The big issue when I was becoming politically aware in the 1950s was about company ownership. Managers, it was argued, were replacing owners as the key decision-makers – “corporation man” seemed to have replaced the “robber baron” as society’s concern. But they were a harmless breed – with, so it was argued, a more civilised set of objectives than the raw pursuit of profit and repression of labour which had characterised the latter. James Burnham was a key figure in the recognition of the role of managers; this 1946 essay by George Orwell played an important part in bringing Burnham's thesis to wider attention.
And, with the scale of publicly-owned companies and the new confidence of post-war Keynesians, intellectuals started to argue that the left could live with what remained in private hands.
CAR Crosland’s The Future of Socialism, published in 1956, was the elegant expression of the new view that patterns of company ownership were no longer of interest to socialists. After fifty years, however, ownership is back as a political issue.Will Hutton has figured several times on this blog as the guy who has most closely mapped the DNA of European capitalism. Recently he has been chairing a British Commission on changes which are needed to this model and outlines the results in an article here -
There is a worldwide debate trying to define what 21st-century capitalism could be. Some countries, such as Singapore and Israel, have developed small state entrepreneurial capitalism as their answer. Then there is Germany and the Nordic countries' stakeholder capitalism; the democratic development capitalism of Brazil and India; China's self-described "socialist market" capitalism; and government activism even works in the US – witness the revival of the car industry. Nowhere can you find a modicum of economic and social success without some form of public and private partnership, directed financial systems, corporate ownership structures driving engagement and stewardship and effective social safety nets.The discussion thread is interesting and one of the discussants posed a series of excellent questions -
This reality is now being increasingly recognised, not least because of the financial crisis whose origins in excessive faith in market forces was caused by the Anglo-Saxon right's ideas. Last week, I launched the conclusions of the Ownership Commission which I have chaired for the last two years. A group of us, including the president of the CBI, and the chairman of the John Lewis Partnership, concluded that an indispensable precondition for a sustained British recovery was a new and more systematic attempt to secure better ownership of British business assets.
We must have more plural and diverse ownership structures, in particular more medium-sized family firms, co-operatives and employee-owned companies, and the public limited company needs to become less fixated with short-term profit goals. We need to ensure the tax, legal and regulatory system triggers the maximum amount of ownership engagement and stewardship and, where it falls short, to devise new means of filling the gaps.
Plc shareholders, we advocate, should, as far as possible, pool their voting rights in new not-for-profit mutuals better to engage with the companies they own. We think company directors should be better enfranchised to think of the sustainable, long-term entirety of their business rather than the next hour's share price. We want the absurdities of the tax and regulatory system that hold back co-operatives and employee-owned companies to be swept away. We want medium-sized firms to be able to build more quickly their capital and their balance sheets – to create the equivalent in Britain of the German Mittelstand, the amazing cluster of largely family-owned companies that drive Germany's innovation and export success. We propose a dramatic and fast scaling-up of existing support along with new measures, such as banks being able to get Treasury indemnities for new lending.
Ownership policy driving plurality, engagement and better stewardship should be one of the anchors of any framework for recovery, in effect the creation of a British variant of north European stakeholder capitalism, as business secretary Vince Cable, speaking at our launch, recognised and endorsed. But it is only a precondition. Britain has to reshape its financial system so that it backs business. The state has to become an active economic player, constructing the system of institutions and direct support that will drive particular industrial and business sectors forward. We have to spend hard cash on infrastructure and R&D. And Britain's fraying social safety net needs repair, not further destruction.
We need a better capitalism and this budget should have decisively begun its creation. Instead, it will be a fudge, betting all on lowering the deficit. A missed chance for Britain and the first notes of the requiem for this coalition.
1) How is capital going to be regulated when capital is free to roam though wires, to evade taxes, entice governments with corruption and blackmail governments with disinvestment to reduce wages, taxes and err … regulation? Waves of capital move around the world to where conditions are better for accumulation leaving joblessness and devastation. Global wages and taxes drop in relation to economic output and this damages demand, capacity, employment and the health of the global economy.Here’s a fascinating interview with a sharp Greek economist on the background to the Eurocrisis.
2) How are gigantic corporations going to be regulated? The Forbes 2000 had revenues of $32 trillion in 2010 (global GDP is $60 trillion). Their profits rose by 67% since 2009!! How many people do they employ? – only 80 million or 1% of the global population. How much do they return back to society for what they turnover? – not much. How many small businesses disappear annually as the process of oligopolisation relentlessly continues in capitalism? How can we have a global economy where decent wages – unsupported by private debt and government spending - can sustain a level of capacity that can provide decent levels of employment in this world with this hideous type of economy? How is this destructive process of oligopoly going to be reversed?
3) How will bank failures be avoided in the future? How will the risk taken by banks be minimised with regulation without thwarting investment and damaging the real economy in a system where hundreds of trillions of capital must be *constantly reinvested* by these banks that must inevitably take risks in these investments. If this investment halts for a second we will all starve.
Credit bubbles like the one burst in 2008 are not a peculiarity; they are the norm in capitalism. Every panic of the 19th century and every crisis of the 20th century was a result of overextension of credit. And curbing credit bubbles is not a solution. It simply causes permanent stagnation unless a dynamic economy is sustained by healthy demand. Once more this is the real issue. The recent bubble did nothing but to mask the real failure of the economy which we are now facing when we contemplate restricting unsustainable credit. Without this bubble we would have had much less economic activity and much higher unemployment.
4) In the short term, how is the debt crisis going to be resolved? Where is growth going to come from when the debt stimulus *still* being pumped is removed from the already anemic economy. What levels of unemployment one needs to expect if deleveraging the local debt or the global total debt (in the order of 300% of global GDP) is seriously attempted.
5) How will capitalism deal with the fundamental problem of "growth". The system "needs" an exponential growth rate that matches the rate with which the productivity of labour naturally increases thanks to competition that forces streamlining and automation in order to .... keep employment stable. This is simply ridiculous.
Regarding the glossing over German, Swedish, Danish, Finnish and Northern Yeti welfare Capitalism: it is declining together with the decline of capitalism: benefits and wages drop, poverty and inequality increase in these places. Welfare was funded by trade surpluses, natural resources, high productivity plus quite a lot of local debt in many cases. And also by the debt and trade deficits incurred by other countries,but the party is over!
I am afraid, this is a truly intractable problem of a system that meets its own contradictions. And such vague articles do not even start to address the problem.
And also a good piece on another localist Greek initiative
And the painting (a gouache) is one of three of Vasil Vulev I bought on Thursday - when I was also fortunate enough to meet the painter himself.