Corporate governance remains a neglected area of debate. In a society with increasing inequalities, it should attract more scrutiny. The way businesses are governed affects every person on this planet. Yet successive governments have abdicated responsibility for democratising them. Inevitably, in a corporatist society, business interests get together and declare that they will carry on their business in their normal way. The evidence of this is to be found in the reports issued by Cadbury, Greenbury and more recently the Hampel reports. The Labour government's response has been to leave regulation of businesses to a business elite.

Today corporations represent the most concentrated form of social power. With its vast wealth business interests can control news, media and information. It can subvert democratic debates by hiring MPs, lobbying governments and shaping public opinion. Businesses have a huge capacity to generate jobs ands wealth. Yet they also have a huge capacity to injure people, affect their life chances and quality of life, as evidenced by the pensions mis-selling and BSE debacles. Millions have seen their savings and investments disappear in Maxwell, BCCI, Eagle Trust, Resort Hotels, Yamaichi and other episodes. Millions suffer from environmental degradation, eczema, asthma, leukaemia, lung cancer and other diseases because corporations put private profit before public good. By any measure corporate activities shape people’s life chances and quality of life.

Governments continue to argue that the governance of businesses is a 'private' matter for shareholders. Such assertions would have some merit, if it can be shown that the consequences of corporate activities are confined solely to their shareholders. Yet there is no such thing as a private corporation. The kind of water we drink, the food we eat, the air we breathe and the news, leisure and pleasure that we consume are all shaped by companies. All aspects of our lives are intertwined with corporate activities. Yet the public has little say in their affairs.

The cry from the City is that minimalist government is good and that the power of state to intervene must be constantly reduced. Well, the real problem is that ordinary people cannot muster any other form of effective power to challenge the self-interest of the corporate elites. Despite the fashionable slogans, one has to ask why must the power of the state be restricted? The decision-making arenas vacated or ignored by the state do not remain unoccupied. Instead, they become the terrain of corporations whose main interest is 'private' gain. The privatisation of water, electricity, railways and other services has not resulted in increased welfare of the people. Ordinary people are powerless to secure better services, or curb high bills and the salaries of the utility executives. The 'rolling back' of the state has neither enhanced democracy nor increased the power of the citizenry.

Some might argue that the law is the effective check on the power of large corporations. Such an argument would be reasonable only if the legal framework was based upon principles of democracy, freedom and equality. It is not and inevitably the law reflects all the institutionalised inequalities of the social world.  Consider, the UK company law which governs the control and accountability of businesses. It belongs to a pre-modern era and bears little resemblance to principles of equality, justice, democracy and fairness. In the pre-modern world, rights were restricted to owners of property and only they could vote. In the late twentieth century, the same is true of the Companies Act 1985. Under it, those owning shares and securities are given rights to attend  annual general meetings, move resolutions and appoint directors. Yet even these minimalist rights are denied to those investing their brain, brawn and lives in businesses. In the consumer society, consumers are supposed to be sovereign. But all that the consumers get are platitudes and hollow charter statements. None have any say in how businesses ought to be organised, their purpose or their social aims. Has universal suffrage really arrived?

Consider another example: the workings of the Insolvency Act 1986. Under it, in the event of an insolvency, the secured creditors have the first claim on all the assets of an insolvent business, followed by unsecured creditors and then other stakeholders. This arrangement enables secured creditors (usually banks) to collect most of the business assets. Unsecured creditors get little and other stakeholders (e.g. employees) get nothing even though they all shared the risks and co-operated to generate wealth. Those stakeholders rendered most vulnerable by business failures are penalised by law. In a society which claims to be based upon principles of equality, democracy and fairness, are there any moral or ethical reasons for prioritising the interests of banks?

Politicians make little connection between social problems and the UK's system of corporate governance. The way forward lies not in tinkering with it within the confines permitted by big business, but by overhauling it to ensure that it is based upon principles of democracy, fairness and equality.