John McDonnell proposes an ambitious economic policy.

John McDonnell proposes an ambitious economic policy.

John McDonnell’s Bold Vision for Workers’ Rights

Labour Party Conference

The Labour Party’s annual conference has been dominated by Shadow Chancellor John McDonnell. Not only did he deliver the keynote address, but he also made appearances in the media and on the fringe events. McDonnell has offered the Labour Party a radical new concept: compelling companies to give their employees shares worth about 10% of the total.

Although his delivery may not have been a rhetorical triumph, McDonnell’s speech provided insights into his worldview and potentially becoming Britain’s next Chancellor of the Exchequer. Unlike last year, when he presented himself as a responsible bank manager, this year he didn’t hide his ambition to shift power from capitalists to workers. McDonnell asserted that the bigger the mess they inherit, the bolder their approach should be.

The core principles of McDonnellism are “public ownership” and “democratisation.” He highlighted the importance of Labour’s adoption of Clause Four a hundred years ago, committing to public ownership of the means of production. Moreover, he emphasized that democracy should extend beyond the workplace. McDonnell proposed industrial democracy, with a third of company boards comprised of workers.

Coming down from these lofty ideals, McDonnell outlined his policies for “reprogramming capitalism.” Alongside familiar approaches like a £10 minimum wage and sectoral collective bargaining, he introduced more nuanced ideas. He suggested rewiring the Treasury to transform it from a block on progressive reform into an agent of regional regeneration and public investment. Most notably, McDonnell wants “big” companies to give 10% of their shares to their workers. These shares would be placed in a collective fund that would pay dividends to workers, reinvest in the company, and contribute to social investment.

However, it remains uncertain whether this plan will resonate with the public. Despite McDonnell’s enthusiasm, the audience at the conference showed indifference towards his ideas. The Labour Party’s default mindset of nationalizing utilities still prevails among its members. Worker share-ownership is viewed with skepticism, resulting in a push-me-pull-you situation.

From a practical standpoint, there is an interesting debate surrounding companies granting shares to workers. Critics argue against holding shares in the same company that pays their salary, as evidenced by the Enron scandal. Conversely, proponents highlight increased motivation when employees have an ownership stake, referencing the success of the John Lewis Partnership.

Unfortunately, McDonnell’s ideas lack substance and appear irresponsible. His blueprint fails to respect property rights, essentially proposing the expropriation of shareholder wealth, causing capital flight and damaging the British economy. Additionally, it would give control of shares to an ownership fund, rather than the employees themselves. The plan also fails to provide significant incentives for employees, as most of the benefit would go to the taxman. McDonnell seems more focused on increasing corporate taxes than fundamentally changing capitalism. Moreover, his scheme risks turning into a British version of “black empowerment,” where the state appoints well-connected individuals to control investment funds and run companies.

Furthermore, McDonnell offers no answers to crucial questions. How would his ideas apply to foreign-owned firms? Would UK-based staff receive a tenth of the capital of multinational companies? And if so, wouldn’t sensible multinationals immediately close their British operations? The same concerns apply to companies with a small proportion of UK employees or foreign firms with British subsidiaries. Additionally, it’s worth noting that there are simpler alternatives, such as providing tax breaks for share awards, to increase share ownership.

While McDonnell’s bold vision may be commendable for its uniqueness, it falls short on practicality. His proposal lacks coherence and raises important economic and logistical concerns. Therefore, despite his prominence at the Labour Party conference, it may be a dud in reality.