''By far the most important force obliging it to behave well is the government or international regulation. It is one of the paradoxes of the CBI state of mind that keeps clamouring for less ‘red tape’ and ‘regulation’, yet capitalism can only work well under the thumb of firm, fair and efficient government regulation. That’s why it never thrives where governments are weak and corrupt: Africa’s poverty exists because no one will invest in countries with governments that can’t guarantee basic property rights or enforce legal contracts.
The CBI resisted the minimum wage, predicting dire consequences. In fact most big companies with large low-paid workforces welcomed it - so long as it was strictly enforced on everyone. If all had to pay the same, there was a level playing field and it would drive out seedy employers engaging in unfair competition by paying below a fair wage.
Good government can and must regulate business for its own sake as well as everyone else’s. ‘Light touch regulation’ was not a good idea for the banking sector when Northern Rock went bust. Who saved the day? Government guarantees – let no one forget it. Out of control borrowing had to be rescued by the state and the taxpayer, but don’t hold your breathe for the Institute of Directors to recognise how much businesses of every kind rely on strong government and ‘red tape’.''
Manchester University Labour Club / society
