Phillip Collins in the Times (£) reminds me why I’m a Marxist rather than a social democrat. He mocks Ed Miliband’s claim that Britain has been run by people with the “wrong values” as being “the dying breath of vintage social democracy.”
What Philip doesn’t do, though, is show why Miliband is so wrong.
To do this, let’s concede his factual premise - that bosses have had the “wrong values”. How can this be so?
Miliband seems to suggest that it might be just bad luck.
What he misses is that selection effects and incentives serve to generate the “wrong values” at the top. I mean this in four ways:
1. It tends to be the ambitious and charming to rise to the top, but these are disproportionately psychopaths.
2. Bosses and politicians are selected for their irrational overconfidence. This means that, when they get power, they are likely to over-rate their own ability and so undertake dangerous policies such as takeovers.
3. “Yes men” tend to get promoted more than nay-sayers and “trouble-makers”. This can contribute to groupthink in boardrooms in which bad decisions are not sufficiently scrutinized.
4. Even if these selection effects were not to work, and bosses had “good values”, competitive pressures would compel them to act badly. As Marx wrote:
Capital is reckless of the health or length of life of the labourer…But looking at things as a whole, all this does not, indeed, depend on the good or ill will of the individual capitalist. Free competition brings out the inherent laws of capitalist production, in the shape of external coercive laws having power over every individual capitalist.
Granted, Marx slightly overstated the case: it can sometimes be rational for bosses to offer good pay and conditions. But the general point holds (sometimes). The bank boss who didn’t hold dodgy mortgage securities or sell payment protection insurance policies would have seen his bank’s share price fall and been under threat of losing his job.
The problem, then, is not one of values but of mechanisms. Capitalism contains mechanisms which tend to produce the "wrong values". The challenge for social democrats is: can you provide alternative mechanisms that constrain this tendency?
Years ago, the answer was: yes, sort of. Strong trades unions acted as a countervailing power - for example by reining in bosses’ “greed.”
But in a world of weak unions, what have social democrats got? Nothing, I fear, but windy moralizing.
Another thing: It’s quite possible that politicians, quangocrats and top civil servants are also selected for overconfidence and “yes-men” characteristics. If so, this just deepens the mess that statist social democracy is in.