Inclusive Ownership Funds: a transatlantic agenda for transformative change.
| Author | Lawrence, Mathew |
Bernie Sanders and the UK Labour Party have both committed to a radical new policy on worker share ownership: Inclusive Ownership Funds. By giving workers new rights over the wealth they create and the firms that they work for, IOFs can set us on the path to the democratic economy we need.
We want to deprive the capitalists of the power that they exercise by virtue of ownership. All experience shows that it is not enough to have influence and control. Ownership plays a decisive role. I refer to Marx and Wigforss: we cannot fundamentally change society without changing its ownership structure. Rudolf Meidner, 1975 interview with LO magazine (1) Oligarchy rules the company. Working people lack a meaningful stake and a say in their firm. Corporate voting rights are near-monopolised by a web of extractive financial institutions, whose power rests on their control of other people's money. Finance--in alliance with executive management--is privileged over the interests of labour and nature. The result: the deep, undemocratic concentration of control in our economy, driving inequalities of power and reward.
Tinkering won't address this deep imbalance. To build an economy that works for the many, we need to transform how the company operates and for whom. Fundamental to this must be a profound change in ownership and control of the company, the 'hidden abode of production'. One recent proposal, the Inclusive Ownership Fund (IOF), has been adopted by the Labour Party and the Bernie Sanders presidential campaign. Its goal: to make the company inclusive, democratic, and purposeful by design.
At its core, the IOF proposal seeks to help democratise the company by redistributing economic and political rights away from external shareholders and executive management and toward the workforce as a collective. It is about redistributing wealth and income, but critically, it is also about redistributing power and control, transforming the company from an engine of wealth extraction and oligarchic power toward a genuinely purposeful, egalitarian institution: one where workers have a collective stake and say in how their company operates, and share in the wealth they create in common.
The policy would do this by requiring all large companies to establish a democratically controlled, all-employee trust, which they would be required to transfer shares into, up to 10 per cent of total shareholding within a decade in Labour's proposal, 20 per cent within ten years for Sanders. This would grant the Fund a growing share of income and control rights, to exercise on behalf of all workers within the company, while diluting that of incumbent shareholders. As Erik Olin Wright wrote, a share dilution mechanism
would create a new institutional equilibrium within which capitalist power would be diminished in the overall configuration of a capitalist economy. Depending upon the details of the design and its trajectory over time, this could even signal an equilibrium in which social power--democratic control over economic power--became dominant. (2) It is worth noting that existing investor guidelines allow for the issuance of new shares to employees--up to 10 per cent of the issued ordinary share capital in any rolling 10-year period--thereby diluting incumbent...
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