This story was brought to my attention by Paul Bernal on Twitter this morning. It involves what he described as a Labour-funded think tank, IPPR, coming up with the brilliant (#irony) idea to turn unemployment benefit into a loan which would be repayable on returning to work. You can find the story on the Observer at the moment here.
IPPR, meanwhile, is fairly transparent as think tanks go. As per the Who Funds You? website, it gets an “A” rating – and on its own website lists current funders thus. Quite a mixed bag, in fact: from charities and David Miliband himself to the European Commission, Serco (#hmm), Aviva, the consumer magazine Which?, a brace of Joseph Rowntree organisations and the City of London Corporation. Hardly straightforwardly Labour-funded, then.
The news did, however, cause me to tweet in the following way:
Taxpayer bailouts; student loans; now the poor in their grasp. The real something-for-nothing scroungers are the bloody banks themselves!
And it’s true. It seems to me that in a crisis entirely due to mismanagement in and around the financial sector – both technical and technocratic it has to be said – those who continue to pay the price for such disintegration are those hardest hit by its consequences. So it is we reward instead of punish the banking corporations for having got it so wrong. As money gets tighter for the poor, opportunities for the banks to make easy cash off our backs are expanded not only by the Wonga-style market forces of the desultory high street but also by the bright and bushy-tailed think-tank boffins themselves. I can’t think of another sector in the world – or, indeed, in history – where failure was such a profitable act.
Nor, in fact, where it continues to get even more profitable.
But, on the train yesterday on the way to a Manchester policy forum, I stumbled across a solution to all our ills. At the moment, corporations are legal figures with many of the rights and obligations of ordinary people. This is well known and well documented and I shan’t repeat myself here. However, what I would like to suggest is that a serious imbalance does exist as far as depriving the liberty of such corporations to act when under investigation – or, indeed, after being found guilty of certain acts.
Ordinary people, for example, quite often when arrested find themselves summarily deprived of their liberty – and no one questions the process. Apart from the odd legal phonecall or interview or occasional family visit, their radius of action and ability to influence the result is radically reduced. This allows for the police to carry out necessary investigations, untrammelled by the interference of too many interested – and perhaps self-promoting – parties.
This does not happen in the case of corporate entities: mostly, in cases of even quite severe misdemeanour (witness recent high-profile banking scandals around the long-term money-laundering of drug revenues by banks you’d hardly expect to exhibit such behaviours), we generally find such corporate figures – flesh-and-blood people in everything but flesh-and-blood – do not get arrested; do not need to request bail; and never get imprisoned. Their liberty is never deprived; they continue to operate in the meantime; they proceed to make their money as before.
Sadly, of course, we often discover after the event that the potential for being fined for some act or another will have been factored into an annual budget before the crimes in question were committed. A fine, even a large fine, even just the threat of a fine, becomes simply one more operating cost to be contemplated as the logistics of the year are calculated.
And although, on occasions, executives do find themselves accused of specific acts, the processes are so drawn out as to make any sensible adjustment to the direction of our socioeconomic fabrics impossible to engineer. They frequently manage to stay at the top of their hierarchical games, despite the complaints of shareholders; despite the unhappiness of a wider consuming public; and despite the reputational damage this leads to. With their battalions of legal support, these alpha men and women feel secure in their protective silos and bunkers of belief. No wonder they behave as imperiously as they do.
In such cases, not only are the operations of the companies in question left untouched, the ability of their apparently criminal leaders to continue leading remains intact.
My suggestion, then, which came to me as I journeyed – quite appropriately – to the TUC’s founding place, is to engineer two new figures in company law:
- the figure of arrest without bail
- the figure of imprisonment
How would these work? Well, in the case of the former, arrest without bail would mean the corporation would have to shut down all its operations immediately. Just as a person who finds themselves under the same deprivation of liberty, whilst investigations into probable misconduct take place, so we should be able to do the same to a company. And the mere threat of being able to do this would surely lead to a radical change in how fines and punishments for corporate maleficence were treated and assessed in the future by those who currently quite happily contemplate them.
In the case of the latter figure, the figure of imprisonment, we could suggest that a company might totally cease operations in a similar way once sentence had been passed a posteriori. Under such circumstances, and for a certain period of time only, the company in question could not continue to occupy the marketplace, in much the same way as a person in prison must effectively cut off all connections to the outside world.
The result would be two powerful instruments to make the corporate figure far more like the human equivalent which – in so many cases – it loves to emulate.
Applied in particular to the banking corporations, it would send a hugely important message around the significance of competence, honesty and openness for our shared societies.
As well as, surely, end the terrible cycle of reward for utter failure – a cycle which appears to be the current tonic and reality of latterday capitalism.