Thursday, 26 September 2013

Accepting that corporate governance is political

One of the books I have on the go currently is The Political Power of the Business Corporation (hat-tip to the High Pay Centre for putting this one on my radar). There is a particularly good chapter, which I skipped ahead to, on corporate governance. Although I don't agree with  all of it, it's a really refreshing take on the issue. I particularly like & agree with the emphasis on lack of political debate about corp gov, and how in the UK it's been concealed as a minor/technical issue.

Here are a few brief nuggets
The words "corporate governance" are bland, unthreatening and moderately arcane. The issues with which it deals share nothing of those characteristics. Corporate governance deals with possibly the single most important social relationship in modern society, how the historically unprecedented wealth created by 21st century corporations is controlled and distributed.

The neglect of corporate governance in postwar British politics is little short of astonishing. For 30 years it was ignored within political debate and for 20 years up to 2012 it was effectively quarantined by the City and the accountancy profession so there was never serious public debate about the rights of corporate boards to control and direct 'their' corporations in the ostensible interests of shareholders.

The Cadbury Code and its successors provide the constitution for the large corporation operating in the UK. In an odd parallel with the UK's 'unwritten' constitution it relies on custom, expectations and voluntary compliance. It is primarily about organisation. It does contain norms in relation, for instance, to transparency, independence and conflicts of interest, but it is value-free. It does not articulate goals such as equality, freedom or even efficiency, and it makes no reference to employees, stakeholders or society at large. It is, in fact, an impoverished document that fails to engage with the vast majority of the issues of corporate power and responsibility...     

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