‘Responsibility: the state or fact of being responsible, answerable, or accountable for something within one's power, control, or management.’
Dictionary.com definition
We chiefly see the human tragedy of huge swathes of violence in so many parts of the world in terms of loss of life, destroyed families and refugees. However, a key part of this desolation is also the wanton destruction of homes and livelihoods — people who were settled and in control of their own circumstances, but suddenly having these local responsibilities wrenched away from them.
Of course, it’s possible to blame a lot of this on autocratic regimes, but western democracies also have a lot to answer for — particularly due to the short-term approach taken by so many of our businesses and politicians.
The link between ownership and responsibility is hard to deny, but it’s often taken for granted. If someone owns a house, they keep it in good order and care for its appearance and surroundings. Tenants rarely feel the same sense of duty and care — the property is owned by a landlord, whose motivation is normally focused on financial returns.
This link between ownership and responsibility is also a key driver for the effectiveness of employee share ownership, and lies behind the headline of The Sunday Times business interview with London Stock Exchange Chief Executive Dame Julia Hoggett, ‘We must make people proud to own shares’.
Share ownership in listed companies has been under a lot of pressure for the past decade. The decline was partly due to the 2008 financial crash and, in the United Kingdom, the demise of Stock Exchange trading activity was also accelerated by Brexit. As Dame Julia said, ‘The UK used to have pretty much 70% of all equity trading [in Europe] because it was the largest capital market in the EU single market, and an awful lot of IPOs came as a consequence of that. We were ‘naturally’ going to lose some of that share when we left Europe, and so it has turned out’. However, this is not just a British or a European problem: JP Morgan boss Jamie Dimon has pointed out that the U.S. stock market has also shrunk, from 7,300 companies in 1996 to 4,300 today.
The pervasive influence of private equity has had much to do with this. It strips underlying value from businesses while they are hidden from public view, leaving the quoted market to pick up the remains. In the financial world, I think it also has much to do with the legacy of the 1986 merging of the roles of agent and principal which introduced huge conflicts of interest into the banking world, thereby allowing their businesses to be consumed by greed — ultimately ending in the 2008 financial crash. Ten years ago, on 9th December 2014, Simon Rose interviewed legendary market maker Brian Winterflood and myself discussing this issue just after the launch of Share Radio.
Meanwhile, politicians have done little either to recognise or to reverse this damage to the financial markets: for example, continuing to favour Private Equity in tax treatment of interest. Indeed, their own actions do little to show that they understand the link between individual ownership and responsibility — socialist legacy certainly hasn't helped but, even under centre-right governments, the public sector has grown massively over recent years. With this growth has come a level of public debt totally out of proportion to the private sector which is forced to sustain it via taxation.
Technology is also bearing down on individual ownership: even music is supplied under subscription, and 'The Cloud' removes the necessity for individual information retention. Meanwhile, as employment comes under constant threat from automation, the response from academics and politicians is invariably that Universal Basic Income will take its place.
However, as we've often drawn attention in the past, Universal Basic Income is simply welfare subservience. It does not embrace ownership as a virtue, but merely supports a baseline existence (that is, if politicians can find a way to finance it, which seems unlikely). Under this scenario, the prospect for most people in the future would be the dystopian existence predicted in George Orwell's ‘1984’ or in Aldous Huxley's ‘Brave New World’.
It's therefore essential to regain an appreciation that a sense of individual ownership is fundamental to people feeling responsible for the world around them. However, unlike our current and historic experience of capitalism which, as Warren Buffett said a fortnight ago, delivers ‘vast disparities in wealth and political influence’, we must find ways to deliver that sense of ownership throughout society and, indeed, across the world. This is why our quest for a more egalitarian form of capitalism is so important. Businesses and those who would govern have to learn to respect people's right to participate in ownership.
Over the long term, much of this can be delivered by inter-generational rebalancing, and our commentary on 18th November showed clearly what's needed in the United Kingdom in order to make that happen. I would like to see these plans for building resources and life skills for disadvantaged young people spreading across the world, with particular focus on countries suffering economic and geopolitical challenges.
However, there is a shorter-term approach that could be offered as a result of the tech revolution, which we’ve called, ‘Stock for Data’ (with the onset of Artificial Intelligence, this should perhaps be ‘Stock for Data and Creativity). As Dame Julia points out, stock ownership can lift people's sense of involvement and responsibility, offering them the opportunity not only to share in capital gain and dividends but also to participate in corporate governance, helping them to steer the future shape of the wider economy.
Ownership is not just about property and motor cars: it's about the world we all share. If people feel they are excluded from that sense of responsibility, we must expect it to result in rejection of the political and ruling classes: that's exactly what has happened in the recent American election, in the emergence of right-wing parties both in the UK and Europe, and in much of the Middle East.
Those right-wing parties may just lead to other forms of autocracy — time will tell. But there is a route that the middle ground could take towards a distributed sense of ownership and responsibility, by embracing a more egalitarian form of capitalism. Let's hope there are a sufficient number of sensible opinion formers in the middle ground to make this a reality.
Gavin Oldham OBE
Share Radio