The Liberal Plan for Worker Co-Ownership

During the 2018 Labour Conference delegates passed a policy motion in which the workers of any given company would be entitled to own 10% of its stock. This, on the face of it, is not something that liberals would be entirely against. Indeed, it was David Lloyd George who, in 1908, settled a rail strike by creating boards which were formed between worker groups and the bosses on an equal parity – 50% worker, 50% bosses. The whole idea of worker cooperatives is also something which we in the Liberal Democrats are in full support, with Nick Clegg saying that he wished to create a “John Lewis economy” as late as 2012. If we look a little deeper, but not by much, we see what Labour’s plan truly is.

There is an insidious proviso in that policy. The stock dividend is capped at £500 per annum. This means that if a stock pays over this dividend, say £600, the state is then entitled to take £100 straight from the pocket of the worker. That money will then be used, presumably, for whatever this new government wishes, be that rail nationalisation or lost to the financial black hole that is the current NHS. Additionally, these stocks cannot be bought and sold. This, of course, means that the worker cannot expand their portfolio to include a wide range of investments in other newly formed cooperatives and, instead, simply leads to the creation of closed shops on a scale heretofore unseen. In short – this plan is nothing short of state mandated theft.

But what can we do about it? In answer, I refer back to Lloyd George. We recreate the worker councils. Worker councils with executive powers will have more of an effect on the day to day working lives of millions of people than an annual dividend that has been dipped from. Instead of a company being able to do what it likes to their workforce they would be forced to listen and, in that, forced to actually care. It brings to the table everyone from the caretakers and agency staff to the person typing out TPS reports. They can have open and honest dialogue to the benefit of everyone. Productivity in this country has collapsed because working conditions and pay have taken a nose dive. Frankly, we have returned to the times in which the boss’s word is supreme and, so, the worker gets the sharp end of the whip. How many times have we heard on the news that a company is laying off workers because it is performing badly with the executives on the top taking no pay cuts whatsoever, with none of them having to leave? Worker councils using contemporary social market structures would be more effective in stopping this behaviour and improving workplaces for the better than an annual dividend that can be anywhere between £50 and £500.

What Labour has gotten correct, however, is that capitalism is broken. Indeed, the damage is irreparable. What is needed, effective immediately, is fundamental reform of society itself. No dipped dividends, no old and flawed nationalisation projects, but actual, tangible, reform. And, as always, it must come from the ground up. The people, the workers, must be given more power. The bosses currently wield too much over too many, becoming little kings presiding over slowly toppling castles. What proposals such as this will do is pave the way for that to happen. In the spirit of Lloyd George the Liberal Democrats must wave the flag of the worker and stand with them.

* Edwin Black is a keen Lib Dem activist in Sheffield whose interests include reading, writing, amateur cartooning and research into the history of British politics.

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31 Comments

  • Innocent Bystander 1st Nov '18 - 9:54am

    “capitalism is broken”

    What? It’s doing very well in Germany, China has embraced it, big style, and every nation which tries to lift themselves from third world status and replace and supplant the once wealthy countries of the west, turns to capitalism, and capitalism alone, as their vehicle.
    It’s Britain that’s broken, Sir, not the market place, which has simply moved from “Made in Britain” to “Made in China”.
    Act as portrayed above, if you like. And those on the receiving end can also act.
    If employers don’t agree with sharing their equity, dividends and controls with your Workers’ Soviets, they are free to make an appropriate gesture in your direction and take their patents, technology, research and know how (and, of course, money) to countries where they will be more appreciated and welcomed.

  • John Probert 1st Nov '18 - 10:52am

    The Liberal line is surely Industrial Co-Partnership whereby a percentage of profit is shared by the workforce. This will encourage the team spirit and boost productivity.

  • William Fowler 1st Nov '18 - 11:30am

    It isn’t capitalism that is broken it is large companies acting like cartels, which is not capitalism… I prefer the term creative capitalism, whereby someone has an idea, risks their money and runs with it. The internet age means that a successful idea can then have explosive, almost exponential, growth. Of course, successful companies have a tendency to close the market out to new companies, which is where the government should step in. Share ownership and profit sharing has its place in both new and established companies as long as people are willing to share the risk, if a company starts to die then salaries would have to be cut to help revive it.

  • William Fowler 1st Nov ’18 – 11:30am…………It isn’t capitalism that is broken it is large companies acting like cartels, which is not capitalism………………………… Share ownership and profit sharing has its place in both new and established companies as long as people are willing to share the risk, if a company starts to die then salaries would have to be cut to help revive it……………………….

    Banking and East Coast Rail are prime examples of ‘profit under capitalism; loss underwritten by the state”.
    Workers “share the risk” today; layoffs and redundancies are part and parcel of today’s society.

  • David Evershed 1st Nov '18 - 12:35pm

    The workers get to vote for the Government.

    Workers are currently voting Conservative.

    Lib Dems should take note.

  • Malcolm Todd 1st Nov '18 - 1:19pm

    William Fowler 1st Nov ’18 – 11:30am
    “It isn’t capitalism that is broken it is large companies acting like cartels, which is not capitalism… ”

    Of course it is! You don’t get to define capitalism as just the bits that you think you can justify.

  • Malcolm Todd 1st Nov '18 - 1:27pm

    Innocent Bystander 1st Nov ’18 – 9:54am
    “’capitalism is broken’ … What? It’s doing very well in Germany”

    Well, to a point. It’s not without its troubles there. But more to the point, the sort of capitalism that is practised in Germany is rather more like what Edwin Black is proposing than it is like capitalism in this country: workers councils have been an integral part of German capitalism since the 1920s and generally credited with playing a positive role in Germany’s post-war economic success.

    Fundamentally, the problem is we’re all responding to Edwin’s frankly rather silly final paragraph, with the obligatory “this is broken, we need to fundamentally change everything” sort of rhetoric that is popular with every generation of students and others too young to have heard it all before; everything up to that point is very sensible – radical, but not pie-in-the-sky or overblown. It’s a real pity Labour aren’t making this argument … I’ve lost any hope of the Lib Dems doing it, I’m afraid.

  • Nigel Jones 1st Nov '18 - 5:44pm

    @Edwin: I heard Lloyd George on record at the museum near Criccieth in August; talking about employment in 1928 he warned that removing ourselves from trade agreements was dangerous, since it would take an extremely long time to replace their benefits with other agreements; how relevant that is.
    @Jo Bourke: My father in South Wales spoke passionately about Churchill’s sending in the troops; for him it was vindication of his opposition to the Tories, but subsequent events also led him to stop supporting Labour.

  • John Marriott 1st Nov '18 - 6:15pm

    Of course capitalism isn’t broken, whatever Labour has ‘gotten’(sic). It just needs a set of rules which all are willing to obey. I think we need a new Bretton Woods to get us through at least the first half of the 21st Century just as the 1944 original set the rules for the remainder of the 20th Century, until Reagan and Thatcher, aided by the demise of the Soviet Union, undermined what it had achieved in the post war period.

    Workers’ Councils and workers’ co-ownership or whatever permutation you can come up with makes sense to me. It’s not new. The Germans have had ‘Mitbestimmung’ for years. What we don’t want is the kind of ‘Workers’ Cooperative’ that Tony Benn pushed in the 1970s.

  • Edwin Black 1st Nov '18 - 9:13pm

    @Innocent Bystander

    Britain is broken, I quite agree, but the fact of the matter is that it is broken due to the economic system we currently have in place. Workplace mental health, productivity, and job satisfaction are utterly terrible in this country. We need to change this system so that everyone benefits – bosses do not benefit from a miserable workforce and the workers do not benefit from tyrannical bosses. Only by working constructively together can we see a change occur.

  • Edwin Black 1st Nov '18 - 9:18pm

    @ Malcolm Todd

    I do apologise, but I do not see the last paragraph as “silly”. If something is broken and numerous ways of trying to fix it is broken then the only recourse is to look to something new.

    However, I must say that I do take a great deal of inspiration from the German system of the social market, though this too needs some work before implementation. A fascinating way of going about a market economy to say the least.

  • Katharine Pindar 1st Nov '18 - 9:43pm

    We support responsible capitalism, colleagues, ‘ A New Economy that Really Works for Everyone’, and, welcome as Edwin’s idealism is, more currently practical policies can be derived from the motion we passed at Brighton in September, on Good Jobs, Better Businesses (and) Stronger Communities.

  • Dave Broadway 2nd Nov '18 - 9:34am

    “financial black hole that is the current NHS” – if that represents current LibDem thinking then I am out. Frankly all of the above is rubbish. Until people and government truly understand money creation (almost all MPs don’t) we will get nowhere. Example: are you aware that tax doesn’t pay for government spending, tax destroys money, oh, and the banks create more NEW money than the government. If you don’t understand those two points how can you run the country?

    Best option for everyone at the bottom end of society is a basic living wage for all – and don’t say we can’t afford it – the government can create the money. This would improve health, poverty, remove the whole benefits system, every time it’s been tested it has shown huge societal benefits.

  • Peter Martin 2nd Nov '18 - 9:51am

    Edwin Black says: ” capitalism is broken”

    Innocent Bystander disagrees. He makes the point: ” It’s doing very well in Germany”

    Both are right and wrong to an extent. Capitalism isn’t broken but its engine certainly is misfiring badly. We could easily fix it if we took a more lateral view.

    Germany does well, according to the rules of the neoliberals, and their ordoliberal allies, because it runs either a small Govt deficit or even a surplus. This is only possible because it also runs a large export surplus. Obvious the world’s countries cannot all run an export surplus so the German, or even the Chinese, model is not generally applicable.

    Neoliberalism/ordoliberalism is the real problem. The Ordoliberals have devised an unworkable set of rules for the eurozone which, unless these are drastically revised, will lead to the downfall of the EU.

    So, if you do want a genuinely functioning popular capitalism, please stop listening to these people! Marxists, if they believed in Him, would think they are God’s gift to the socialist cause.

  • Peter Martin 2nd Nov '18 - 10:05am

    @ Dave Broadway,

    “Frankly all of the above is rubbish. Until people and government truly understand money creation (almost all MPs don’t) we will get nowhere. ”

    You’re quite right of course. But I’d just make the point that Lib Dems do, mainly, have their hearts in the right place. Stick around and explain how they can do what they’d like to do if only they ‘had the money’ to do it !

    PS You do have to also explain how “the government can create the money” without it creating high inflation!
    The neolibs love to bring Zimbabwe and the Weimar Republic into the argument.

  • Gordon Lishman 2nd Nov '18 - 10:28am

    You don’t have to go back as far as Lloyd George. Elliott Dodds and other Liberals were writing in the 30s, 40s and 50s about co-ownership and “Ownership for All”. The debate in the 60s led to the consolidation of the policy brought together in “The Best of Both Worlds” (Lishman & Macgregor, 1970). The key elements were works councils, annual representative meetings (50% employees; 50% shareholders) and profit-sharing, all with a statutory basis. We decided against German-style two-tier boards (actually a misnomer; the key elements were a result of the post-war Allied Control Commission) or French-style power-through-unions representation and opted for a British model. Co-operatives and mutual ownership companies are both welcome, but peripheral to the core big idea of co-ownership in mainstream employment.

    I agree entirely that the Liberal Democrats should return to these big ideas. Some elements were drawn out in the recent Social Liberal Forum book “Four Go In Search of Big Ideas*” and the SLF is working on a follow-up which concentrates on these areas.
    The current gap is in thinking through the implications of the participatory idea in the public and voluntary sectors where councillors, Parliamentarians, their appointees and Trustees rightly have the primary and budgetary responsibilities. The role of trade unions in this environment as a support for worker representatives (but not appointing or controlling them) is another element which needs thinking through.

    *Four Go In Search of Big Ideas”; SLF 2017; Editors: Helen Flynn, Iain Brodie-Browne, Gordon Lishman & Ekta Prakesh; £9-50 via SLF website; half-price with SLF subscription.

  • I think if you take a long view – capitalism has worked remarkably well. If you were to take a factory worker from 200 years ago and instantly transfer them to today then they would think it was a life of luxury even at the bottom of society. And capitalism and business has powered much of that change – but not solely on its own. With Government and with scientists and others who haven’t necessarily benefited financially.

    But there are clearly things that capitalism do extremely badly. It cannot of itself redistribute wealth. Businesses want to capture monopoly profits – understandably. But that acts against the good functioning of the system. So monopolies need to be prevented and broken up. And it needs a framework of law and regulation which businesses cannot individually provide.

  • Dave Broadway,

    I think most economists and treasury specialists understand money creation and that banks create more NEW money than the government. It is equally important to understand that money is a unit of measure – a measure that (unlike weights and scales) changes year by year. The average value of an house measured in terms of money is five times what it was a few decades ago eventhough in terms of utility its value is exactly the same today as it was then.
    The real currency is time or what we can buy with an hour of our work or “Time is Money”. It used to take about 3 years of work to buy a house not it is around 9 years of work.
    Matt Ridley, author of the Rational Optimist, writes well on these issues. This piece on Industrial strategy is a good example http://www.rationaloptimist.com/blog/industrial-strategy/ where he writes “..[Government].. needs to clear the drains of invasive roots, push the legal roadblocks aside and remove the parasites from the system.”

  • Sue Sutherland 2nd Nov '18 - 12:51pm

    I would rather say that capitalism is flawed, rather than broken, so it needs laws to manage it and these laws need to change when capitalism produces a society which is very unequal. At least that would be the Liberal position I think. Unfettered industrialisation produced the sort of society that Marx believed would lead to revolution, but it was the predominately agricultural countries which, in the main, had revolutions. At the moment India and China are going through the industrialisation process with many of the accompanying social problems that we dealt with in the 19th and 20th centuries when achieving a more equal society through Liberal reforms and Labour’s pro worker actions.
    Meanwhile we and other Western countries are going though a post industrial/ technological revolution and we are not managing it well, so our society has become much more unequal again, though we have a higher standard of living. Reform will not be achieved by a battle between owners of the means of production and their underpaid workforce, even though the Labour Party is still enamoured of this theory. It seems much more likely that the Liberal ideals of community rather than state verses the individual will lead to a solution to modern poverty. Co-ownership is one step towards recognising the value of everyone involved in the capitalist experience.

  • Peter Martin 2nd Nov '18 - 12:58pm

    Prof Stephanie Kelton is one of my favourite economists. If you are looking for the next ‘big idea’ she’s well worth a listen:

  • The problem with capitalism is that it is random and based on endlessly expanding the sale of rubbish. Basically It’s just amoral to the core and is perpetuated through re-enforced habit.

  • nvelope2003 2nd Nov '18 - 5:44pm

    Dave Broadway: Where has the basic living wage been tested, apart from Finland where it was scrapped after a short time ? I am sure your idea of abolishing tax would be very popular. I think the French revolutionaries tried printing money to pay the bills but it simply caused inflation. At least they would not actually have to print it now so they would not even have to employ printers.

    Glenn: What other positive ideas do you have to replace capitalism?

    Peter Martin: What would you do with those who are simply no good at work and would simply create problems ? We have all met them

  • Peter Martin 2nd Nov '18 - 8:21pm

    @nvelope2003,

    We simply ‘print money’ now to pay the bills. Except its all done electronically these days. The trick to ensuring that inflation is kept under control is to have a well functioning tax system.

    The question should be what do we do “with those who are simply no good at work” rather than what would we do. It’s not a hypothetical problem. The neoliberal idea of a pool of labour doesn’t work, because, and as Stephanie Kelton puts it, employers always prefer to hire “off the top” and don’t want to take on the longer term unemployed. So Stephanie’s suggestion is essentially based on the idea that we do what we can to prevent people becoming unemployable.

    It’s not going to be a total answer. No-one is saying that. But it is going to be a big improvement on the present system.

  • Nvelope2004
    I don have anything to replace it. It’s an observation. Death is also awful. I’m not in a position to replace that either. But I’m not going pretend that I think capitalism is awesome or that what amounts to waged slavery is fantastic or that landfills, pollution and greed are good things. Just because you’re lumbered with something it doesn’t mean you’ve got to like it. What’s your solution to finite resources, waste, and so.
    Work, of course, is an even worse thing than capitalism. Night Shifts, for example, are a severe health hazard up there with smoking for it’s effects on the human body.

  • Gordon Lishman 3rd Nov '18 - 8:59pm

    Is nobody seriously interested in the substance of the original post rather than blathering on about undefined “capitalism “?

  • Yes Gordon – I am!

    And I disagree with a lot of the post. Capitalism does need fixing but it’s not irreparable, and the strong anti-business sentiment I sometimes hear in Lib Dem circles disturbs me.

    People hear about the disgraceful behavior of a small number of very big (and often multi-national) companies like Amazon, Sports Direct or whoever the bogeyman of the day is, and cry “capitalism is broken – something must be done”. They forget that 99% of UK companies are SMEs, and that 96% employ less than 10 people. SMEs collectively employ 60% of UK workers, and are often owner-managed.

    Edwin calls those owner-managers “little kings presiding over slowly toppling castles”, which is insulting and incorrect.

    Surely if any party should be supporting SME companies it should be us, but we will never come up with effective policies if we can’t move beyond the “all bosses are evil” socialist meme. Has anyone considered that maybe most bosses, particularly the ones running SMEs, are actually decent people who treat their employees well and want to contribute to the communities that they operate in? And that the best way to help them with that is to provide an economic environment in which they can thrive? Insulting them won’t help (nor will it encourage them to vote for us).

    When deciding what the “something must be done” is, please remember the 5.5 million plus UK companies who don’t make the news for exploiting workers, dodging taxes or providing obscene rewards to bosses for failure.

  • Innocent Bystander 4th Nov '18 - 10:06am

    Gordon,
    “Capitalism” being irreparably broken actually is the substance of the original post and it was the miracle solution of Workers’ Soviets which didn’t get very far. Those who point to Germany are clutching at straws. We are not Germans and for us to behave like Germans will take a couple of hundred years of directed effort to convert us. It’s as pointless a suggestion as declaring that Venezuela could solve its economic problems by behaving like the Finns.
    German trade unionism is a special case in that all the traditional hard left TU leaders er…”disappeared” in 1933 and in 1945 a new breed emerged which recognised the need for cooperation and moderation if their shattered nation was to recover. Our TU is markedly different. I had a long industrial career and worked with many shop stewards and convenors who were the finest people and whom I admired and trusted. However, there were, and are, still plenty, especially at the more senior levels who are simply nihilists.
    Edwins’s view of our industrial base is wrong and Nick’s is correct. Edwin’s is predicated on a world which did exist but doesn’t now. Once there was the mines, the docks, the rail, the steel, the ships, the machine tools, the engineering, all with huge workforces. But now, all, yes all, big employers are foreign owned and are more than happy to move elsewhere the moment they are told to hand over control to their employees. All “we” are left with are the employers Nick accurately describes and they are already close to their employees (being so small).

  • Geoffrey Payne 4th Nov '18 - 12:18pm

    I suspect that the “decent bosses” are much more open to co-ownership, indeed many of those are members of the party. However if you consider the impact of The Apprentice, a TV entertainment program that depicts bosses as authoritarian, we need to accept that this strikes a chord because many bosses are like that. There are many businesses where paying their employees the minimum amount possible whilst paying the bosses disproportionately high amounts regardless of their performance is simply what their business model is.
    This is disempowering the workforce and therefore illiberal. It is not a model created by market forces, it is an example of where market forces do not work. The (naked) self interest of the boss overrides the interests of the company. For example Spain was one of the PIIGS countries where the economy was devastated by EU interest rates and other factors following the economic crash in 2008. However the worker cooperatives in the Mondragon corporation continued to make profits, see https://en.wikipedia.org/wiki/Mondragon_Corporation

    The traditional business model, top down authoritarian management where the inequality of pay and conditions between the management and the workers is maximised is highly illiberal. There is no point in being a Liberal unless we challenge that model and seek to replace it.

  • Peter Hirst 5th Nov '18 - 4:51pm

    It makes sense for workers, suppliers and customers to have a share in a business. If nothing else it means the business will be more receptive to outside forces and so survive longer. It will grow more sustainably and with a broader base and hopefully also pay more tax.

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