Stakeholder Rights

Stakeholder Rights.

Professor Sir Tony Atkinson(*) has made 15 proposals for reducing inequality; and for good measure added 5 further ideas that he thinks could be worked up to become proposals. His thoroughness is impressive. But is he perhaps carrying things too far. He seems to have made it his objective that everyone in the country have the same spending power. I see in Britain a great variety of abilities and tastes, and conclude that this is natural; something to work with, rather than against. To level out the wealth of citizens completely would be highly artificial and constitute a massive interference. 

I believe our first objective should be to halt the slide towards inequality. There are too many ways (see below **) in which the rich (or smart) can take from the poor (or simple). I feel impelled to intervene, just as you would if you saw a big bully pounding a weakling. We clearly cannot rely on the ‘bullies’ having a sense of generosity or fairness. In Britain, though it is still regarded as unacceptably bad form to kill a person and take his goods, even that sense of justice may soon be challenged; and bare-faced theft become normal. We already accept taxes on alcohol, the promotion of gambling, tolerate lethal drugs, allow extortionate interest rates, and tolerate the ‘collateral’ bombing of citizens.  

So, leaving aside (for the present) the reasons why we must combat inequality, let us pass on to consider the means. I would like, here, to comment on only one of Professor Atkinson’s proposals. 

“Proposal 2: Public policy should aim at a proper balance of power among stakeholders, and to this end should:

(a) introduce an explicitly distributional dimension into competition policy;

(b) ensure a legal framework that allows trade unions to represent workers on level terms; and

(c) establish, where it does not already exist, a Social and Economic Council involving the social partners and other nongovernmental bodies.”

Stakeholders presumably include Labour and Capital as major players, with perhaps customers and government as minor players. For two centuries we have witnessed the tug of war between Capital and Labour. The public can see both sides of the argument, though dimly, and in tiny glimpses; and has made some attempt to maintain a balance  by siding at times with Labour and at times with Capital. This is a most unsatisfactory arrangement. The fair (or “proper”) balance is too ill-defined, too subjective, the mechanism too unwieldy and slow-responding. Professor Atkinson may have cracked it with his “distributional dimension”, “level terms” and his “Social and Economic Council”, but I see these as little more than giving ponderous names to the agonising conflicts we all feel during a prolonged strike. What is the proper balance?

In order to “aim at a proper balance of power”, we must first define it.  Of course, the market can decide one type of proper balance, when some businesses fail and others succeed. But that is destructive and painful to watch. Some years ago I suggested looking, for each business in turn, at the ‘annual cost’ of Labour and the ‘annual cost’ of Capital. In many employments these are approximately in the ratio 1:2. It would be logical, and just, to have worker participation on management boards in a similar ratio. At the very least this would lead to workers understanding better the economics of the business, and would foster a spirit of common purpose.  

*  Sir Tony Atkinson died 1st Jan 2017. Many good obituaries of this good man can be found at: https://www.tony-atkinson.com. 

** The rich can buy up the competition, or the food supply, or, with deep pockets, they can simply wait. They can sometimes even subvert justice.