William Davies shines a light on the pervasive influence of the 'intrapreneurs' - the accountants, auditors, credit-raters and fund-managers - who shape and redefine the terms of our capitalist economy from deep inside the walls of its businesses and institutions, hidden away from regulation or oversight.

One of the dominant metaphors in Karl Marx's analysis of capitalism was that of the vampire. Capital, Marx argued, was effectively 'dead labour', the product of previous generations of workers. But it returns from the dead to suck the blood of the working class. The privately owned factory represented the ghostly tyranny of the dead over the living.

Living in zombie capitalism

Today, in the seemingly permanent wreckage of the financial crisis, the equivalent metaphor is that of the zombie, that which cannot be killed. Our oppressors ought to have died by now, but somehow they will not, maybe because they cannot. Governments still squirm for the approval of credit-rating agencies. Central banks nurtured the balance sheets of the major banks through quantitative easing, who passed much of this public money on to their own staff and shareholders. London is still celebrated as a playground for property investment and a haven from social democratic tax regimes, while much of the rest of the UK languishes. This is all what the political economist, Colin Crouch, has titled The Strange Non-Death of Neoliberalism (2011, Polity). We are governed by something undead.

Save for where an unfortunate millionaire, such as Fred Goodwin of RBS or 'Fabulous' Fab Tour? of Goldman Sachs, is hauled before the media, the critics of contemporary capitalism often find themselves chasing shadows. We look hopefully to the law courts, in the hope that more bankers will be jailed, as UBS rogue trader Kweku Adoboli was in November 2012, having gambled with an astonishing £7 billion of the bank's money. But shaming and taking down such individuals leaves a zombie system still unharmed. Targeting the '1 per cent' only confirms the frustration of our current predicament: the culprits are so few as to be virtually invisible. Traditional class warfare this is not.

To better understand this situation, the left needs to drop its fixation on both markets and 'business', ordinarily understood. These are both component parts of capitalism, but they are not the cause of its current pathologies. The reason that political-economic progress has stalled is that problems lie with those invisible intermediaries who make capitalism possible in the first place. These are not the 'bosses' but the accountants, lawyers, advisors, auditors, market-makers and financiers who sit in the crevices between businesses, without whom the market system would not work at all.

The power of intermediaries

We are not typically inclined to notice the power of intermediaries in public life. When reporting events in the European parliament, the media understandably focus on what MEPs have said to each other. It would be odd to divert attention to the interpreters, despite the fact that they are indispensable mediators. And when following ongoing legal cases, the public interest is primarily in the evidence that is marshaled by each side, not in the behaviour of the judge. This is partly because the judge is not considered to have their own agenda.

Capitalism also relies on its 'interpreters' and its 'judges'. Between, say, a manager overseeing a company and a pension-holder receiving dividends from that company there is a long chain of intermediaries, each of whom subtly translates information as it is passed along. And decision-making by investors, consumers or employers is constantly dependent on the expert judgment of accountants, regulators and lawyers. Just as in a parliament or a court of law, acts of translating and judging carry huge public responsibility. If they become determined by the private interests of the interpretor or judge, then everybody else is in serious trouble. This is what has happened in economies such as Britain's.

The credit-rating agencies have been roundly criticised for being so seduced by the rhetoric - and money - of the investment banks that they gave glowing endorsements to financial products that they scarcely understood. And public outrage with (legal) corporate tax avoidance has belatedly turned to the big accountants, who translate 'profit' into less taxable categories. But the power of these intermediaries is undimmed, because they are the facilitators of contemporary capitalism, and not ordinary participants.

One might argue that finance itself falls into this category, or should do, and that the tendency of politicians to view financial services as one of Britain's leading 'industries' is dangerously misguided. Kill the car industry, and Britain shifts mournfully towards a post-industrial capitalism of retail, coffee and tourism. But kill financial and business services, with their codes, measurements and audits, and contemporary capitalism simply cannot proceed. Those who we depend on to carry out economic evaluations are placed beyond evaluation, or else the system collapses into infinite regression or murky relativism.

Language systems and the agency problem

During the 1990s, as Britain and the United States were confronting their new post-industrial reality, it was these purveyors of language and audit who were treated as the hope for the future. The notion of the 'symbolic analyst', as propagated by social scientists Robert Reich and Saskia Sassen, referred to these highly skilled, highly paid individuals who exercised judgment and interpretation in ways that computers could not.1 Symbolic analysts would, it was hoped, remain attracted to cities such as New York and London, paying taxes to fund public investment (at least the first bit turned out to be true).

What Sassen and Reich did not consider was the tacit public responsibility that symbolic analysts held for the rest of the economic system. As competition authorities recognise with respect to software, a language is unlike an ordinary economic good. We cannot simply choose to use a new or uncommon language without suffering as a result. Equally, the power of dominant accountants, auditors, credit-raters and fund managers derives from their monopoly over the language of the financial economy. As Andy Haldane, executive director for financial stability at the Bank of England, has argued, the complexity of financial languages in the City is deeply anticompetitive.2 But it is this complexity that makes so much expensive translation necessary, and there is therefore no will to reduce it.

Orthodox economics deals with this as a problem of 'agency'. Agency problems, according to this theory, arise when one individual is acting on behalf of another. Some have argued that the banking meltdown was not a crisis of capitalism, strictly speaking, but an epic crisis of agentism. Inasmuch as it arose from excessive profitability of banks, rather than insufficient, there is some merit in this argument. The managers of banks were supposed to be acting on behalf of shareholders but were instead pursuing their own agendas. Fund managers are supposed to be growing our pensions, but often they are rewarded out of any proportion to what the rest of us receive.

In which case, perhaps better auditing or corporate governance standards are adequate to restore capitalism to health. Or perhaps, as a recent paper by PWC, 'Making Executive Pay Work', has explored, agency theory can be improved by integrating insights from psychology or neuroscience or whatever, to better 'incentivise' those who act on our behalf.3 But there are two grave problems with this sort of interpretation and proposed fix.

The first is that 'agents' are not only exerting a stranglehold on investors and savers but over the public in the broadest sense. Ratings agencies cast judgment over entire polities. The media and public depend on the data and audits produced by accountancy firms and consultancies simply to develop some idea of what is going on in the business world. It is scarcely any exaggeration to say that critical elements of economic and business reality are produced by companies that themselves are seeking to maximise their profits, just as critical elements of physiological reality are now determined by the agendas of 'big pharma'. Those tasked with representing, measuring and judging capitalist activity are also seeking to profit from capitalist activity, which brings certain consequences with it.

If this problem were limited only to a handful of public-facing institutions then one solution would be to nationalise the credit-raters, accountants and consultants, and place them in some sort of BBC-style independent governance structure. Merely removing the quest for profit from these companies would do much to restore some genuine independence, and possibly a sense of public vocation as well. But the problem is arguably much more diffuse than that, and it derives from one of the core values of our era: our enthusiasm for a particular type of intermediary, namely the entrepreneur.

'Intrapreneurs', entrepreneurs and the paradox of neoliberal economics

Some years ago in Oxford University's Said Business School, I spotted a flyer for an event sponsored by BT and Accenture. It contained a set of 'commandments' that I found so startling that I hung on to it. These included 'Come to work each day willing to be fired', 'Circumvent orders aimed at stopping your dream' and 'Work underground as long as you can - publicity triggers the corporate immune system'. The event was celebrating an ethos known as 'intrapreneurship'.

The neologism 'intrapreneur' refers to those who behave like entrepreneurs but do so within large organisations. As such, it touches on one of the great dilemmas of the neoliberal economic programme that was launched in Britain and the US in the 1970s and '80s, before spreading across the world and through multilateral institutions during the 1990s. On the one hand, neoliberalism (together with its conservative allies) has always celebrated the heroically independent entrepreneur, doing battle with the forces of large bureaucracies. But on the other, it has in practice warranted tremendous consolidation of multinational, shareholder-owned companies.

The great theorist of entrepreneurship, Joseph Schumpeter, anticipated this ambivalence in the early decades of the 20th century. For Schumpeter, the great value of entrepreneurship was that it disrupts the routines of an increasingly bureaucratised capitalism, by enacting 'new combinations' of materials and people, so introducing novelty into the economy. And while Schumpeter was fearful of the large corporations that were emerging during his youth, he became increasingly aware that entrepreneurship might disrupt these companies from within rather than from without. While James Dyson and Jamie Oliver provide the friendly public face of 'entrepreneurship', it may be that the most significant innovators are the intrapreneurs, operating deep inside large corporations.

The problem with the entrepreneurial ethos, as my business school flyer reveals, is that it is definitively amoral, in the particular sense that it ignores existing economic rules. By definition, there is no template, model or authority for entrepreneurial activity, because it is defined by its capacity to operate outside of pre-existing rules, or rather, between sets of rules. As Schumpeter wrote, 'entrepreneurs do not form a social class in the technical sense, as, for example, landowners or capitalists or workmen do'.4 They are distinguished instead by a certain type of personality or mood that is comfortable operating in the margins and spaces between more predictable forms of institutional life. Rationalist theories of 'incentives' and 'agency' cannot capture what drives the entrepreneur, which Schumpeter saw as 'a will to conquer: the impulse to fight, to prove oneself superior to others'.5

Since the crisis of the 1970s, when US corporations suddenly came to appear slow and inflexible in comparison to their Japanese rivals, businesses have been intoxicated by the entrepreneurial ethos. Out went bureaucratic notions of routine and hierarchy. In came a spirit of flexibility, creativity and constant reinvention. This is a mandate to ignore the rules - but where to draw the line? Who is to say that 'rogue trader' Kweku Adoboli was not simply obeying the intrapreneur's 'commandments', deep inside the shell of UBS?

Lawless innovation and the appeal of the familiar

The late 20th century embrace of entrepreneurial values represented a Faustian pact for large organisations. Certainly it won greater flexibility and energy from skilled employees, who became referred to as 'talent', and managers, who were flattered with the title of 'leaders'. But it also unleashed unpredictable, literally lawless forms of 'innovation' that weren't necessarily beneficial to organisations in themselves, and less still to the public. Corporate executives now plead for critics to understand that they simply cannot know what goes on inside their organisations. With the rise of technologies of transparency - email in particular - large organisations are now encountering constant legitimacy crises, as the 'intrapreneurial' activities of their staff come to light. This pattern is present in most of the defining scandals of recent years, from Libor-wrangling to phone-hacking.

Imported into the world of finance, auditing and advisory services, this ethos is quite catastrophic. If there is one institutional domain which must remain committed to boring routine and codification, it is those institutions which provide the rules and language for the rest of the economy. It is one thing for a manufacturer to spot an entirely new way of producing a product, one which lies outside of the existing capitalist tramlines, and then to just do it. It is quite another for a financier to spot an entirely new way of quantifying and labeling risk and to just do it.

Once profit-seeking innovation engulfs not only productive activity but interpretive and evaluative activity also, chaos ensues. In the Babel of post-2008 capitalism, the same old voices are listened to, not so much because they are trusted to tell the truth but because they are the sole source of coherent narrative. Barack Obama was criticised by some on the left for appointing neoliberal 'zombies', Tim Geithner and Larry Summers, to his White House team in 2009. But where a crisis occurs due to excessive innovation, complexity and risk-taking, as this one did, the appeal of familiar storytellers is not to be underestimated.

From exploitation rights to exploiting opportunities: a different type of capitalist crisis

Capitalism can best be understood as a system of exploitation rights. Property-holders have a right to exploit their land. Managers have a right to exploit their employees. Patent-holders have a right to exploit a particular idea. This is the root of capitalism's alliance with liberalism: it needs the liberal legal framework of rights in order to function effectively. By the same token, this makes the reorganisation of capitalism quite plausible, as the 'golden age' of social democracy between 1945-79 demonstrated. Exploitation rights can be revoked or reallocated.

By contrast, agentism, entrepreneurialism and intrapreneurialism rest on exploitation opportunities. The 'judges' and 'interpreters' of contemporary capitalism find themselves in situations where they have huge and unsanctioned powers to alter the terms of trade, potentially for their own private benefit, sometimes with huge public costs. The Libor-fixing scandal, in which millions of mortgage-holders suffered from the opportunism of a few dozen people, was simply one manifestation of this. Such opportunities can arise unpredictably and invisibly to regulators or the public, and are as inexhaustible in their number and variety as language and mathematics themselves. Very often, resisting these opportunities is merely a question of willpower on the part of the individuals at hand, which some inevitably lack. And so we fall back on the idea of jailing the bankers, as a last resort for rescuing capitalism from opportunism.

The inequality that results does not map easily onto traditional notions of class. This isn't quite explicable in terms of capital or management versus labour. Very few of the villains of this crisis can be so easily pigeon-holed. As Manchester University's Centre for Research on Socio-Cultural Change reported in a paper shortly before the crisis, 'the number of high-paid intermediaries is much larger than the number of high-paid giant firm executives'.6 As the rhetoric of the 99 per cent intuitively acknowledges, rather than one class exploiting another - as Marx had witnessed - this is a case of a small and disparate group of entrepreneurial agents, or 'symbolic analysts', exploiting opportunities to reconfigure the conduct of everyday economic activity.

It is because this is not a traditional capitalist crisis that it is so difficult to reform or to criticise in any familiar way. Where there is a governing class, idea or set of rules then a crisis occasions its demise; this is the fate that befell industrial, unionised Keynesianism during the 1970s. But contemporary capitalism now appears to operate without a governing class, idea or set of rules, other than the constant reinvention of financial languages, in pursuit of profit. The frightening thing is that there is no sign that it cannot continue like this.


1. Sassen S (1991) The Global City: New York, London, Tokyo, Princeton University Press; Reich R (2010) The Work of Nations: Preparing Ourselves for 21st Century Capitalism, Knopf ^back

2. Haldane A (2012) 'Towards a Common Financial Language', paper presented at the Securities Industry and Financial Markets Association (SIFMA) 'Building a Global Legal Entity Identifier Framework' symposium, New York ^back

3. PwC (2012) 'Making Executive Pay Work: The Psychology of Incentives' ^back

4. Schumpeter J (1934) The Theory of Economic Development: An Inquiry Into Profits, Capital, Credit, Interest, and the Business Cycle, Transaction: 78 ^back

5. Schumpeter 1934: 93 ^back

6. Erturk I et al (2007) 'Against agency: a positional critique', Economy & Society, 36(1): 51-77 ^back