“History suggests that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition for it.”
“A society that puts equality – in terms of equality of outcome – ahead of freedom will end up with neither equality nor freedom.”
Milton Friedman (1962 & 1980)
The news last Friday that every one of BT’s 100,000 employees would get shares worth £500 every year, in order to help motivate a turnaround and boost their confidence, knocks John McDonnell’s 2018 employee ownership proposals into a cocked hat. As Philip Jansen, BT’s new chief executive since February, says: “Is this a move to a more inclusive form of capitalism from BT? It absolutely is, and it is just the first part”.
Following in the footsteps of Milton Friedman, at the Share enterprises we’ve been arguing consistently for a more egalitarian form of capitalism for years: indeed, at Share Radio we have a website article dedicated to that aim. It’s therefore great news to be able to welcome such a significant initiative, from one of the UK’s leading companies.
In the interest of these initiatives spreading from business into politics, this commentary challenges forward-looking politicians to include such radical solutions in their manifestos.
It was just three weeks ago that Juliet Samuel wrote in the Business section of the Daily Telegraph “But unless the right comes up with its own radical answer to the problems posed by low wage growth, low productivity, and declining demographics, it will simply create a vacuum in which [socialist] ideas will flourish”.
It’s not a challenge limited to the United Kingdom, but it is as relevant here as anywhere else in the world. Politics have broadly broken down into three groups, none of which responds to the challenge of egalitarian capitalism:
- Left-wing: driven by socialism, it looks for the state to subdue individual freedom by assuming control over as many essential needs as possible - thereby giving it the ability to impose the lowest common denominator on all.
- Right-wing: driven by a focus on the free market with little regard for the disadvantaged, thereby allowing wealth concentration to take hold, both across society and across generations until revolution sets in.
- Centre ground: by trying to hold an unstable equilibrium of right and left, it is little understood by either and results in neither – rather, it tends to degenerate into a self-serving elite.
The political pendulum inevitably swings uncomfortably between the three, whereas what we need is a combination of individual freedom with a built-in bias towards equal opportunity: thus fostering wealth creation while offering widespread individual empowerment. Such a combination needs built-in intergenerational egalitarian re-balancing to ensure long-term stability.
The task of encouraging someone who believes in the freedom of the individual to embrace an egalitarian approach is substantially easier than that of persuading those who believe in state control to cede that empowerment to the individual. However, many former communist countries have shown that state control rarely results in true equality, as George Orwell illustrated so well in his book ‘Animal Farm’: the slogan ‘for the many’ may sound good, but it just results in empowerment of the few who control the levers of power. Whether political or financial, the intermediation instinct is a gripping addiction for those in power.
This issue is highly relevant in UK politics at present due to the political instability resulting from Brexit. There is almost certain to be a leadership contest in the Conservative party in the next two months; however, because that in itself will not change parliamentary arithmetic, it is also very likely that a General Election will follow within the next nine months.
So much can change between now and then: no doubt, if we are still struggling to find the Brexit end-game, that could confuse the outcome. For example, if the Brexit party led by Nigel Farage were to be a major factor in a General Election rather than just the European Parliament election next Thursday, it’s anyone’s guess what the House of Commons would look like in a year’s time. The one thing that’s sure is that there would not be a collection of MPs well-equipped to address long-term issues such as the economy, social justice, or the environment.
It’s therefore really important for at least one of the key contenders, with a real chance of leadership in government, to embrace this move to a more egalitarian form of capitalism.
For this reason, I salute Philip Jansen’s initiative at BT: he has started in a big way with his employees. I look forward to encouraging him similarly to offer enfranchisement to his customers through share ownership. Perhaps other leading companies, particularly the tech giants, may see what’s happening - and join the party.
The long-term answer for democracy has to lie with egalitarian capitalism: showing deep respect for people right across society, empowering the disadvantaged - especially young people - to seek aspiration, fostering enterprise, and leading to long-term and sustainable stability. It can be done.
Gavin Oldham OBE