One of the myths about Tony Blair is that he actually understands how capitalism works. How anyone can believe that is beyond me, so here’s another example of how Blair’s government is getting things wrong. It’s from the Daily Telegraph and it concerns Britain’s proposed new company law:

“So what are the bill’s critics so worried about? Perhaps the most serious changes relate to directors’ duties, potentially exposing directors to legal action from lobby groups, activists, disgruntled employees – you name it. At present, a director’s duty is to the shareholders, whose capital is at risk. Indeed, this has been the ultimate principle behind English company law for 400 year. But the bill gives directors new and conflicting duties to “stakeholders”. The key passage is Section 156, which says that, in fulfilling his duty to shareholders: “A director must (so far as reasonably practicable) have regard to the likely consequences of any decision in the long term, the interests of the company’s employees, the need to foster the company’s business relationships with suppliers, customers and others, the impact of the company’s operations on the community and the environment.” This may all sound well-meaning, but the clause represents fundamental changes to a director’s responsibilities. “The interests of these stakeholders conflict and there’s no hierarchy in the bill – no explanation of which are more important,” says Baroness Noakes, a Conservative Treasury spokeswoman. “There’s also no explanation of what is meant by ’success’ – that is a very subjective term.”Noakes suspects that the legislation would oblige directors to take expensive and time-consuming legal advice that would bring decision-making in boardrooms grinding to a halt.”

Indeed (sorry, folks, but it’s a good word) it would.

Mildly reassuring to see that the Conservative party looks as if it may be actually prepared to oppose this bill. At first glance, the wording of S.156 looks as if it’s exactly the sort of the ill-informed PC nonsense that would appeal to David Cameron.