A multi-stakeholder system that goes beyond worker co-ops
By A.D. Rowland (comments invited: firstname.lastname@example.org )
'Citizens Ownership [outlined below] is a practical attempt to transfer the control of the wealth creating talents of ordinary people back to where it belongsthe people themselves.
What follows runs against the orthodox view of the vast majority of the economic academe. Granted, changing will be extremely difficult and will take years to reorganize: it is shifting the power base away from the present powers that be over to ordinary people. It is those people who create the world's wealth, hence they are best able to control and assume responsibility for a fair distribution of wealth.
As to whether this would solve problems arising between members of the Lomé Convention and the multinational conglomerates could be thought about. It would certainly address the Small States who are a part of the Lomé Convention.
SUMMARY OF CITIZENS OWNERSHIP.
[The citizens ownership] system is radical, not revolutionary. Radical takes present structures and transforms them, whereas revolutionary abolishes the present and sets up a completely different order. It does this by replacing competitive capitalism with the stewardship of wealth and therefore is Economic Heresy. This is the reason the economic priesthood shun these new ideas.
The manner in which the world's wealth is distributed is the primary cause of unrest, it manifests itself in wars, poverty, preventable disease, and all the anguish mankind is heir to, causing militant action, by those disaffected, often culminating in criminal activity. This malevolence has been with us since the very beginning of civilization. Its fundamental cause is quite simple - wealth is controlled by a small group for their own selfish ends. be it a single dictator or a political party, a family hierarchy or a combination of them. Stating that is no great revelation - it is commonly accepted. But changing it has eluded scores, or even hundreds of well intentioned groups and individuals. The usual resort is the self- defeating ploy of violence. We are living in a capitalist society, the best way to overcome its malfunctions is to tackle capitalism itself. The foundation of capitalism is the company. Put simply, an entrepreneur organizes a company of shareholders who buy shares, they employ a manager, or manage it themselves, cause a factory to be built, people are taken on as employees and produce a commodity or a service. In the case of a bank, this becomes the 'factory' manufacturing money as a versatile 'tool' for buying labor and materials.
The main motive is profit; we measure success by profit taking and the greater the profit the greater the greed. All this is a sure recipe for, to say the least, irritation, discord, exploitation and much more besides: add to all this the fact the company is the property of the shareholders and employees do not so much as own the dust on the factory floor; many of whom (and in the case of unit trust holders) need not know that they are the unwitting shareholders.
This paper will show for the first time in history how the errors of the past can be corrected and how ownership of a company can change from the shareholders over to those who spend their very lives in producing goods and services for their community
What follows is a fundamental change that seeks to incorporate Co-operative principles into our civilization. Doubtless it will be ferociously opposed by conventional academic economists, the financial oligarchy and right wing political parties: all of whom support competitive capitalism.
Cooperation is the world's earliest corporate activity - think how the Pyramids were built, or the canals in Mesopotamia. An approach is required which will need an open mind to absorb it. A new reader would be advised to put orthodox economics firmly to the back of the mind, and visualize a wholesome structure free from 'party political' government, be it an elected assembly or a dictatorship. Regard it as a concept that supersedes competitive capitalism. Citizens' Ownership is a concept in which ordinary people are producers, also consumers and have a regard for the environment. The operative word is 'Stewardship'.
Ownership is paramount; for without this control is a nonentity. Many will be familiar with Employee Stock Ownership Plan (ESOP). For our purposes the employees buy up 100% shares of a company. Also they will know of the European Works Council (EWC) a European Union (EU) directive which started on 22nd. September '96. Firms employing 1000 workers or more will be required to form a works council and most of the major firms have had these established for many years. In Germany a company employing more than five employees must set up a works council. The same number is used in Citizens' Ownership. Combining ESOP and EWC is a natural progression.
Citizens' Ownership incorporates producer, consumer and environmental elements thus: one third of the control is responsible to producers (trade union), one third is responsible to consumer groups, one third is responsible to environmental groups. All the elements have identical working conditions and salaries.
The excess profit motive has gone: Consumers will see this profit can come from only one pocket - theirs - although it is obvious some profit is essential to keep the company in business. The environmentalist will see pollution is above profit. It is one of the few self-regulating systems that cannot change into no-regulation.
The workforce is divided in three elements.
The Role of the Producing Element.
The basis of this is much the same as when management and shop stewards meet to solve common problems; often with the help of a trade union officer. The areas they would consider improving production, removing bottle-necks, new methods of working by combining several tasks, automation, health and safety, retraining, shift patterns, internal disputes, holiday shut down, fair pay, etc.
The Role of the Consumer Element.
The consumer element employees would look for any improvements in quality, quantity, likewise, the manufacturing costs are closely monitored. The National Consumer Council could coordinate the various consumer bodies. If there is a need, a consumer auditor organization with mandatory powers could be set up. This change of direction would end low pay and high executive director share options.
The Role of the Environmental Element.
Environmentalists would monitor pollution and seek means to prevent it. This can be expensive, but as the basis of the company has shifted from profit-taking to servicing the community, the objection of costs cannot be cited. It can call in specialist technical assistance from an organization, e.g. 'Friends of the Earth'.
As the Environmental Element is not directly involved in either the production or consumer elements it is able to be impartial in any differences between these elements and provide management material.
Peter Drucker's book 'Management Challenges for the 21st Century' highlights the role of 'knowledge workers' - 'But knowledge workers own the means of production. It is the knowledge between their ears.' In Citizens' Ownership all the workers are just that. This gives them a far greater responsibility than in the conventional company. Restoration of the respect for the craft-workers as a creators of beauty, in all that constitutes our lives; should include an admiration for the buildings that are a part of our cities. Hopefully this will put the vandal to shame. Clearly, this is the end of the Victorian 'hand'. Another role is in Governments who have a second chamber would incorporate this environmental element.
Financing the probable increased expenditure could come from corporation tax which citizens, in effect, pay themselves. The government of the day could set out the various levels of welfare against the rates of corporation tax each welfare option would require. As a rough guide about eight per cent of the national budget is spent on welfare.
Economic democracy would give power to ordinary people via their EWC's. This in turn brings responsibility down to the shop floor. It has been suggested people may not want this burden. In Germany the attendance at the EWC's exceeds 90%. "When people perceive they can do something they rise to the challenge." (Source, 'Social Justice' page 210. Pub. Vintage.)
The best place to start is the privatized public utilities and we cannot do better than quote from the TUC 1986 document 'Industries for People' Appendix one, paragraph five: "On the question of compensating for re-acquiring privatized assets, such as BT (British Telecom), the TUC (Trade Union Congress) has been perfectly clearand current consultative exercise has endorsed existing policythat those shares be bought back at the price for which they were sold: in the case of BT, for example, at 130 pence per share. This means that in deciding on how much the securities would be redeemed for, when and at what of interest it would pay in the meantime, the aim would be for the securities to be tradable for around 130 penceeven though the government itself would not be bound to buy them for perhaps 20 years."
These public utilities may be brought into the ESOP structure. It is worth quoting Unity Trust Bank:
I can comment in only very general terms on whether an ESOP and the proposals in the TUC document could be combined, but certainly, the re-purchased shares November 1986 proposal could be passed into an ESOP, to be held for the benefit of workers, past present and future, rather than back into the old style nationalized structure."(Source, letter from Unity Trust Bank.).
This is different from the current policies of the TUC and New Labour. Both are seeking a rapport between employees and employers. One questions the validity of this: history teaches trades unions were founded because there was no rapport.
What is proposed will not be a cost to the taxpayer: our citizens would own and control what was originally their property. A new interpretation of the Conservative concept of a 'Property Owning Democracy'!!
Such a proposal would take about five years to complete: There is no reason against this proposal being extended eventually to all our major industries; including banking. One result would be that these companies, by paying no dividend to shareholders, in effect opt out of Stock Exchange trading. The shortfall for pensioners should be made up from current earnings.
It is possible foreign-owned companies would oppose and as a last resort pull out. This has been borne out recently by the closure of plants in the U.K. That does not give them leave to profit from British people indefinitely; if they decided to take this step the ESOP/EWCs could create alternative work. The overseas companies are here for their profit and not for British citizens. They would be bought out.
As the previous Government gave wide coverage to privatization, so too does the present Government. Should not the national governments work towards a world-wide single currency thereby causing currency speculators (gamblers) to be redundant?
The ESOP/EWC could take on the work of the board of directors. This would include the governance of a transnational conglomerate with the workers in the underdeveloped world being carefully brought into the company. By increasing their affluence would probably create markets for the United Kingdom.
This is a Citizens' Ownership not a workers' co-operative and the reason is that a workers' co-operative is responsible to a single sector of the community and any monopoly is undesirable. An illustration of how a Citizens' Ownership economy is manifest is in energy/pollution, for today's energy generation invariably causes pollution. But in 1982 at a conference in Stockholm two UK official bodies, the Energy Technology Support Unit and the Central Electricity Generating Board stated that 110% of UK energy could come from renewable resources. (source 'Tribune' 23/2/'90).
Present thinking is along the line of a Carbon Tax, this merely increases the cost of fuel. Citizens Ownership economy would phase out combustion engines and replace them with the fuel cell, or similar non-polluting engines, at the moment the fuel cell needs developing to be a viable replacement; then there are photovoltic cells which create electrical energy from the sun, these are very expensive and who holds the patent rights on these cells - none other than the oil companies! If these companies were in the Citizens' Ownership economy doubtless their costs would fall dramatically; as to whether South facing roofs could be covered by them is a possibility to conjecture,
However, consider this huge upsurge in renewable energy. Could covering areas of the hot desert areas in America with photo-voltaic cells cause the United States be less, or completely independent of Arab oil at a fluctuating price per barrel; why stop at the American deserts, why not areas of African deserts. The consequences of a non-polluting energy source would be a stabilizing factor that could not be ignored.
What marks off Citizens' Ownership from other economic systems is that it is based upon mankind's earliest social activity - trading, which preceded nationalism and organized religion by thousands of years. By eventually placing most of industry within Citizens' Ownership, representatives of the ESOP/EWCs of our basic industries could be in the second chamber. This enhances Economic Democracy; these ESOP/EWCs are subject to the people in the enterprises who elected them. In the future, we could argue that as industries are creators of the nation's wealth they are the best people pay tax - corporation tax is the least painful; those outside these industries pay income tax as is normal practice.
To further Economic Democracy, the government of the day could engage a market survey company to ascertain exactly what are citizens expectations on the NHS, welfare benefit, pensions, child care and like concerns then adjust corporation tax to pay for these expectations. Quite probably this vision will have its detractors; it is doubtful any can find a basic flaw in the concept, but they will dwell upon the difficulties, which are freely admitted. Empires have fallen and been replaced by new ideas. Citizens' Ownership could supersede competitive capitalism..
PS., I am looking for an institution/think tank/university economics department to study the Implications of the concept, for example, the wealth generated in the country in which the Citizens' Ownership system is adopted, then incomes are fairly divided among its citizens. An extraordinarily difficult procedure, this should give us a probable figure on which to base a standard of living. From this, other countries can arrive at their basic standard of living. All this is far beyond the author. It can only be worked out by an economic department of a university, or an equally talented institution. My reason for passing on this task to other strengths - I am 83.Include the citation below and GEO Newsletter grants permission to copy, use, and distribute this article.
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