In his leader’s speech last week, Ed Miliband talked about ‘changing the values of our economy.’ Some businesses have good values, he claimed, and others do not: we need to distinguish in our policy, in our regulation, between ‘producers‘ and ‘predators‘. Right-wing commentators have lambasted these comments from a predictable stand-point. David Osler also suggested here that the distinction was not as clear as he made out – indeed “from the point of view of the working class, predation with a human face is still predation.” Chris Dillow proposes an elegant explanation of why it is no accident that business tends to be predatory:
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.
Read the rest of his article here.