I am a convinced supporter of Dr Sean Gabb’s Libertarian Alliance, and will remain so. But I am not sure he is right to argue that libertarians should reposition themselves as opponents of capitalism, in particular, opposing limited liability companies, and the preferential advantages the limited company format gives to big business. It strikes me as a wheeze, an attempt to strike a left-wing pose, or what would be seen as one, in a context where many libertarian views are seen as either right-wing, or a cover for those who are right-wing.
Firstly, the UK in particular does well out of large companies. BP would have been a good example a while ago, but appears likely to fall foul of the US administration’s interpretation of US laws in such a way that BP, a limited liability company, is unable to pay what had appeared to be the maximum of US$75m in liability for oil companies beset by an oil spill. The City of London and large pharmaceutical, financial services and defence companies form the mainstay of British Big Business–to a large extent, we are still living off our former imperial glory (sadly one with Nineveh and Tyre these days), and the advent of an era of cottage industry small businesses would be profoundly negative for the medium-term outlook of the UK economy. Second, I would react with alarm to the idea that I should be held personally responsible for losses of a company I held shares in–another related point that Dr Gabb has encouraged discussion on. The joint-stock company format has allowed millions of small private investors to piggyback on the growth of the larger companies and make provision for their futures, and I think libertarians should see that as positive. The alternative is dependence on state pensions financed out of taxation.
Part of what Sean Gabb seems to be getting at is that the joint-stock corporation means that bourgeois capitalism is no longer with us. This fact complicates a lot of arguments that libertarians make: for example, where libertarians support freedom of association and therefore the right of a business to refuse the custom of anyone, for any reason (including race, sexual orientation, etc), what if the managers of the business do not personally own the business? What right is it of them to pursue these kinds of agenda when they do not even own the business concerned? If we supported freedom of association only where a business was owner-managed, as with a corner shop or a bed-and-breakfast guesthouse, we could end up supporting freedom only in certain circumstances, only at the margins of society.
I was impressed by the arguments of the late Sam Francis in the US, that a new managerial elite had effectively replaced the former bourgeoisie. In a development not anticipated by Karl Marx, the progression from feudalism to capitalism has been succeeded, not by a progression from capitalism to communism, but from capitalism to managerialism, obviating much of the Marxian doctrines. As corporations grew larger, owner management became rarer, and in fact impossible. Even where a business remains in the hands of the original family founders, they require personnel directors and many other similar managers to run the business for them. The joint-stock company further diluted the control of the original entrepreneurs, who in most cases sold up, to the extent that individual entrepreneurs no longer control significant parts of the economy today. There are no capitalists left.
With ownership so diffuse, managers control the economy today. This answers the essential question that Lenin asked of political economy, “Who, Whom?” The key point of political analysis is to work out who the elite is and who the governed are. The capitalist-style analyses of the socialist left are simply wrong, in that they give the wrong answer to “Who, Whom?” as there are no capitalists. What there are are managers in a technocratic economy-state. Sam Francis pointed out that all institutions are run by the same people today. A civil servant can leave for the private sector and take up a managerial job, and then move on to a managerial job in the church, and then move on to a similar job in the defence industry, and then into politics. The public sector, the private sector, the churches, the charities–these are run by a mobile elite flitting between them. Church finance directors are not deeply religious people who do the job out of faith, but rather finance directors who have had a number of posts elsewhere and demand six-figure salaries for running the finances of a church. Personnel directors of charities are not people who are seeking to work with the disadvantaged, but personnel directors who have worked elsewhere and demand large salaries and pensions, to be paid directly from sums raised ostensibly for charitable deeds. The same type of people are doing everything.
The bureaucratisation of the economy is aided by causes such as “anti-racism”, “multi-culturalism”, “health and safety” and “the environment”. These causes are the justification for the employment of technocrats. Even private companies have to employ large phalanxes of people whose jobs are essentially political. (In fact, abolishing limited liability would simply diminish risk-taking, and lead to the development of more technocratic jobs in the area of risk management. Whole departments of functionaries handling risk would be born in every private enterprise.) It seems that a large proportion of the private sector is directly dependent on government policy (not just companies that benefit from government contracts, but the semi-quangoized charities that depend on public handouts, and many other niche technocratic roles–think of the people who produce the Energy Performance Certificates for houses being sold or the people whose jobs depend on the exorbitant fees charged to check the criminal records of teachers and nursery nurses: their roles have been invented as an act of public policy, although to no useful purpose).
It is worth asking what we can do about the managerial elite. Opposing limited liability seems to position libertarians as anti-capitalists, without addressing the argument that a new public-private managerial elite has replaced those capitalists. There are big businesses around today, but the problem is not that they are big, or even particularly predatory in behaviour, but that they have been captured by functionaries, technocrats who staff layers of middle and upper management that are strictly unnecessary. Big business needs to survive, because otherwise we would not be able to invest in these companies, and the average person would remain dependent on the state to provide for his long-term future. We need instead to think of anti-technocratic policies to cut down on the bureaucratic behaviour of functionaries in both public and private sectors.
I would like to severely cut down on the numbers going to university, as the universities have largely been remade as factories producing pro-managerial wannabe technocrats. The promotion of cultural agendas such as anti-racism and multi-culturalism should be criminalised–in the private sector as well as the public sector. It should simply be a criminal offence for companies to spend any money on political propaganda on cultural issues to their workers. There should be no public financial support for charities. There should be a clear distinction between the public and private sectors: I would argue that anyone whose livelihood depends on the public purse should not have the right to vote or stand for Parliament. This would severely cut down the pro-managerial electorate, and clarify that people who work in the public sector are our servants, and not the other way round. All consultancy work for the public sector should be banned, as should advertising by public-sector bodies. All public-sector workers should be limited to maximum salary of £50K. While consultants in the NHS and others should earn more–this should be facilitated by the privatisation of the health sector. If headteachers of failing schools hope to earn six-figure salaries, they should do so in the private sector, where they would have to work to attract pupils. We could reintroduce annual parliaments (the norm in the Middle Ages) and ban political parties from funding candidates’ election campaigns. All policies should be designed with an eye on preventing control by the managerial elite.
The easy part is cutting down the public sector. The difficulty comes with the private sector: once the owner-managers of the bourgeois era have gone, are we condemned to technocratic management for ever? I would argue that many of the technocratic posts in the private sector have been created by government regulation, and by eliminating the regulation and reducing the availability of graduates, we could reverse the quangoization of the private sector. Countries like Japan and China have big businesses and limited liability, but have not seen the cultural trends of the Western countries, such as multi-culturalism, simply because there has been no attempt to delegitimize national identity in those countries–and if we economically disarm ourselves by opposing big business, we will find that the Far Eastern countries end up becoming our new masters. However, given that we have the cultural problem of self-righteousness among the middle class, and the Far Eastern countries do not, something has to be done to try to counteract it. Could we introduce compulsory John Lewis-style workers’ democracy into joint-stock companies, seeing as their managers do not actually own the companies? Maybe managers adopting a technocratic style could be “recalled” by their staff members? Ultimately, a society’s culture is not just a function of the size of its businesses or something like limited liability, but a product of political discussion, the broadcast media, the schools and the churches. It is these that are driving trends in the private business sector today and not the other way round, and so the restoration of our culture can only begin by sorting out the political parties, the media, schools and churches.