CAPITALISM ADVANCES IN A CLIMATE OF MISTRUST Hostility to big business is mounting, and the resentment could worsen if there is a stock market collapse
[by Tony Jackson]
Consider the following three events: the collapse of the world trade talks in Seattle; Europe's rejection of genetically modified crops; and the exclusion of Railtrack, the UK transport company, from part-privatisation of the London Underground.
These events range from the global to the parochial. But they seem to me to exemplify a common theme: hostility to big business.
The trade talks, for instance, might well have collapsed anyway. But among the myriad protesting groups in Seattle, the one link was the premise that since big business stands to profit by free trade, it must be a bad thing.
As for GM crops, the underlying science is open to debate. But most European news stories on the issue in recent months have brought in Monsanto, conventionally described as "the giant multinational". And Monsanto's hidden aim, we are told, is to enslave the peasant farmers of the developing world by making them dependent on its devilish inventions.
And Railtrack? Well, the company is popularly held liable for the recent rail crash at Paddington. Reports on Railtrack mostly include an obligatory reference to the fact that it makes £1m profit a day. By implication, it is in it for the money. Therefore it is irresponsible, and cannot be trusted with the Underground.
Defenders of capitalism, of whom I am one, have a stock response to this kind of thing. We seek to rebut the initial premise.
Thus, we will say, trade liberalisation is the best hope for developing countries to enrich themselves. GM crops could be a bad thing, but we need to establish the facts. The chief blame for Britain's dilapidated railways lies with successive governments for under-investing.
More generally, we may say there is no objective evidence that companies are getting bigger, let alone more powerful. We may point out that profit is an indispensable way of directing money to where it is most useful. We may even quote the deceptively subtle aphorism of Dr Johnson: "There are few ways in which a man can be more innocently employed than in getting money."
All true, and all beside the point. For opponents of big business, the above might as well be ancient Greek. The essential thing is that they are getting results. To that extent, they are living in the real world while we are deluding ourselves.
When I talk to big companies about all this, the response is one of immediate and harassed recognition. But I have yet to meet a fund manager who takes the point. The stock market is still going up, so where is the problem?
Before I get to that, consider for a moment where the hostility to big business comes from. Part of the answer is familiar, and lies with technology.
One result of technological innovation is that companies have been able to extend their global reach drastically in recent years. As a matter of course, democracies have been slower to respond. Building global institutions, as the WTO found in Seattle, is tougher than building a global business.
Hence the widespread feeling that companies are assuming vast and unaccountable powers, while governments are losing their grip. Never mind that governments will catch up in time, and that companies themselves feel less powerful than ever.
Once again, the perception is the reality, particularly if it gets results.
Technology apart, I would suggest that most people never liked or trusted big business much in the first place. But until a decade ago, they had one good reason to keep quiet: the threat of communism.
At the risk of sounding far-fetched, there is an analogy with Italian politics. In the 1980s, Italians knew the ruling Christian Democrat party was corrupt. But the Italian communist party had a third of the votes, so the situation was tolerated. Then communism collapsed, and a surprising number of Italian politicians went to jail.
I do not mean that captains of industry are about to be led off with coats over their heads. I do believe, though, that the growing paranoia which I detect in big companies is at least partly rooted in fact.
Perhaps most worrying, the views of companies and their critics continue to diverge. Opponents of big business say companies are getting more powerful and consumers weaker. Companies say - and believe - the exact opposite.
Critics point to the immense rise in chief executives' compensation in recent years. Chief executives fret about the other side of the coin - their insecurity. And indeed, there is empirical evidence that they have less time to prove themselves these days before being handed their heads on a platter.
Critics say companies are becoming less and less accountable. Companies complain privately that they cannot get away with anything these days.
The same technology that extends their reach means they are living in goldfish bowls. Any misdemeanour is instantly spotted and broadcast worldwide over the internet.
So why does the stock market not worry about this? Primarily, of course, because corporate earnings are still going up. And while the market may be aware that companies are unpopular, it sees no immediate mechanism whereby that could be translated into a squeeze on profits.
Neither do I, or anyway not yet. But there is one risk that does worry me.
This is the outside possibility of a real old-fashioned stock market collapse. In one sense, this would be nemesis: a come-uppance for capitalist triumphalism.
But it could also be damaging to companies themselves. At present, they are widely disliked despite bringing home the bacon. A market collapse could produce real resentment. And if I am unsure what practical form that might take, I am very sure I do not want to find out.