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Worker participation and profits
With the huge spate of ieg i islation Passing through Parliament it s
reasonable to assume that no Labour minister has any longer any time to think. Among the many Sills promised in the Queen's speech is one dealing with employee participation in company decisions. The EEC Commission has long been pressing for it and has favoured the German two-tier board system with worker representatives occupying one-third to one-half of the seats on the superv,isorY board. But there is no tnoUght-out agreement in the Labour Party on this issue. I see that Mr Eric Heffer — proving you have to get sacked before you find time to do any thinking — has been writing in another place that the trade unions must not get involved in management decisions; they Must remain independent, "protecting the workers even from the very people they have elected, and c.ertainly from the State." Syndicalism, it seems, is what he wants as a Prelude to the dictatorship of the Proletariat. It is understandable that the trade unions want to be outside the law, as Mr Foot's failed Bill intended them to be, but it is making a monkey of this country if they Want also to be outside the econ?nil'. I suppose they feel they must hne loyal to Clause 4 of the Labour art's constitution, which postulates the destruction of capitalism, but as there is a world recession on hand, as there is a mounting unemployment crisis on top of tnem, which would not be resolved even if we became a satellite of Soviet Russia, I would have thought they would have become interested in making private enterprise More profitable so that they could get the offer of more jobs. That at any rate is the hope of Mr Wilson, Mr Healey and Mr VarleY, Whose new industrial policy involves recognising that 'profit' is no longer a dirty but a beneficent Worci, l'he object of the new i.ndustriai Policy, as I understand it, eis to enlarge the proportion of the cnnornY devoted to manufacturing Marketable goods. At present — thanks to the encroachment of the welfare state apparatus — this
proportion is only 30 per cent of the GNP.
It seems to me that if this new industrial policy is to succeed it is essential to get the workers interested in increasing the profit of manufacturing industry. And that surely depends upon offering them a share of it. No English worker is going to work harder and increase his productivity for someone else's advantage. Much less the canny Scot. Much less the touchy Welsh. By offering the worker a share in the profits of private manufacturing industry we might be able to bring the trade unions into the British economy. But how is it to be done? The party ideologists have been arguing this issue for seventy-odd years.
When the Labour Party was in opposition and was able to do some thinking on its own, it produced a series of Green Papers, one of which was on 'Capital and Equality' in 1973. This was concerned with their old contention that the fruits of the capital growth of companies must not be allowed to remain the preserve of the few, that is, the shareholders and directors, but must be spread throughout the community. Barbara Castle, Ian Mikardo, Lord Diamond and Professor Kaldor were members of the study group which produced the paper. It is interesting to read that they were all heavily against profit-sharing schemes. "We believe," they said, "that profitsharing can all too easily encourage workers to accept the ideology of management — that they are somehow part of a company team. It can also encourage the belief that the interests of managers and those of the workers are really identical. This kind of approach, we believe, is the very antithesis of industrial democracy. For there is surely no such identity of interests."
This no doubt is the Marxist rejoinder to profit-sharing schemes. And the authors were certainly right to point out that individual company profit-sharing would perpetuate and deepen existing inequalities between workers. Some companies would be very profitable; some would be -unprofitable; and some would go bust. And the millions of workers who are engaged in the nationalised industries and in municipal jobs would be left out in the cold because there would be no profits to share in.
So the authors of this green paper fell back on recommending (i) more lethal taxation of private wealth (which has been implemented), (ii) more public ownership (which is being implemented to our economic disadvantage), (iii) the state acquisition of equity shares by open market operations and/or through an agency (like the NEB), and finally (iv) the establishment of a National Workers' Fund. This was to be built up by companies allotting free shares to their workers, that is, by watering their capital. I thought it was a halfbaked scheme. It would have many of the disadvantages of profit-sharing schemes; it would be very complicated to work; it would cause dissension among workers.
A much better scheme would be a public unit trust. I am perhaps prejudiced in favour of a public unit trust because I first proposed the idea in these columns in 1958 and put it up to Mr Harold Wilson when he was leader of the Opposition in 1963 and 1964. I called it SPUT — State Participation Unit Trust — and in those days I thought it could be launched by a state fund buying shares on the Stock Exchange and by taking shares from the trustees of deceased estates in payment of death duties. Today it could be launched tomorrow by taking over the most suitable of the commercial unit trusts, as has been proposed, up to, say, £2,000 millio, and the industrial equity shares now in the hands of Lord Ryder at the NEB. An important point is that its management should be in expert hands, independent of the Treasury and the Government, and that its managing board should invite subscriptions from the public — with little or no loading charge — on the honest conviction that it would be offering a better inflation hedge than Post Office savings, which, of course, are no inflation hedge at all. Those old boys who subscribed to `Daltons' at 100 — now quoted at 17 — would appreciate that point. One would expect a lot of switching out of PO savings into the units of SPUT.
Opinions may differ, but I think there is a case for two public unit trusts — a general one to attract general savings and a specialised industrial one to attract the worker whose enthusiasm we want in order to make a success of the Government's new industrial policy. How is this to be set up? An American lawyer, Mr Louis Kelso, has proposed an ingenious_scheme — whereby shares are allocated to workers out of an ESOT (Employees Stockholders Ownership Trust) whose capital is loaned to the companies by the banks and redeemed by a profit-sharing scheme. This is turning workers into capitalists, which would be too great a shock for the communistindoctrinated worker of this country. But the TUC and the CBI should be told to work a scheme for' an industrial unit trust giving trade unionists a proportion of the units — to be paid for out of bonuses — over a period of time — which would not make them feel capitalists but a part of the 'economic show'. At the moment their sense of alienation from the show is almost complete.
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