The collapse of Peacocks is a tragedy for all those who work there, and a major blow to the Welsh economy, given that Peacocks is one of the few large companies to be headquartered here. Whatever happens by way of salvage, it seems inevitable that what emerges will be a smaller and leaner company – with a much reduced workforce.
It isn’t the only company to be facing difficulties of course; many others have already been hit, and we can be certain that more will be hit in the future. The reaction from opposition politicians (and it really doesn’t matter which party or parties are in government and which in opposition) is that somebody must do something.
The somebody is invariably code for ‘the government’; and given the essential similarity of economic policy of the government and the opposition, the something inevitably means the use of public money, since the differences in economic policy between opposition and government are too small and too long term to make a difference at the point at which a company has failed.
As an instinctive interventionist, I don’t see anything wrong, in principle, with the use of public funds to rescue private firms and save jobs and livelihoods. It’s the practice which concerns me, not the principle.
It is a fundamental tenet of the capitalism whose image the UK parties are all busily trying to burnish that capital gets rewarded for taking risk, and that capital gets the lion’s share of the rewards of success. The question is over how much risk they’re really taking if public funds are being used for rescues when a capitalist enterprise fails. It’s another example of privatised rewards and socialised risk. And it often looks as though the biggest risks of all are borne by those who have little choice but to work for a capitalist enterprise.
The danger in using public money to bail out private companies is that governments are usually asked to step in only after the banks have already decided that the risk of default is too great for them to loan the money. I’m not sure on what basis anyone believes that governments are better placed than banks to predict the success or failure of an enterprise; it seems a highly unlikely proposition to me.
Perhaps rather than lending or giving money direct to the companies to bail them out, the government might think about lending or giving it to the employees for them to take a growing stake in the companies for which they work. It would not only give them a greater stake in the success of the enterprise, but it would also start to rebalance the economy away from a pure capitalist model. After all, Marx said that capitalism contains within itself the seeds of its own destruction. All we need is the mechanism to give effect to that, and the failure of capitalist company after capitalist company might even be creating opportunities if we look for them.