Friday, July 13, 2007

New Capitalism's Old Hats

Here is an argument to say why New Labour should embrace what is seen as the "New Capitalism". I can't get into the author's comment box, so I give my response below.

Ideas That Were "New" In the Olden Days

The dubious notion that capitalism is changing its spots under the influence of more people having a stake in pension funds, life insurance policies and other investments is hardly new. In this country, Tony Crosland and others started to peddle the idea as soon as the dust started to settle on the 1945-51 Labour Government's reforms.

Unfortunately, pension funds have been collapsing left-right-and-centre recently and are a poor example of how the "New Capitalism" has started to transform us all into stakeholders. Moves to protect such funds will hardly put their members in the driving seat over free market operations. This is because capitalism belongs to capitalists. It belongs to those with serious wealth, who use it to advance the size of their own portfolios and dominate what their Boards get up to. They don't need majority ownership to be able to override the isolated views of those whose biggest stake isn't their investments, but what they get from their paid employment.

Even the argument that capitalists (old and new) have a vested interest in being nice to their workers, was being propounded by Robert Owen as part of his theory of "the economy of high wages" back in the 1817. However, after bashing his head against this brick wall he moved on to the notion that worker's should unite and act collectively in their own interests via Trades Union and Producer Co-operatives.

Socialism's Contemporary Relevance

Of course, we have to regulate, restrain and attempt to influence how capitalism functions in today's world - a task made more difficult by its globalised nature in many of the areas which really matter. Advances to any socialist alternatives have, of course, to beware of bureaucratic abuses. In Britain ,thinkers such as GDH Cole had pointed this out from 1917.

But just as socialism is lost without democracy, so is democracy only a shadow of what it could be without socialism. We should at least start talking to people about the need to turn the ship round in order to start even a gradualist move to democratic socialism. If we don't start acting upon co-operative, egalitarian and democratic principles; then we will continue down the road to an even more miserable world. There is modernisation for you.

But How Do We Get To A Socialist Perspective?

Try this for size - Part 1, Part 2 and Part 3.

1 comment:

John Gray said...

Hi Harry
I posted the original article on Labour Home. I think you couldn’t post a comment because for some reason you have to reduce the size of the title before you can make a comment. The post is also on my "John’s Labour blog" (and I’ve put your response on both).

It was interesting to find out that the proponents of the possible influence of “workers capital” have been about for a long time.

I do think that the situation today is potentially very different than the past (although fraught with similar difficulties). Pension funds themselves as such have not collapsed. 80% of Private sector Defined benefit schemes are closed to new entrants (disastrous for new entrants); however, these massive capital rich schemes, will still be inexistence for a considerable amount of time. Also, the funded public sector DB schemes are still about (and growing). Most Defined contributions (DC) schemes should still be subject to 50% member nominated representation. Of course, we will soon have the Personal Pension Account fund. Which of course there are problems with (not guaranteed, inadequate employer contributions etc), but will rapidly become one of the biggest funded pension schemes in the world.

The legal framework is also very different to the past. By 2009 pension funds will be legally required to have 50% member nominated representation on its trustee boards. The “Cowan v. Scargill” decision is pretty much dead in the water. The Paul Myners report etc has empowered member activism. While the 2006 International Law firm Freshfields report makes it clear that trustees make even nowadays be sued if they do not consider ethical, social or governance issues.

A majority of the worlds “capital” will “legally” belong to us. The wealthy will be in a small but very influential minority. The problem is exercising and organising the control over our money.

I think that eventually despite opposition from traditional capitalist interests we will be to act at the very least (minimum)in a similar way as the Co-op bank and insurance acts over its investments. There is also a prize to fight for and win. Not admittedly Marxist based socialism, but based upon common values of co-operative, egalitarian and democratic principles. In the absence of any practical or realistic alternative being “nice” to the workers is a honorable aim, especially when so many companies clearly are not.

As I said this will not solve all the problems in the world, it will potentially make significant and meaningful differences to millions of workers both here and abroad.

Probably, I am “overegging” to get the point across, however, I honestly believe that we have the potential to have workers paid more, be safer at work, promote trade unions, help ensure that their kids are educated, reduce corruption and excessive executive salaries. If this succeeds then this will not only be of benefit to the greater good it will do nothing to stop or hinder more traditional arguments about the direction of democratic socialism.

Dare I use that horrible “new management” term “win, win”?