8. What’s the point of this?
This tendency to spread ownership and control over a business spreads the rewards of that business. The wider economic effect is to reduce the inequality caused by the concentration of power and control.
Individual differentials reduce by accentuating group cooperation. Two habits may spill over into wider society. First, a supportive working environment, because people’s pay depends on each other’s efforts as much as their own. And if a happy colleague is a productive colleague, then employees will have reason to support each other. Second, greater equality tends to enhance familiarity, which enhances unity. Reducing inequality won’t make everyone best buddies, but it should reduce resentment. And people who are nicer to their colleagues will be nicer to their neighbours.
This potential for friendship and compassion between employees and decision makers has the potential to combine equality and freedom. And it is difficult to see how to build the mansion of freedom, friendship and fairness without replacing coercion with compassion.
Opening up ownership and control to employees distributes power, through checks and balances on share classes, and reverses the concentration of control.
This certainly doesn’t create perfect equality, but tends to distribute control and, therefore, power. The motor toward increased clustering of power is not only a condition for inequality and abuse, it is unsustainable.
This system reduces inequality without the coercive hand of the state. A more entrepreneurial people will be a more prosperous people, less reliant on government (which governments won’t like).
State reliance is the main threat to democratic freedom. Prosperity requires freedom, because freedom allows people to spot wants and meet them without hindrance. This system preserves and promotes freedom, overtly and subtly.
Overtly, by giving people the opportunity to increase their wealth, absolutely and relative to others, without coercion.
Subtly, by ending the mass idea that there is a fixed amount of wealth. Statism tends to encourage this belief. And it is such a dangerous idea because it encourages the view of wealth as a zero sum, win-lose, game. It is not, and if ordinary people are given the opportunity to profit from the alternative, this poisonous mistake will end.
The end of capitalism…
OK, this part of the title is an attention grabber. Is it justified?
First, a definition: Marx defined capitalism as the control of the means of production by the owners of capital. If that control passes to labour, to employees, then that is no longer capitalism.
Under this system, control will generally pass to employees in businesses where payroll is bigger than profits. That means most businesses because most companies spend more on wages than they take out in profits. So more shares will be owned by employees than investors in the company.
The company is controlled at General Meetings, where the Directors are chosen, by means of one vote per share. So, if employees own a majority of the shares, then day-to-day control of the company passes to them.
However, if capitalism means economic freedom, freedom to exchange and dispose of your property as you want, then this system does not end capitalism.
In this case, you can replace my claim about “The end of capitalism” with “The end of class”, which is still an achievement. If you make employees into owners, in the same asset class as owners of capital, you reduce, perhaps drastically, class differences. You align interests, distribute ownership, and spread the flow of money.
It is necessary for investors to receive rewards for their investment of capital, since business needs capital. But it is not necessary for investors to retain day-to-day control, which can pass to labour under this system. The sharing of ownership and control between capital and labour must erode class differences.
These are the implications. The implications of the implications are speculative but interesting: sympathy in authority relationships; empathy between the sexes, instead of the balance of power; compassionate child raising, instead of physical power.