On the one year anniversary of Fred Goodwin being stripped of his knighthood, the British Academy Policy Centre has released a new report looking at legitimacy and trust in Britain’s business sector.‘Schumpeter’s nightmare? Legitimacy, trust and business in Britain’ examines whether the business sector’s ability to command some sort of moral authority is in decline.
Written by Professor Michael Moran FBA – Professor of Government and Business at the University of Manchester – the report examines whether the current mistrust and disgruntlement towards British business is just a straightforward reaction to the recent financial crisis or whether this is part of a longer term decline that could threaten its long term survival, as predicted in the 1940s by renowned Austrian economist, Joseph Schumpeter.
Drawing on the work of some of the twentieth century’s most influential thinkers, Professor Moran explores the growing pressures on business, how they have responded to these pressures and the apparent contradiction between the public’s mistrust of “big business” and its willingness to place a surprising amount of trust in particular institutions and business individuals, such as Lord Sugar and Richard Branson.
As Michael Moran says: “Big business in Britain has rarely been so powerful. A fantastically rich plutocracy has been created over the last couple of decades, while the financial crash revealed an elite out of control. The consequences for our economy have been devastating. But popular attitudes to big business are in reality complex and often contradictory. Big business is commonly despised, but many business personalities are liked and trusted. There is widespread anger at the abuses of recent years, but popular confusion about how to deal with them. In this report I try to unravel these contradictions.”
The report identifies five core growing pressures on business:
- Growth of regulation;
- Increasing power of the environmental movement;
- Desertion of historical allies, such as the Christian denominations;
- Increase of lobbying;
- Development of new technologies that allow social mobilisation.
The report finds that there is a draining away of expressed trust in big business which began long before the current financial crisis, but the business sector is not living Schumpeter's nightmare. The public's dissatisfaction has failed to take root. Polling data shows that while business as a collective identity is despised by the public, a huge investment in PR and brand management has ensured that particular businesses and particular personalities are exempted from this image. Schumpeter failed to anticipate the ability of business to shape and manipulate the character of public debate.
Surprisingly though, the business sector in Britain has failed to work collectively to defend its interests. A great weakness of British business is that it has often been divided, unlike in the US where businesses have invested vast amounts of money into pro-business think tanks.
Critics of the business sector have also been muted by failing to find a clear focus for their frustrations. The political parties, now dependent on business for funding and increasingly disconnected with people at the grass roots, have also failed to provide an outlet for the public's increasing anger and dissatisfaction with the business sector. The growth in popular, but often short-lived and incoherent protests in recent years, such as the 'Occupy' movement, is evidence of this.
On a practical level, British people are willing to place a significant amount of trust in business institutions and certain business individuals. But, they also want their concerns over business practices to be heard and addressed.
Professor Moran concludes:”Until the political parties reconnect with civil society and reduce their reliance on funding from business tycoons, and provide an outlet for the public's dissatisfaction, the decline in public trust in British business is likely to continue to grow.”
‘Schumpeter’s nightmare? Legitimacy, trust and business in Britain’will be available for download from the British Academy website from today.
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- The British Academy Policy Centre oversees a programme of activity, engaging the expertise within the humanities and social sciences to shed light on policy issues, and commissioning experts to draw up reports to help improve understanding of issues of topical concern. This report has been peer reviewed to ensure its academic quality. Views expressed in it are those of the author(s) and are not necessarily endorsed by the British Academy but are commended as contributing to public debate.