The new capitalists.
| Author | Davis, Stephen |
| Position | Essays - Critical essay |
Introduction
This article has a simple starting point. The majority of the shares in most of our large companies are owned by pension and life insurance companies which represent millions of people. This means that the 'commanding heights of the economy' are not owned by a small class of wealthy individuals, but by you and me. That should be a pretty exciting starting point for a political party whose aim is to ensure that property is the servant and not the master of ordinary citizens.
But it also presents some policy challenges. For many years the left-ofcentre has tended to think of the owners of business as being the opposition. Business was to be regulated, even nationalised, to ensure that it fulfilled a social purpose. However, if collectively we are the co-owners of the world's largest companies, a different approach is necessary. Business can be channelled to social purpose not principally by being commandeered or regulated, but by being made properly accountable to its citizen owners. But how can we possibly make thousands of companies accountable to millions of owners? How can this be made to work when the casino capitalism of Wall Street and the City seems so influential?
Those are the subjects covered in The New Capitalists (Davis, Lukomnik and Pitt-Watson, 2006). For some, like Robert Peston, the BBC Business editor, the book 'offers hope that global capitalism can be made democratically accountable'. For others, like John Monks, its ideas represent a roadmap, and 'no-one who seeks to influence company behaviour should be without it'.
In this article we will try to summarise some of the arguments made in the book. First, we explore what this new form of ownership, once dubbed 'pension fund socialism', should mean for the way in which companies are run. Second, we try to identify the institutions which can influence company behaviour. Third, we spell out what actions we can take, as individuals, as savers, as trade unionists and as policy-makers, to ensure companies act in a way which is positive, both financially and socially. Finally this article describes how a 'civil economy' might mirror in the economic sphere the 'civil society' which we have built in the political sphere.
Lies, damn lies and statistics
Can it really be true that collective investment schemes own the majority share of our largest companies? Surely the statistics suggest that wealth is much more concentrated. Well yes, 'marketable' wealth is highly concentrated. But pension savings are not 'marketable'. Of course, wealthy people have higher pensions, but most are invested in collective schemes which owe the same duties to all their members. A trustee of a pension fund owes equal duties to the richest and the poorest of its beneficiaries.
The biggest block shareholder in the UK stock market is not the Queen or Richard Branson, it is the British Telecom pension scheme (BTPS), representing hundreds of thousands of workers. And it's not just British investors which own British companies. Investors are diversified across the globe. More than 30 per cent of the shares on the London Stock Exchange are owned by foreign investors--most of them, like BTPS, representing the savings of working families.
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