Roger James: How can we get a ‘fairer capitalism’?

In the first of a two-part series, Roger James examines how we can work together to promote a fairer form of capitalism that benefits us all

Occupy Bristol 2

Occupy Bristol has captured a public anger that conventional politics ignored

Attacking capitalism as practised seems to be suddenly fashionable across the mainstream political parties. As the spring ‘bonus season’ is imminent, David Cameron has highlighted that he wants to take action on excessive salaries in the corporate world.

The Prime Minister promises to boost shareholder power to give them more of a say in curbing enormous payouts for top executives and the Liberal Democrats want independent remuneration committees.  One Conservative MP has made the case against what he calls ‘Crony Capitalism’. The Labour leader, Ed Miliband has called for a “fairer and better capitalism”, following up his conference speech when he divided capitalism between good “producers” and bad “predators”.

Politicians are aware that high salaries, especially in the banking community, allied to inequality and public austerity are a matter of concern to many voters. A report from the Institute for Public Policy Research found  that chief executive pay rose to an average of £5.1million last year, a hike of 33% against a 24% increase in the value of their companies.

The Government has accepted Sir John Vickers’ proposals to ‘ring-fence’ banks retail and investment activities; however, the changes will not be implemented until the start of 2019.

Action and coverage in 2011 was high. UK Uncut protested about alleged tax avoidance and Occupy captured a public anger that conventional politics ignored. The Guardian’s Tax Gap series highlighted companies avoiding £25bn tax through tax havens and loopholes.

More recently, the High Pay Commission  reported: “As Britain enters times of unparalleled austerity, one tiny section of society has been insulated from the downturn. That is the top 0.1% of earners, with company directors in particular continuing to enjoy a huge annual uplift in rewards.”

The recent Organisation for Economic Co-operation and Development (OECD) report, “Divided We Stand” finds that the average income of the richest 10% is now about nine times that of the poorest 10%  across the OECD, and the individual  UK report indicates even bigger differentials.

The public will probably await evidence of deeds following the rhetoric to see whether politicians are willing to tackle the “unacceptable face of capitalism” – a phrase coined by former Prime Minister, Ted Heath back in the early 1970s.

So, what can we do about it?  – here are some ideas to take up right now…

Invest for change and consume ethically

Firstly, we can all take action in our own lives by our investment and consumer choices.  The Co-operative Bank’s Ethical Consumerism Report recently reported that the overall spend on ethical food and drink was £6.6bn up 5.07%. Within this, Fairtrade sales increased 36% and alongside rainforest alliance, organics and ethical boycotts command over £1bn of the market.

The value of money in ethical savings and investments increased by 9% in 2010 to £21.2bn. This includes £9bn in ethical bank deposits as well as £11.3bn in ethical investments.

There is lots of help to invest your money ethically. The EIRIS Foundation and Ethical Investment Research Services is a great resource and a leading global provider of independent research into the environmental, social, governance (ESG) and ethical performance of companies.

The UK Sustainable Investment and Finance organisation (UKSIF) aims to ensure that the UK finance sector is the world leader in advancing sustainable development through financial services. The Ethical Investment Association (EIA) is an association of financial advisers from around the UK, dedicated to the promotion of green and ethical investment. One local firm of advisors are Rathbone Greenbank Investments.

The Local Authority Pension Fund Forum LAPFF exists to promote the investment interests of local authority pension funds, and to maximise their influence as shareholders whilst promoting social responsibility and corporate governance at the companies in which they invest.

National Ethical Investment Week (NEIW). October 14-20, 2012, is a special week to promote this growing area of the economy. Your banking choices can also be influential – bankers with a declared conscience include the Triodos Bank, The Co-operative Bank  and the socially orientated Unity Trust Bank.

We should not forget the growing role of credit unions as  sustainable financial co-operatives. The Ethical Consumer Research Association’s Guide or the Southwest Fairtrade Guide will help guide your purchases.

Find the facts and get campaigning

Secondly, public campaigning and pressure on companies is a very effective way to change their practices – adverse publicity can affect their brand image, their sales or dent customer loyalty.

The New Economics Foundation have a couple of a handy publications to help you understand banking and the financial world.

If you want to monitor and challenge company practice,  organisations  like the Good Banking CampaignAmnesty,  Corporate Watch or Corporate Europe Observatory (CEO) research and campaign on finance and corporate issues. The Corporate Responsibility (CORE) Coalition strives to improve UK companies’ impacts on people and the environment.

The (Ecumenical Council for Corporate Responsibility) works for justice in and through economic structures and for responsible stewardship of the earth and its resources. Global Witness has run pioneering campaigns against natural resource-related conflict and corruption and associated environmental and human rights abuses. If you want to know a lot about a corporate you can sign up to Corporate Critic who give a comprehensive check on ethical or environmental performance.

Spring  also welcomes in company annual meetings (AGMs)  when boards  report back to their owners, the shareholders. Shareholder activism, you only need one share, is a way in which shareholders can influence a corporation’s behaviour.

Activism covers a broad spectrum of activities. Activism includes “voting with one’s feet”, private discussion or public communication with corporate boards and management, press campaigns, blogging and other e-ways of public “naming and shaming”, openly talking to other shareholders, putting forward shareholder resolutions, calling shareholder meetings and – ultimately – seeking to replace individual directors or the entire board.

Shareholder activism can be very effective , but  has some constraints in a globalised world. Shareholders may only be short-term profit seeking owners, while 41% are foreign owned. Insurance companies hold 13%,  pension funds (see LAPFF) 13% and individuals only 10%.

So, exercising  your financial power and campaigning already are, and can continue, making a difference. Fair pensions do a good guide to help you get involved.  NCVO have great campaigning resources, including one dealing with the private sector (currently being updated). Their Forum also has lots of useful advice.

Check out some of the links above – have a great time; positive change for a fairer and sustainable society is at your fingertips. Next week in part two, I will look at some other ideas. Meanwhile, it would be great if you can share your ideas for action on this blog!

Roger James is a campaigner for Oxfam South West in Bristol – these views are his own

3 Responses to Roger James: How can we get a ‘fairer capitalism’?
  1. Nick
    January 19, 2012 | 12:25 pm

    Fairer Capitalism – er Oxymoron its Socialism!

  2. RAB
    January 18, 2012 | 8:30 pm

    You are asking the wrong question Roger. Why would I, or anyone else, private individual or corporation, wish to pay more tax? What guarantee do we have that our Govt is spending it ethically and wisely? I don't think invading Iraq and Afganistan was particularly "ethical" do you? But we are paying for it through the nose for it, and there's not a damn thing we can do about it. The Govt has just promised to spend 32 billion on a high speed train link that shaves a mere 24 minutes off the journey. You and I will be paying for it and I for one will probably be dead before one bum gets placed on a seat. It is a monsterous waste of public money but we are expected to grin and bear it and pay up. The man in Whitehall always knows best doesn't he? Er just like the Channel Tunnel vanity project that was supposed to be built with private money, but went bankrupt several times and got bailed out by the taxpayer.

    So I would like to see the Govt's books please. What are they spending my money on and am I getting value for money for it? Indeed are they spending my money on things that are not any of their damn business, and should best be left to the private sector?

    We pay 50 million a day to the EU, a paragon of virtue who's own books have not been successfully audited for 16 years now. Where does that money go? how much is syphoned off in fraud? If the EU was a private business it would be bankrupt and in liquidation by now (it is within a hairsbreath already, you must have noticed).

    Ethical and sustainable are two of the most prominent buzzwords of our time, and completely meaningless. Money is a medium of exchange and hopefully a store of value (though not the way our Rulers are going about it with the old Quantitative easing eh?) it is not ethical or sustainable it merely is.

    Why not cut all our taxes and leave it to us, the people, to decide how to spend our money, and on what. But the Govt's of the world just don't trust us Sheeple do they? that's why they treat us as such.

    Let the market decide and tell the Govts to keep their damn noses out of our business!

  3. @agreensteam
    January 18, 2012 | 4:04 pm

    Interesting article and encouragement for personal responsability, which is the key to a different "capitalism". Today I saw a very interesting data visualisation on microfinancing… another way to shift away resources from the 1%.

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