Satanic mills to Jerusalem? January 31

All together now: ‘We will not rest until we have built good capitalism inEngland’s green and pleasant land.’ David Cameron gives the melody ‘I want these difficult economic times… to lead to a socially responsible and genuinely popular capitalism.’ Nick Clegg harmonises with ‘I want this to be the decade of employee ownership.’ Ed Milliband provides the robust bass line: ‘Let’s see deeds, not just hear words.’

How do you move from dark satanic mills toJerusalem? From dark satanic Stock Exchange companies, run for the benefit of those with capital, to properly equitable companies run for the benefit of investors, workers and other stake holders equally?

First, you begin by recognising the nature and scale of the problem. The fundamental structure ofUKshare-holding companies favours the rich few. The few have been joined by others, including millions of pension holders. The basic system, however, has not changed. The role of pension fund managers is still to boost the wealth of their clients, not to support good companies. Adding more employee shareholders into existing companies will not change anything lasting. Those who have provided capital for the companies will still have the upper hand.

Some years ago Barclays Uganda announced that it would share 5% of profit among staff. Their workforce responded by producing increased profits. But the Board said there were also more bad debts that year. Profit was set aside to cover loans not being repaid. The workforce continued to expect their ‘shares.’ The following year profits were again up, and, as key workers knew, some of the bad debts had been repaid. The Board looked at the 5% and decided it was too much money to ‘give away’ to employees. They allocated a smaller percentage and then scrapped the scheme.

A friend of mine worked for an international business consultancy. Under the founder, each consultant was treated as a partner, sharing some profit. The founder retired and the company was taken over by new owners who made reassurances that they would retain the ethos of the founder. The profit sharing stopped.

Tinkering with little alterations, making promises which can easily be broken with impunity, is no good. It will lead to cosmetic, token, temporary, initiatives. The problem is with the foundation of UK share-holder companies.

Second, you address the foundation. I am not sure the UK Government can do much here. They could try to enact new company law requiring each company’s Board to have equal representation from investors and workers. This would take an iron will and would be unpopular because it would be copyingGermany. They could give tax benefits to cooperatives and other more equitable companies. This would be seen to be unfair, particularly as cooperatives have not had a good track record in theUK, especially cooperatives subsidised by the Government.

What is needed are equitable companies with good track records. First we need to build ‘love your investor and you love your worker’ companies. We need to demonstrate that building on a different foundation is possible and better both ethically and economically. Once people can see the benefits of these companies, people will opt for them, governments will be able to promote them.

A few of us are already seeking to build Christian Equitable Companies, which are neither shareholder companies nor cooperatives. For more details please write to admin@laddermedia.co.uk .

And I look forward to writing blog posts about other matters as well as economics. Unless you prefer this theme to continue? Leave a comment.

Roger Harper

PS Today I wrote a comment on a Sun newspaper rant against Arch Druid Williams and the Red Bishops. Ignoring the invective, I picked up one good idea – having ‘merchants, medics and mechanical engineers’ in the House of Lords. (See Reforming the Lords: 25 June.)  http://www.thesun.co.uk/sol/homepage/news/politics/4096015/Red-revs-out-of-touch-with-Britain-today.html