Two dogs have not barked in the row over the bid by the US drugs
company Pfizer to take over the British pharmaceutical firm
AstraZeneca. They sit on either side of the dispute, but both point
to deeper issues that have gone unquestioned in the debate about
the efficient functioning of a globalised free market, and the need
to protect the science base in Britain.
Critics have argued that the takeover will be bad for research
and development. Pfizer has a reputation as an asset-stripper and
cost-cruncher. Its takeover of the second-largest pharmaceutical
company in Britain would hit research and development, cut British
science jobs, and undermine our attempt to position ourselves as a
hi-tech knowledge economy.
That allegation carries weight. Politicians who support the
unbridled free market say that it does not matter who owns the
company, so long as it brings jobs to Britain. And it is true that
foreign investment does bring us jobs. But history also suggests
that, when a corporate empire makes cuts, it is jobs in far-off
branch offices that are first to go. When he appeared before a
House of Commons committee, Pfizer's boss, Ian Read, admitted that
the combined business would have fewer scientists, and spend less
on research than the two companies do now.
Yet for all that, AstraZeneca was itself made up from successive
mergers, and only one in six of its staff are British. It is also
in the process of closing down its large research facility in
If the Government is intent on boosting the nation's scientific
base, what would make more sense would be for it to invest more in
Britain's universities. Before the Thatcher revolution, the UK was
one of the world leaders in research; today, we spend less on
research and development proportionately than the United States,
Germany, France, South Korea, and China. Training more scientists
is what will give Britain the cutting edge.
There is a deeper point on the other side, too. Repeatedly, we
have heard that it is for the shareholders of AstraZeneca to decide
whether the Pfizer bid should be accepted. This shows how corrupted
our idea of a company has become.
Not even the 2008 global financial crisis appears to have shaken
the received Anglo-Saxon capitalist wisdom that the duty of a board
is simply to act in the best interests of its shareholders. This is
a woefully insufficient definition. It sets up the notion that the
share price is the only criterion by which success is to be judged.
As Professor John Kay has argued, this turns managers into
"meta-fund managers". Yet even those trying to fend off the Pfizer
bid accept this logic; AstraZeneca's chairman, Leif Johansson,
complained only of the final Pfizer bid that it "undervalues the
company and its attractive prospects".
A company has a key responsibility to its shareholders - but
also to its customers, employees, suppliers, the local community,
the environment, and the wider world, without which it could not
operate. The idea that all this is secondary to securing the best
short-term gain for shareholders is deeply flawed. It shows that we
need to redefine what a company is for in the modern world.
Paul Vallely is Visiting Professor in Public Ethics and
Media at the University of Chester.