Is Ed Miliband’s Attack on ‘Fast-Buck’ Capitalism Anti-Business?

28/09/2011 11:02 am

Ed Miliband’s Labour Party conference speech brought deliberately emotive language to the politics of business and placed the issue of long-termism firmly on the UK business agenda.

In attempt to capture the mood of a nation weary of economic crisis and insecurity, he took aim at “bad” business, promising to introduce policies to promote and support long-term planning while penalising those out for a ‘fast buck’.

Predictably the immediate reaction to the speech has been equally emotive.  Lord Jones, former director of the CBI and a trade minister under Gordon Brown, was amongst the most notable critics, describing it as “divisive and a kick in the teeth” for business.

However, there is considerable academic theory to support the sentiment in Ed Miliband’s speech of the need to encourage long-term thinking from our business community.

Professor Ha-Joon Chang explains in his book – 23 Things They Don’t Tell You About Capitalism – how it is vital that companies are not run solely in the interests of their owners. 
He argues that of all the stakeholders of a business, the increasing mobility of shareholders means they are the least interested in an organisation’s long-term future, with their interests best served by maximising immediate dividends rather that retaining profit for future investment.

Therefore to create stable and sustainable businesses that will provide employment, exports and tax revenue for decades to come, it can be argued that balancing the interests of all stakeholders is desirable for long-term success.

As the debate on long-termism develops in the months and years to come, it will become increasingly important for business leaders to show how they are placing the pursuit of a balanced corporate reputation at the heart of their organisation and how they are actively incorporating the needs of all stakeholders in their planning.