Four ways to prevent a repeat of the economic meltdown

To help prevent a repeat economic meltdown, we need greater economic democracy, participation, transparency, decentralisation and accountability.

By Peter Tatchell

One significant factor in the economic meltdown of the last three years is the undemocratic and unaccountable way in which economic power and decision-making is organised. A small elite of directors, managers and major shareholders decide everything, to the exclusion of employees, consumers and the wider public.

Britain is, in effect, an economic dictatorship, with an extraordinary concentration of economic power and wealth. It is, in part, this lack of economic democracy and accountability that bought Britain to the brink of catastrophe in 2008 and has left the country vulnerable ever since.

Regrettably, the Conservative, Labour and Liberal Democrat leaders have no serious plans to reform the economic system that allowed irresponsible decisions by banks and big businesses. This absence of reform leaves Britain vulnerable to more economic chaos in the future.

To help prevent a repeat economic meltdown, we need greater economic democracy, participation, transparency, decentralisation and accountability.

There are four ways we could achieve this:

• Make corporate negligence and recklessness an explicit criminal offence, to reign in big business sharks and ensure more responsible economic management.

Bankers and company bosses should not be able to wreck whole economies and squander with impunity people’s jobs, pensions and savings. They ought to be held personally liable for damaging corporate decisions. This spectre of legal penalties is likely to result in more prudent corporate governance

• Require medium and large-sized companies to be accountable to their employees and to the general public by including on their management boards employee-elected directors and independent directors to represent the interests of consumers.

Employee and consumer directors could act as watchdogs and whistleblowers against corporate irresponsibility. Not being driven by the profit-motive, they could also push for company policies that are more socially inclusive and environmentally protective.

• Give trade unions a majority stake in the management of their members’ pension funds, to decentralise and democratise investment decision-making and to give it a social and ethical dimension. The £900 billion invested in pension funds is a sizeable counter-weight to the economic clout of big business. It could be invested in ways that help make the economy more fair and people-centred.

Trade unions are less likely to invest in the arms trade and sweatshops. They would be more open to investment to meet people’s needs, including renewable energy, affordable housing and quality public transport.

• Grant employees the legal right to buy out their companies and turn them into workers cooperatives; possibly with funding from trade union-controlled pension funds. These co ops would weaken the power of big corporations, localise economic decision-making and give employees incentives for greater productivity.

Evidence shows that people who are employed in worker-owned enterprises tend to have higher output, better job satisfaction and greater social solidarity.

These four reforms would radically reduce the chances of a re-run of the banking crisis and the subsequent near-failure of the whole economy. They would achieve this goal by a combination of decentralising economic power; incentivising wiser economic decision-making; improving corporate social responsibility; and strengthening the accountability of businesses to their staff and the wider public.

These policies could be implemented unilaterally by a UK government. However, given the globalised economy, they would work most effectively if they were adopted by the EU. Although predominantly a big business cartel, the EU could embrace this alternative economic framework, if the peoples and parties of Europe demand it.

The EU’s massive share of international finance, production and trade would enable it to withstand pressure to conform to the dominant neo-liberal economics of the US-China axis. In other words, Britain and the EU could lead the way in the structural transformation of autocratic, dog-eat-dog capitalism; pioneering a new democratic, cooperative, accountable and socialised economy.

• For more information about Peter Tatchell’s human rights and social justice campaigns visit www.petertatchell.net.

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46 Responses to “Four ways to prevent a repeat of the economic meltdown”

  1. William J. C. Brown

    Four ways to prevent a repeat of the economic meltdown: http://t.co/xQ1O2ACu by @PeterTatchell

  2. Rosie

    like these ideas, especially making corporate negligence and recklessness an explicit criminal offence http://t.co/inkCC8qh @PeterTatchell

  3. Political Planet

    Four ways to prevent a repeat of the economic meltdown: To help prevent a repeat economic meltdown, we need grea… http://t.co/cY2PwUu8

  4. Rosie

    "Bankers & co. bosses shd not b able to wreck economies & squander with impunity people’s jobs, pensions and savings." http://t.co/inkCC8qh

  5. John Lever

    Four ways to prevent a repeat of the economic meltdown http://t.co/qez3fhFw

  6. Debbie Jolly

    RT @leftfootfwd Four ways to prevent a repeat of the economic meltdown: http://t.co/RIS4QcTi by @PeterTatchell

  7. Noxi

    RT @leftfootfwd: Four ways to prevent a repeat of the economic meltdown: http://t.co/AzturOiW by @PeterTatchell

  8. Alex Braithwaite

    RT @leftfootfwd: Four ways to prevent a repeat of the economic meltdown http://t.co/yEIaXb1Q

  9. Noah

    Four ways to prevent a repeat of the economic meltdown | Left Foot …: To help prevent a repeat economic meltdo… http://t.co/cztBA3V7

  10. Eugene Nulman

    "@leftfootfwd: Four ways to prevent a repeat of the economic meltdown: http://t.co/LwfpbLLg by @PeterTatchell" – #4's the way to go!

  11. Noah

    Four ways to prevent a repeat of the economic meltdown: By Peter Tatchell One significant factor in the economic… http://t.co/P4cEZiIP

  12. tracy e

    like these ideas, especially making corporate negligence and recklessness an explicit criminal offence http://t.co/inkCC8qh @PeterTatchell

  13. Gill Goodswen

    Four ways to prevent a repeat of the economic meltdown: http://t.co/xQ1O2ACu by @PeterTatchell

  14. w.m o'mara

    Four ways to prevent a repeat of the economic meltdown: http://t.co/xQ1O2ACu by @PeterTatchell

  15. Tim Worstall

    Peter, stick to the human rights stuff, you understand that. From the above economics really isn’t your thing.

    “They ought to be held personally liable for damaging corporate decisions. This spectre of legal penalties is likely to result in more prudent corporate governance”

    That’s abandoning limited liability, the third great invention after agriculture and the scientific method. Simply not sensible.

    “Grant employees the legal right to buy out their companies and turn them into workers cooperatives; possibly with funding from trade union-controlled pension funds.”

    That’s just insane. You never, ever, want to have your pension, your savings and your income all in the same place.

    No, stick to the human rights stuff.

    And trade unions running the pension funds? Have you ever actually bothered to look at the American system where this does often happen? The Mafia looting of the Teamsters pension funds for example?

  16. Dave Citizen

    Spot on Peter – the increasingly undemocratic concentrations of financial power and decision making access that coordinate the international economy are now a major threat to majority prosperity in Britain and elsewhere.

    Capitalism’s powerful productive dynamics have progresively been distorted and undermined by a parallel characteristic of concentration of capital, property and productive assets at an international scale. These concentrations have begun to stifle innovation and resilience just at a time when these qualities are vital.

    I would add use of the taxation system to your list as this looks like perhaps the only realistic way to release a nation’s productive land, property and labour resources from the grip of the vast but still narrow private interests of concentrated wealth.

    Of course, traditional economic ‘experts’ will struggle with any analysis that challenges the primacy of free market efficiency even when those markets are in the grip of such distorting concentrations of buying power!

  17. Peter Tatchell

    Well Tim, how would you democratise the economy? How would you break up the centralised, unaccountable economic power that allowed Northern Rock and RBS directors etc. to act recklessly with other people’s money – and get away with it scot-free? Why should we – the people – demand political democracy but tolerate economic dictatorship?

  18. 45apl

    RT @leftfootfwd: Four ways to prevent a repeat of the economic meltdown: http://t.co/vEcpWyj6 by @PeterTatchell #NewsClub

  19. Leon Wolfson

    @1 – That you think limited liability is so important says so, so much about your corporatist views. Negligence and recklessness by an individual are criminal, if directors knowingly allow them at a company, they should…also be criminal.

    And yes, let’s have the tax system actively support things like worker cooperatives by knocking a couple of points off their corporation tax rate!

  20. Knut Cayce

    RT @leftfootfwd: Four ways to prevent a repeat of the economic meltdown http://t.co/52Vjd46r

  21. Tom Miller

    #Economic #democracy is essential 4 justice & to prevent repeat #recession. Read here: http://t.co/ffxduDp2 #capitalism @leftfootfwd @labour

  22. Derek Oakley

    #Economic #democracy is essential 4 justice & to prevent repeat #recession. Read here: http://t.co/ffxduDp2 #capitalism @leftfootfwd @labour

  23. Effie Lewis

    #Economic #democracy is essential 4 justice & to prevent repeat #recession. Read here: http://t.co/ffxduDp2 #capitalism @leftfootfwd @labour

  24. Darren Mowbray

    #Economic #democracy is essential 4 justice & to prevent repeat #recession. Read here: http://t.co/ffxduDp2 #capitalism @leftfootfwd @labour

  25. Alex Roebuck

    Big business is not democratic, it’s meritocratic. Those with talent, intelligence and diligence rise to the top. Unfortunately, most people are lazy and stupid and expect the world on a plate.

  26. Skeptocentric

    RT @leftfootfwd: Four ways to prevent a repeat of the economic meltdown http://t.co/Z3cfPLbm

  27. Skeptocentric

    #Economic #democracy is essential 4 justice & to prevent repeat #recession. Read here: http://t.co/ffxduDp2 #capitalism @leftfootfwd @labour

  28. Nathanael Williams

    UK is an economic dictatorship. Time for economic democracy. Read this article: http://t.co/X59qUUON

  29. Louise Matthews

    #Economic #democracy is essential 4 justice & to prevent repeat #recession. Read here: http://t.co/ffxduDp2 #capitalism @leftfootfwd @labour

  30. Stephe Meloy

    #Economic #democracy is essential 4 justice & to prevent repeat #recession. Read here: http://t.co/ffxduDp2 #capitalism @leftfootfwd @labour

  31. Tony Thomas

    Four ways to prevent a repeat of the economic meltdown http://t.co/0e6S4GjV

  32. S K

    Four ways to prevent a repeat of the economic meltdown http://t.co/0e6S4GjV

  33. John Slinger

    RT @leftfootfwd: Four ways to prevent a repeat of the economic meltdown http://t.co/rAd0hjak. Interesting radicalism from Peter Tatchell.

  34. Leon Wolfson

    If by “world”, you mean the ability to eat reasonably well, have a roof over their head and heating and lighting, yes.

    Sadly, this is no longer something which is going to be affordable for many.

  35. Anon E Mouse

    “Four ways to prevent a repeat of the economic meltdown” – Spend less than you take in tax – it would never fail to work…

  36. Peter Tatchell

    I am perplexed. None of the critics have offered any serious arguments as to why these four ideas would not help act as a helpful counter-balance to the reckless economic decisions that began the downturn in 2008. If you disagree, fine. But please explain why and offer some alternatives. Without them, there will be more economic chaos in the future – caused by the wieldiung of undemocratic, unaccountable economic power.

  37. Peter Tatchell

    #Economic #democracy is a human rights & social justice issue. Read Peter #Tatchell ideas here: http://t.co/ffxduDp2 @leftfootfwd

  38. Tatchell Foundation

    #Economic #democracy is a human rights & social justice issue. Read Peter #Tatchell ideas here: http://t.co/Td2OSFlj @leftfootfwd

  39. Anon E Mouse

    Peter Tatchell – Ok then.

    Where you say “caused by the wieldiung of undemocratic, unaccountable economic power” most would say that describes the EU pretty accurately and that costs us a fortune.

    By leaving the EU to continue with their grandiose project of being a government that we cannot reject, we could save ourselves a fortune, not be tied to economic misery where the poor taxpaying workers of Europe line the pockets of the greedy European bankers and control our own destiny.

    Regarding your four points the first takes place in America already but ask Berlusconi to agree it with European law and his veto.

    The second is just a pipe dream. Why should business owners take the risk if the public don’t? That smacks of Socialism and we know how that is hated by our leaders – especially Labour who rewarded the city slickers, spivs and bankers like no previous government in history.

    Thirdly considering the amounts of money Trade Union leaders are paid do you really think that would work?

    Lastly if a business does well why should it’s risk taking, tay paying owners be forced out after their efforts to reward the workers?

    Stick to your human rights stuff fella – you’re good at that but it’s a shame you didn’t ask Tony blair not to hug Gaddafi so closely or advise Mandelson not to go on holiday with his son in Corfu…

  40. cinnamonshelper

    RT @GreeGreece: Four ways to prevent a repeat of the economic meltdown http://t.co/SHcOMSKo

  41. London IWW

    FYI, Interesting: Four ways to prevent a repeat of the economic meltdown http://t.co/5TDP2sU7

  42. Leon Wolfson

    @7 – Really? Wait, no, the bank crisis had absolutely nothing to do with that. You’re spouting spoon-fed propaganda again.

    And by leaving the EU, we would be facing either high tariffs with our major European trade partners, or having to implement 70-80% of EU law without ANY say in forming it.

    And the Tories are rewarding the bankers far more right now, despite your pathetic attempts to re-write history, on top of their calls in the past for even less regulation.

    Keep on standing up for those poor, poor billionaires!

  43. Anon E Mouse

    Leon Wolfson – No one apart form you is discussing the reasons for the crash, just the means by which we get out of the mess Labour left us in with their monumental structural deficit.

    I also mentioned Italy and was proven right on that this morning as well.

    If people do not want to buy British goods it doesn’t matter what club we’re in – they either want the goods or they don’t and if they hammer us with taxes to sell to them we can do the same to them on their goods.

    It’s called capitalism Wolfy – you seem to be the product of education under a Labour government I feel.

    Are you saying now that Labour didn’t deregulate the bankers more and reward them with knighthoods more than any government in history?

    If you are please provide your evidence for that assertion because it is nonsense. Labour were “comfortable to see people getting filthy rich” as their business secretary told us so often.

    Are you also saying the Labour Chancellor, Alistair Darling was wrong about how useless Gordon Brown was regarding the deficit because one of them is lying and history shows it wasn’t Darling.

    As for billionaires you want the European working taxpayers to fund the German banks so the Greeks can retire at 53 whilst the Germans have to work longer and the greedy bankers keep getting the workers money.

    At least you can’t call that socialist I suppose which means you’re learning. Well done Wolfster….

  44. Derek Wall

    @PeterTatchell economic democracy is exactly what we need to put things back together for justice and ecology http://t.co/WHInJZJW

  45. Derek Wall

    @PeterTatchell #OccupyWallSt Economic democracy with an economy for all not just hyper rich is the key demand http://t.co/WHInJZJW

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