Sunday 28 September 2014

Inequality, ownership and control

I've blogged recently about some of the ideas Roy Hattersley proposed in respect of the governance and ownership of business. In my opinion this deserves revisiting both because the proposals are still valid and because of the way he argues for them. They also closely coincide with my own views, which have emerged after a fair bit of time trying to do lefty stuff in the field of governance and ownership.

Funnily enough, it seems like there is something is in the air. A week or so back the latest Fabian Review came out, and it came with the latest of their great series of pamphlets. It is by Kate Pickett and Richard Wilkinson, better known as the authors of The Spirit Level and titled A Convenient Truth. As the title suggests, the pamphlet talks about the threat from climate change and, as you might expect, the negative effects of inequality are an important part of the story. What you might be surprised by is what they focus on as reform proposals. The core idea is the democratisation of business (industrial democracy if you like) and the proposals that flow from it include the extension of employee ownership and employee representation in corporate governance.

Actually they did talk about this in The Spirit Level too, but it's part of the book that has seemed (to me anyway) overlooked to to date. Not any more though, here the extension of employee ownership and voice at work are the main event, and this advanced as a way to tackle inequality. This, of course, slots in well with the idea of focusing on predistribution, or as they put it:

Our response should be to build effective democratic constraints permanently into the economic system. We need to develop policies to extend democracy into the economic sphere in ways which are consistent with, but modify the effects of, the market. 
I think you could build a consensus around this kind of stuff (note the IPPR put out a great report covering very similar ground). It's always struck me as incongruous (and a weak point for the Right) that in an era when we're encouraged as citizens, users of public services and consumers to take more power into our own hands that the workplace is off limits. I think the Left could make this argument. On the capital P political level governance reform and encouraging employee ownership doesn't cost money. And these proposals can be advocated appealing to various desirable outcomes - sharing wealth, spreading power and improving employee morale/productivity.

My one big gripe about this discussion in general is the absence of a role for unions in the mix too (though the Fabian pamphlet does highlight the correlation between inequality and declining union power). Again, if you want to try and tackle inequality without having to get the state to do all the heavy lifting then encouraging stronger unions is the most obvious way to achieve this. This would also help underpin the other reforms from within the workforce.

Nonetheless, interesting and encouraging stuff.

1 comment:

CityUnslicker said...

This is a very statist approach though and falls apart when you consider 80% of people work in the UK for businesses of less than 10 people.
There is llittle room for democracy here without hugely disincentivising the entrepreneurial management that drives such businesses. Why would an entrepreneur want to share everything with his few employees. PLus how does it work for private businesses? For public businesses the regulations work - but Branson and Sugar are not going to play ball, then what?

Unions too in this country will be the answer when they consider business needs to - as USDAW has done. more unions are like the RMT which means management want no part of it - remember Grangemouth?