Follow the money: how left-behind cities can hold their corporate bullies to account

Paul Mason in The Guardian

If you walk along Britain’s poorest streets, the phrase “left behind” – in vogue again after many such places voted to leave the EU – takes on a complex meaning. It’s not just that they are lagging behind the richer, better-connected places. It can seem, as you survey the pound stores and shuttered pubs, that these towns have been discarded: left behind, as in “unwanted on the journey”. Wealth has flowed out of them to somewhere else.

The logical question should be: who did this? Sometimes it’s obvious: in Ebbw Vale, for example, the answer is the Anglo-Dutch steel company Corus, which closed the plant in 2002. In many places it’s not obvious. Jobs seep away; council services are privatised; bus timetables dwindle; the local school gets taken over by a “superhead” from somewhere else, outsourcing the dinner ladies on day one. You can get angry about it, but there is nobody specific to be angry at.

Faced with the same problem, union and community organisers in the US have, in the past 12 months, adopted a novel way of fighting back. Through a campaign group called Hedge Clippers, they have begun tracing the lineages of financial power behind the decisions that affect specific places, and targeting those financiers – pension funds – with a new kind of pressure.

Steve Lerner, one of the instigators of the 1980s Justice for Janitors campaign, which, for the first time, organised migrant cleaning workers in the US, explains how the tactic evolved. “We were organising janitors working for contract cleaning companies: but they’re just middlemen,” he said. “So we targeted the building owners. It turned out they, too, were dependent on banks and pension companies, so we got a trillion dollars worth of pension money to say it won’t invest unless there is decent pay. Then we asked ourselves: OK, what else do they own?”

It turns out, quite a lot. In Baltimore, the city’s privatised water industry hiked its bills. Then, when people started to fall behind in payments, the city agreed to bundle up their unpaid bills into a financial vehicle called a “tax lien” and sell it to investors. The investors can, after two years, evict people from their homes for non-payment.

When campaigners looked at who was buying up the debt, they included an anonymous company linked to one of the biggest hedge funds in America: Fortress Investments, with $23bn worth of assets invested in “the largest pension funds, university endowments and foundations”.

Since the 2008 crisis, with returns on government bonds negative, and stock market dividends depressed, pension funds have been pouring money into the hedge fund sector. “It’s a form of assisted suicide,” Lerner argues: “Workers are investing their pension money into firms whose mission is to destroy us.”

He set up Hedge Clippers, which aims to force pension funds to divest from companies whose investment strategies fuel the cycle of impoverishment.

If you apply the same approach to Britain, you’re dealing with a different ecosystem. No city has yet securitised the unpaid debts of the poor, as Baltimore did. While there is no shortage of predatory lenders to the poor, there are – after a campaign led by Labour MP Stella Creasy – at least elementary controls on them.

However, pension funds are now the biggest source of money for UK hedge funds, according to a Financial Conduct Authority survey last year, with 43% of their money coming from institutional investors. The most obvious act of financial predation is the private finance initiative (PFI), where schools and hospitals were built with vastly lucrative private loans. As a result, the taxpayer is committed to paying back £232bn on assets worth £57bn.

Many pension funds, either directly or indirectly, are investing in the so-called “infrastructure funds” who buy up PFI debt. The investment analyst Preqin found 588 institutional investors worldwide with “a preference for funds targeting PFI”, 40% of which were based in Europe.

Tracing the more complex ways institutional finance is funding the cycle of impoverishment is not easy. What you would want to know, in places such as Stoke-on-Trent or Newport, is not just who took the decisions to close high-value workplaces but, more importantly, who makes the decisions that lead to chronic under-investment now. Governments, including the devolved ones of the UK, spend a lot of time and money effectively bribing global companies to create jobs and keep them in Britain’s depressed areas. Communities themselves have little or no input into the process, which is in any case all carrot and no stick.

Lerner’s initiative in the US grew out of trade union activism, because the unions there learned to follow the money instead of wasting time trying to negotiate with the powerless underlings of global finance. They worked out that, in an age where the workplace and the community can seem like two different spheres of activism, it is the finance system that links the two.

Older ‘left-behind’ voters turned against a political class with values opposed to theirs



Union organising of the unorganised, and community activism in Britain have both traditionally been weak because top-down Labourism has been strong. Faced with PFI, predatory loans, rip-off landlords and privatisation, the British way is to demand legislation, not chain yourself to the door of a Mayfair hedge fund.

With or without Jeremy Corbyn, the near-impossibility of Labour gaining a Commons majority in 2020 – whether because of Scotland, boundary changes, a hostile media or self-destruction – has to refocus the left on to what is possible to achieve from below. We have to start, as the Americans did, by mapping the invisible forces that strip jobs, value and hope out of communities; make them visible; trace their dependencies and then use direct action to kick them in the corporate goolies until they desist.

If "Protest never changes anything"? Look at how TTIP has been derailed

Owen Jones in The Guardian

People power has taken on big business over this transatlantic stitch-up and looks like winning. We should all be inspired.

 

Illustration by Ben Jennings


For those of us who want societies run in the interests of the majority rather than unaccountable corporate interests, this era can be best defined as an uphill struggle. So when victories occur, they should be loudly trumpeted to encourage us in a wider fight against a powerful elite of big businesses, media organisations, politicians, bureaucrats and corporate-funded thinktanks.

Today is one such moment. The Transatlantic Trade Investment Partnership (TTIP) – that notorious proposed trade agreement that hands even more sweeping powers to corporate titans – lies wounded, perhaps fatally. It isn’t dead yet, but TTIP is a tangled wreckage that will be difficult to reassemble.

Doubts rise over TTIP as France threatens to block EU-US deal



Those of us who campaigned against TTIP – not least fellow Guardian columnist George Monbiot – were dismissed as scaremongering. We said that TTIP would lead to a race to the bottom on everything from environmental to consumer protections, forcing us down to the lower level that exists in the United States. We warned that it would undermine our democracy and sovereignty, enabling corporate interests to use secret courts to block policies that they did not like.

Scaremongering, we were told. But hundreds of leaked documents from the negotiations reveal, in some ways, that the reality is worse – and now the French government has been forced to suggest it may block the agreement.

The documents imply that even craven European leaders believe the US demands go too far. As War on Want puts it, they show that TTIP would “open the door” to products currently banned in the EU “for public health and environmental reasons”.

As the documents reveal, there are now “irreconcilable” differences between the European Union’s and America’s positions. According to Greenpeace, “the EU position is very bad, and the US position is terrible”.

The documents show that the US is actively trying to dilute EU regulations on consumer and environmental protections. In future, for the EU to be even able to pass a regulation, it could be forced to involve both US authorities and US corporations, giving big businesses across the Atlantic the same input as those based in Europe.

With these damning revelations, the embattled French authorities have been forced to say they reject TTIP “at this stage”. President Hollande says France would refuse “the undermining of the essential principles of our agriculture, our culture, of mutual access to public markets”. And with the country’s trade representative saying that “there cannot be an agreement without France and much less against France”, TTIP currently has a bleak future indeed.

There are a number of things we learn from this, all of which should lift hopes. First, people power pays off. European politicians and bureaucrats, quite rightly, would never have imagined that a trade agreement would inspire any interest, let alone mass protests. Symptomatic of their contempt for the people they supposedly exist to serve, the negotiations over the most important aspects of the treaty were conducted in secret. Easy, then, to accuse anti-TTIP activists of “scaremongering” while revealing little of the reality publicly.

But rather than give up, activists across the continent organised. They toxified TTIP, forcing its designers on the defensive. Germany – the very heart of the European project – witnessed mass demonstrations with up to 250,000 people participating.

From London to Warsaw, from Prague to Madrid, the anti-TTIP cause has marched. Members of the European parliament have been subjected to passionate lobbying by angry citizens. Without this popular pressure, TTIP would have received little scrutiny and would surely have passed – with disastrous consequences.

Second, this is a real embarrassment to the British government. Back in 2011, David Cameron vetoed an EU treaty to supposedly defend the national interest: in fact, he was worried that it threatened Britain’s financial sector. The City of London and Britain are clearly not the same thing. But Cameron has been among the staunchest champions of TTIP. He is more than happy to undermine British sovereignty and democracy, as long as it is corporate interests who are the beneficiaries.

And so we end in the perverse situation where it is the French government, rather than our own administration, protecting our sovereignty.

And third, this has real consequences for the EU referendum debate. Rather cynically, Ukip have co-opted the TTIP argument. They have rightly argued that TTIP threatens our National Health Service – but given that their leader, Nigel Farage, has suggested abolishing the NHS in favour of private health insurance, this is the height of chutzpah.

Ukip have mocked those on the left, such as me, who back a critical remain position in the Brexit referendum over this issue. But if we were to leave the EU, not only would the social chapter and various workers’ rights be abandoned – and not replaced by our rightwing government – but Britain would end up negotiating a series of TTIP agreements. We would end up living with the consequences of TTIP, but without the remaining progressive elements of the EU.
Instead, we have seen what happens when ordinary Europeans put aside cultural and language barriers and unite. Their collective strength can achieve results. This should surely be a launchpad for a movement to build a democratic, accountable, transparent Europe governed in the interests of its citizens, not corporations. It will mean reaching across the Atlantic too.

For all President Obama’s hope-change rhetoric, his administration – which zealously promoted TTIP – has all too often championed corporate interests. However, though Bernie Sanders is unlikely to become the Democratic nominee, the incredible movement behind him shows – particularly among younger Americans – a growing desire for a different sort of US.

In the coming months, those Europeans who have campaigned against TTIP should surely reach out to their American counterparts. Even if TTIP is defeated, we still live in a world in which major corporations often have greater power than nation states: only organised movements that cross borders can have any hope of challenging this unaccountable dominance.

From tax justice to climate change, the “protest never achieves anything” brigade have been proved wrong. Here’s a potential victory to relish, and build on.

The Tata's failure - Another nail for Indian corporate power?

Jayati Ghose in The Guardian

Thousands of steelworkers’ jobs are threatened as Indian company Tata threatens to walk away from its loss-making business in the UK. The move is causing shockwaves over the health of Britain’s manufacturing industry; but it is also a strong indicator of changing political and economic winds in India.

When Tata Steel acquired the steel giant Corus in 2007, it generated some cheers in India, but also raised eyebrows. The cheers were loudest among those who saw this as a macho declaration of Indian corporate arrival on the global scene. The purchase by Tata Steel of a company that was four times larger than itself made it at a stroke the fifth largest steel producer in the world and the first Fortune 500 multinational company from India.

But there were concerns over both the timing and the price at which the purchase was made. To fend off a Brazilian rival, Tata had to pay a 70% premium over the stock price. This was hefty for a company already in financial trouble with a large debt burden. And Tata paid only $4bn (£2.8bn) of the estimated $14bn final price out of its own funds – the rest was borrowed, mainly from Indian public sector banks.

Why were taxpayer-funded banks so willing to lend to a big conglomerate to buy up an overpriced European company, even as they denied loans to Indian farmers and small-scale producers? The sense of reversal of colonial roles might well have played a role. The deal was lauded by politicians as a sign that Indian industry had come of age as a global player, and so prudent considerations were simply cast aside.

Repayment of those loans was supposed to be made out of the profits of Tata Steel Europe. But those profits never came. At the time of acquisition Corus made an annual profit of about $800m, but since then the company has shown only losses – despite numerous rounds of restructuring, job cuts, asset sales and “modernisation”. In the past six months the company has shed around 3,500 jobs in the UK, but the financial indicators look worse than ever. This could result from incompetent management, but it also reflects worsening global conditions.

In Europe steel demand has been falling continuously over recent years, and there is fierce competition as Chinese exporters lower prices to cope with their own massive over-capacity. No one in the world really expects much dynamism from the European economy in the coming years.

By contrast, Indian steel demand is still increasing, if slowly, and the Indian operations still make profits. Tata Steel is now hugely weighed down by the UK business, which also accounts for around a third of its total debt. The charm of owning a big British company may no longer be enough to compensate. Instead, the urge is to cut losses and move out of an area that does not look likely to generate profits anytime soon.

Maybe the company also hopes the mere threat of exit will make the British government react by providing more subsidies – a technique that has worked in the past in India and elsewhere.

 ‘The Indian businessman Vijay Mallya fled to the UK and is now ensconced in his mansion in a London suburb.’ Photograph: Saurabh Das/AP

But this episode could also reflect collateral damage from another corporate scandal currently enthralling India. The flashy liquor baron Vijay Mallya, whose company Kingfisher Airlines (named after the beer his other company produces) collapsed, was also a major beneficiary of largesse from Indian banks. He now has unpaid debts of about £730m that he’s failed to pay for several years. Since he is also an elected member of the upper house of parliament, voted in by the ruling Bharatiya Janata party, this has caused a political outcry.

When the supreme court of India indicted him for abuse of law and ordered him to pay up or face the consequences, Mallya fled to the UK and is now ensconced in his mansion in a London suburb. He has offered to pay just over half of what he owes in six months’ time, an offer yet to be accepted. But his story must have raised concerns within Tata and among other large Indian businesses with huge debt – that even if the government spares them, the Indian courts may not.

So for now, Indian corporate chiefs planning to invest in the UK are more likely to be looking at real estate, rather than at multinational businesses.

Apple v FBI - Some Uncomfortable Truths

 

‘We must not lose sight of corporate power.’ Grand Central, an installation by Valentin Ruhry, cleverly subverts digital consumer culture with a product display featuring everyday objects found at a train station. MAK GALLERY, Vienna, 2014, curated by Marlies Wirth. Courtesy of Christine König Galerie, Vienna.


Julia Powles and Enrique Chaparro in The Guardian


It has been a spectacular six-week showdown – the world’s most valuable brand, Apple, pitted against the powerful American agents of the FBI. Two titans of spin, locked in a fast-moving battle over a dead terrorist’s smartphone. Now, as dramatically as it exploded, the FBI’s legal demand that Apple help it crack the iPhone of one of the San Bernardino killers has evaporated – the agents hacked their way in anyway, assisted by a mysterious third party.

There was always more to the Apple v FBI case than met the eye – and it is true for this latest twist too. The biggest issue is that both sides stand to gain a lot more from this battle than any of us. With little relation to reality, and backed by a worryingly partisan chorus, the notoriously closed Apple is emerging as a champion of users’ rights. Equally worryingly, a government agency is claiming the power to keep to itself a tool that can potentially break security features on millions of phones, while earmarking a demand for further judicial or legislative intervention in the future. Whichever way you look, this feud is far from a road to freedom in the digital environment.

Breaching Fortress Apple

From the FBI’s side, it seems clear that the case was opportunistically selected. No one wants to defend a terrorist. And after hammering on about law enforcement “going dark” on secured communications, the authorities were salivating for a pin-up case. Terror on home soil provided it.

But the FBI failed to account for one thing: the fallout of enraging a cultish brand on top of the most guarded, controlling ecosystem that computing has ever seen. Apple, incensed at the idea of anyone trespassing on its authority, went public – an equally opportunistic move, straight from the Taylor Swift playbook. And in so doing, Apple debunked the FBI’s otherwise earnest rhetoric that it only wanted to get at one iPhone, from one terrorist.

The key fact is that the FBI demanded a general tool: a modified operating system able to circumvent certain user-set security features in any given iPhone. There are clear dangers in bringing such a tool into existence. As forensics expert Jonathan Ździarski puts it, this is “a bomb on a leash”; a leash that can be undone, legally or otherwise. The FBI’s last-minute deferral of the court hearing in this case would, ideally, have been the enlightened recognition of this reality, as well as the multiple case-handling incompetencies and dubious legal foundations of the FBI’s request. Bizarrely, the withdrawal was on another ground: a third party had emerged with a hack. With the case now wholly dropped, we have a new danger: a classified bomb held by the FBI and unknown third-party hackers – but not by Apple, the one party capable of defusing it.

These facts are as much as the public debate has countenanced, resulting in predictable mud-slinging between techies and bureaucrats; big tech and big brother. What this misses is that this case has been a cause célèbre all along because it presents minimal threat to vested interests and power.

Apple v FBI was never the mother of all privacy battles. It is and always has been a security battle, between alleged national security and individual security, fought over a landscape of increasing insecurity.

It is this insecurity – existing, pervasive, worsening, global vulnerability of our infrastructure, communications and rights – that has been the greatest deception in this battle to date. Because despite how Apple has portrayed itself and been valorized by the media, phones are not impregnable, nor are our data and the platforms they reside on. Not by a long shot. The outside hack proves just that: if an external source that decided to cooperate with the FBI could break into the phone, and in shockingly short time, other less savory sources could do so too.

This case should be a tremendous opportunity for a global conversation about technology fragility. We need responsible leadership that recognizes that there is no such thing as perfect security, and that responds with restraint and redundancy, rather than a headlong tumble into connecting all the things.

Coupled to this must be a specific concession at the heart of the case and the unsatisfactory truce now reached. Digital locks and picks, by their very nature, are binary – they work for all or for none. In the current state of the art, it isimpossible to manufacture what the FBI wants: implanted vulnerabilities, or “backdoors”, that work exclusively for “good guys with a warrant”. Whatever the FBI is holding now, it suffers from this reality. But the problem is also bigger than that. As renowned computer security expert Matt Blaze describes the essence of the dilemma: “We can’t discuss how to make our systems secure with backdoors until we can figure out how to do it without backdoors.”

Boxing in the shadows of vast corporate power

This case, and others like it, are also an opportunity for a deep and reaching conversation about corporate power, and about the increasing intrusion of tech majors into democratic space. This is an angle that has been worryingly absent in most of the case’s commentary.

Regardless of the merits of its position, many of the arguments that have been marshaled at Apple’s feet in recent weeks set a dangerous, potentially pernicious trend. In particular, the argument that corporations are subjects entitled to human rights such as freedom of expression is deeply problematic, undermining reasonable regulation and presenting a destabilizing influence on democracy. The black box society is real, and this case and inevitable future iterations of the same battle have every indication of making it worse.

So we are at the crossroads. And out in the cold. Many decisive questions still remain open, and despite the reams of technical jargon written about this case, its core is not primarily technical, but political.

Under ideal circumstances, and privilege against self-incrimination aside, we should expect that any society would reasonably cooperate with law enforcement to investigate heinous crimes. But what is the most rational response to take when authorities such as the FBI, as well as lawmakers around the world,continue to overreach in their demands, seemingly unwilling to protect an already fragile technology ecosystem and our rights within it?

At the same time, the sheer scale of corporate power challenges the very foundations of democracy, while keeping us locked within walled gardens. Apple,Google, Facebook and the rest have received a tremendous windfall from this case, with nothing more than their words to induce our trust. But trust must be earned. It is predicated on transparency and it demands accountability, not marketing and press releases. Big tech will maintain privacy (or whatever theydefine as privacy) as far as it is convenient for their business. And when it is not, they will gladly forgo it. Apple is no more immune to this than any other business, and we should be as vigilant about its power as we are about any government.

Political, legal and technical solutions (in that order) for these problems may exist. Only honest, open, democratic discussion can find them.

The Observer view on corporate cheats

“If only everything in life was as reliable as a Volkswagen” ran the slogan of one of VW’s most iconic ad campaigns. Last week’s revelations that VW deliberately and illegally cheated emissions tests will rightly do irreparable damage to a global brand that has traded off its reputation for quality and reliability.

The way this has played out on both sides of the Atlantic raises two critical and related questions about corporate accountability. First, VW is only the latest in a series of global corporates to be caught breaking the law, a sure sign that, even where regulations exist, they are often not fit for purpose. Second, VW’s law-breaking has highlighted the extent to which powerful industry lobbying has watered down European testing to the extent it can be manipulated without illegal action, and at terrible cost. Air pollution accounts for some 50,000 premature deaths a year in the UK – three times as many as liver disease. But in the face of corporate lobbying, EU and government efforts to address it have been utterly inadequate.

“It was not an accident… a lot of work has gone into this,” was the verdict of John German of the International Council on Clean Transportation, the NGO that uncovered VW’s use of sophisticated software to flout US emissions tests. It’s a textbook case of predatory capitalism: a global business deliberately flouting regulations to harm the environment and cause unnecessary deaths in the name of profit.

The business community reacted with outrage when former Labour leader Ed Miliband condemned predatory businesses, accusing him of unfairly tarring the whole private sector with this brush. But each new corporate scandal makes this response more untenable. Scandals in banking, energy and food show that a serious misdemeanour at one global firm is often indicative of poor practice across a whole industry. Other car firms have already been found guilty of illegally manipulating tests, albeit not on the scale of VW.

The common lesson from these scandals is that capitalism is neither inherently good nor inherently evil. But unless they are rooted out, poor cultures that permit bad individual behaviour can and will develop in businesses. Companies such as VW employ the equivalent of a small city’s worth of people: in a company that size, there may well be employees with criminal tendencies. What’s critical is whether company cultures root out these bad apples, or whether they allow them to set in train a corporate race to the bottom. This is not an insight limited to business: the MP expenses scandal and widespread doping in athletics show what happens when people feel able to police themselves.

The financial crisis should have served as a warning of how imperfect our regulatory systems are at rooting out criminal practices within business. But the debate about reforms to corporate accountability has not been commensurate with the scale of the challenge. This is partly because there are no easy solutions. There is a consensus that regulators need to focus more on firm cultures, but little understanding about what an effective approach might look like. Greater personal liability undoubtedly has a role to play, but is no magic fix, as poor organisational cultures can encourage people to take risks regardless of the consequences.

The German system of corporate governance – often held up as an exemplar for its employee representation – has failed to prevent scandals afflicting big German companies such as Siemens, Deutsche Bank and Deutsche Telecom: a system designed to work for modestly sized, community-rooted businesses has not worked in holding global giants to account. But corporate governance is an imperfect lever through which to try to change corporate culture.

The VW case shows how a relatively small NGO running independent tests was eventually able to get US – if not European – regulators to take action. It demonstrates how independent civil society organisations can play an important role in holding corporates to account: but to do so, they need to be properly resourced.

This is particularly true given the way in which global companies have wielded their huge power to get regulations watered down, perhaps the most shocking aspect of how this has played out in Europe.

Air quality is a serious killer. But addressing it is easier than other public health challenges because it relies more heavily on changing corporate than individual behaviour. It is much more localised than climate change policy: unlike with carbon emissions, action to improve air quality in the UK overwhelmingly benefits the UK. Yet the immense lobbying power of the German car industry has knocked air quality down the agenda both in Brussels and Westminster. As a result, EU emissions tests are far laxer than in the US. There are even legal loopholes that allow car manufacturers to use the type of software that VW was found to be using in the US.

The European Commission and the government have both been warned about the implications: some diesel cars that have passed European laboratory tests have been found to be producing seven times the legal limit of nitrogen oxide emissions. But as reported by this paper today, the government has been seeking to block EU legislation to toughen up emissions tests. And it has ignored European legal limits for nitrogen dioxide levels altogether. It has taken a legal case by the NGO Client Earth to force Defra even to consult on proposals to reduce air pollution, proposals that experts believe fall far short of what’s needed. The scale of government inaction in the face of heavy industry lobbying is staggering even in relation to other public health challenges such as obesity and smoking.

As well as tougher European vehicle testing and a properly resourced plan from government to improve air quality, there needs to be a more holistic approach to environmental policy. Diesel has been promoted as a greener alternative to petrol as a result of its lower carbon emissions, but it performs much worse on air quality. There are similar issues with biomass. Yet climate change policy sits with the department of energy and climate change, while air quality is the responsibility of Defra.

VW’s behaviour has had terrible consequences for global human health. It is only the latest warning that business regulation remains unfit for purpose, and a powerful reminder that corporate lobbying has too often stopped governments taking action to prevent avoidable human suffering. It must not take another corporate scandal on this scale to get governments to act.

How a corporate cult captures and destroys our best graduates

George Monbiot in The Guardian

‘

People who had spent the preceding years laying out exultant visions of a better world were suddenly sucked into the mouths of corporations dangling money like angler fish.’ Photograph: Daniel Pudles

To seek enlightenment, intellectual or spiritual; to do good; to love and be loved; to create and to teach: these are the highest purposes of humankind. If there is meaning in life, it lies here.

Those who graduate from the leading universities have more opportunity than most to find such purpose. So why do so many end up in pointless and destructive jobs? Finance, management consultancy, advertising, public relations, lobbying: these and other useless occupations consume thousands of the brightest students. To take such jobs at graduation, as many will in the next few weeks, is to amputate life close to its base.

I watched it happen to my peers. People who had spent the preceding years laying out exultant visions of a better world, of the grand creative projects they planned, of adventure and discovery, were suddenly sucked into the mouths of corporations dangling money like angler fish.

At first they said they would do it for a year or two, “until I pay off my debts”. Soon afterwards they added: “and my mortgage”. Then it became, “I just want to make enough not to worry any more”. A few years later, “I’m doing it for my family”. Now, in middle age, they reply, “What, that? That was just a student fantasy.”

Why did they not escape, when they perceived that they were being dragged away from their dreams? I have come to see the obscene hours some new recruits must work – sometimes 15 or 16 a day – as a form of reorientation, of brainwashing. You are deprived of the time, sleep and energy you need to see past the place into which you have been plunged. You lose your bearings, your attachments to the world you inhabited before, and become immersed in the culture that surrounds you. Two years of this and many are lost for life.

Employment by the City has declined since the financial crash. Among the universities I surveyed with the excellent researcher John Sheil, the proportion of graduates taking jobs in finance and management consultancy ranges from 5% at Edinburgh to 13% at Oxford, 16% at Cambridge, 28% at the London School of Economics and 60% at the London Business School. But to judge by the number of applications and the rigour of the selection process, these businesses still harvest many of the smartest graduates.

Recruitment begins with lovebombing of the kind that cults use. They sponsor sports teams and debating societies, throw parties, offer meals and drinks, send handwritten letters, use student ambassadors to offer friendship and support. They persuade undergraduates that even if they don’t see themselves as consultants or bankers (few do), these jobs are stepping stones to the careers they really want. They make the initial application easy, and respond immediately and enthusiastically to signs of interest. They offer security and recognition when people are most uncertain and fearful about their future. And there’s the flash of the king’s shilling: the paid internships, the golden hellos, the promise of stupendous salaries within a couple of years. Entrapment is a refined science.

We have but one life. However much money we make, we cannot buy it back. As far as self-direction, autonomy and social utility are concerned, many of those who enter these industries and never re-emerge might as well have locked themselves in a cell at graduation. They lost it all with one false step, taken at a unique moment of freedom

.
We have but one life. However much money we make, we cannot buy it back.

John Sheil and I sent questions to eight of the universities with the highest average graduate salaries: Oxford, Cambridge, Imperial, the LSE, the London Business School, Warwick, Sheffield and Edinburgh. We asked whether they seek to counter these lavish recruitment drives and defend students from the love blitz. With one remarkable exception, their responses ranged from feeble to dismal. Most offered no evidence of any prior interest in these questions. Where we expected deep deliberation to have taken place, we found instead an intellectual vacuum.

They cited their duty of impartiality, which, they believe, prevents them from seeking to influence students’ choices, and explained that there were plenty of other careers on offer. But they appear to have confused impartiality with passivity. Passivity in the face of unequal forces is anything but impartial. Impartiality demands an active attempt to create balance, to resist power, to tell the dark side of the celestial tale being pummelled into the minds of undergraduates by the richest City cults.

Oxford University asked us, “isn’t it preferable that [the City] recruits bright, critical thinkers and socially engaged graduates who are smart enough to hold their employers to account when possible?”. Oh blimey. This is a version ofthe most desperate excuse my college friends attempted: “I’ll reform them from within.” This magical thinking betrays a profound misconception about the nature and purpose of such employers.

They respond to profit, the regulatory environment, the demands of shareholders, not to the consciences of their staff. We all know how they treat whistleblowers. Why should “bright, critical thinkers and socially engaged graduates” be dispatched on this kamikaze mission? I believe these universities are failing in their duty of care.
 

The hero of this story is Gordon Chesterman, head of the careers service at Cambridge, and the only person we spoke to who appears to have given some thought to these questions. He told me his service tries to counter the influence of the richest employers.

It sends out regular emails telling students “if you don’t want to become a banker, you’re not a failure”, and runs an event called “But I don’t want to work in the City”. It imposes a fee on rich recruiters and uses the money to pay the train fares of nonprofits. He expressed anger about being forced by the government to provide data on graduate starting salaries.

“I think it’s a very blunt and inappropriate means [of comparison], that rings alarm bells in my mind.”

Elsewhere, at this vulnerable, mutable, pivotal moment, undergraduates must rely on their own wavering resolve to resist peer pressure, the herd instinct, the allure of money, flattery, prestige and security.

Students, rebel against these soul-suckers! Follow your dreams, however hard it may be, however uncertain success might seem.

The East India Company: The original corporate raiders

William Dalrymple in The Guardian

One of the very first Indian words to enter the English language was the Hindustani slang for plunder: “loot”. According to the Oxford English Dictionary, this word was rarely heard outside the plains of north India until the late 18th century, when it suddenly became a common term across Britain. To understand how and why it took root and flourished in so distant a landscape, one need only visit Powis Castle.

The last hereditary Welsh prince, Owain Gruffydd ap Gwenwynwyn, built Powis castle as a craggy fort in the 13th century; the estate was his reward for abandoning Wales to the rule of the English monarchy. But its most spectacular treasures date from a much later period of English conquest and appropriation: Powis is simply awash with loot from India, room after room of imperial plunder, extracted by the East India Company in the 18th century.

There are more Mughal artefacts stacked in this private house in the Welsh countryside than are on display at any one place in India – even the National Museum in Delhi. The riches include hookahs of burnished gold inlaid with empurpled ebony; superbly inscribed spinels and jewelled daggers; gleaming rubies the colour of pigeon’s blood and scatterings of lizard-green emeralds. There are talwars set with yellow topaz, ornaments of jade and ivory; silken hangings, statues of Hindu gods and coats of elephant armour.

Such is the dazzle of these treasures that, as a visitor last summer, I nearly missed the huge framed canvas that explains how they came to be here. The picture hangs in the shadows at the top of a dark, oak-panelled staircase. It is not a masterpiece, but it does repay close study. An effete Indian prince, wearing cloth of gold, sits high on his throne under a silken canopy. On his left stand scimitar and spear carrying officers from his own army; to his right, a group of powdered and periwigged Georgian gentlemen. The prince is eagerly thrusting a scroll into the hands of a statesmanlike, slightly overweight Englishman in a red frock coat.

The painting shows a scene from August 1765, when the young Mughal emperor Shah Alam, exiled from Delhi and defeated by East India Company troops, was forced into what we would now call an act of involuntary privatisation. The scroll is an order to dismiss his own Mughal revenue officials in Bengal, Bihar and Orissa, and replace them with a set of English traders appointed by Robert Clive – the new governor of Bengal – and the directors of the EIC, who the document describes as “the high and mighty, the noblest of exalted nobles, the chief of illustrious warriors, our faithful servants and sincere well-wishers, worthy of our royal favours, the English Company”. The collecting of Mughal taxes was henceforth subcontracted to a powerful multinational corporation – whose revenue-collecting operations were protected by its own private army.

It was at this moment that the East India Company (EIC) ceased to be a conventional corporation, trading and silks and spices, and became something much more unusual. Within a few years, 250 company clerks backed by the military force of 20,000 locally recruited Indian soldiers had become the effective rulers of Bengal. An international corporation was transforming itself into an aggressive colonial power.

Using its rapidly growing security force – its army had grown to 260,000 men by 1803 – it swiftly subdued and seized an entire subcontinent. Astonishingly, this took less than half a century. The first serious territorial conquests began in Bengal in 1756; 47 years later, the company’s reach extended as far north as the Mughal capital of Delhi, and almost all of India south of that city was by then effectively ruled from a boardroom in the City of London. “What honour is left to us?” asked a Mughal official named Narayan Singh, shortly after 1765, “when we have to take orders from a handful of traders who have not yet learned to wash their bottoms?”

We still talk about the British conquering India, but that phrase disguises a more sinister reality. It was not the British government that seized India at the end of the 18th century, but a dangerously unregulated private company headquartered in one small office, five windows wide, in London, and managed in India by an unstable sociopath – Clive.

In many ways the EIC was a model of corporate efficiency: 100 years into its history, it had only 35 permanent employees in its head office. Nevertheless, that skeleton staff executed a corporate coup unparalleled in history: the military conquest, subjugation and plunder of vast tracts of southern Asia. It almost certainly remains the supreme act of corporate violence in world history. For all the power wielded today by the world’s largest corporations – whether ExxonMobil, Walmart or Google – they are tame beasts compared with the ravaging territorial appetites of the militarised East India Company. Yet if history shows anything, it is that in the intimate dance between the power of the state and that of the corporation, while the latter can be regulated, it will use all the resources in its power to resist.

When it suited, the EIC made much of its legal separation from the government. It argued forcefully, and successfully, that the document signed by Shah Alam – known as the Diwani – was the legal property of the company, not the Crown, even though the government had spent a massive sum on naval and military operations protecting the EIC’s Indian acquisitions. But the MPs who voted to uphold this legal distinction were not exactly neutral: nearly a quarter of them held company stock, which would have plummeted in value had the Crown taken over. For the same reason, the need to protect the company from foreign competition became a major aim of British foreign policy.

FacebookTwitterPinterest Robert Clive, was an unstable sociopath who led the fearsome East India Company to its conquest of the subcontinent. Photograph: Hulton Archive/Hulton Archive/Getty Images

The transaction depicted in the painting was to have catastrophic consequences. As with all such corporations, then as now, the EIC was answerable only to its shareholders. With no stake in the just governance of the region, or its long-term wellbeing, the company’s rule quickly turned into the straightforward pillage of Bengal, and the rapid transfer westwards of its wealth.

Before long the province, already devastated by war, was struck down by the famine of 1769, then further ruined by high taxation. Company tax collectors were guilty of what today would be described as human rights violations. A senior official of the old Mughal regime in Bengal wrote in his diaries: “Indians were tortured to disclose their treasure; cities, towns and villages ransacked; jaghires and provinces purloined: these were the ‘delights’ and ‘religions’ of the directors and their servants.”

Bengal’s wealth rapidly drained into Britain, while its prosperous weavers and artisans were coerced “like so many slaves” by their new masters, and its markets flooded with British products. A proportion of the loot of Bengal went directly into Clive’s pocket. He returned to Britain with a personal fortune – then valued at £234,000 – that made him the richest self-made man in Europe. After the Battle of Plassey in 1757, a victory that owed more to treachery, forged contracts, bankers and bribes than military prowess, he transferred to the EIC treasury no less than £2.5m seized from the defeated rulers of Bengal – in today’s currency, around £23m for Clive and £250m for the company.

No great sophistication was required. The entire contents of the Bengal treasury were simply loaded into 100 boats and punted down the Ganges from the Nawab of Bengal’s palace to Fort William, the company’s Calcutta headquarters. A portion of the proceeds was later spent rebuilding Powis.

The painting at Powis that shows the granting of the Diwani is suitably deceptive: the painter, Benjamin West, had never been to India. Even at the time, a reviewer noted that the mosque in the background bore a suspiciously strong resemblance “to our venerable dome of St Paul”. In reality, there had been no grand public ceremony. The transfer took place privately, inside Clive’s tent, which had just been erected on the parade ground of the newly seized Mughal fort at Allahabad. As for Shah Alam’s silken throne, it was in fact Clive’s armchair, which for the occasion had been hoisted on to his dining room table and covered with a chintz bedspread.

Later, the British dignified the document by calling it the Treaty of Allahabad, though Clive had dictated the terms and a terrified Shah Alam had simply waved them through. As the contemporary Mughal historian Sayyid Ghulam Husain Khan put it: “A business of such magnitude, as left neither pretence nor subterfuge, and which at any other time would have required the sending of wise ambassadors and able negotiators, as well as much parley and conference with the East India Company and the King of England, and much negotiation and contention with the ministers, was done and finished in less time than would usually have been taken up for the sale of a jack-ass, or a beast of burden, or a head of cattle.”

By the time the original painting was shown at the Royal Academy in 1795, however, no Englishman who had witnessed the scene was alive to point this out. Clive, hounded by envious parliamentary colleagues and widely reviled for corruption, committed suicide in 1774 by slitting his own throat with a paperknife some months before the canvas was completed. He was buried in secret, on a frosty November night, in an unmarked vault in the Shropshire village of Morton Say. Many years ago, workmen digging up the parquet floor came across Clive’s bones, and after some discussion it was decided to quietly put them to rest again where they lay. Here they remain, marked today by a small, discreet wall plaque inscribed: “PRIMUS IN INDIS.”

Today, as the company’s most articulate recent critic, Nick Robins, has pointed out, the site of the company’s headquarters in Leadenhall Street lies underneath Richard Rogers’s glass and metal Lloyd’s building. Unlike Clive’s burial place, no blue plaque marks the site of what Macaulay called “the greatest corporation in the world”, and certainly the only one to equal the Mughals by seizing political power across wide swaths of south Asia. But anyone seeking a monument to the company’s legacy need only look around. No contemporary corporation could duplicate its brutality, but many have attempted to match its success at bending state power to their own ends.

The people of Allahabad have also chosen to forget this episode in their history. The red sandstone Mughal fort where the treaty was extracted from Shah Alam – a much larger fort than those visited by tourists in Lahore, Agra or Delhi – is still a closed-off military zone and, when I visited it late last year, neither the guards at the gate nor their officers knew anything of the events that had taken place there; none of the sentries had even heard of the company whose cannons still dot the parade ground where Clive’s tent was erected.

Instead, all their conversation was focused firmly on the future, and the reception India’s prime minister, Narendra Modi, had just received on his trip to America. One of the guards proudly showed me the headlines in the local edition of the Times of India, announcing that Allahabad had been among the subjects discussed in the White House by Modi and President Obama. The sentries were optimistic. India was finally coming back into its own, they said, “after 800 years of slavery”. The Mughals, the EIC and the Raj had all receded into memory and Allahabad was now going to be part of India’s resurrection. “Soon we will be a great country,” said one of the sentries, “and our Allahabad also will be a great city.”
***

At the height of the Victorian period there was a strong sense of embarrassment about the shady mercantile way the British had founded the Raj. The Victorians thought the real stuff of history was the politics of the nation state. This, not the economics of corrupt corporations, they believed was the fundamental unit of analysis and the major driver of change in human affairs. Moreover, they liked to think of the empire as a mission civilisatrice: a benign national transfer of knowledge, railways and the arts of civilisation from west to east, and there was a calculated and deliberate amnesia about the corporate looting that opened British rule in India.

A second picture, this one commissioned to hang in the House of Commons, shows how the official memory of this process was spun and subtly reworked. It hangs now in St Stephen’s Hall, the echoing reception area of parliament. I came across it by chance late this summer, while waiting there to see an MP.

The painting was part of a series of murals entitled the Building of Britain. It features what the hanging committee at the time regarded as the highlights and turning points of British history: King Alfred defeating the Danes in 877, the parliamentary union of England and Scotland in 1707, and so on. The image in this series which deals with India does not, however, show the handing over of the Diwani but an earlier scene, where again a Mughal prince is sitting on a raised dais, under a canopy. Again, we are in a court setting, with bowing attendants on all sides and trumpets blowing, and again an Englishman is standing in front of the Mughal. But this time the balance of power is very different.

Sir Thomas Roe, the ambassador sent by James I to the Mughal court, is shown appearing before the Emperor Jahangir in 1614 – at a time when the Mughal empire was still at its richest and most powerful. Jahangir inherited from his father Akbar one of the two wealthiest polities in the world, rivalled only by Ming China. His lands stretched through most of India, all of what is now Pakistan and Bangladesh, and most of Afghanistan. He ruled over five times the population commanded by the Ottomans – roughly 100 million people. His capitals were the megacities of their day.

In Milton’s Paradise Lost, the great Mughal cities of Jahangir’s India are shown to Adam as future marvels of divine design. This was no understatement: Agra, with a population approaching 700,000, dwarfed all of the cities of Europe, while Lahore was larger than London, Paris, Lisbon, Madrid and Rome combined. This was a time when India accounted for around a quarter of all global manufacturing. In contrast, Britain then contributed less than 2% to global GDP, and the East India Company was so small that it was still operating from the home of its governor, Sir Thomas Smythe, with a permanent staff of only six. It did, however, already possess 30 tall ships and own its own dockyard at Deptford on the Thames.

FacebookTwitterPinterest An East India Company grandee. Photograph: Getty Images

Jahangir’s father Akbar had flirted with a project to civilise India’s European immigrants, whom he described as “an assemblage of savages”, but later dropped the plan as unworkable. Jahangir, who had a taste for exotica and wild beasts, welcomed Sir Thomas Roe with the same enthusiasm he had shown for the arrival of the first turkey in India, and questioned Roe closely on the distant, foggy island he came from, and the strange things that went on there.

For the committee who planned the House of Commons paintings, this marked the beginning of British engagement with India: two nation states coming into direct contact for the first time. Yet, in reality, British relations with India began not with diplomacy and the meeting of envoys, but with trade. On 24 September, 1599, 80 merchants and adventurers met at the Founders Hall in the City of London and agreed to petition Queen Elizabeth I to start up a company. A year later, the Governor and Company of Merchants trading to the East Indies, a group of 218 men, received a royal charter, giving them a monopoly for 15 years over “trade to the East”.

The charter authorised the setting up of what was then a radical new type of business: not a family partnership – until then the norm over most of the globe – but a joint-stock company that could issue tradeable shares on the open market to any number of investors, a mechanism capable of realising much larger amounts of capital. The first chartered joint-stock company was the Muscovy Company, which received its charter in 1555. The East India Company was founded 44 years later. No mention was made in the charter of the EIC holding overseas territory, but it did give the company the right “to wage war” where necessary.

Six years before Roe’s expedition, on 28 August 1608, William Hawkins had landed at Surat, the first commander of a company vessel to set foot on Indian soil. Hawkins, a bibulous sea dog, made his way to Agra, where he accepted a wife offered to him by the emperor, and brought her back to England. This was a version of history the House of Commons hanging committee chose to forget.

The rapid rise of the East India Company was made possible by the catastrophically rapid decline of the Mughals during the 18th century. As late as 1739, when Clive was only 14 years old, the Mughals still ruled a vast empire that stretched from Kabul to Madras. But in that year, the Persian adventurer Nadir Shah descended the Khyber Pass with 150,000 of his cavalry and defeated a Mughal army of 1.5 million men. Three months later, Nadir Shah returned to Persia carrying the pick of the treasures the Mughal empire had amassed in its 200 years of conquest: a caravan of riches that included Shah Jahan’s magnificent peacock throne, the Koh-i-Noor, the largest diamond in the world, as well as its “sister”, the Darya Nur, and “700 elephants, 4,000 camels and 12,000 horses carrying wagons all laden with gold, silver and precious stones”, worth an estimated £87.5m in the currency of the time. This haul was many times more valuable than that later extracted by Clive from the peripheral province of Bengal.

The destruction of Mughal power by Nadir Shah, and his removal of the funds that had financed it, quickly led to the disintegration of the empire. That same year, the French Compagnie des Indes began minting its own coins, and soon, without anyone to stop them, both the French and the English were drilling their own sepoys and militarising their operations. Before long the EIC was straddling the globe. Almost single-handedly, it reversed the balance of trade, which from Roman times on had led to a continual drain of western bullion eastwards. The EIC ferried opium to China, and in due course fought the opium wars in order to seize an offshore base at Hong Kong and safeguard its profitable monopoly in narcotics. To the west it shipped Chinese tea to Massachusetts, where its dumping in Boston harbour triggered the American war of independence.

By 1803, when the EIC captured the Mughal capital of Delhi, it had trained up a private security force of around 260,000- twice the size of the British army – and marshalled more firepower than any nation state in Asia. It was “an empire within an empire”, as one of its directors admitted. It had also by this stage created a vast and sophisticated administration and civil service, built much of London’s docklands and come close to generating nearly half of Britain’s trade. No wonder that the EIC now referred to itself as “the grandest society of merchants in the Universe”.

Yet, like more recent mega-corporations, the EIC proved at once hugely powerful and oddly vulnerable to economic uncertainty. Only seven years after the granting of the Diwani, when the company’s share price had doubled overnight after it acquired the wealth of the treasury of Bengal, the East India bubble burst after plunder and famine in Bengal led to massive shortfalls in expected land revenues. The EIC was left with debts of £1.5m and a bill of £1m unpaid tax owed to the Crown. When knowledge of this became public, 30 banks collapsed like dominoes across Europe, bringing trade to a standstill.

In a scene that seems horribly familiar to us today, this hyper-aggressive corporation had to come clean and ask for a massive government bailout. On 15 July 1772, the directors of the East India Company applied to the Bank of England for a loan of £400,000. A fortnight later, they returned, asking for an additional £300,000. The bank raised only £200,000. By August, the directors were whispering to the government that they would actually need an unprecedented sum of a further £1m. The official report the following year, written by Edmund Burke, foresaw that the EIC’s financial problems could potentially “like a mill-stone, drag [the government] down into an unfathomable abyss … This cursed Company would, at last, like a viper, be the destruction of the country which fostered it at its bosom.”


The East India Company really was too big to fail. So it was that in 1773 it was saved by history’s first mega-bailout

But unlike Lehman Brothers, the East India Company really was too big to fail. So it was that in 1773, the world’s first aggressive multinational corporation was saved by history’s first mega-bailout – the first example of a nation state extracting, as its price for saving a failing corporation, the right to regulate and severely rein it in.
***

In Allahabad, I hired a small dinghy from beneath the fort’s walls and asked the boatman to row me upstream. It was that beautiful moment, an hour before sunset, that north Indians call godhulibela – cow-dust time – and the Yamuna glittered in the evening light as brightly as any of the gems of Powis. Egrets picked their way along the banks, past pilgrims taking a dip near the auspicious point of confluence, where the Yamuna meets the Ganges. Ranks of little boys with fishing lines stood among the holy men and the pilgrims, engaged in the less mystical task of trying to hook catfish. Parakeets swooped out of cavities in the battlements, mynahs called to roost.

For 40 minutes we drifted slowly, the water gently lapping against the sides of the boat, past the mile-long succession of mighty towers and projecting bastions of the fort, each decorated with superb Mughal kiosks, lattices and finials. It seemed impossible that a single London corporation, however ruthless and aggressive, could have conquered an empire that was so magnificently strong, so confident in its own strength and brilliance and effortless sense of beauty.

Historians propose many reasons: the fracturing of Mughal India into tiny, competing states; the military edge that the industrial revolution had given the European powers. But perhaps most crucial was the support that the East India Company enjoyed from the British parliament. The relationship between them grew steadily more symbiotic throughout the 18th century. Returned nabobs like Clive used their wealth to buy both MPs and parliamentary seats – the famous Rotten Boroughs. In turn, parliament backed the company with state power: the ships and soldiers that were needed when the French and British East India Companies trained their guns on each other.

As I drifted on past the fort walls, I thought about the nexus between corporations and politicians in India today – which has delivered individual fortunes to rival those amassed by Clive and his fellow company directors. The country today has 6.9% of the world’s thousand or so billionaires, though its gross domestic product is only 2.1% of world GDP. The total wealth of India’s billionaires is equivalent to around 10% of the nation’s GDP – while the comparable ratio for China’s billionaires is less than 3%. More importantly, many of these fortunes have been created by manipulating state power – using political influence to secure rights to land and minerals, “flexibility” in regulation, and protection from foreign competition.

Multinationals still have villainous reputations in India, and with good reason; the many thousands of dead and injured in the Bhopal gas disaster of 1984 cannot be easily forgotten; the gas plant’s owner, the American multinational, Union Carbide, has managed to avoid prosecution or the payment of any meaningful compensation in the 30 years since. But the biggest Indian corporations, such as Reliance, Tata, DLF and Adani have shown themselves far more skilled than their foreign competitors in influencing Indian policymakers and the media. Reliance is now India’s biggest media company, as well as its biggest conglomerate; its owner, Mukesh Ambani, has unprecedented political access and power.

The last five years of India’s Congress party government were marked by a succession of corruption scandals that ranged from land and mineral giveaways to the corrupt sale of mobile phone spectrum at a fraction of its value. The consequent public disgust was the principal reason for the Congress party’s catastrophic defeat in the general election last May, though the country’s crony capitalists are unlikely to suffer as a result.

Estimated to have cost $4.9bn – perhaps the second most expensive ballot in democratic history after the US presidential election in 2012 – it brought Narendra Modi to power on a tidal wave of corporate donations. Exact figures are hard to come by, but Modi’s Bharatiya Janata party (BJP), is estimated to have spent at least $1bn on print and broadcast advertising alone. Of these donations, around 90% comes from unlisted corporate sources, given in return for who knows what undeclared promises of access and favours. The sheer strength of Modi’s new government means that those corporate backers may not be able to extract all they had hoped for, but there will certainly be rewards for the money donated.

In September, the governor of India’s central bank, Raghuram Rajan, made a speech in Mumbai expressing his anxieties about corporate money eroding the integrity of parliament: “Even as our democracy and our economy have become more vibrant,” he said, “an important issue in the recent election was whether we had substituted the crony socialism of the past with crony capitalism, where the rich and the influential are alleged to have received land, natural resources and spectrum in return for payoffs to venal politicians. By killing transparency and competition, crony capitalism is harmful to free enterprise, and economic growth. And by substituting special interests for the public interest, it is harmful to democratic expression.”

His anxieties were remarkably like those expressed in Britain more than 200 years earlier, when the East India Company had become synonymous with ostentatious wealth and political corruption: “What is England now?” fumed the Whig litterateur Horace Walpole, “A sink of Indian wealth.” In 1767 the company bought off parliamentary opposition by donating £400,000 to the Crown in return for its continued right to govern Bengal. But the anger against it finally reached ignition point on 13 February 1788, at the impeachment, for looting and corruption, of Clive’s successor as governor of Bengal, Warren Hastings. It was the nearest the British ever got to putting the EIC on trial, and they did so with one of their greatest orators at the helm – Edmund Burke.

FacebookTwitterPinterest Portraits of Nabobs, or representatives of the East India Company. Photograph: Alamy

Burke, leading the prosecution, railed against the way the returned company “nabobs” (or “nobs”, both corruptions of the Urdu word “Nawab”) were buying parliamentary influence, not just by bribing MPs to vote for their interests, but by corruptly using their Indian plunder to bribe their way into parliamentary office: “To-day the Commons of Great Britain prosecutes the delinquents of India,” thundered Burke, referring to the returned nabobs. “Tomorrow these delinquents of India may be the Commons of Great Britain.”

Burke thus correctly identified what remains today one of the great anxieties of modern liberal democracies: the ability of a ruthless corporation corruptly to buy a legislature. And just as corporations now recruit retired politicians in order to exploit their establishment contacts and use their influence, so did the East India Company. So it was, for example, that Lord Cornwallis, the man who oversaw the loss of the American colonies to Washington, was recruited by the EIC to oversee its Indian territories. As one observer wrote: “Of all human conditions, perhaps the most brilliant and at the same time the most anomalous, is that of the Governor General of British India. A private English gentleman, and the servant of a joint-stock company, during the brief period of his government he is the deputed sovereign of the greatest empire in the world; the ruler of a hundred million men; while dependant kings and princes bow down to him with a deferential awe and submission. There is nothing in history analogous to this position …”

Hastings survived his impeachment, but parliament did finally remove the EIC from power following the great Indian Uprising of 1857, some 90 years after the granting of the Diwani and 60 years after Hastings’s own trial. On 10 May 1857, the EIC’s own security forces rose up against their employer and on successfully crushing the insurgency, after nine uncertain months, the company distinguished itself for a final time by hanging and murdering tens of thousands of suspected rebels in the bazaar towns that lined the Ganges – probably the most bloody episode in the entire history of British colonialism.

Enough was enough. The same parliament that had done so much to enable the EIC to rise to unprecedented power, finally gobbled up its own baby. The British state, alerted to the dangers posed by corporate greed and incompetence, successfully tamed history’s most voracious corporation. In 1859, it was again within the walls of Allahabad Fort that the governor general, Lord Canning, formally announced that the company’s Indian possessions would be nationalised and pass into the control of the British Crown. Queen Victoria, rather than the directors of the EIC would henceforth be ruler of India.

The East India Company limped on in its amputated form for another 15 years, finally shutting down in 1874. Its brand name is now owned by a Gujarati businessman who uses it to sell “condiments and fine foods” from a showroom in London’s West End. Meanwhile, in a nice piece of historical and karmic symmetry, the current occupant of Powis Castle is married to a Bengali woman and photographs of a very Indian wedding were proudly on show in the Powis tearoom. This means that Clive’s descendants and inheritors will be half-Indian.
***

Today we are back to a world that would be familiar to Sir Thomas Roe, where the wealth of the west has begun again to drain eastwards, in the way it did from Roman times until the birth of the East India Company. When a British prime minister (or French president) visits India, he no longer comes as Clive did, to dictate terms. In fact, negotiation of any kind has passed from the agenda. Like Roe, he comes as a supplicant begging for business, and with him come the CEOs of his country’s biggest corporations.


The idea of the joint-stock company is arguably one of Britain’s most important exports to India

For the corporation – a revolutionary European invention contemporaneous with the beginnings of European colonialism, and which helped give Europe its competitive edge – has continued to thrive long after the collapse of European imperialism. When historians discuss the legacy of British colonialism in India, they usually mention democracy, the rule of law, railways, tea and cricket. Yet the idea of the joint-stock company is arguably one of Britain’s most important exports to India, and the one that has for better or worse changed South Asia as much any other European idea. Its influence certainly outweighs that of communism and Protestant Christianity, and possibly even that of democracy.

Companies and corporations now occupy the time and energy of more Indians than any institution other than the family. This should come as no surprise: as Ira Jackson, the former director of Harvard’s Centre for Business and Government, recently noted, corporations and their leaders have today “displaced politics and politicians as … the new high priests and oligarchs of our system”. Covertly, companies still govern the lives of a significant proportion of the human race.

The 300-year-old question of how to cope with the power and perils of large multinational corporations remains today without a clear answer: it is not clear how a nation state can adequately protect itself and its citizens from corporate excess. As the international subprime bubble and bank collapses of 2007-2009 have so recently demonstrated, just as corporations can shape the destiny of nations, they can also drag down their economies. In all, US and European banks lost more than $1tn on toxic assets from January 2007 to September 2009. What Burke feared the East India Company would do to England in 1772 actually happened to Iceland in 2008-11, when the systemic collapse of all three of the country’s major privately owned commercial banks brought the country to the brink of complete bankruptcy. A powerful corporation can still overwhelm or subvert a state every bit as effectively as the East India Company did in Bengal in 1765.

Corporate influence, with its fatal mix of power, money and unaccountability, is particularly potent and dangerous in frail states where corporations are insufficiently or ineffectually regulated, and where the purchasing power of a large company can outbid or overwhelm an underfunded government. This would seem to have been the case under the Congress government that ruled India until last year. Yet as we have seen in London, media organisations can still bend under the influence of corporations such as HSBC – while Sir Malcolm Rifkind’s boast about opening British embassies for the benefit of Chinese firms shows that the nexus between business and politics is as tight as it has ever been.

The East India Company no longer exists, and it has, thankfully, no exact modern equivalent. Walmart, which is the world’s largest corporation in revenue terms, does not number among its assets a fleet of nuclear submarines; neither Facebook nor Shell possesses regiments of infantry. Yet the East India Company – the first great multinational corporation, and the first to run amok – was the ultimate model for many of today’s joint-stock corporations. The most powerful among them do not need their own armies: they can rely on governments to protect their interests and bail them out. The East India Company remains history’s most terrifying warning about the potential for the abuse of corporate power – and the insidious means by which the interests of shareholders become those of the state. Three hundred and fifteen years after its founding, its story has never been more current.

Taming corporate power: the key political issue of our age

Big business and its lobbyists have taken control of our politics. But there is an alternative. In the first of a new series, here’s how we can take on the fat cats

• 
• • George Monbiot
  • The Guardian, Monday 8 December 2014

Illustration by George Monbiot

Does this sometimes feel like a country under enemy occupation? Do you wonder why the demands of so much of the electorate seldom translate into policy? Why parties of the left seem incapable of offering effective opposition to market fundamentalism, let alone proposing coherent alternatives? Do you wonder why those who want a kind and decent and just world, in which both human beings and other living creatures are protected, so often appear to be opposed by the entire political establishment?

If so, you have encountered corporate power – the corrupting influence that prevents parties from connecting with the public, distorts spending and tax decisions, and limits the scope of democracy. It helps explain the otherwise inexplicable: the creeping privatisation of health and education, hated by the vast majority of voters; the private finance initiative, which has left public services with unpayable debts; the replacement of the civil service with companies distinguished only by incompetence; the failure to re-regulate the banks and collect tax; the war on the natural world; the scrapping of the safeguards that protect us from exploitation; above all, the severe limitation of political choice in a nation crying out for alternatives.

There are many ways in which it operates, but perhaps the most obvious is through our unreformed political funding system, which permits big business and multimillionaires in effect to buy political parties. Once a party is obliged to them, it needs little reminder of where its interests lie. Fear and favour rule.

And if they fail? Well, there are other means. Before the last election, a radical firebrand said this about the lobbying industry: “It is the next big scandal waiting to happen ... an issue that exposes the far-too-cosy relationship between politics, government, business and money ... secret corporate lobbying, like the expenses scandal, goes to the heart of why people are so fed up with politics.” That, of course, was David Cameron, and he’s since ensured that the scandal continues. His Lobbying Act restricts the activities of charities and trade unions but imposes no meaningful restraint on corporations.

Ministers and civil servants know that if they keep faith with corporations in office they will be assured of lucrative directorships in retirement. As head of HMRC, the UK government’s tax-collection agency, Dave Hartnett oversaw some highly controversial deals with companies such as Vodafone and Goldman Sachs, apparently excusing them from much of the tax they seemed to owe. He now works for Deloitte, which advises companies such as Vodafone on their tax affairs. As head of HMRC he met one Deloitte partner 48 times.

Corporations have also been empowered by the globalisation of decision-making. As powers, but not representation, shift to the global level, multinational business and its lobbyists fill the political gap. When everything has been globalised except our consent, we are vulnerable to decisions made outside the democratic sphere.

The key political question of our age, by which you can judge the intent of all political parties, is what to do about corporate power. This is the question, perennially neglected within both politics and the media, that this week’s series of articles will attempt to address. I think there are some obvious first steps.

A sound political funding system would be based on membership fees. Each party would be able to charge the same fixed fee for annual membership (perhaps £30 or £50). It would receive matching funding from the state as a multiple of its membership receipts. No other sources of income would be permitted. As well as getting the dirty money out of politics, this would force political parties to reconnect with the people, to raise their membership. It will cost less than the money wasted on corporate welfare every day.

All lobbying should be transparent. Any meeting between those who are paid to influence opinion (this could include political commentators like me) and ministers, advisers or civil servants should be recorded, and the transcript made publicly available. The corporate lobby groups that pose as thinktanks should be obliged to reveal who funds them before appearing on the broadcast media; and if the identity of one of their funders is relevant to the issue they are discussing, it should be mentioned on air.

Any company supplying public services would be subject to freedom of information laws (with an exception for matters deemed commercially confidential by the information commissioner). Gagging contracts would be made illegal, in the private as well as the public sector (with the same exemption for commercial confidentiality). Ministers and top officials should be forbidden from taking jobs in the sectors they were charged with regulating.

But we should also think of digging deeper. Is it not time we reviewed the remarkable gift we have granted to companies in the form of limited liability? It socialises the risks that would otherwise be carried by a company’s owners and directors, exempting them from the costs of the debts they incur or the disasters they cause, and encouraging them to engage in the kind of reckless behaviour that caused the financial crisis. Should the wealthy authors of the crisis, such as RBS chief Fred Goodwin or Northern Rock’s Matt Ridley, not have incurred a financial penalty of their own?

We should look at how we might democratise the undemocratic institutions of global governance, as I suggested in my book The Age of Consent. This could involve dismantling the World Bank and the IMF, which are governed without a semblance of democracy, and cause more crises than they solve, and replacing them with a body rather like the international clearing union designed by John Maynard Keynes in the 1940s – whose purpose was to prevent excessive trade surpluses and deficits from forming, and therefore international debt from accumulating.

Instead of treaties brokered in opaque meetings (of the kind now working towards atransatlantic trade and investment partnership) between diplomats and transnational capital – which threaten democracy, the sovereignty of parliaments and the principle of equality before the law – we should demand a set of global fair trade rules. Multinational companies should lose their licence to trade if they break them.

Above all, perhaps, we need a directly elected world parliament, whose purpose would be to hold other global bodies to account. In other words, instead of only responding to an agenda set by corporations, we must propose an agenda of our own.

This is not only about politicians, it is also about us. Corporate power has shut down our imagination, persuading us that there is no alternative to market fundamentalism, and that “market” is a reasonable description of a state-endorsed corporate oligarchy.

We have been persuaded that we have power only as consumers, that citizenship is an anachronism, that changing the world is either impossible or best effected by buying a different brand of biscuits. Corporate power now lives within us. Confronting it means shaking off the manacles it has imposed on our minds.