Catallaxy Files

The business of business is no longer business.  It is now something completely different.

Nowadays the business of business is a cocktail of social and socialist agendas funded through higher than necessary prices by businesses protected from competition by government.  It is the most recent incarnation of stamocap, state monopoly capitalism.

If you are a business who wants to engage in business, you need to find a new business to engage in.

A whole new industrial complex has emerged from the new NGO sector seeking to shape, promote and propagate social policy through business and the private sector.  Why bother nationalising business and industry when government and its NGO acolytes can achieve the same political outcomes without the political costs.

Have a look a the work of social NGOs such as the Australian Institute of Company Directors, the ASX Corporate Governance Council and business schools who no longer seem have any interest in identifying and teaching best business practice.  It is now about best social practice.

Consider this.  The UTS business school last week hosted a discussion titled The Banking Royal Commission: How Should Business Schools Respond.  And at this discussion, Walter Jarvis, the director of the UTS Master of Management course said:

business was about serving society and that meant looking after not just shareholders but all stakeholders

For those who did not hear that properly, let’s just repeat that:

business was about serving society and that meant looking after not just shareholders but all stakeholders

Business used to be about delivering a product or service above the cost of production to customers who were prepared to VOLUNTARILY pay for that product or service, and ideally come back.  Yes, employees, shareholders and broader stakeholders were important, but at the core, at the center, was the customer.  Much like the tax payer, the customer is no longer that important.  Customers, in the mine of the business socialisation industrial complex, are a nice but not necessary ingredient.

Reflect upon your local butcher shop, trying to deal with rising electricity prices, rising rent and rising labour costs trying to sell its products to customers at a price they are prepared to pay.  Sitting of an evening, rather than going through sales and costs figures, said butcher is working on strategies to ensure that he only sources methane neutral meat and that he has an appropriate gender balance on his staff and board – and if he does not have a board, working out how to get a board with at least 30% women.

And thanks to the National Party, the Hayne Royal Commission has turbocharged this process of quasi-nationalisation.  While the Hayne Banking Royal Commission was an important process, it failed to ask the fundamental question and as a consequence the conclusions and recommendations address the wrong issues.  In case there are any politicians or political staffers reading, let’s try to explain this another way.

Consider the following scenario.  You have the people who build stadiums (unrelated to Allianz) and ensure a constant supply of Christians, you have the lions and you have the Christians.

If the lions kill and eat the Christians, who carries most of the blame?  It’s not the Christians.  Perhaps the lions have some blame, but they are behaving as lions behave.  The greatest share of blame belongs to the people who build the stadiums , ensure the constant supply of Christians and subsidise the breeding of lions.

In contemporary Australian financial services, the Stadium builders and Christian suppliers are the Government.  They created giant financial system edifice through things like the RBA, ASIC and APRA.  They then made sure there was a steady supply of Christians through compulsory superannuation and financial services laws.  And when the Christians were killed, they blamed the lions.

But it all makes sense because the academy and the experts agree it is the fault of the lions.  After all, there are no consulting fees and lectures to give if the government, dare it be said, got the hell out of the way.

The new and current business of business is compliance and tax revenue generation.  Customers, well, they are for the textbooks.  Old textbooks for historians to study.