Governing in the private interest?

The liberty of a democracy is not safe if the people tolerated the growth of private power to a point where it becomes stronger than the democratic state itself. That in its essence is fascism: ownership of government by an individual, by a group, or any controlling private power.

Franklin D Roosevelt

Anyone interested in the health and sustainability of liberal democracy should be concerned if the levers of government come under the control of concentrated, sectional interests. That is the case whether the interest is corporations, the military, trades unions, bureaucrats, or organised religion. By happenstance such situations may result in benign government with a concern for the broader interest. More typically they result in government not for the many but for the few.

The merits of pluralism have been much debated. Political processes in which all have the potential to prevail, on the basis of the strength of the case they can make, capture something important about the nature of liberty. They are the antithesis of systems in which entrenched and powerful interests systematically shape and dominate the agenda. It is a topic close to the hearts of Liberal Democrats. Genuinely pluralist political practice remains something to strive for. Its attainment is by no means assured and precarious at best. But it is nonetheless a noble aspiration.

These thoughts crossed my mind at 3.30am this morning as I was enjoying some bonus time awake courtesy of rather too much late night caffeine.

While I was waiting to see if sleep might revisit I read the recent Democratic Audit report Unelected Oligarchy: Corporate and Financial Dominance in Britain’s Democracy. And the content is alarming enough to keep a good democrat awake at night all by itself.

The report touches on a range of issues that have been around and about in discussions of the changing nature of Westminster government for a while. The focus is upon the many and varied modes of corporate influence upon government and policy. In bringing these issues together it paints an unappetising picture of the current health of democratic practice. Corporate interests appear to have become intermeshed with the business of government to an extent that cannot be wise.

At times the report slightly overplays its hand, and it gives negligible consideration to the advantages of corporate contributions to policy making, but the overall picture constructed is one that resonates, with me at least. The report never uses the word corruption, but if one thinks in terms of corruption of purpose rather than a more legal definition of corruption then we are talking a something that fits the bill rather well. For those that are interested, I’d suggest having a look at Michael Johnston’s Syndromes of corruption: wealth, power and democracy.

The report focuses upon two main issues: buying informal influence and revolving doors. Corporations buying political influence – either through financing political parties, financing think tanks, or lobbying activities – is a well established practice, but all these activities have increased in scale over recent years. The aim and the net effect of all such practices is, of course, to ensure that certain perspectives have higher prominence and influence in policy and public debate. And to make it harder for alternative views to get a hearing.

Revolving doors, while not unknown previously, are a practice that has increased enormously in scale over the last decade and a half. The report distinguishes between revolving in – corporate actors coming in to government to have an input into policy development and the running of government itself – and revolving out – ministers and civil servants who leave public office to take up roles in the private sector. In March 2011 it was reported that there were – to my surprise – as many as 31 former ministers who held roles in the private sector during the previous 12 months. Many held roles with companies operating in the policy fields in which they had previously held a ministerial portfolio. While the picture is rather murky, the implication is that these are people being recruited in order to benefit from their inside knowledge and their contacts and their ability to influence current incumbents.

With this type of activity on this type of scale one would suppose that many ministers come to view that a transition into the private sector is a fairly automatic next step on from Ministerial office.

The question is what difference revolving out on this scale makes to public policy making. One could frame it in broadly public choice terms. Public choice theory is usually applied to the issues such as bureaucrats’ self-interest in shirking or budget maximizing, or to the impact of politicians’ self-interest in re-election on the sort of policy platforms being presented to the electorate. But if revolving out has become a normalised practice then we might reflect upon politicians’ self-interest when faced with the possibility of a lucrative future position beyond government.

Presumably it might, everso slightly, influence the way in which they go about dealing with private interests. Is it in their interests to be seen as unreasonably tough on the private sector? Or would that suggest that one isn’t quite the right sort to be offered a position in future? I’m sure that Ministers with no thought for future employment opportunities would take as robust a stance as they thought appropriate. But those, on the other hand, who might anticipate being at a bit of a loose end and in need of some extra cash when their time at the Department is over …

At the moment ministers and civil servants have to wait two years before they can take up a role in the private sector and, as far as I am aware, there are no limits to them taking on a role closely aligned to that of their previous Ministerial portfolio. One way to change the incentives associated with revolving out would be to ban it all together. That might be judged unnecessarily draconian. Another might be to increase the time period before a private role can be taken on. That way the ex-minister must be offering something more than connections and inside knowledge, which can date relatively quickly. A different strategy might be ban ex-ministers from taking on a role in the policy area with which they have been associated. Then if private companies wish to employ them it would be for their insight, strategic thinking or analytical ability rather than for their contacts and specific insider knowledge.

And revolving doors are only one small element of the bigger picture.

One of the challenges here is that once problematic practices or structures of the type identified in the Democratic Audit report are in place they act, in themselves, as a barrier to change towards more democratic structures. But it strikes me that taken in the round there is a problem here that needs to be taken very seriously if we are to reinvigorate democracy as a practice that encompasses the broad not the narrow interest.

In the context in which the Government is committing itself to further embedding corporate interests at the very heart of government, and in the process weakening the countervailing influences on the democratic process, these are issues of the utmost urgency. And the only major party that has the legitimacy, or is likely, to raise them is the Liberal Democrats. Let’s hope they do so.

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