Trading favours

David Miliband has prepared (with the help of Alistair Darling and some big businesses) a manifesto for the development of the EU Emissions Trading Scheme (EU-ETS) after 2012 (Phase 3). He has circulated it to trade associations and big business (or "British industry", as he likes to call it, forgetting as usual about the majority of smaller businesses), asking them to endorse it. The manifesto and its covering letter are attached.

His attitude to "UK business" is summed up in the following sentence from his covering letter:

"Our initial impression of the level of consensus on EU ETS was confirmed when we met some key industry figures to discuss the manifesto in November."

How can you test a level of consensus by meeting some key industry figures? Isn't the definition of consensus that it includes the many, not just the few? If the few tell you that there is consensus amongst the unconsulted many, are you a wise politician to believe them? Even if it were the view of many, should you do what is wanted by the majority (or even the consensus) amongst a particular interest-group, or what is right without reference to interests? Most of us want taxes to be lower, but his Government seems to care less about the consensus on that subject. How do they decide which consensus to listen to and which to ignore?

It used to be said that "UK business" wanted us to go in to the Euro. Now it is said that "UK business" does not want us to go in to the Euro. What is meant is that the majority of bosses of big City institutions and major corporations used to think that the Euro would be good for their businesses, and now the majority think it would be bad. That is not the same thing as the opinion of UK business (even if the Confederation of Big Industry says it is). The Government's reliance on the self-interested, vacillating, superficial assessments of this "elite" is what makes policy so inconsistent and unprincipled. The attitude to EU-ETS and their alliance to produce this manifesto is just another example.

Equally illuminating is the advice from the Association of Electricity Producers (AEP, the energy industry's trade association) that:

"the larger members will sign on to the Manifesto, more because they do not want to be seen not to sign, rather than through any great passion for the document."

That one sentence sums up beautifully what is wrong with Britain today. Why would their large members care that they were seen to sign a vague Manifesto? If they fear real consequences, it would represent very serious abuse of political power by our Government, reminiscent of Germany between the wars, in terms of the authoritarian nature of the government, the pusillanimity (or complicity) of industry, and the popular misconception that they should all be part of some grand, common plan for the aggrandisement of the nation and the welfare of the -Volk-. Even if there were consequences, should not those companies stand up for what they believe in? Or is it possible that they are claiming that their support is reticent for something that really suits their self-interest? Whether their signatures represent passionate or reluctant support for the document, they will be interpreted as saying that "UK business" supports the government's manifesto on EU-ETS, when there is no such consensus amongst "UK business".

This is the secret to modern government. If you can, align your interests with those whose voices are loudest. Make sure that you have sufficient control of people's prospects that self-interest/preservation will force most of them not to contradict you. Refuse to listen to the few brave enough to express a different view, and try to discredit them (or at least deprive them of a platform) if you can. Then claim a consensus in favour of your agenda.

Ludwig von Mises knew where this style of government led. His book Liberalism is available online. Have a look at the chapters on The Crisis of Parliamentarism and the Idea of a Diet Representing Special Groups, and Liberalism and the Parties of Special Interests for a description of the relationship between big government and big business that is as applicable today as when it was written in 1927.

It is not only in terms of the precarious nature and maladministration of global finances, and the ever-greater intrusion of the state into individuals' lives, that our situation today is like 1928 all over again. The inter-war period saw (bizarrely, given its malign influence in the preceding decades) the extension of the German corporatist model to most rich economies, to disastrous effect. Despite the lessons of the twentieth century, that corporatist approach is stronger now than ever, but with the whole of Europe this time playing the role of Germany.

Francis Fukuyama's End of History theory looks even less credible today than when he first published. We are heading for interesting times. Who will save us from the authoritarians this time?