Why Britain’s Business Leaders Should Beware

Business Leaders Should Beware

With Labour doing well in the polls as compared to the Tories should Britain’s business leaders beware? After all this could mean that Britain has its most left-wing government in years. If so then there is popular support to move our capitalist system towards socialism. For example:

Hundreds of supporters of Jeremy Corbyn have launched a campaign to reinstate the historic Clause IV of Labour’s constitution in an attempt to “end capitalism and bring about the socialist transformation of society”

The Policies

The policies in Labour’s last manifesto are not as radical as Labour’s supporters and detractors pretend:

  • Nationalise railways – what we had in 1991
  • Increase infrastructure investment – to level we had in 1985 excl PFI, or 2010 inc PFI
  • “deal with” tuition fees – what we had in 2010
  • increase investment in NHS – NHS budget doubled in the 1990s, and in the 2000s
  • Increase corporation tax to the rate it was in 2010
  • Nationalise the Royal Mail, back to 2013

Of course there is always the risk that they will go ‘off-piste’ and implement a more radical agenda than they promised to do. But the manifesto pledges themselves are closer to Miliband and May than they are to Marx.

The Consequences For Business Leaders

If you were an elite business leader would the above policies scare you? It should, but they seem to feel confident that even in the event of a Labour victory then reality will intervene. The result is that Labour will end up watering down its Socialist mantra of:

From each according to his ability, to each according to his contribution.

Maybe business leaders have recognised that the problem is not about the literal meaning of socialism (or Marxism)? Have they realised that it’s the labelling of these policies as socialist or Marxist that is the real problem? By applying labels to policies then it becomes a convenient mental crutch to allow people to immediately reject ideas without analysing the details.

But I would suggest even with this realisation, business leaders may have made an impetuous assumption. Are these leaders carefully considering all the possible consequences? This is especially important after the shocks of Trump and Brexit. Instead of trusting in luck that events will work out for the best then they should be asking themselves a simple question. Is it fair that the Britain’s top executives are now paid around 130 times their average employee, while most Britons’ pay stagnated?

In 1998, the average FTSE 100 CEO was paid 47 times their average employee. Analysis of six major UK companies in 1980 found that CEOs were paid between 13 and 44 times their average employee.

The pay gap was highest at media company WPP where CEO Martin Sorrell took home a pay package nearly 800 times bigger than his employees, while Next boss Lord Wolfson was awarded pay worth 459 times as much as his average employee, but did distribute his bonus to staff. The pay ratio was highest at catering group Compass, where CEO Richard Cousins made 418 times as much as the average employee.

Or that the energy, water and railway industries that Labour wants to nationalise:

were sold off, then sold again, until now, for the most part, they are owned either by international conglomerates or, in many instances, by foreign governments, notably those of our Continental neighbours.

It’s up to each business leader to decide if Jeremy Corbyn and John McDonnell, the would-be chancellor, are suggesting sensible remedies. But if they’ve learnt something from Brexit and Trump then it should be that you can win by recognising something has gone badly wrong. And reminding people that in the UK socialism isn’t such a dirty word.

What do you think? Why not leave a comment below:

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Originally posted 2018-04-06 17:00:01.

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