Saturday, 29 September 2012



Is pre-distribution still an idea without a back-bone?

Pre-distribution is the catch-word of the week. But at this stage it is nothing more than an empty aspiration. It would indeed be nice if we could 'even out' the rewards of work before collecting income tax rather than after tax has been collected; then 'welfare' could be earned, rather than doled out as an act of charity. OK, nice idea; but how? Even if you accept the analysis [1] that what is needed is a strengthening of the bargaining power of labour, you have still not got us further forward than we were in 1979; for then, after a decade of strikes, the country voted in a Conservative government explicitly bent on breaking union power. O'Neill and Williamson are right to point [2] to the German concept of Mitbestimmung (i.e. Co-determination) as a possible way through that silly impasse, just as I was right to do so two years ago in this blog [3].
However, I went further than merely wondering why we in Britain did not force boards of moderate and large companies to accept a certain amount of labour representation, as was done in Germany and Sweden in the seventies. I showed how a very simple rationale could determine (with logic and justice) exactly how much voting power should belong to labour and how much to capital. In brief, if the annual wage bill of a company is x and the annual interest (or dividend) paid on its capital is y, then the ratio (labour:captial) of voting power on the board should be x:y.
There will be objections to allowing a just and logical amount of labour power to determine the fortunes of a company, just as there were objections to allowing a propertyless and uneducated electorate to vote in parliamentary elections. But, to our credit, we (as a country) got over that hurdle. And with patience I think we shall learn to accept Co-determination. Thus one objection to my formula will be that if mal-administration causes the business to go bankrupt, capital will lose all and labour will lose nothing, for labour has no stake in the company. To which one must answer that labour will lose its livelihood, which is worth (to it) exactly as much as capital is to the capitalist. If labour finds itself too ignorant or too foolish to interfere in the running of the company, it will surely have sufficient wit to find a proxy that is competent. If not, that business will founder and others will survive.


L. Cawstein

1 comment:

Anonymous said...

This is still an important contribution to a debate that has run for at least 200 years.