Business must answer to 'Occupy Wall Street'

In short, Adam Smith and Frederick Hayek would recoil at the economic status quo. Indeed, the 'left' claim to be 'progressive' when much of its social democratic agenda is already fulfilled.

If genuine liberals want to maintain credibility, they need to distance themselves from corporatist and managerial rent-seeking as much as they do from the labour and bureaucratic kind.

The targets for reform are endless. Arguing for a greater role for owners of capital in our economy – shareholders – is one important way to encourage enduring support for capitalism. Adam Smith railed against the avarice and waste of the managers of the British East India Company. Indeed, economists have long recognised the gross inefficiencies that can arise when the link between ownership and control is severed, whether in government or private enterprise.

Limited liability companies are a gift and construction of the state. They came about to promote risky ventures whose success could bring wide benefits but the costs of whose failure would be borne by the owners. They have been a boon for western civilisation, but they require managers to exercise prudence and restraint, especially in the banking sector where limited liability for owners and no liability for bankers can have harmful social outcomes.

It is possible in some cases sufficient restraint is not being exercised, overseas or in Australia.

It is even more important that corporate governance is accepted and effective in Australia, where the fruits of workers' labours are coercively siphoned off into superannuation accounts. On the bright side, this Australian model of dispersed share ownership offers a platform for ordinary people to have more say over the running of companies. Superannuation funds need to give vent to the views of their members when voting.

Even if the distribution of incomes and wealth is of no concern, how it comes to manifest itself is. If the current trend continues, whereby ever greater rent-seeking, bureaucratic and corporate parasitism contributes to ever greater disparities of wealth, our western democracies leave ourselves open to extreme elements that could remove the freedoms and liberties we still have.

As the Remuneration Tribunal is about to recommend massive pay increases to politicians and senior public servant – justified with reference to 'market' rates – it is worth considering whether corporate largesse is contributing to a creeping venalisation of the public service as well, which will only accelerate the erosion of public support for our economic system.