Posts Tagged ‘‘Industry and Commerce’’

Corporate Influence and Staffing of Government in Britain and Pre-Revolutionary Russia

April 28, 2014

One of the features of post-Thatcherite British government is the strong influence of big business on government policy and even the staffing of government departments. Government officials are frequently drawn from corporations, where they have directorships or occupy other positions in senior management. The conferences of all three main parties are sponsored by businesses hoping to influence government policy and win contracts or other business concessions from their political clients, once they are in government. The parties increasingly formulate their policies according to think-tanks, formed by and representing the views of particular industrial or corporate interests. Private Eye for years, since as far back as the ‘sleaze’ of John Major’s administration, has documented the way corporations and their employees have permeated government institutions. This has most often been done with the specific intentions of reducing or blunting government regulation of industry. Thus you can find the presence of various senior employees and directors of the big accountancy firms in the Inland Revenue, presenting the government with schemes on how the rich can become even richer by avoiding a tax. Officials drawn from the City have entered the various government bodies regulating the financial sector, to argue that the City should be less regulated. The result of this policy was the massive corruption and trading in toxic debt that created the present international financial crisis. And an extremely large number of the present government have links to private healthcare companies hoping to benefit from the privatisation of the NHS. One of these is Jeremy Hunt, the current Health Secretary, and IDS. I’ve blogged before about how the Nazis had a similar policy of co-opting leaders from business to staff the Reich industrial combines and organisations.

And it was exactly the same in Russia in the decade immediately preceding the Revolution. Big business deliberately set out to influence government policy. Business leaders entered the government, while ministers, senior civil servants and officers of the armed forces moved into posts in private industry. The regime was compromised and ultimately discredited by massive corruption. Kochan describes the situation in Russia in Revolution (London: Paladin 1970).

Industrialists more and more put themselves at the service of the government in the economic development of the empire. An Association of Industry and Commerce, founded in 1906, and its journal Industry and Commerce, devoted themselves specifically to the purpose. The association was a federation of industrial organisations formed along geographic and functional principles, e.g. The mine owners of south Russia or the Baku oil producers. By the beginning of 1914 it embraced thirty-four banks and insurance companies, 251 industrial undertakings, eleven transport companies and nineteen trading concerns.

The association consistently advocated the further economic development of the empire through a policy of high entrepreneurial profits combined with austerity in consumption. It argued against free competition – ‘the anarchy of the market and a chaotic fluctuation of prices’ – and in favour of a five-, a ten- or even a fifteen-year plan, that would overcome Russian backwardness and free it from dependence on agriculture. It proposed cooperation between industry and the government in, for example, the irrigation of Turkestan for the cultivation of cotton, the construction of the Volga-Don canal, and the intensive exploitation of the Magnitogorsk iron deposits in conjunction with Siberian coal. … Planning from above, with the sympathetic stabilizing and regulatory intervention of the vast resources at the disposal of the Treasury would enable trade and industry to take their full share in industrial development, it was hoped. In the last resort, the association envisaged a type of corporate state in which industrial and commercial interests would play a co-determining role vis-à-vis the government in relation to economic policy.

For this reason the association scheduled its own congresses to take place during the Duma sessions – the membership overlapped in many cases – and ‘sometimes its debates were the more interesting and important of the two,’ noted one observer. The association functioned as a vast pressure group: ‘… Russian industry and commerce must, in the interests of self-preservation, ‘ declared an early initiator of the association, ‘express not only its broadly based views but also know how to present these views to those institutions and groups on whom will depend the putting into practice of this or that law or policy … Here lies the whole root and the whole meaning of the All-Empire congresses of the representatives of industry and commerce. (pp. 166-7)

What socio-economic influence was possessed by these conglomerates of power? This is not easy to analyse. It seems likely however, that they had a disintegrating influence in further corrupting and demoralising the Tsarist bureaucracy. An insider, V.I. Gurko, at one time assistant minister of the interior and member of the state council, avers that the integrity of the overwhelming majority of high officials was ‘beyond question’. But he must also admit that private concerns engaged prominent officials at ‘fabulous sums’ with a view to the man’s ‘official connexions and his knowledge of the methods necessary to obtain governmental backing … particularly to secure some state concession. ‘ The line between public and private interest became more and more difficult to draw. This applied particularly to the armament industry. Take Avdakov, for example, for some years the chairman of Produgol, then the Association of Industry and Trade and at the same time councillor in the ministry of industry and trade; or Lieutenant-General Brink, a former head of the department of naval construction and chief inspector of naval artillery, who became a director of the Putilov works; or Vice Admiral Bostrem, a former commander of the Black Sea fleet, who became president of the board of the Nikolaevsk naval construction company; or General Ivanov who joined the board of the same company; or General Miller, former head of the state-owned Obukhovo works, who became director of the Tsarizyn artillery plant.

Civilian official similarly moved between government posts and private industry, especially in they were engaged in the ministries of finance and trade and industry. There was Timryazev, for example, and Bark, Arandarenko, M.M. Fedorov, V.I. Kovalovsky, N.N. Pokrovsky, Langovoi, Litvinov-Falinsky – all these men moved at one time or another between their ministerial arm-chairs and an equally well-padded position in industry or industrial association. (p. 168).

This describes pretty much every government since Maggie Thatcher, including that of Cameron and Clegg today. And the Association’s policy of demanding high profits as well as austerity exactly describes the current government’s policies.

That all ended with the upheaval of the 1917 Revolution and the Bolshevik seizure of power. We don’t need a revolution with all its horror and bloodshed in Britain. But we do need proper government, where the public interest rules and where corporations are not allowed to corrupt, influence and direct government policy.

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