The End Of Capitalism As We Know It?

smaller eo banner image

So far this month (August 2016 at the time of writing) two recent national broadsheet newspapers have called for a new approach to business ownership.  They suggest similar solutions to solve different but perhaps related problems.  Does this suggest a recognition that our traditional “winner takes all…laissez faire…trickle down economics” approach to how we provide the goods and services we need and involve as many people as possible in productive and fulfilling work is not fit for its purpose?  If so, it’s way beyond time.


Employee ownership…

In the Times on 2 August, Maggie Padano described a walk along Oxford Street.  She saw the empty shell that was once BHS, reduced to ruin with the loss of 10,000 jobs and 20,000 pensions placed at risk.  Not far down the road she could buy herself some new trainers at Sports Direct, many of whose employees suffer from “Victorian workhouse” conditions.  But she then decided to check out John Lewis, and found a totally different world: an employee-owned company in which profits after reinvestment go to the employees – last year £145 million.  In the 1920’s, the founder’s son, John Spedan Lewis, wanted to find an alternative to the managerial capitalism that he felt stifled the west and the Bolshevism that he saw rising in the east.  His solution was employee ownership, and he transferred the business to its staff, with astounding and sustainable success.

Maggie noted that there are now 300 employee owned companies in the UK and that according to the Employee Ownership Association employee-owned companies outperform other companies on a range of measures.  Whilst employee ownership is no panacea and isn’t suitable for all types of business, there is significant untapped potential for it to grow.

Business owners and employees alike now enjoy tax breaks for employee ownership where a company becomes majority owned by an employee ownership trust.  Is it time to go one step further and offer companies corporation tax relief for profits channelled to employee ownership trusts to fund the cost of them buying shares from existing owners?


…And ownership by freelancers

 Turning to the venerable Financial Times, on 10 August Rana Foroohar highlighted the trend for the number of people working as freelancers – often for multiple masters – to grow dramatically.  With freelancers already representing 35% of the workforce in the US, the days of traditional long term employment with a single employer may be on the decline.  This raises the spectre, unwelcome for most, of what he calls “Uberisation”:  jobs across the social spectrum being handed out to the lowest bidder, like a feudal marketplace.  But he identifies a solution: that self-employed workers get organised by combining through co-operatives, owning the means of production and using economies of scale to secure decent prices for their products and services.  Well known and large brands such as Ocean Spray in the US are producer owned, as are some brands in Europe such as Brittany Ferries (farmer owned).

So if we find that there are fewer employees to become owners, a similar approach can be taken by those working as contractors and self-employed.


The gritty reality

All of this chimes with what’s happening on the ground.  It’s fast become a cliché that the Brexit vote represented a traditional Anglo-Saxon two fingers to the traditional order.  It looks like Teresa May may be listening, but we’re badly in need of some political vision.

That’s probably enough futurology for now.  We’ll turn to the even bigger question of what happens when many of our existing jobs have been automated in a later blog!

Robert Postlethwaite