Tuesday, 26 June 2018

A defence of capital strategies as a tactic for unions

There have been a few bits and pieces recently that I have read that critique capital strategies from a labour movement perspective. I think these are generally helpful, and having worked in this field for a long time, I share some of the critical views expressed.

Nonetheless at points I think some critics end up articulating a position of "radical inaction" - essentially that it is better not to get involved with pension funds, and we should so other things. I think this would be a mistake, so here are a few points I would make in return.

1. Most obviously, we do not have to choose between organising and capital strategies and other campaigning tactics. Some critics of capital strategies work appear to believe that this is seen as a shortcut to/substitution for organising. I can only speak from my own experience, but most capital strategy work I have been involved in has developed where a) there is a live organising drive and b) where the union(s) at the sharp edge want to engage investors.

This work has to be linked to organising to have any value. In my experience, in practice capital strategies get used where there is live organising and the company responds in a hostile fashion.

2. Almost as obviously, someone will employ capital strategies utilising workers' retirement savings, even if unions don't. Most frequently, our pension funds delegate control to asset managers who will then utilise the power that different corporate law/governance regimes give them to pursue what to them seem to be reasonable objectives. In plenty of companies I've been involved with - Ryanair, Sports Direct etc - there was already some degree of investor interaction with the companies underway before unions got involved.

The default / status quo in terms of use of our capital in shareholder/investor-company relationships is not passivity. It is control by financial market intermediaries, frequently acting against labour's interests. You might argue that there is an opportunity cost to undertaking workers capital based work, and I'll listen to that point with an open mind. But in return I will argue that there is a risk in inaction.

3. Some union people don't want capital strategies to work at the theoretical level. I think we should just be honest about this. On one level I get this. It would be a lot easier to conclude that we compromise ourselves too much and achieve too little by dirtying our hands undertaking work in financial markets. I would also prefer a system in which labour's voice was significantly stronger than capital's in corporate governance - even if it's workers' capital.

But we aren't starting from where I would like, so I feel a responsibility to look at the reality: point 2 above. Pretty much every week I get an email from a union somewhere in the world along the lines of "we have a problem with employer X, can you help us talk to investor Y?" I feel compelled to try and help them as long as these requests keep coming. I am very happy to discuss why we need a different pension system and/or corporate governance regime, and I often agree with the ideas that people come up with. But that does not help in the short term.

4. I don't believe that undertaking this work reinforces existing governance structures/priorities as some claim. I'm looking at things from a primarily European perspective, but in my experience we are more than capable of both utilising capital strategies within the current framework and trying to change that framework. I also think some Left critics over-estimate how significant policy interventions that unions have taken in some markets are. That said, as I've blogged before, I would not advocate any extension in shareholder rights in the UK, given that a number of institutional shareholders have lobbied against worker voice in corporate governance.

5. It's a tactic, that's all. I don't subscribe to any larger theory about what the existence of workers' pension funds mean in terms of "ownership". Here I agree with critics from the Left. But this does not mean that undertaking work amongst investors cannot be a useful tactic. It's a tool we use to campaign with, and that's enough in my opinion.

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