodies to “Buy British” after Brexit were rightly savaged as a “retreat away from free and open markets … unfairly protecting and subsidising large incumbents at the expense of true competition”. Bravo! This was exactly what a defence of a competitive market economy should look like, although their head of trade’s claim that these mercantilist measures put her into “actual convulsions” seemed a tad over the top.

So what was their reaction to Labour’s more stringent calls for active industrial and regional planning, nationalisation for the purpose of cutting prices, and taking de facto government ownership stakes in large companies? Presumably, it sent them into apoplexy. Well, you wouldn’t know it from their media release, which read: “Taken as a whole, Labour’s measures on business risk being too much stick and not enough carrot.” Such a line might be appropriate for a minor Tory budget tax threat to push firms towards subsidising creches. But it read pathetically in response to a manifesto proposing a reversal of the Thatcherite revolution and the imposition of Yugoslavian‐​style “market socialism”.

The FSB’s behaviour has been similarly bewildering. It had nothing but caveated praise for the measures in Labour’s manifesto. “Firms welcome Labour small business pledges, but more details needed” was their press release headline. Sure, the Labour Party’s shadow chancellor might want to overthrow capitalism.

But, no worries, he has made “cast‐​iron commitments to end the late payment crisis”. Surprisingly, the usually corporatist CBI offered the most clear attack on Corbyn’s manifesto, explaining: “Labour’s default instinct for state control will drag our economy down.” All would be well, of course, if only the party would just “work with business”.

Look, we all know many companies dislike Brexit and want to remain closely aligned with the single market. Tory state aid plans worry them particularly then, as they signal a desired looser free‐​trade agreement with the EU. Plenty of people in the business community are really playing part‐​time psephologists.

Given current polling, they consider Conservative measures they dislike as a more realistic threat to their interests, resting on their laurels that a Labour majority just won’t happen or that, anyway, a Corbyn‐​led government would be short‐​term and constrained by mythical “Labour moderates” or coalition partners. Such faith, though, is fantasy. Electoral history shows the propensity for voting shocks. And, if Labour wins or becomes the largest party, it will be taken as a mandate for their radical manifesto.

Business is a mere week away from being governed by leaders who want to “democratise” the whole economy, introducing ownership institutions to facilitate its slow nationalisation. At best, Labour sees private business as its lapdog for socialist goals — granting a place by the fire for doing right by Labour’s agenda, or a smack on the nose for business models or practices “the party” doesn’t approve of.

We’ve seen already this week how Labour would use the bully pulpit of government for the sinister targeting of individual businesses. The party’s Twitter feed denounced five major firms directly and shared a deeply sinister spoof video mocking Virgin owner Richard Branson.

Business groups remained silent. Companies who fail to decarbonise are already being threatened. No doubt Corbyn and McDonnell’s anti‐​Americanism would infuse their actions too. Under Labour, businesses would have to worry about pleasing their dear leaders, not just their customers.

Highlighting this threat is not to dismiss businesses’ frustrations today. No major party has put pro‐​business policies at the forefront of its campaign. Individual companies do worry over trade, migration and tax policies under the Conservatives. I can understand why high street retailers may like Labour’s measures that hit digital competitors. Certain businesses may well consider apprenticeship levy reform the be all and end all.

But it is a complete false equivalence to compare such issues to proposals that represent an existential threat to a modern market economy as a whole. In prevaricating or remaining neutral between these risks, the UK’s business community is making a high‐​stakes, short‐​term bet, rather than taking out prudent insurance.

At best, it’s been complacent. At worst, suicidal.

Ryan Bourne

Ryan Bourne is the R Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute.