Ownership and control

Here's something I wrote for work...

Ownership and control

If you’re a delivery driver whose movements are monitored remotely, or doing gig work through a platform like Uber or Deliveroo, you’re already seeing the impact of technology on work. Millions of other transport workers will have the same experience in the years ahead.

Too often, rather than liberating workers from drudgery, technology is something that is forced on them, undermining their occupational status and reducing their freedom at work. As a result technology often looks like a weapon to used against workers, rather than a tool to assist them.

Some far-sighted thinkers saw this coming. For example, writing in the 1970s, Harry Braverman, warned that technology was used to disempower and deskill workers:

The mass of humanity is subjected to the labour process for the purposes of those who control it rather than for any general purposes of “humanity” as such… Machinery comes into the world not as the servant of “humanity”, but as the instrument of those to whom the accumulation of capital gives the ownership of machines… [I]n addition to its technical function of increasing the productivity of labour — which would be the mark of machinery under any social system — machinery also has in the capitalist system the function of divesting the mass of workers of their control over their own labour.

Writing a decade earlier, and coming from a different political perspective, the economist James Meade offered a bleak view of future society if action was not taken to address some of the trends he saw in market economies:

There would be a limited number of exceedingly wealthy property owners; the proportion of the working population required to man the extremely profitable automated industries would be small; wage rates would thus be depressed; there would have to be a large expansion of the production of the labour-intensive goods and services which were in demand by the few multi-multi-multi-millionaires; we would be back in a super-world of an immiserized proletariat and of butlers, footmen, kitchen maids, and other hangers-on.

What both of them believed was that the problem was not technology itself, but rather who owned and controlled it, and therefore who benefitted from its rewards. Unless these questions were addressed, workers would suffer. If we fast forward to the 21st century, the world of the millionaire “tech bros”, Uber drivers and platform working, the views of Meade and Braverman look very prescient. But could the labour movement address these problems by focusing on the ownership of technology?

The question of ownership addresses two related issues of critical importance to workers — power and reward. It is not surprising that labour’s opponents defend current ownership models, since they put both power in the hands of management and ensure that they and their allies derive the most reward. In contrast, if we could expand worker ownership we could both increase our power at work and ensure that wealth is shared more equally at the point of production.

The terrain may be more favourable for this type of change than in the past. For many technology businesses, capital may be less important to them than labour. The dominant organisational model in business, the joint stock corporation, developed in an era of capital intensive businesses. For example, this was a highly useful organisational form during the construction of railways. Given the risk shouldered by providers of capital (shareholders), the model awarded them significant power within the firm.

But many public companies are now net contributors of capital to shareholders, as share buybacks increase. And technology firms in particular can be far less capital intensive.

In addition, the individual shareholders of the 19th century, placing their capital in a handful of businesses, have long since been supplanted by institutional investors managing billions or trillions of dollars’ worth of capital. These investors reduce their risk by investing across hundreds of companies, meaning that the failure of any one does not adversely affect them. In contrast workers bear “firm specific” risk — most of us only work for one business, and if it goes under we lose our job. Meanwhile for companies it is “human capital” that matters most.

So the current model seems to have its priorities upside down — it awards power to the party that bears less risk, and makes little contribution, but denies it to those without whom the business cannot function. Again this point has been identified by past thinkers, and even conservatives have sometimes acknowledged it. For example, the point was made by the Tory peer Lord Eustace in a speech in 1944:

The human association which in fact produces and distributes wealth, the association of workmen, managers, technicians and directors, is not an association recognised by the law. The association which the law does recognise — the association of shareholder-creditors and directors — is incapable of production or distribution and is not expected by the law to perform those functions. We have to give law to the real association, and to withdraw meaningless privilege from the imaginary one.

This could be addressed by rewriting company law, as Eustace envisaged, or it could be achieved through an expansion of worker ownership.

For example, what might Uber or Deliveroo look like if they were owned by those that work for the business? Clearly drivers or riders would have a direct interest in ensuring the apps that allocate jobs work well for customers. But equally, they would want to eliminate or alter features that are exploitive or invasive. At the same time, workers would directly benefit from the success of the company, rather than the seeing the fruits of their labour syphoned off by external investors.

Change could even be achieved within the current model. For example, public companies could be required to issue shares to worker funds which would enable them to build up a controlling ownership position. This need not be complete ownership of the equity, but having a sizeable position (say, upwards of 30% in each company) would mean that the workers in the company receive both a fair share of the wealth they create and exercise meaningful control. In countries where workers do not currently have representation in corporate governance, this ownership would also justify board membership or similar participation structures. In addition, having a worker ownership fund of this size, aligned to the business, would provide a defence against hedge funds and other speculators who might seek to take over or break up the firm.

Alternatively this approach could be scaled up, so that sectoral funds or even a national fund could hold the equity. This was broadly what Meade advocated — the creation of a national Citizens’ Trust — and a similar idea has recently been floated by the Institute for Public Policy Research. An advantage here would be that workers would be able to diversify their financial risk, although on the downside control might shift away from workers in a specific business to the fund. Nonetheless, the fact that think tanks are now looking at ownership again, suggests this is an idea whose time has come.