UK Left-Right divide hasn't sharpened. Corporatism rules

Despite Labour and Conservative rhetoric, Britain remains a corporatist economy. Most of what's at stake is who can manage it better. The corporates don't mind who's in power, because at the end of the day, they're still quids in

Corporatism
Not so free market...
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the commentator
On 3 October 2013 22:00

It's not written in stone that it has to be this way, but Britain, like Western economies generally, remains a corporatist social democratic society. Those who can't see the wood for the trees are wont these days to ponder on whether there's a return to a more substantial Left-Right divide, capitalism versus socialism even.

This is largely down to a bit of social populism from Labour leader Ed Miliband -- his recently announced plan to freeze energy prices, hike minimum wages etc -- and a retort from Prime Minister Cameron that he'd like to build a lower tax, enterprise society.

It is highlighted by the Daily Telegraph (link above) which canvassed opinions from some of its columnists who take different views but "agree that this party conference [Labour's after the Miliband speech] has unexpectedly reordered the political landscape and redrawn the general election battle lines."

It's possibly true that the political landscape in the narrowest, opinion-poll driven sense has changed, for about the next five minutes at least. But in no sense has British political-economy or the precepts that sustain it changed one iota.

The share of gross domestic product (the economy, essentially) flushed through the state in terms of public spending remains at around 45 percent -- pretty much, give or take, the same as in most OECD nations. That's a cigarette paper away from half of every piece of economic activity being conducted by the state. If you think that's capitalism, you haven't read your Milton Friedman recently, or even your Karl Marx.

The level of public spending as a proportion of GDP is an excellent starting point. But there's so much more to talk about: the huge burden of employer regulation (no, not just from the EU); a tax regime that is so burdensome you basically have to be independently wealthy to start a business in the first place; the accountancy requirements meaning that it is a criminal offence to run a business unless you have the paperwork to prove every last transaction; and so it goes on.

Big businesses don't care very much about this. They operate in industries with only a very few equally large rivals, and having accountants and lawyers to deal with the regulations is little more than pin money. For the corporates this is a huge advantage because it kills off small competitors before they can grow into big competitors.

Meanwhile, entrepreneurs who do start to make it through get whacked with enormous levels of taxation.

And that, of course, is inevitable when 45 percent of the economy is run by the state. They can either tax you for it or they can borrow it -- otherwise known as taxing your children.

Unless a major political party in Britain is prepared to address this, the debate between Right and Left is largely a matter of who can better run what has already been agreed upon by both parties and political society generally. The Right would be a tad more sensitive to calls for lower taxes; the Left a tad more sensitive to calls for more state spending. But at the end of the day, it doesn't make much difference.

Meanwhile, practically all of the giant corporates -- former state utilities on rare occasions forming possible exceptions -- remain largely untouched. Why? Because this is corporatism, and it suits them very well.

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