What do the phone hacking scandal involving Britain's tabloid press, the marketing of harmful drugs (such as Thalidomide in the 1960s) and the mis-selling of payment protection insurance by British banks have in common? Apart from the fact that they are all manifestly against the public interest – and contrary to either civil or criminal law – they are also all perpetrated by private-sector corporations in pursuit of higher profits.

Although these misdemeanours - which are just a few examples of the countless thousands of corporate abuses that could be cited - have received extensive coverage in the media, it is striking that little if any of the commentary on them draws attention to the link between such anti-social conduct and the pressures to maximise profits. On the other hand those who realise that the mainstream media are inherently constrained from saying anything seriously damaging to the corporate interests to which they are commercially beholden will scarcely be surprised at such reticence.

Indeed the failure of the corporate media to draw attention to the numerous instances of conflict between public and private interests surely reflects the fact that a key principle of the ideology of market capitalism which has come to dominate the world is that the pursuit of private profit, within a society governed by the rule of law, is essentially benign for the community as a whole – and indeed is a vital motive force driving progress. Philosophically, this principle is generally considered to be derived from Adam Smith, patron saint of laissez faire ideologues, who famously asserted that it is by appealing to the “self-love” of our fellow human beings that we secure our own welfare, the clear inference being that as consumers we gain from the efforts of tradespeople competing to provide us with goods and services of optimal quality and price. Although Smith himself pointed out that such profit-seeking business people also have a tendency to try to subvert or distort competitive forces in such a way as to deprive their customers of the benefits of freely operating market forces, this has not prevented politically dominant interests from establishing the belief that the private profit motive is a “public good” and that consequently states should seek to encourage it.

In truth the notion that the pursuit by entrepreneurs of maximum profit may not necessarily be in the public interest has been well understood since long before the time of Adam Smith. Equally in more recent times it has been under sustained attack from leading economists such as J.K. Galbraith, who in books such as The Affluent Society (1958) and The New Industrial State (1967) described how modern corporations rig markets and limit competition and technical innovation so as to try and maximise their own financial benefit, typically at the expense of consumers, not to mention taxpayers.

In the present neo-liberal era, starting around 1980, such concerns have been swept aside by an overwhelming propaganda offensive in support of the view that there is no sector of the economy that cannot benefit from an injection of the profit motive, particularly as an antidote to the “dead hand” of the state. Nowhere has this gung-ho ideology been applied with more uncritical enthusiasm than in the privatisation of essential public services and utilities, particularly in Britain. This strategy has been pursued notwithstanding the well known fact that they are all – from telecommunications to water supply – more or less natural monopolies, mainly because they depend on hugely expensive common infrastructure which it would be uneconomic to duplicate (which is the main reason why many of them were originally set up under monopoly public ownership, often by Conservative administrations in the Victorian era) – as well as being so vital to the economy that any interruption of service must be avoided at all costs. The danger that privatised utilities would exploit their monopoly position to make excessive profits at the expense of customers and the wider interests of the economy has led to the creation of regulatory bodies to monitor their performance and approve key management decisions on such matters as capital investments or price levels. Yet quite apart from the fact that such regulators add an extra layer of costs to the industries concerned – negating many if not all the supposed gains in efficiency that might be expected to arise from private-sector management – it has been found that (as in the US) privatised utilities tend to “capture” their regulators (by more or less subtle forms of corruption), thereby assuring themselves favourable rulings. Hence it is often possible for the operators to have excessive costs – e.g. for unnecessarily high capital investment – reflected in the prices charged to consumers, and / or to provide sub-standard service, with the effective blessing of the regulator.

This compulsion for private capital to be put to work in areas where it was previously not thought appropriate is increasingly seen in other public services such as prisons, schools and care of the elderly disabled, where it is even more obvious that the demands of shareholders for profit maximisation may work against the vital public interest of delivering adequate quality of care. In the US it is even reflected in the “contracting out” of vital activities of the military to private operators in Afghanistan and Iraq.

What lies behind this trend to introduce private capital into areas where its rationale of profit maximisation is inevitably in conflict with considerations of public welfare? The answer to this question – which is hardly even posed in corporate media so besotted with the simple-minded prejudice that private must always be better than public – is that it meets the ever more insatiable demand for investment outlets for the accumulated profits of the private sector. It is thus a symptom of the age-old business cycle in which, as long identified by Marxist economists, the inexorably rising excess of accumulated capital (surplus value) progressively drives down the rate of profit to the point where large-scale capital destruction and slump are inevitable if balance is to be restored.

This imbalance in capital markets is now, moreover, exacerbated by technological change, which means that capital for fixed investment is no longer needed on the scale it was in the past. In fact this second factor will surely come to be seen as by far the more significant one, as it portends what is coming to be seen as a new industrial revolution, which is rendering market capitalism as obsolete as feudalism was at the dawn of the French revolution in 1789 .

The nature and far-reaching implications of this “Third Industrial Revolution” will be the subject of another instalment of this blog. For the moment what is important to grasp is the continuing devastation caused to our economy by the increasingly desperate efforts of the private corporate sector to force the public to meet their compulsive need to reap an ever rising share of national value added in order to try and satisfy the insatiable profits monster. This should lead us to resist – for example – demands from the energy industry that we should subsidise hugely costly and uneconomic (as well as anti-environmental) investments in nuclear and wind power - which are favoured by the investor community precisely because they will absorb such large volumes of capital. As such these demands are just another manifestation of organised capital’s compulsive need to grab an ever rising share of economic value at the expense of more socially valid purposes. Once the public understand this fatal connection they must surely demand an end to the worship of the golden calf of profit-seeking for good.