Shareholders of the world unite!

John McDonnell

By Simon Hannah, Tooting CLP

The major policy announcement of Labour Conference from John McDonnell was the proposal to force larger compaies to put aside 10% of their shares on an annual basis –  an “inclusive ownership fund” (IOF).  The IOF would be run by a board of workers who would not be able to sell the shares, but £500 a year in dividends would go to the workforce.

This step is being heralded as a major step forward for workers democracy. In reality it is a kind of John Lewis model write large, turning workers into share holders. The aim is to progress to a model inspired by Rudolph Meidner (https://en.wikipedia.org/wiki/Rudolf_Meidner). The aim after many years of steady growth is for the workers to eventually own a controlling share in the company of 52%.

Two major problems with this – the first is obviously the time scale. Waiting over twenty years for the shares to slowly accumulate leaves plenty of opportunities for a change of government and new legislation that will dismantle the IOFs. How can there be any legal protection for them that can survive another Tory government?

The second one is more fundamental. Socialists want workers’ control – on that we agree with McDonnell. But turning workers into share holders is not even a step in the right direction – it is a different direction all together.

It turns workers into shareholders with a financial incentive in the private sector. It will put workers on the boards of companies, not with a controlling vote (and those 52% ownerships 20 years from now will never come) but buy them into management decision making. General Motors has had union leaders on their board of directors for years and all that did was co-opt union organisers into helping deliver painful job cuts and other cost cutting measures.

The policy even smacks a little of some of the populist capitalist measures from the Thatcher era – giving away shares in privatised companies to workers. No wonder a YouGov poll found that 38% of Tory voters supported it.

The policy is inteded to boost productivity. As McDonnell explained; “the evidence shows that employee ownership increases a company’s productivity”. The issue that socialists have with simply increasing productivity in the private sector is – why do we want to boost the private sector? Surely the socialist programme is to expand the public sector and to empower trade unions to fight against their exploitation across the economy (which means repealing the anti-union laws – all of them, not some)?

This goes to the heart of the contradictions that a reformist social democratic programme will always suffer – it wants to boost growth in the private sector to create more jobs, higher wages and generate more tax whilst also boosting trade union rights (although perhaps not enough) and forcing companies to give shares to the workforce, thus disincentivising investment. Having your cake and eating it will be a tricky feat.

Let us know what you think? Write a reply? theclarionmag@gmail.com

(Photo: Wikimedia Commons/Sophie Brown)

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