This should be a big day for Liberals. For generation we have promoted a vision of an an economy where businesses are owned by those who work in them, where as Richard Wainwright used to say 'labour hires capital'. Today we made a big stride in that direction, so why is it that Lib dem bloggers tell so little about the Nuttall report?
In his new role Norman Lamb commissioned Graeme Nuttall to produce a review of employee ownership. Today Nick Clegg and Norman Lamb launched the report. Clegg's speech can be found in full here he told his audience that 'we are on our way, driven by the vision of an economy in which more power rests in the hands of ordinary workers'. He went to say:
dog-eat-dog, laissez-faire capitalism'Thirty-five years ago, one of my predecessors as party leader, Jo Grimond, visited the famous Mondragon workers co-operative in Spain. He came back inspired and became the first chairman of Job Ownership Limited, promoting employee ownership. Grimond was drawing on a rich liberal tradition. For liberals, employee ownership has long proved that the choice we face is not simply between dog-eat-dog, laissez-faire capitalism - or union-dominated, uncompetitive socialism. John Stuart Mill believed that employee owned firms, co-operatives and mutuals could help to end what he described as the ‘standing feud between labour and capital’ creating fiercely competitive firms, fighting for profits and customers in a competitive market but where employees have as big a stake in them as possible.'
The big thing that Grimond brought back from Mondragon was his admiration for the mutual bank that the workers' co-ops had established and which was crucial for their expansion. In that context the question put to Clegg by the Yorkshire Building Society is important ' in view of the banking scandal should govt be encouraging financial mutuals ?' This is a question with which this blog has been concerned. There is a real opportunity during this parliament to promote a significant expansion of mutuals in retail banking. After all the government owns retail banks and they would dearly love to dispose of them. These could be the basis of regional mutual banks who could purchase them from the government over an agreed period.. As Clegg went on to say:..,.banking stories show the need for power to be distributed to new hands.
I suppose the best known example of an employee owned business today is the John Lewis partnership. In days gone by the big example used by Liberals was the Scott Bader company. I did look up the UK example used in the 1928 Liberal Yellow Book which was a Yorkshire woolen mill, Taylor's of Batley, sadly it has been wound up. Nevertheless I did find this report from the Catholic Herald of 1936 which outlines its success in that recession. Any way back to John Lewis, their boss Charlie Mayfield pointed out that Germany has three times the proportion of non PLCs to PLCs than UK. The dominant form of business ownership in the UK is the PLC and it is a very regressive form of ownership compared to many other countries. We need to plot a credible route to change the balance so that employee ownership accounts for a bigger share.
It is worth reflecting that for many Liberal part of their advocacy of employee ownership has been that it redistributes wealth. The 1938 Ownership for All policy described the mal distribution of wealth as 'gross and shocking'. It is worse than that today! I quoted a bit of a paper from a US academic the other week which is in line with the policy championed by Prof James Meade and (even) David Steel:
I am of the opinion that we can’t address the problems we’ve got just with the standard fare of income-based measures and government transfers. Given the scale of problems that exist when thinking about economic inequality, the idea that we can bridge the gaps that exist through these traditional strategies, through government transfer payments, earned-income tax credits, or whatever you may come up with, is really not enough. If you’re looking at the drivers of income inequality, it’s not just paychecks, it’s wealth. Rich people are rich because they own stuff and that stuff gets more valuable as they sleep. The greater mass of the population is being asked to survive on paychecks—on income. That’s a race they’re never going to win. Strategies that intervene at the point of ownership of productive assets of business are, therefore, an important place to be.
We need to include distribution of wealth in our vision of workers' ownership