Bloated corporate dinosaurs: has their time come?

Have mutuals been fatally ignored by the left? Should we be wary of the chancellor’s present zeal for employee share ownership? Father and son Stephen and Toby Lloyd debate whether big businesses' stranglehold on the UK economy may be about to be broken

Stephen Lloyd

It’s not often that I see any merit in anything that the chancellor George Osborne comes up with, but his latest ideas about encouraging share ownership for employees made me start thinking.

I’m not sold on the idea of trading employment rights for shares, although of course if you set a business up as a partnership and make everyone genuine partners they have no employee rights anyway. But the key point is that if you want lots of members of society to own property, you should recognise that property does not have to mean bricks and mortar – it can mean a share in the company you work for.

I know this is heresy for many Brits – but as more and more people are priced out of the housing market, you would have thought that politicians would seize on an idea that could help underpin the idea of a property-owning democracy. And in particular you would have thought that this was natural territory for the Conservatives.

There is a small minority who get the importance of alternative forms of business – the likes of the Conservative MP Jesse Norman and the Conservative Co-operative Movement. But they seem to be voices crying in the wilderness as the government by and large remains resolutely pro-business – by which it means supporting big business rather than encouraging the development of competitive markets.

You see this really well in the government’s attempt to set up public service mutuals. While in education the ministers will only allow academies to be run by charities funded by grants, in health they are insisting on full, open competition so that any bantam weight start-up mutuals will be in the same ring as heavyweights like Capita or Serco.

Not surprisingly these mutuals are finding it tough, and the salutary tale of the mutualised bus companies in the 1980s haunts those that do manage to win a few contracts.


Toby Lloyd

Lots of different voices seem keen to say good things about employee ownership and mutuals right now: Labour peer Maurice Glasman and the Blue Labour movement for one. 

It’s not hard to see why alternative forms of business might be politically popular at a time when corporate capitalism has demonstrably failed, and state ownership remains off the table. The real question is why, given their political saleability, such models are so scarce. 

The truth is that for most of the last 100 years neither side really backed mutualism. One of the tragedies of the twentieth century was the way the co-operative and wider self-organisation strand of leftie thinking got squeezed out by Fabian socialism – or in some countries, put up against a wall and shot. The creation of the welfare state did for it too, as people no longer needed solidaristic forms of welfare like the friendly societies. 

Now, the headlong retreat of the state and the disgrace of global finance could be a good opportunity for a new wave of mutuals. Whats more, they should suit the emerging network society that digital technology is meant to herald, just as large-scale state systems suited the mass industrial era. Social change that goes with the grain of technological change always has a better chance of catching on and might even herald a new golden age of social and economic progress, if Carlota Perez is to be believed.

I like co-ops, and quite fancy a golden age too, but I'm very suspicious of any call for mutualism from the top – and even more if it’s from the right. Co-operation only works if it’s real, if it’s driven from the bottom, from people’s need and desire to work together. The chancellor’s call for employee share ownership is a bit like a fox offering to teach the chickens self defence, in exchange for them removing their fences. Or like Westminster promoting freedom for local councils, while cutting their budgets dramatically. If Osborne’s new zeal for co-ops is just a front for cutting rights and cutting spending, it’s not going to work: it’s not even going to happen. 


Stephen Lloyd

Ah, you’ve fallen for the trap that sees self organisation as being a product of the left. In my view this transcends politics. You have to remember that the world’s most successful single co-operative system is Mondragon in the Basque province of Spain.

The first business was set up in 1955 by a Jesuit priest inspired by Catholic Social Teaching and appalled by the poverty and unemployment he found when he moved there. This was long before Liberation Theology got going. Mondragon is now Spain’s seventh largest company in terms of turnover, employing 84,000 people. It shows us that we need bottom-up innovation to create social change – and if the energy to do that comes from left, right or centre, who cares?

The key is that people are helped, not hindered, to create new mutuals, co-ops or to take over existing businesses. And you’re right that modern technology which helps create networks can be key to helping support an ecology of small and medium-sized businesses which are not too big to fail – ‘TBTF’ – with all the ghastly consequences that go with that. 


Toby Lloyd

In the spirit of bipartisanship I agree that no firm should ever be TBTF, and some free market creative destruction can be a very good thing. I’d be more convinced by Osborne’s agenda if he put some effort into breaking the stranglehold big business has on our economy, rather than targeting employees’ rights. 

Then maybe we would see some bloated corporate dinosaurs crashing into the swamp, creating space for the small furry mammals of a vibrant mutual sector to take over.