The Guardian view on Labour’s worker ownership plans: power to the people | Editorial

Labour can outflank the Tories by rethinking the firm and who controls its surplus rather than just nationalising it

In 1970 Milton Friedman published his seminal "greed is good" essay in the New York Times magazine. In it the rightwing academic tarred managers who thought there were corporate responsibilities beyond profits as "unwitting puppets of the intellectual forces that have been undermining the basis of a free society". Friedman's view of shareholder primacy became the conventional wisdom, boosted by Margaret Thatcher and Ronald Reagan. Since 1979 the idea that only company owners are the rightful claimants of the fruits of the economy gained traction. Nowadays shareholders are the central actor in economic life. This has been a damaging and unwise road to take.

Putting shareholders first means less cash for workers and other stakeholders, hampering efforts to tackle in-work poverty and climate change. While the UK's largest listed companies have doubled in a decade the amount paid out to shareholders (a record 110bn last year), the average wage in November 2019, measured as weekly real pay, was lower than in February 2008. If the 110bn was divided up between the 5 million people employed by the FTSE 100 companies, each worker would receive 22,000 each.