Business, State, and Community: ‘Responsible Risk Takers’, New Labour, and the Governance of Corporate Business

Published date01 March 2000
Date01 March 2000
In December 1998, Peter Mandelson MP, one of the principal architects
of the Labour Party’s victory in the May 1997 general election, dramati-
cally resigned as Secretary of State for Trade and Industry. Nevertheless,
despite his relatively brief period in that office, Mr. Mandelson left his
imprint on policy through the publication in November 1998 of a major
White Paper,
‘Our Competitive Future: Building the Knowledge Driven
Economy’. The White Paper sets out the New Labour analysis of the
national political economy in a globalized world economy and is very much
influenced by Mr. Mandelson’s experience of the entrepreneurial spirit
during his fact-finding visit to the United States of America. This article
seeks to chart the relationship between New Labour’s desire to foster the
development of the corporate sector within a vibrant entrepreneurial cul-
ture and the need to ensure that the integrity of the market is preserved in
an arena which is seen as inimicable to strong regulatory intervention by
the state. As well as mapping New Labour’s political rhetoric onto con-
temporary debates in corporate governance, the analysis will involve an
examination of the interface between business practice and morality. In
particular, the article will focus upon the role of the conception of compa-
ny directors as ‘responsible risk takers’ and the upon the use of name-and-
shame sanctions in the development of an entrepreneurial culture in which
all corporate enterprises are seen as having a legitimate societal ‘licence
to operate’.
The changes we face in the 21st century economy involve permanent economic revolu-
tion: continuous and rapid innovation that compels unprecedented flexibility and
adaptability in skills and knowledge. Increasingly every good and every service will be
© Blackwell Publishers Ltd 2000, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA
* Department of Law, University of Leeds, Leeds LS2 9JT, England
I wish to thank Michael Cardwell, Sarah Lowrie, Jo Shaw, and Sally Wheeler for their help-
ful comments and suggestions. This article is written as at 31 October 1999.
ISSN: 0263–323X, pp. 151–77
Business, State, and Community: ‘Responsible Risk Takers’,
New Labour, and the Governance of Corporate Business
exposed to relentless global competition. And to equip ourselves best to meet and
master these challenges, we need a pro-enterprise, pro-opportunity Britain.1
This article seeks to examine some of the various dimensions of the gover-
nance of corporate business in modern Britain. In order to do this, it is pro-
posed to sketch out an overview of New Labour’s approach to the subject
as informed by its analysis of the wider political economy. It should be
noted that the primary objective of the article is to map this political
rhetoric on to contemporary debates in corporate law and governance and
that space does not permit an extensive critical analysis of the many con-
testable concepts involved therein.
The importance of the current political interest in corporate law and gov-
ernance should not be underestimated. Whilst such interest is hardly novel,
the communitarian approach of New Labour has the potential to transcend
the Thatcherite neo-liberal dichotomy between the private world of the eco-
nomic actor and the public world of the societal actor through the creation
of new regulatory spaces and community-based discursive processes. It
remains to be seen if such spaces or processes will emerge in actuality, as
this will depend upon whether New Labour’s particular communitarian
mix proceeds by dialogue or edict.
There is no shortage of primary source material in relation to United
Kingdom company law as there is at present a great deal of interest in the
subject in a large part due to the very extensive technical review of the area
being undertaken currently by the Department of Trade and Industry. The
aim of the review is to evaluate critically and holisitically the structural
basis of United Kingdom company law that was laid down in the nine-
teenth century (and which has only been revised incrementally during the
present century), so as to address explicitly the regulatory issues arising in
the contemporary global economy, and thereby to provide a modern facil-
itative framework of company law that will be effective in promoting and
sustaining an entrepreneurial economy.
The article will, in particular, draw upon two crucial Department of
Trade and Industry (DTI) consultation documents that have been issued in
the course of the review.2In order to chart the political dimensions of the
debate, it is also proposed to centre discussion around three key speeches
by the present Secretary of State for Trade and Industry, Stephen Byers
MP, namely, the speeches at the Lord Mayor’s Trade and Industry Dinner
at the Mansion House (2 February 1999), which first introduced the con-
cept of the director as a responsible risk taker; at the Pensions Investment
Research Consultants (PIRC) Annual Corporate Governance Conference
(23 March 1999); and at the London Business School (21 July 1999).3
© Blackwell Publishers Ltd 2000
1Extract from the speech of the Chancellor of the Exchequer, Gordon Brown MP, to the
Newspaper Conference (22 July 1999).
2 DTI, Modern Company Law for a Competitive Economy (1998) and Modern Company Law
for a Competitive Economy: The Strategic Framework (1999).
3Hereafter, respectively, the ‘Mansion House speech’; the ‘PIRC speech’; and the ‘LBS

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