guild socialism

Shareholders or Stakeholders?

Cameron has “threatened” a “new law” to “rein in executive pay”; the inference that shareholders in limited companies should be given a legal right to “veto excessive pay”.

Harrumph. As you know, in the Deft Left we don’t believe in being cynical. After all, during the War of Position we Socialists mustn’t look like a bunch of beardy grumblers. But we’ll allow ourselves, just this once, to shout “Hogwash. A typical smoke ‘n’ mirrors Sunday Westminster village story!” Thanks.
Now we’ve got that off our chests we feel better and ready to rock.
It really is a load of old boll*cks that Shareholders “own” companies and that they’re run in the Shareholders’ interest. And Shareholders generally care little about the long term interests of the company; Shareholders can be mobile with their investment; sell-up and bugger off taking their loss or profit. Plus once the dividends are maximised in this kind of organisation there’s less cash for reinvestment and proper efficiency. Or Shareholders are actually us, our pension funds, our savings, our vehicles we’ve had mis-sold to us to help us pay off those daft loans we’ve been encouraged to buy. But it’s not us getting the votes at the AGMs, or in cahoots with the Boards and remuneration committees. No. It’s the fund managers and so on. Small wonder GDH Cole wouldn’t even accept interest on his savings, let alone play any part in this seemingly unavoidable racket.
Marx foresaw the limited company. In his youth capitalists gambled their own money in the main and went to jail if they went bankrupt. But no one had the personal wealth for a railway or big cotton mills so by the mid-1850s the ‘limited liability’ idea became widespread, i.e. smaller investors could give money in return for shares but if the company went bust they’d only lose just their investment. Marx realised the significance of this and his prediction (in 1865) that this would put the forces of capital onto “a different plane” has proved prescient. He was a good lad. You should read some Marx.
By the early 1900s the fear that management would take excessive risk (as they weren’t playing with their own money) appeared irrelevant, as limited companies run by charismatics such as Ford & Edison were part-owned by the board. But as multi-nationals became larger no-one had the personal wealth to own a large chunk. So ‘management’ has become the dominant business class. The shareholders have become passive. Management is about maximising sales, maximising abstract stock-market value; not maximising reinvestment. Capitalism has gone wrong. Even big (if critical) fans of American capitalism warned against this in the mid-20th Century (e.g. Joseph Schumpter and JK Galbraith) as any 1980s ‘A’ Level Sociology student will tell you.
Then, in the 1980s the Reaganites and the Thatcherites found the Holy Grail. The principle of ‘Shareholder value maximisation’. Management were to be rewarded according to the amount of bread they scored for shareholders. So, 1) Profits had to be seen to be maximised immediately by cutting (i) costs; (ii) wage bills, (iii) decent inventory, (iv) proper reinvestment – all that went up the creek. 2) The highest possible slice of those profits had to therefore go to shareholders, ergo 3) management were encouraged to behave this wayby having their pay-packages heavy with relevant “on-target” bonuses and stock-options – so they identified with the shareholders. Stocks went up and up, with a couple of minor dips, for almost 30 years. So shareholders didn’t question the pay-packets of the managers.
Meanwhile all the other stakeholders in the companies got fuck*d over. Jobs were cut. Workers were fired and re-hired as non-unionised labour (especially in the US); real wage increases were diminished (often by outsourcing and relocating to countries such as China or simply threatening to do so). Suppliers (and, of course their workers) got squeezed by cuts to their procurement price. Governments cut corporate tax rates and (in the case of former UK nationalised industries such as energy and rail) bunged subsidies to anyone who asked nicely. The proletariat were encouraged to join in by borrowing money as ridiculous interest rates. Inequality soared.
This method doesn’t do the company much good either. Fewer workers and the threat of redundancy means poorer performance. Workers are discouraged from learning company-specific (and therefore company enduring) skills. Once all the cuts have been made for short-term shareholder benefits then higher and higher dividends have to be paid. If stock goes up the company starts to buy back its own shares, thereby keeping the price high and so indirectly redistributing even more cash to shareholders while they sat at home. Share buybacks used to be (pre 1980) less than 5% of US corporate profits, but, according to Business Week (24th August 2009) it was a mind-boggling 280% in 2009! This is what knackered G.E. in 2009.
Then profits don’t get reinvested. According to Professor Ha-Joon Chang from the Economics department of the University of Cambridge UK income growth rates have fallen from 2.4% pre-shareholder value maximisation (1960-1980) to 1.7% during the heyday of shareholder capitalism (1990-2009). So running companies in the interest of shareholders certainly doesn’t help the wider economy.
Elsewhere in the world, outside the old Anglo-American idea of shareholder capitalism, other capitalist countries have generally attempted to reduce the influence of short-term floaty shareholders and have tried to create long-term stakeholders. In some countries central government holds a sizeable share in key organisations (e.g. Renault in France) or indirectly have a stake by having state-owned banks (such as South Korea). In Germany there is an ongoing tradition of significant union representation on the boards of key enterprises. That’s why in these capitalist countries there’s not so much sacking, more efficient reinvestment, less buybacks. General Motors did all that and went bust, b*ggering the lives of tens of thousands of Americans and their cities.

Running companies in the interests of mobile shareholders is why ‘fat cats’ get their corporate bonuses and their share dividends. They are supposed to empathise with the shareholders.

Cameron’s sudden concern is, inevitably, towards the Thatcher generation, the small-town Tories, small businesses and the ‘squeezed middle’, not towards the majority who are outraged at the sheer waste and injustice of all this cr*p. Giving shareholders a vote on corporate pay new isn’t a new idea, you can do it in a large percentage of these kinds of companies anyway (although shareholdings are dominated by institutional holders  – mostly playing with your money – who nearly always go along with the board).

The biggest joke of course is that Cameron is saying, on behalf of his stakeholders, that the rest of us can just p*ss off; only shareholders have any right to decide what the bosses get. A profit for shareholders is king. The workforce is merely a variable necessity to bring this about. Sounds like the 1920s and 1930s.

It’s semantics. ‘Shareholder value’ is a total smokescreen to mean THEM.

THEIR power and wealth.

US: we are to stay quiet, suppressed by anti-union laws and a capitalist press.

WE, the workers, are a much bigger part of the teamwork of production than remote shareholders. Putting a representative of the workforce on the top earners’ remuneration committee would be a start, even though we accept that person could be ignored or outvoted by the other members of the committee, but 
pay MUST be agreed in the future by the workforce as a whole at an annual meeting of representatives of all the main occupational grades within the organisation. Or, far better, let’s remove individuals – whether workers or cronies – from the remuneration process. Let’s instead force companies to stick to a formula whereby the highest paid person in the firm cannot be paid more than x-times the lowest paid. So if you want to pay yourselves a fortune you don’t need to persuade the tame worker on the committee. Instead you have to raise everyone else’s wages to stay within the ratio. We’d recommend a ratio of 5:1. Or less.
But these are interim measures, to make capitalism bearable. In the last analysis, the Guilds should be running things. Meanwhile, if we’re going to have to put up with private ownership of one kind or another for a while longer, let’s make sure the workers own the companies. Not outside interests. John Lewis is a good example. A certain amount of the pain of alienation and surplus value is removed when employee ownership kicks in. Not all of it, mind. But it makes capitalism more bearable. Until the Great Day. Don’t get us wrong. This stuff doesn’t solve capitalism’s problems. But it soothes the pain a bit for those of us on the receiving end.

If pay structures are to be efficient then the workforce, not just the shareholders, must have a major say in determining it. 

Let’s discuss this further on 16th February at the Half Moon in Putney.

GDH Cole on Guild Socialism

This might not pump all of your ‘nads. But it blimmin’ should do. Comrade Waterhouse has been on. He’s alerted us to this pamphlet. It’s the transcript of a speech GDH Cole made to the Fabian Society in 1919.  It’s all about Guild Socialism.

Now, as you know, the Guild loves Guild Socialism. Absolutely bloody loves it. And the optimism of both the intellect and the will reflected in the first part of this pamphlet is so exciting. There was a time when, with the Russian revolution but two years old, the possibility of Guild Socialism was genuinely imminent. Let’s recreate that optimism, brothers and sisters. Let’s make it happen.

Where’s GDH now? We need him. But, in his absence, we just sing about him.

Now, if you need to hear us do so, come down to our next gig. It’s going to be brilliant. Mods Against The Cuts at Blow Up! August 13th. Denmark Street. Do not miss this. You’ve got our new album? Y’know that song ‘Only Marxism Leninism Can Set You Free’? Y’know how top notch the piano is on that? That’s cos it features Ivan Chandler, pianist to Dusty Springfield, Lulu and others, back in the day. Well, he’ll be playing with us. Yup, he will be onstage with Thee Faction. Do not miss this gig. Under any circumstances.

See you there, brothers and sisters.

GDH Cole and Guild Socialism. A Beginner’s Guide

A lot of you who have bought At Ebbw Vale have been asking who GDH Cole is. He gets mentioned on the sleeve, and is, apparently, a bit of a mystery to many of you. For his low profile you can blame an array of people. The Left in the 60s didn’t think he was very sexy – when you’ve got Marcuse and co to market, a rather stuffy old Brit who did a sideline in detective fiction doesn’t quite have the caché you’re looking for. The Labour Party never thought he was very sexy either. He knew all the right people, and was a prominent Fabian, but his blueprints for a better tomorrow weren’t quite in line with the democratic socialist orthodoxy of the moment. He was talked about as having a ‘Bolshevik soul in a Fabian muzzle’. Not the kind of guy the Labour Party were likely to make a song and dance about (though, weirdly, Labour List has published a piece about him today, pointing out that Cameron’s Big Society is just a bourgeois version of GDH Cole’s Guild Socialism). And the rest of the British left simply never knew how to categorise him. He was non-communist, but clearly Marxist in his analysis. That didn’t appeal to the CPGB. He was against a strong state, and had no truck with State and Revolution type thinking, so the Trots didn’t like him much either. Overall, there was no one who was likely to keep the GDH Cole momentum going after he’d left us.

We, of course, have always tried to. We’re a Socialist R&B band. We employ a Marxist analysis of history. But our vision of a better tomorrow is not necessarily informed by communists. Indeed, we have always seen history like Marx, the immediate struggle like Gramsci, and the vision of a better tomorrow like GDH Cole. The three pillars of Thee Faction’s thinking.

You all know how to apply Marxism as a critical tool. You all understand the nature of the war of position, as outlined by Gramsci. But the release of At Ebbw Vale has shown us that you don’t, necessarily, know your way around GDH Cole. So here is the briefest of guides to his way of thinking. There’ll be more of this, should it interest you, in the weeks and months to come. Think of today’s post as a very simple beginner’s guide.

GDH Cole was born in 1889. Between then and his death in 1959, he effectively did all the things you’d expect a man of the British Left to do. He wrote for the Guardian, the Left Book Club and the New Statesman, he ran the Fabians, he was huge in the cooperative movement, he was a Professor at Oxford, he taught Wilson and Gaitskell (not well enough, of course), and he was the inspiration behind Professor Yaffle in Bagpuss (if we tell you that his wife was Margaret Postgate, that might explain why). But so far this is a fairly standard portrait of a solidly Establishment British left-winger of the Webbs, Orwell, HG Wells, GB Shaw type. What separated Cole out from the rest of the gang?

The answer is: Guild Socialism. A million and one blueprints for socialism exist. Most lead unavoidably to Stalinism, because they hand everything over to the State. Guild Socialism doesn’t. That whole area of life that exists between the individual and the state is what needs to be democratised: Civil Society. So where Stalinism destroyed all the space between the individual and the State, ensuring that the State was everything, Guild Socialism offers a path to a socialism where the State is almost nothing.

Guild Socialism is a libertarian socialism for democrats. It’s a way of democratising civil society. The emphasis is on democratising the workplace, and all the other associations we find ourselves a part of when we walk out of our front doors. We self manage everything. Yup, there’ll still be a State. But it won’t have that much to do – just mediate between the different guilds and deal with criminal law. It’s the logical conclusion to the British cooperative movement. It’s socialism as it should be. Imagine – your workplace is democratised. As is the bus service to your workplace. As is the club you drink in after work, and the library you get your books from after that. All of which must work out ways of organising society to make sure all can thrive.

A month or three back we recommended that you read Darrow Schecter’s Radical Theories. There’s great stuff in there on Guild Socialism. But if you can get your hands on any of Cole’s original stuff, read it. It’s great. Avoid his detective novels, mind. They’re deadly dull, as befits a man who Beatrice Webb reckoned had no sense of humour.

Anyway, hope that clarifies things on the GDH Cole front. When you hear about the Big Society, or other daft attempts by the bourgeois state to abdicate responsibility for what goes on in civil society, remember that there is a way of doing just that, but without the abdication of state responsibility, without the moral abacus of the market, and without it being a patronising, top-down gesture. It’s called Guild Socialism, and it rocks like a motherfucker.

Eyes left. We describe ourselves as a Guild, see. Because we try to run ourselves along Guild Socialist principles. Relations between Thee Faction and Soviet Beret are a superb example of life under Guild Socialism. Things are not always harmonious. But they are democratic, and we’re all empowered. Can the same be said of Sony Records and its music-making-minions?

Guild Socialism. Get ready for it, cos it’s on its way brothers and sisters.

Cameron’s Britain – you never know who’s behind you…

Parked in front of us in Wandsworth yesterday was this van. It’s a sad indictment of Cameron’s Britain, brothers and sisters. Where tradesmen used to specialise, and, through guilds and trades’ unions, could protect their trade from casual labour, interlopers, blacklegs and so on,  it now seems that in the British working class, anything goes. It’s clear that, in the depths of this recession, they have simply added additional trades to the ones they had previously delivered, without a care for those who have committed their lives and careers to delivering excellence in that area. What happened to proletarian solidarity, brothers and sisters?

So while you might snigger at these guys offering to bleach your nether regions, that is far from being the point of this post. Think, for one second, about the qualified anal bleachers whose livelihoods are being encroached upon by these cowboys. Capitalism is desperate to see them drop their prices to compete with each other, until the deliverers of top class anal bleaching will have to cut corners in order to survive. Do you want it to be your family’s bottoms that are painted in Tesco Value bleach?

Think on comrades. If it’s happening in anal bleaching, it’s happening in your own trade. Let’s not stand for it. We all know that Guild Socialism is the answer to this. But the only way we’re going to get there is by fighting back against the hegemony of market forces. Join your trade’s union, and protect your trade, brothers and sisters.

What will it be like after the revolution, Daddy?

Marx gave us a great big bag of tools for looking at the world, and an understanding of how history works. What he didn’t do much of is tell us what it’s all going to be like once the age of capital is done and dusted. We’ve seen one attempt at it – the Stalinist one – and it wasn’t a lot of fun. But that particular branch of Marxism-Leninism has never been our only option. There’s tons of really fun-looking post-capitalist visions. We in Thee Faction have a tendency to concentrate on the analysis of the now, and counter-hegemonic strategies that might get us to the world of joy and hope which will follow. But we don’t, perhaps, talk enough about how we might design that vision of a better tomorrow.

We have all, of course, waded through libraries’ worth of books on this stuff. We don’t necessarily recommend that you do the same. Instead, our old friend and comrade Darrow Schecter has written a book (well, he wrote it 15 or so years ago), which handily digests lots of these competing ideas into one beautifully written guide to our options for the post-capitalist world, concentrating on the politicisation of civil society as the means towards it. That is to say, Comrade Schecter is well and truly with us on the Gramscian counter-hegemonic strategy front.

Thee Faction make no secret of their own preference for Guild Socialism, of course – and there’s a splendid chapter on that peculiarly British vision of a socialist society. As Bertrand Russell put it: ” The best practicable system, to my mind, is Guild Socialism, which concedes what is valid both in the claims of the State socialists and in the syndicalist fear of the State, by adopting a system of federalism among trades for reasons similar to those which are recommending federalism among nations.” This is, perhaps, our main reason for including a portrait of Russell on the walls of the DDRofR&B, along with other socialist and R&B figures of note. Ruskin, Morris, Penty and, perhaps most importantly, GDH Cole, all contributed to the formation of this set of ideas which look most attractive to Thee Faction as a post-capitalist way of life. Indeed, we try to organise Thee Faction along guild socialist lines.

But it isn’t up to us, any more than it’s up to these fellas at their university desks. It’s up to you to build post-revolutionary society. Comrade Schecter’s book just gives you some ideas. He takes us a on a tour of: revolutionary syndicalism, anarchism, council communism, guild socialism, market socialism and green, post-industrial socialism. You can treat it as a pick’n’mix, brothers and sisters. No need to pick one of these wholesale. When capitalism falls there will be much talking and debating, and all of these ideas will be in the mix. But now is as good a time as any to start planning. It won’t be long now.

Comrade Schecter has always been a Chicago punk-rock kind of guy – he always preferred The Effigies or Naked Raygun to Thee Faction back in the day. But we’re pretty sure there’s still room in his heart, along with all the space taken up by GDH Cole and Antonio Gramsci, for some Socialist R&B. Comrade Schecter, we salute your handy guide to post-revolutionary society.