Reforming capitalism: The need for popular ownership

In the wake of coronavirus, how should Liberal Democrats think about and approach capitalism?

For those on the left this pandemic is confirmation that capitalism has failed; without significant state assistance it lacks, we are told, the resilience to manage in times of crisis. As a result, socialists declare that the market must be restrained, tempered, and tamed. Crucially, however, it is the state which is to be charged with achieving this. We must, we are told, have more taxation and greater regulation as well as greater state spending.

In contrast, for those on the right this episode has confirmed that we need more, not less, of the Chicago school thinking that has dominated so much economic thought since the days of Thatcher and Reagan: we require, we are told, less taxation and fewer regulations.

Contrary to the above, Liberal Democrats should draw on our rich intellectual heritage and demand a new, reformed, and radical form of capitalism. The hallmark of such a vision should be one in which capital is much more widely owned than is currently the case and in which as many people as possible own capital.

Of course, such emancipatory ideals have long been a staple of liberalism and, as long ago as the nineteenth-century, liberals, like J.S. Mill, advocated greater peasant proprietorship, confident that the values of self-reliance, independence, and thrift would be nurtured when individuals owned their own capital, in this case land. Today, we must emphasise the need to transform the hierarchical power relations that exist within our society by spreading capital ownership so that everyone may become their very own capitalist; our vision should be a nation of marketeers.

Naturally, there would be much opposition to such popular ownership; our society is much more familiar with the language of private versus public ownership than it is with the notion of popular ownership. Labour’s reliance on maintaining a division between those who own, often substantial, capital and those who own very little, or even none, makes them unlikely to support such reforms, while for Conservatives such a challenge to the status quo would pose a threat to the owners of large capital whose interests they serve. Both parties are, after all, dedicated to serving sectional, vested interests, and not the public good; unlike the Liberal Democrats they are parties of class, not ideas.

However, for a small party, like the Liberal Democrats, possessing a distinctive narrative is a necessity. Indeed, it is the very lack of one which poses the greatest danger to our party’s future.

Policies to consider in bringing about the above might include greater employee ownership, more assistance for budding entrepreneurs, stronger anti-monopoly legislation, and an increased emphasis on helping individuals get on the property ladder. Finally, and while there has been much discussion of a universal basic income, an alternative might be a universal capital grant in which citizens receive a large, one-off, lump sum which they may do with as they please, such as purchasing property, investing in a business, or studying.

In putting forward a vision of popular ownership not only would Liberal Democrats be drawing on our liberal roots, and offering something unique to the electorate, but we would also be addressing the lack of financial security that many citizens, particularly in a post-coronavirus world, feel.

* Daniel Duggan is a Liberal Democrat Councillor in Gateshead

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19 Comments

  • ……………..Contrary to the above, Liberal Democrats should draw on our rich intellectual heritage and demand a new, reformed, and radical form of capitalism. The hallmark of such a vision should be one in which capital is much more widely owned than is currently the case and in which as many people as possible own capital………………

    My goodness; coupled with the bits about “include greater employee ownership”, etc. socialism ‘red in tooth and claw’
    It seems that, as Mill’s ‘steady state economy’ could only occur with, and be maintained by, state control, this is rather to the left of Corbyn. ‘

  • Yes, let’s all be creative capitalists, making new products out of thin air using our brain power, imagination and new tech where necessary. I would say reasonably priced “shophouse” style properties, free of business rates and council tax, where you make products or sell services on the ground floor and live upstairs would be a good starting point – a new kind of high street, even. Taxes would be recovered by a turnover tax and transaction tax rather than the arcane system we have at the moment, both quite difficult to avoid. Renting out would only be allowed for someone over 65 who wants to rent out the business half of the property whilst still living upstairs.

  • Phil Beesley 30th Apr '20 - 12:44pm

    Congrats to Daniel for becoming a councillor in Gateshead.

    I crudely divide the UK population into people who believe that ‘normal service will resume shortly’ after a few tweaks and those who think that everything has already started to change. I place myself with the latter.

    There was a shop down the road being ripped apart for a new occupant when news reports informed us that parts of northern Italy were going into lockdown. I think if I planned to open a shop, I’d ask myself whether to carry on as normal or to pay off the builders to make the premises safe. Just in case I had to change my plans.

    The builders went back in again last week, briefly. For a project which almost certainly will not work on a business plan conceived last year.

    Some random thoughts:
    * Air freight will become much more expensive for consumer goods. Local craft manufacture or volume production will become more viable.
    * Shops will become more open spaces, owing to social distancing and lack of capital for display pieces. Expect more showrooms with catalogues. Expect manufacturers to reduce the range of items available on demand, or wait for a special run to be completed.
    * Many struggling businesses will not re-open. For those with capital, it is an opportunity to buy equipment. There will be a lot of vacant premises and society needs to consider how to deal with empty streets.
    * People who can repair or refurbish equipment will be in demand. Like the hastily erected screens at your supermarket, lots of things will be cheap and cheerful.
    * Utilities such as water, gas, electricity will work because they were designed by conscientious engineers. Billing companies (aka ‘suppliers’) may go bust, so there will have to be quick reconnections to consumers. Plans to change fixed line telephony from analogue to digital will be seriously delayed.
    * There’ll be a massive demand for childcare providers who can work within a small ‘social bubble’.

  • I am a great believer in wider share ownership. However that requires individuals to defer consumption, save, and invest. At present some do, but many prefer to spend all of their income. Some overspend and sink into debt.

    What I do not support are measures to take money from one group of people and give it to another, without a good case being made. There are some good cases, which is why we have a tax system at all. I think eventually we should introduce a universal basic income funded out of taxation.

    However I am very sceptical when I read articles that can be condensed down into “employee ownership good, capitalist ownership bad.”

  • Phil Beesley 30th Apr '20 - 4:52pm

    Mohammed Amin: “What I do not support are measures to take money from one group of people and give it to another, without a good case being made.”

    In normal times, I’d suggest reading about Baxi/Baxendale and how they have helped companies to move to shared or employee ownership.

    https://www.baxendale.co.uk/what-we-do/

    Today, in 2020, some companies are plain bust. They don’t earn any money and their cash in the bank will not cover essential bills. Richard Branson has his begging bowl out for his airlines, proffering his idyllic hurricane destination as a guarantee. So let’s do the numbers for Virgin Atlantic for the next six months.

    Current income: £0
    Anticipated income: £0

    Aircraft maintenance, technical staff, admin staff, hospitality staff: £100s of millions

    I don’t know how to rebuild a business like Virgin Atlantic unless the share holders back the firm. They will have to pay out hundreds of millions of pounds.

    If the firm goes bust, it is effectively government property — unless anyone wants to pick up the debts.

    People, employees, engineers, logisticians, airplane hosts, call phone centre operators — they keep Virgin Atlantic running. I’d like it if some of them had a job in a different business.

    Rishi Sunak can’t run an airline. But he is expected to pick people who can.

  • When it comes to companies, we have a lot of popular ownership already, it’s just well disguised.

    With the default of opting employees in to pension schemes and other forms of savings, many of us own shares in listed companies and property, it’s just indirect via pension and investment companies.

    That means we lose our tiny bit of control and influence which should go with our ownership of a tiny bit of a company.

    Perhaps there should be a way letting all of us tiny shareholders act together and have real influence?

  • Phil Beesley 30th Apr '20 - 9:15pm

    Joseph Bourke: “In an employee-owned firm, there are no shareholders with the capital reserves to back the business in times of financial distress.”

    It is also why anti-capitalists have bank accounts.

    “Cutting staff bonuses when sales are down is one thing but when you have the kind of economic slump we are seeing today most staff have to move on to new jobs.”

    It is a right pickle, innit. If you have worked for a business, and own a bit, you’re still part when you have to take another job.

    “The high street retailers have been hit with a double whammy of lockdown and rising rents on onerous leases and rates.”

    Onerous? Retailers thought that they could live with silly rent costs, and it turns out that they miscalculated. So what. Small firms thought that they should rent a shop that they can’t afford. I am more sympathetic, but I have to return to the world of business. If you could not afford to invest in the business, you shouldn’t.

    “It is the rent and rates that will kill of most of these retail operators as more and more buying goes online.”

    Do you reckon that male and female ‘power dressers’ buy their outfits online? How shabby will the suit look next year?

  • Daniel Duggan 30th Apr '20 - 9:24pm

    Thank you all for your comments.

    Mohammed Amin – “However I am very sceptical when I read articles that can be condensed down into “employee ownership good, capitalist ownership bad.”

    But employee ownership IS capitalist ownership. Indeed, one could argue that it is more capitalist than a firm with one owner as it creates and involves more capitalists.

    expats – “It seems that, as Mill’s ‘steady state economy’ could only occur with, and be maintained by, state control, this is rather to the left of Corbyn. ‘”

    For Mill a stationary state was inevitable and, as a result, would not be maintained via state control, but rather by the laws of political economy.

  • Jenny Barnes 1st May '20 - 7:25am

    Labour is supposedly a party that represents those who have to sell their labour to live (clue in the name); not one that attempts to maintain a supposedly artificial distinction between those with capital and those without. Capitalism relies on the distinction between those who own the means of production and those who must sell their labour. If you reformed it to remove that distinction it would no longer be capitalism.

  • We need a plan, for tomorrow, to calm us down today.
    ZERO – get to zero infections, by throwing everything at it
    REPAIR- make a plan for rising again, carefully, differently. A new economy
    BREXIT- extend to let political fires die down, then re-join, no point in having double whammy
    RECOVERY- follow the EU initiative for our long term future, green & digital
    COHESION- strengthen our state, change support, UBI
    CLIMATE- take it very very seriously, act on all fronts, strengthen path to zero and beyond

  • Jenny Barnes – ”Labour is supposedly a party that represents those who have to sell their labour to live (clue in the name); not one that attempts to maintain a supposedly artificial distinction between those with capital and those without”.

    In order to achieve the former they rely on the latter being maintained; indeed, if people are to sell their labour, and be represented, they must have someone to sell it too. This is one reason why historically Labour and the trade unions in the UK have been more conservative than their European counterparts and failed to embrace more radical socialist visions, such as guild socialism.

    ”Capitalism relies on the distinction between those who own the means of production and those who must sell their labour. If you reformed it to remove that distinction it would no longer be capitalism”.

    I would agree if I had a Marxist understanding of capitalism. I do not, however, think that capitalism always results in the destruction of small capitalists and I do think it is possible to have an economic system in which capital is privately owned, competition and the profit motive exists, those who own capital also sell their labour, and for it to be still be ‘capitalist’.

  • Toby Keynes 1st May '20 - 10:06am

    Daniel Duggan: “But employee ownership IS capitalist ownership. Indeed, one could argue that it is more capitalist than a firm with one owner as it creates and involves more capitalists.”

    Well, yes and no.
    An employee is only a capitalist owner if they actually own some shares in the company.

    If they’re members of a co-operative, like John Lewis, the workforce as a whole owns the business (collective ownership), but the employees individually do not.
    Each qualifying individual employee has an interest in the business: they benefit directly in good times (through bonuses), and they have governance rights (through electing their representatives on an ownership council).
    But they do NOT have personal ownership, because they can’t take take it with them: they lose all those rights the moment they cease to be employees.

    If, on the other hand, a business gives its employees shares in the business, or encourages them to buy shares, each of those employees becomes a capitalist owner; they are an employee and an owner, but there is no collective employee ownership.

    Co-operatives like John Lewis are a great model, with major flaws, but they aren’t capitalist.
    And capitalism too is a great model, with major flaws, but it ain’t co-operatives.
    They can and should co-exist, side by side.

    We should of course encourage much wider share ownership and we should encourage more people to invest their savings.

    That does require us as a society to ensure that more people who work for a living earn enough to be able to invest for their futures, rather than just to survive for the present.

  • Trevor Smith (0f Cli 1st May '20 - 12:15pm

    The Lib Dems should appoint a policy committee like the inter-war Yellow Book on “Britain’s Industrial Future” to suggest how best to devise commercial and industrial models and regulation for the future situation which will be very different from the ups and downs of the post-1945 period. At the moment the Party has little by way of a relevant agenda on this or, indeed, much else.

  • Trevor Smith (0f Cli 1st May '20 - 12:15pm

    The Lib Dems should appoint a policy committee like the inter-war Yellow Book on “Britain’s Industrial Future” to suggest how best to devise commercial and industrial models and regulation for the future situation which will be very different from the ups and downs of the post-1945 period. At the moment the Party has little by way of a relevant agenda on this or, indeed, much else. I have NOT commented on this before!

  • Jenny Barnes 3rd May '20 - 7:09am

    “If people are to sell their labour “
    There’s a fundamental distinction between selling labour time and goods. Under capitalism if you don’t sell your labour you starve. That’s what the enclosures and clearances meant in the end. Goods don’t starve if noone buys them.

  • Peter Martin 3rd May '20 - 7:33am

    @ Michael Meadowcroft,

    I hadn’t appreciated that Jo Grimond was a revolutionary socialist!

    If the capitalists own the land, the factories, the shops, the expensive real estate in the cities etc then the only way to achieve “worker ownership” is to transfer that ownership.

    As the workers are unlikely to be able to raise quite enough cash to do that in conventionally accepted ways ………..

  • John Littler 3rd May '20 - 9:03am

    Michael – “Daniel Duggan is right and co-ownership in industry not only works extremely well but was Liberal Parry policy from the 1940s”

    That is all very well as far as it is possible, but how is that going to work in most of the real jobs now. In small and often tenuous businesses, through part time jobs, or foreign owned businesses & the gig economy?

    What if businesses refuse to play ball ( as many won’t) and transfer their ownership or I.P overseas, which many already do to reduce taxes. What is any member of staff going to own within the UK exactly.

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