Fixing Society 139


Much too little thought is given to fundamental ways of fixing society’s most pressing problem, which is massive inequality of wealth. Banking regulation is an important part of the problem. But to attack the root cause of corporatism, you need to look at the make-up of corporations.

Two simple measures can make a radical improvement. The first is share ownership by workers. This appears to have gone completely out of political discussion.

Whatever the legal basis of a company – private, public limited, partnership etc – a substantial share in it should be given to all those who work in it and actually create the wealth. This share should come with full voting and distribution rights. I would advocate that 40% of the ownership of every company should be given to those who work in it. The distribution of that 40% should be adjusted annually according to the number of man hours put in, on the basis that everyone’s man hours are equal. Retired and ex-employees would retain rights until death, with all hours ever worked in that company included.

Thus if Jane were one of four people working in a start-up and they all worked equal hours, after one year she would own ten percent of the company. If the next year four more staff joined, and they all continued to work the same hours, Jane’s share would fall but she would still own more than those who joined later. If eventually there were thousands of staff, her percentage would become very small, but of a very large company, and she would still own significantly more than people who had put in far less accumulated hours over the years. On retirement, in addition to her pension, she would still own a share in the company, but this would diminish as other people built up their own contribution to the enterprise.

It would make no difference if Jane were the cleaner or the MD, and if she owned or not other kinds of non-worker shares in the company,

The other major difficulty in society’s relationship to remuneration is the ludicrous over-valuation of “management” work. The gulf in salary and remuneration between higher and lower paid employees of a company has grown enormously in the last thirty years. This is an easy fix. There should be a limit on the multiple of total remuneration (including all benefits) between the highest and lowest paid person in a single company or other body, including government department, agency or authority. I should suggest a multiple of six as appropriate. So if the cleaner is on £18,000, the CEO can get no more than £108,000.

This measure would solve the low wage problem overnight, as the CEO’s prime drive becomes increasing the cleaner’s remuneration. Attempts to evade (ie management by separate consultancy company) should be a criminal offence.


139 thoughts on “Fixing Society

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  • Ted

    Some forward looking companies tried giving employees in my late father’s company shares in their own company. I remember my father telling me most of them demanded cash instead of the shares and he lamented their blinkered thinking, This was late seventies by the way, before Thatcher.

  • Phil the ex frog

    OK, fair enough. There are a thousand other sticking plasters you might have mentioned. Co-operative housing is a little discussed solution to the crises in London for example.

    However, in the long term more radical change is needed. Here’s an interesting article from last year. Presumably the subject, Rojova, is not that new to most readers here. What is interesting is the writer and publisher of such enthusiasm. Ross Carne and the FT.

    http://www.ft.com/cms/s/2/50102294-77fd-11e5-a95a-27d368e1ddf7.html

  • Resident Dissident

    And how would you compensate the many who are not on final salary pension schemes. like yourself, for the loss in the value of their pensions as a result of the loss of value in their investments due to value of their shareholding being transferred to employees.

    How would you stop companies pushing people onto insecure short term contracts so as to stop them being counted as employees and diluting the interests of existing employees. What do you do regarding the disincentive effect on lazy employees – which is exactly what happened in Soviet co-operatives.

    I have nothing against increasing employee shareholdings and reducing pay differentials – but the practicalities are that such changes have to be introduced in an incremental and gradualist manner otherwise the unintended consequences are likely to be massive and actually wreck the initial intention.

  • John Goss

    “The first is share ownership by workers. This appears to have gone completely out of political discussion.”

    I think share-ownership could work in a certain political atmosphere much different from what we have today. As a former member of the Cooperative Bank I was very disappointed to see the members let the US take it over since which time access to money for certain individuals, Moazzam Begg for example, and orgainisations, Cage and PCG has been stopped. If it can happen to them now it can happen to me and you tomorrow.

    “How would you stop companies pushing people onto insecure short term contracts so as to stop them being counted as employees and diluting the interests of existing employees?”

    I won’t be rude but this is exactly what is happening in the UK, and other western countries today. What does he think zero-hours contracts are? He really should look a bit nearer home. Zero-hours contracts, where ’employees’ sit by the phone wondering whether they will have work tomorrow, is a modern-day reality.

    They have no opportunity to organise into trade unions as previously. This is the most totalitarian society anybody could ever live in. There were faults with the Soviet Union and an egalitarian society is hard to establish and make work properly. But surely it is more preferable to the slave society that is emerging before our eyes with ever more gains for the super-rich and austerity for the poor. This is what we should be fighting for. If they have not found a way of getting rid of Jeremy Corbyn by the time of the next General Election I shall be working for him, and working for the removal of neocon Blairites from the Labour Party.

  • John Spencer-Davis

    Craig Murray
    21/02/16 10:37am

    “Man hours”? Do only men work?

    I know I seem to outrage some people by commenting on gender biased language, but this really is a case in point. Does Jane work “man hours”? No, and you don’t use the expression when talking about her. “Working hours” or “hours worked” would convey your meaning as well or even better, and would have the advantage of gender neutrality, and would assist us all in a tiny, incremental way in shaping a gender neutral consciousness and culture.

    Kind regards,

    John

  • Resident Dissident

    “As a former member of the Cooperative Bank”

    You were never a member of the Co-operative Bank – it was a plc owned by the Co-op Group which was and is a Co-op. The choice for the members of the Co-op Group was either to let the Co-op Bank go broke – or to have its shareholding in the Bank diluted to below 50% by allowing the bank’s debtors convert their debts into shares – not unsurprisingly the Co-op Group and its members chose the latter. They could have raised money to pay off the debtors but they chose not to and/or were not capable of doing so.

    “I won’t be rude but this is exactly what is happening in the UK, and other western countries today.”

    So why further encourage the trend further – btw those on zero hours contracts are usually employees and have entitlement to employee benefits. Those on self employed/own company/agency contracts do not get employee rights.

  • Mattias

    We did pass something like this in Sweden, where part of the earnings of a company was used to bye stock in the company for the workers. The idea being that the workers had made the earnings possible and were entitled to a share, and also as a socialism light way of fixing the inequality of wealth.

    https://en.wikipedia.org/wiki/Employee_funds

    Of course there were massive protests and the system was scrapped at the earliest opportunity. The funds were eventually used for funding research, startup companies and other worthy causes that in no way challenged and wealth inequality.

    Personally I think the best way to realise something like this is to start companies with this in their charter, and then outcompeting companies that treat their workers worse.

  • John Goss

    “So why further encourage the trend further – btw those on zero hours contracts are usually employees and have entitlement to employee benefits. Those on self employed/own company/agency contracts do not get employee rights.”

    I have never heard anybody supposedly on the left defend zero-hours especially with a two-edged statement the first part suggesting not to encourage it the second defending zero-hours, but I think I can guess where your allegiance lies. It is a recent innovation (Blairite) and prevents workers from organising, restricts available working hours, has little worker-protection in law, is aimed at subjugating the workforce and creating a pool of almost employed workers fighting one another for limited jobs. This innovation is a product of your favoured capitalism. With socialists like you the Tories have no opposition, no worries, and they can keep applying further austerity till the cows come home.

    Regarding coops ‘member’ was the wrong word. I meant shareholder.

  • fedup

    And how would you compensate the many who are not on final salary pension schemes. like yourself, for the loss in the value of their pensions as a result of the loss of value in their investments due to value of their shareholding being transferred to employees.

    As usual you are talking out of your hat!!!
    You have no idea about the stock market and the share distribution that is passed as an all inclusive and important index for every citizen in UK!! This bunkum is the product of misinformation that persists despite the available data that proves the actualities to be contrary to this fantasy.

    The actual institutional stock holding in UK stock market is 17 percent!!! so that is not exactly the pension busting claptrap you are espousing and the rest of the gradual introduction is simply put an attempt to maintain the current inertia and the feeling will wear off soon attitude!!!

    =================

    Craig there is a fundamental problem with the current models of economy, that cannot be addressed by adding a plaster here and there. The value based economy versus the model of arbitrary scarcity model is always open to abuse, ought to be explored instead.

    The fundamental problem remaining is the same as before but operationally different in some form or another that before long will be legislated out.

    Case in example being the NHS that is being headed by a goon (Simon Stevens) who used to work for health insurance industry (scam artist in chief) then stopped his tenure in UK to go to US to fight the Obamacare concept in the US and then returned to be deployed as the head of the NHS!!! Talk about handing over the flock to the friendly wolf to watch over them!!!

    Next they will appoint the Hatton Garden safe deposit burglars as the guards for the Bank of England Gold deposit bunkers.

  • Resident Dissident

    “I have never heard anybody supposedly on the left defend zero-hours”

    And I have done no such thing and don’t – just pointing out that your inaccuracy regarding their contractual status – under Craig’s scheme they would be employees already – THE POINT I WAS MAKING WAS IN RESPECT OF THOSE WHO WORK UNDER CONTRACTS BUT ARE NOT EMPLOYEES. 0ne of the reason why the hard left has been so ineffectual in the UK is that they are more interested in dogma and shibboleths rather than the practical realities of where we are.

  • John Spencer-Davis

    Phil The Ex Frog
    21/02/16 11:00am

    Thank you for this important link. I do not think the importance of these ideas of democratisation of the local community (and of the workplace) can be overstated.

    I think Craig’s ideas would be good quick fixes, but they do not go nearly far enough. If we ever got anywhere near their realisation as a society, which does not strike me as likely without profound social upheaval which might well kill a great many people, their most important aspect would be in teaching people that we may not, as human beings, actually need to organise ourselves into competing groups trying to maximise gain for themselves at the expense of the pockets of others. I am particularly struck by Craig’s natural assumption that “the CEO’s prime drive becomes increasing the cleaner’s remuneration”, by which of course he means maximising the CEO’s own remuneration. Keeping the psychos in charge, in fact, in practical terms. When we are shifted, as a people, out of the idea of maximising and into the idea of satisficing, I think we will be getting somewhere.

    Kind regards,

    John

  • craig Post author

    Obviously to work up all the detail of the proposal would take many pages. I stated that it should be a criminal offence to try to obviate the purpose of the law by making management consultants. Of course it should also be a criminal offence to attempt to evade it by using agency workers or zero hours contracts for employees.

    As I so often state, the purpose of this blog is to make people think outside the very narrow mainstream box. I am very pleased with the comments so far which make plain people are doing that. I do not in any sense equate thinking with agreeing with me – I genuinely don’t mind if people do that or not, so long as they are thinking.

  • nevermind, it might be interesting

    Unsustainable banks will create and be the basis of unsustainable economies. Unless we find a sustainable value for the assets we trade, only represent real values that are backed up, we will carry on down debt creek.

    Giving workers a share will guarantee survival in hard times, that much will be learned of VW’s downfall. You can be rest assured that unions and shareholders will demand that such a scandal can not happen again.

    That said, why did VW choose to run with diesel vehicles when Japan was developing ultramodern hybrids?

    How about this for basic tax law, scrap all other editions of it.

    ‘All those who sell in this country or work here for a living will pay tax according to HMRC’s rating and say so. There are no appeals.’ HMRC will be independently funded from and according to the level of taxes they raise over and above the nominated national need.

  • Grill

    ‘I should suggest a multiple of six as appropriate.’ – I would suggest a multiple of one is appropriate, what needs do CEOs have that cleaners do not have? What pseudo-psychological theory states there are not people who work for the sake of doing something?

  • Peter Beswick

    Welcome or not I am not letting that pass without rebuttal, delete at your discretion

    “Much too little thought is given to fundamental ways of fixing society’s most pressing problem, which is massive inequality of wealth.”

    This is not true!

    On several levels!

    “ Much too little thought is given to ..”

    To the particular fallacious subject an inordinate amount of time is given to it.

    “fundamental ways of fixing”

    And you go on to exemplify a completely non-fundamental, unworkable and wealth shrinking panacea, to a condition that you did not show to be broken.

    “society’s”

    Which society?

    “most pressing problem, which is massive inequality of wealth.”

    What about too many people on the planet? The wars? Dishonest politicians? The Middle East Diaspora? Starving Children? The US and Saudi Arabia contributing to 40% of global military spend? Care Home crisis? Global warming? Travesties of Justice?

    Inequality of wealth is up there but you cannot give a cogent argument to establish it is the extreme example.

    BTW I have it on good authority that bloke we were talking about was taking brown envelopes from more than one source. The difference between a double and triple agent is normally life expectancy, I hope you didn’t shorten his.

  • Republicofscotland

    There will always be disparity when it comes to paying workers. Big business and government are in the business of driving wages down. Your idea is a good one but alas, is just that an idea it will not see the light of day, anytime soon.

    Years ago I thought of a society that if it could feed and power itself wouldn’t need to rely on money.

    That country would continue doing what it did prior to the removal of cash. If you worked then you still worked the same or similar job after.

    Accommodation, food and power were free, because the citizens worked for free. Everyone that could work did and was allocated a job if they didn’t already have one.

    In my minds eye it was a society as close to equality as you could get. But as you get older you realise such a society would never come to fruition, human nature (via big business)would see to that.

    Many have dreamed of near utopian societies, but in reality it’s the greedy self serving nature of man that’s the real problem.

  • Republicofscotland

    And the man who’s job is polishing the brass cannons outside the town hall?”

    ____________

    Well Fred that man would still have good wages, he’d still need to polish your brass neck ?

  • lysias

    The system of Mitbestimmung imposed on Germany after WWII under which the union for a firm’s workers has equal representation with the stockholders on the board has helped Germany escape most of the bad consequences of globalization and financialization.

  • Republicofscotland

    Fixing society, well, we’d need to start from the top down, by removing unelected monarchs who live lavish lives at the expense of the taxpayer.

    Then remove the 900 or so unelected Lords some with hereditary peerages, who also receive monirs and subsidised fare frim the taxpayer.

    Seems like a good place to start.

  • John Spencer-Davis

    Republicofscotland
    21/02/16 1:48pm

    “But as you get older you realise such a society would never come to fruition, human nature (via big business)would see to that.

    Many have dreamed of near utopian societies, but in reality it’s the greedy self serving nature of man that’s the real problem.”

    Human beings are capable of greed and selfishness, for sure, every single one including myself. In my opinion, what drives almost all people into acquisitiveness is the need to feel safe. Safe in terms of accommodation, health provision, children’s education, material standard of living. There are other ways, other models, to assist people to feel safe, than the one the US and the UK largely uses. (And much better ones, I think. How many people in the UK can say that they won’t be made redundant tomorrow and lose their accommodation as a result?) Scandinavian countries are a good example. Once people feel that they and their children are materially fairly safe, then other aspects of human character can manifest themselves. Witness great capitalists who have also been great philanthropists.

    In my opinion there has never been anything better written than this, on this matter of human nature and greed and selfishness:

    http://www.ditext.com/chomsky/equality.html

    “Presumably it is the case that in our “real world” some combination of attributes is conducive to success in responding to “the demands of the economic system.” Let us agree, for the sake of discussion, that this combination of attributes is in part a matter of native endowment. Why does this (alleged) fact pose an “intellectual dilemma” to egalitarians? Note that we can hardly claim much insight into just what the relevant combination of attributes may be. I know of no reason to believe, and do not believe, that “being smart” has much to do with it. One might suppose that some mixture of avarice, selfishness, lack of concern for others, aggressiveness, and similar characteristics play a part in getting ahead and “making it” in a competitive society based on capitalist principles. Others may counter with their own prejudices. Whatever the correct collection of attributes may be, we may ask what follows from the fact, if it is a fact, that some partially inherited combination of attributes tends to lead to material success? All that follows, so far as I can see, is a comment on our particular social and economic arrangements. One can easily imagine a society in which physical prowess, willingness to murder, ability to cheat, and so on, would tend to bring success; we hardly need resort to imagination. The egalitarian might respond, in all such cases, that the social order should be changed so that the collection of attributes that tends to bring success will no longer do so. He might even argue that in a more decent society, the attributes that now lead to success would be recognized as pathological, and that gentle persuasion might be a proper means to help people to overcome their unfortunate malady. Again we return to the question: What is a just and decent social order? The “egalitarian” faces no special “intellectual dilemmas” distinct in character from those that confront the advocates of a different social order.

    A standard response is that it is just “human nature” to pursue power and material interest by any means so long as one can get away with it. Let us suppose that human nature is such that under given social conditions these admirable traits manifest themselves, or more accurately, that people with such tendencies will prosper. Suppose further that wealth and power, once attained, can be employed to extend and protect such privilege, as has been the case under industrial capitalism. The obvious question, of course, is whether other social arrangements might be brought into being that would not encourage these tendencies but would rather be conducive to the flourishing of other traits that are no less part of our common nature: solidarity, concern, sympathy, and kindness, for example.”

    Noam Chomsky: Equality: Language Development, Human Intelligence, and Social Organization. Published in Equality and Social Policy, edited by Walter Feinberg. Reprinted in The Chomsky Reader, ed. James Peck, 1987.

    Kind regards,

    John

  • Stage 4

    Ah, this takes me back to the days when Employee Stock Ownership Plans (ESOPs) were all the rage. Canny executives quickly learned that their optimal policy was to render the equity worthless by stripping the assets or looting.

    No, I’m afraid the root problem is impunity for control fraud. Banks have complete impunity. Corporations vary, but executives at all of the largest have rigged governance to facilitate looting. Control fraud has increasingly become standard operating procedure at non-profits too, including leading universities and state agencies (at the Pentagon $8 trillion is gone and untraceable.) The model, once known by its mafia term ‘bust-outs,’ is increasingly applied to public pension plans. Concomitant state incapacity only accelerates the process: 9/11 prompted massive but still uncounted looting at Marsh and McLennan and Deutsche Bank. Control fraud is the definition of modern capitalism.

    So how do you fix that? The transparency NGO TIRI, a splinter group of Transparency International, advocates civil society oversight – but in the US and UK police states, civil society is repressed, shunted into futile electoral ritual, or criminalized. Control fraud is ultimately self-limiting, and appears to be hitting the wall in defense procurement with catastrophes such as that flying turd the F-35 and the egg-shelled littoral combat ship. So losing a war with an SCO entente would stop the rot and permit reconstruction. Otherwise, we’re in for a repeat of the Soviet collapse.

  • Republicofscotland

    Interesting quotation John, of course as it states the need for security arises, who doesn’t want to feel financially secure, and that is indeed a very big factor as to why human nature tends to be self serving.

    What would happen to a society that didn’t need to worry about security, in the forms of accommodation, food and power, would that society then turn its hand to more educational activities.

    As you mentioned John the Scandinavian model, tinkers around the edges of what could be the way forward in the continuing development of society as a whole.

    In my opinion rather than help mankind the rise of money as a whole has hindered his development. I’m sure many will disagree with that statement, as they look out the window of their penthouse suite or dip their toes in the warm sea from the comfort of their yachts.

    But for everyone who has made it to the top or inherited vast sums of wealth, or born into opulence, there are thousands more who’ve struggle on a daily basis.

    Chomsky is wheeled out far too often on such matters, and those who oppose a liberal and progressive society often use him as a whipping stick against those who want social advancement.

    But here Chomsky alights to the heart of the problem, social attitudes, which need to change if society is to progress.

    “The process of shaping opinion, attitudes, and perceptions was termed the ‘engineering of consent’ by one of the founders of the modern public relations industry, Edward Bernays.”

    We have been subvertly engineered to believe that this type of society is the best example, cleary to the average person its not.

  • Courtenay Barnett

    We can trace this problem of inequality in society ( at least in a Western philosophical sense) along a certain trajectory of thought.
    A. The magnum opus written by Adam Smith has often been used to equate ‘The Wealth Nations’ with unregulated pursuit of self-interest as a means of buoying up the general wealth of a nation. However, even Smith in the 1700s understood that there was a need for regulation as the business class left totally to its own devices would act in ways that were inimical to the general social welfare.
    B. In modern times ( say under President Reagan) we saw a process start for the repeal of the Glass-Stegall Act which process was completed under Clinton. Just as Adam Smith had observed the consequences become inimical for the general social welfare. Should I be doubted, just weigh the utterly devastating consequences for the financial system, not merely in the US, but wider afield when one weighs the impact of use of derivatives, hedge fund losses, rape of pension funds and the like. Add insult to injury it becomes the taxpayers’ money that is used to bail out Wall Street. Britain has its similar structural equivalent. Thus candidate Bernie Saunders is speaking to this reality and some in the US seem to be listening and paying attention.
    *The Glass-Steagall Act at the time of the Great Depression was passed to regulate banks and near-bank financial institutions. The repeal of the Act has demonstrated and proven right precisely what Adam Smith had observed.
    C. So – how does one structure the following:-
    i) A global economy that works on a utilitarian basis for the greater good of the majority of humankind?
    ii) On the scale of the nation state – a similar structural challenge as asked at i) above where there far less massive income disparities and greater fairness in the workplace? (which is what Craig addresses)
    The issue and questions are not new. It is the practical process through a political system that is the real challenge. I am sure that Corbyn would agree with me.

  • bevin

    This proposes a “top down” solution. The most practical way to deal with inequalities of this sort, which are unsustainable without a permanent rule of terror based upon mass surveillance, is to begin by establishing a policy of full employment and a guaranteed minimum standard of living.
    This was the direction that the UK went in from about 1942 to 1951. It involved nationalising critical industries, such as power and transport, and providing a broad range of social services, from health to retirement homes to the educational system designed to enhance the welfare of the population.

    And it worked very well, despite the fact that, at the same time the government continued wartime expenditures on imperial adventures, largely to placate the US and its Fifth Columnists. Even worse, without extracting reparations (or attempting to-a lesson learned in the 1920s) the country’s finances were crippled by exporting potential capital investment to the USA.

    The problem now is that the Beveridge Report and the Labour manifesto of 1945 were both very popular: people understood what was planned and were committed to it, having made sacrifices, they were ready to make more provided that the results were tangible in the medium term. There was a widespread belief in socialism and in democracy. Today, I suspect, there is neither.

    But that is a temporary problem: what ails society, what ails the planet itself, can only be solved democratically. And democracy, in the modern world, implies political equality which is impossible so long as all power in the economy and society is apportioned on the basis of wealth.

    In immediate terms we are talking about a steeply progressive taxation system, widespread nationalisation and an economy under democratic control to enable a return to the path chosen three generations ago.

  • Courtenay Barnett

    Nevermind…
    “Unsustainable banks will create and be the basis of unsustainable economies. Unless we find a sustainable value for the assets we trade, only represent real values that are backed up, we will carry on down debt creek.”
    I agree with your observation and would extend it a bit. For, we have the industrialized world and others ( ‘Third World’ if you care to so term it). So:-
    The challenge for the Third World is to garner capital for investment in the real economy ( i.e. production of goods and services that translate into lasting jobs which is then reflected in the GDP; as distinct from inflated financial instruments chasing more paper for increased consolidation of restricted monetary accumulation – to the so-called 1%).
    But – how does one accomplish this when the lenders at the IMF/World Bank are within a circle of monetary paper production of trillions only being held afloat by the fact that the US dollar remains the world’s reserve currency? Remove that and as Mugabe discovered in Zimbabwe printing money not backed by tangible goods and services will give rise to hyperinflation; and – the US will be in the same boat – one with no bottom as there is an end to the degree to which so-called ‘quantitative easing’ can continue. All that to say that the Third World has a double bind. First it is caught in an IMF debt-trap. Secondly, the very same sources of global capital are designed further to impoverish the borrower in the sense of continually insisting on devaluation and so outsourcing/exporting what would otherwise would be internally absorbed inflation in the US or the lender country.
    Get out of that one if you can!

  • Why be ordinary?

    John Lewis would be a good example to look at in more detail.

    One other problem is the “Maxwell pension fund” problem – if the workers’ savings are all effectively shares in their own employer then when the company gets into trouble they are even more stuffed than they woul be otherwise (many Enron 401Ks went south with the company itself).

    Lysias has a good point about Mittbestimmung – although there are risks with that too. The workers reps have not always been incorruptible

  • justaguy

    This Horizon documentary is worth a watch:

    https://www.youtube.com/watch?v=-obHJfTaQvw

    It tells the story of the Mondragon Corporation in the Basque Country, a collection of worker owned and managed co-operatives which has become the tenth largest company in Spain.

    Top pay is capped at a fixed ratio to minimum wages, and the workers themselves employ their directors, rather than the other way around.

    This talk by Richard Wolff on similar topics is also worthwhile:

    https://www.youtube.com/watch?v=Ifad2pMZDgg

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