With capitalism in the doldrums and a general election nearly upon us it is the season to reflect on how we might manage to convert the neoliberal, market-driven free-for-all of our current society into something we might actually like to live in. Will Hutton set the ball rolling in the Guardian yesterday with a lengthy promotion of his new book, which lays out a new framework for building “smart societies.” Hutton’s critique of the existing order raises some salient points and only those living on the moon over the last generation or three could have failed to notice that “problems in the British economy and society run deep.” He is also right in asserting that, if “there are no networks of reciprocal obligation, and no acknowledgement that human beings associate in a society they can construct, redesign and reform around those principles, then we are all reduced to atomistic consumers and workers – serfs who are no more than notations in the spreadsheets of companies and public bodies alike.”
The problem with Hutton’s analysis, however, is that he still puts business and wealth creation at the heart of society. “The aim of any manifesto for change” says Hutton “must be to create the smartest economy for Britain – it is the only route to prosperity in the decades ahead.” Refining the mechanisms of wealth generation is all very well but surely this should not take precedence over the social and human fabric of the world we live in. Unfortunately, Hutton is a little sketchy on this issue and even though he is adamant that businesses should not solely tools of stock market speculation, he also declares that “companies are organisations of genius, solving problems, innovating and delivering great goods and services.” ICI, GEC and Rolls Royce are all used to show Britain’s great industrial tradition but he conveniently forgets recent allegations of corruption and bribery in the latter.
He is right in deriding that the obsessive ‘short-termism’ of investors and correct that we need to reimagine how companies are owned. But sadly, despite his assertions to the contrary, he does not have much regard for the individuals and societies that are ultimately at the heart of firms and their profits. Hutton’s call for a “Companies Act for the 21th Century” sounds like a noble suggestion but he is light on detail and vague about social impact:
“The cornerstone of a new approach to ownership should be a Companies Act for the 21st century…this would set out unambiguously what society expects from companies in exchange for the privileges they are afforded. The aim is to create purposeful companies with a more just relationship between themselves and the wider society, capable of fostering the trust relationships that are at the heart of high-innovation and high-performance workplaces. Companies would be required to declare their business purpose on incorporation: they should incorporate to deliver particular goods and services that serve a societal or economic need and will need particular capabilities and skills. It is through delivery of their purpose that they should seek to make profits.”
“The objective is to put business purpose at the heart of every enterprise and make it something for which directors are held to account – to create a societal obligation to match the privileges of incorporation. This will not be a weaselly commitment to “have regard to” the delivery of business purpose…it should be a statutory obligation. Directors will have to produce an annual account of their stewardship of the company, of which today’s financial reporting will be but one element. There will also be an account of investment, innovation, research and development, human capital development, pay scales, executive pay in relation to median pay and supply-chain relations, along with an account of the company’s wider commitments on the environment and bribery.”
So the solution to our current societal malaise lies in Britain’s commitment to long-term, responsible investment and the fostering of business aims over financial speculation. And in return for a commitment to greater transparency, corporations would cement themselves even further as the cornerstone of our societies. With this in place, claims Hutton, the State can then work hand-in-hand with private business to improve productivity, innovation and, of course, profits for the newly responsible owners. And even though “social solidarity” is still to be valued, he says, it is crucial that employers can still “move quickly and without penalty to adjust the size of their workforces downwards.” So social solidarity obviously does not extend to the workforce.
After reading all 4596 words of the Hutton’s self-review on the Guardian website, I am still struggling to get grips with what this new society would look like. On the one hand, it seems sensible that a review of the company’s role in economy and society should be on the agenda as we approach an election. It may even make sense for someone to write a book about it. On the other hand, however, it seems astonishing that a review of corporate practice and activities should serve to reinforce the view that the company should continue to maintain its predominant position in our societies. Perhaps we should try to remember that it is people who are the drivers of the economy and the soul of the community. It is the blue collar workers who are at the heart of wealth generation, and having people like Will Hutton perpetuate the myth that the company is a supernatural being, driving the economy from up on high, only serves to diminish their role. Creating an environment for innovation is obviously crucial but this should be done with societal gains in mind rather than just Hutton’s woolly notion of “wealth.”
Hutton aims to create a Britain that is “an exemplar of the good economy and society” but what he really means is a more responsible model of corporate governance in exchange for regulations and a “financial system designed to support business growth, innovation and investment.” If we really want to change society for the better while working within our existing economic framework then we need to hand a greater role to employees, citizens and communities in defining the objectives and working methodology of our enterprises. Instead of putting the financial system at the service of business we need to have it promote greater opportunities for cooperative style ownership. Having employees own and run their firms, with oversight from the wider community, promotes and strengthens the relationship between economy and society. Let direct stakeholders decide what impact they want large firms to have in their communities and beyond. And this can extend too to greater support for social cooperatives, allowing community members and staff to have a greater say in provision of public services. Italy already has over 7000 social cooperatives designed to benefit the community and boost the social integration of the citizens. Britain lags behind many other European countries in terms of business and social cooperatives but there is evidence to suggest that they can give Hutton his wealth generation while also acting as a much needed tool for social integration and harmony.
The reasons why it makes sense to empower people in creating their own business and societal frameworks are many, but most reflect the fact that people have had enough of our existing socioeconomic model. Whether it is nationalism in Scotland and Catalunya, socialism in Greece and Spain, or right-wing anti immigration in various parts of the EU, people are expressing a desire to have a greater role in shaping the places where they live. Although these movements are mostly built on different, and often opposite ideologies, they are all connected by the drive to decentralise decision making and to ensure that individual rights are not subservient to corporate or State power. When Hutton talks of “smart societies”, what he really means is “smarter corporations”, because a smarter society would surely be more inclusive and value people over profit. So maybe people like Will Hutton and many others need to change their priorities before trying to change our societies.
Feel free to read Will Hutton’s full article in the Guardian here.