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The Tories are the party of crony capitalism

THIS month Michael Gove gave a speech at Policy Exchange. The speech was boosted much further than the average Tory think tank talk: the Daily Mail headline read Gove’s Crony Capitalists Crackdown: He Declares War on Fat Cat Executives Who Have ‘Rigged the System’ to Build Huge Fortunes.

Attacking the worst aspects of capitalism is a familiar ritual for Tory wannabe leaders. In 2010 David Cameron gave a speech, also decrying “crony capitalism.” 

On becoming Prime Minister in 2016, Theresa May gave a speech saying she would fix the “burning injustice” of unfairness to poor and black British people, take on the “powerful,” the “mighty” and the “wealthy.” 

She announced that her mission “to make Britain a country that works for everyone means more than fighting these injustices” because “if you’re from an ordinary working-class family, life is much harder than many people in Westminster realise.”

We can see two things. First, Gove wants to be Tory leader, because castigating capitalism is something future Tory PMs do. 

Second, these promises are not just predictable, they are predictably empty. Is there less crony capitalism after Cameron? Hardly. Government-linked firms like Carillion continued to suck in billions of public contracts for shoddy work. 

Are poor people or ethnic minorities being looked after by May? Hardly. She is stealing their benefits and even their citizenship.
Let’s look more closely at Gove’s speech.

Gove declared that “while capitalism has brought both growth and progress in the past, it is not delivering now.” 

He said that the rich were getting richer while wages were stagnating because “economic power has been concentrated in the hands of a few and crony capitalists have rigged the system in their favour and against the rest of us.”  

Gove emphasised that billionaires and corporations were especially guilty of environmental crimes, of making the world “dumping grounds for chemicals and plastics.”

A key reason for this “increased concentration of wealth and power in the hands of the already wealthy and powerful” 
is “a tendency towards crony capitalism in developed nations.

“Established economic interests have the time, money and personnel to get close to government,” so “companies with cash in the bank make sure to spend a generous slug on lobbying and securing rules that favour their interests.”

This is very true. But it also means Gove’s Tories are unlikely to change anything.  

Let’s look at one powerful company, Vedanta Resources.
Vedanta is an international metals and mining company with a British HQ. It is listed on the London Stock Exchange. 

Its place in the City of London gives Vedanta respectability and easier access to investment. Vedanta boss Anil Agarwal is a billionaire who has “concentrated wealth and power” in his hands. He has also despoiled the environment.

This got very serious this May, when 13 protesters were shot dead by police outside Vedanta’s Sterlite Copper Smelting Plant in Tamil Nadu, south India.

The protest was against Vedanta’s plan to double the size of the plant, despite 20 years of active opposition from locals, who say the factory’s pollution causes diseases including asthma and cancers.
Vedanta has faced many accusations of pollution and other problems, at its Indian copper plant and elsewhere.

The state government of Tamil Nadu has shut down the plant several times over pollution complaints. India’s Supreme Court also fined Vedanta £12 million in 2013 for pollution.

In 2009 a British government-backed watchdog slammed Vedanta in an official report, saying: “Vedanta did not respect the rights and freedoms” of local people around its bauxite mine in India. 

In 2010 the Church of England ended all its substantial investments in Vedanta because of complaints about human rights and pollution. Amnesty International has also frequently criticised Vedanta’s human rights record. 

In 2017, 2,000 Zambian villagers were granted the right to sue Vedanta in British courts over pollution from Vedanta’s copper mines: judges overruled Vedanta’s attempt to stop the court case.

In January 2018 a British court ruled Vedanta must pay the Zambian government an extra $139m, money which Zambia says Vedanta owed it in underpayments for mining agreements.

So Vedanta is the very picture of the concentration of power in the hands of the polluting rich. Labour argued for a firm response to the killings in India. 

John McDonnell called for Vedanta to be de-listed from the stock exchange to stop “further reputational damage to London’s financial markets from this rogue corporation.”

But neither Gove nor his government would back this pressure on Vedanta. This may be because Agarwal, the billionaire chairman, founder and part-owner of Vedanta, has given the Tories £103,673 since 2015.

It’s a pattern for the firm. It also gave around £400,000 to India’s ruling party, the BJP.

When Gove says the crony capitalists rig the system by spending money to get close to government, he is right. But he forgot to say one of the main ways they do this is by throwing money at his own party. 

Gove can make a speech about cracking down on “crony” capitalism but he won’t do anything about it. Cronyism is an inbuilt tendency in capitalism, not an add-on. And his Conservative Party is the party of the crony capitalists. 

Other crony capitalist parties are available.

Charlie Mullins’s firm Pimlico Plumbers has been fighting for years to keep “wealth, and power in the hands of the already wealthy and powerful.” 

Principally Mullins wants to define his staff as “self-employed,” so his plumbers have fewer workplace rights. This month one of his plumbers, who had been sacked because he wanted to work part-time following a heart attack, won a case against Pimlico Plumbers. 

Gary Smith proved in court he should have had workers’ rights, including against unfair dismissal, because he wasn’t just “self-employed.” It’s an important blow against the rights-free “gig economy.” 

Mullins has always tried to keep politicians to his way of thinking by giving them money. 

Pimlico Plumbers has given the Tories £64,000 in donations, as well as helping fund its conferences with a big, elaborate “Pimlico Plumbers” stall. 

However, Mullins fell out with the Tories over Brexit — which he is very much against. No matter. He has new political friends. 

According to the latest Electoral Commission report, Pimlico Plumbers gave the Lib Dems £25,000 in March. So the next time the Lib Dems talk about unfairness in the workplace, remember they are funded by one of the unfair employers.

Solomon Hughes writes every Friday in the Morning Star. Follow him on Twitter @SolHughesWriter.


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