Here’s a small change that could transform the world…
I haven’t fully explored this idea, but I think it’s a good one to consider as a thought experiment.
What if we removed the ability for people to privately own companies?
Some people might have quite a reactionary response to this, thinking it an inherently communist idea, but I don’t think that would have to be the case at all.
How might it work?
It wouldn’t make sense to nationalise everything; we know that this can often be problematic.
Instead, as a formality, each person who worked at the company could “own” one share in the company. The founder would have one share, and so would the cleaner.
However, this ownership wouldn’t be ownership in the traditional sense, because it couldn’t be bought or sold. You would lose ownership by leaving the company.
Remuneration would still be skewed, with higher skilled and more senior roles being paid better than others. Also, control of the company could still be held, contractually or otherwise, by the founders or senior leadership.
Since ownership could not be bought or sold, injections of capital would have to take the form of loans or perhaps complex financial instruments or arrangements to reflect the risk of putting money into the organisation.
This would need thinking out carefully to ensure that worthy projects are able to get the support that they need, where “worthy” is somehow measured by the relative benefit to the complex web of life on Earth, rather than the destructively narrow focus of profit.
What would happen?
Shares and the stock market would cease to exist immediately.
With companies no longer at the behest of shareholders, there would a reduced need for companies to focus on profit as their primary driver.
At present, whilst it isn’t quite the case that the law dictates that companies must always maximise profits for shareholders in the USA (as is often stated), it is true that the regulatory and competitive landscape makes it very difficult for companies world worldwide not to make profit a primary priority.
Of course, it’s well understood by anyone educated that the pursuit of profit is one of the primary drivers of environmental destruction, and competition to generate more profit drives ever-plunging standards for the protection of nature, the environment and our relationship with it.
With investor pressure and pursuit of profit no longer calling the shorts, companies could focus more on purpose and legacy. This isn’t to say that companies wouldn’t have to balance their books and do good work: of course they still would. But companies could now be in existence more to achieve goals more aligned with life on Earth, rather than profit.
As I write this (I’m going through this thought process as I write), I’m wondering if I have just described a world full of cooperatives, rather than companies, like the Basque region of Spain… perhaps I have!
Couldn’t we just regulate companies to improve environmental standards?
Regulation has failed, is failing and will continue to fail. Corruption has always eroded regulation, but now, in an increasingly globalised economy, it is too easy for businesses to relocate to regions with less regulation, lower taxes, tariffs etc.
There will always be an impoverished country willing to sacrifice nature and the long-term inhabitability of the land and sea within its jurisdiction in exchange for short term dollars.
We need something more radical.
I certainly wouldn’t advocate for the removal of markets — healthy, competitive markets in goods and services help to drive quality and innovation.
But perhaps we should remove markets in companies. It’s at least worth thinking about.