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January 17, 2012

Comments

Jim

In an effort to induce engagement and innovation, I suggest we confuse ownership with hierarchy.

Even the significant psychological benefits of employee vestment will be undone by stifling organizational structures.

Firms are beginning to decentralize. I believe that will eventually lead to lower salaries at the top as well, including a more inclusive sharing of pain during bad times and sharing of profits during good times.

Some companies (very few) are already organized and have a culture like this. Every one I know tends to dominate their industry, or at least they are very profitable.

I believe strongly that both the hierarchical Taylor theories and assumptions, and the union response is incorrect; teams and organizations, like complex organisms, must be all-in together. The cultural story of the great leader is mostly wrong, just as the one about the heroic worker speaking truth to power.

The organization of the future will be much flatter, better at communication, and therefore much more adaptive and innovative. What happens to ownership is more a question of incentive than character.

aragon

Bear Stearns and Lehman Brothers, and Enron are all financialised companies, with shares distributed as salary, and are not representative of proper mutual companies.

Concentrated risk, is an issue partially offset by the state safety net. But once a company is well established the capital comes from retained profits (no returns to shareholders), rather than the workers, just look at building societies.

Account Deleted

Clegg's speech conflated two quite distinct things: employee ownership and employee share schemes.

Employee ownership is a good thing, in no small measure because the company stock is not listed, thus allowing you to ignore the short-termist opinion of the market. Re capital, as well as using retained profits, mutuals can also issue corporate bonds (as John Lewis have).

Employee share schemes do not seriously erode the controlling position of the existing owners (they'd be unlikely to implement such schemes if they did), so their impact on the business's ethical behaviour is exactly zilch.

They are also often biased towards the executive layer, which means many are not that different to the traditional partnership model employed by merchant banks, such as Lehmans.

In his speech Clegg also sang the old song about a "shareowning democracy." Despite the best efforts of the mad old bint, only about 10% of the FTSE is directly owned by individuals (ignoring our indirect ownership via UKFI), and only about 1 in 5 of the population own any shares at all (excluding indirect ownership via pension funds).

If we assume the government will not mandate that all PLCs have an employee share scheme, and if we take it as read that shareholding will continue to be more an oligarchy than a democracy, his speech was just a plea for more favourable treatment of mutuals and cooperatives, which is neither radical nor likely to achieve much.

Of course, if he goes on to demand the creation of workers' soviets in every business with more than 20 employees, I'll reconsider.

Keith

It is worth pointing out that John Lewis is not a cooperative or share holder business!! No one seems to have picked up on this elementary error by Clegg or which ever unpaid intern wrote his latest rubbish. John Lewis is owned by a perpetual trust and the partners have no control of the capital. A co op is owned by its members who can close it down and dispose of its capital as they please.

I agree about risking your capital in your employer could be a big mistake. But that is why this plan is a sure failure. The Spanish coops of mondragon have their own bank to redistribute risk between coops and act as a supervisor to stop Enron type corruption. They replace the stock market with an alternative regulatory device, which works much better. A stock market is always the play thing of a small wealthy minority and it often fails at its economic function of allocation too. Clegg is talking nonsense, it is 1982 all over again! We had it all before under thatcher. The wealth is still in the hands of the 1 per cent.

rogerh

Clegg and Gove are not stupid - so what is the motivation for floating their recent crop of palpably stupid ideas. Both must be aware these notions damage their credibility - so why do it?

Keith

How do we know Clegg and Gove are not stupid? Being well off and attending very expensive private schools is not the same as having ability. Very few MPs show much sign of ability. They can work the old school tie and "network" and gab glibly but ability? I am not convinced about that, I see little evidence for that belief.

Dipper

did I miss the bit where Clegg announced that the government, in which he is no 2, is introducing a scheme to ensure more government contracts go to firms which have employee share schemes? Did he quantify the savings govermment can make?

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