How Many Shares Have You? (1975)

From the September 1975 issue of the Socialist Standard

How often have Socialist speakers heard the absurd defence of Capitalism that, because anyone can now own “shares” in companies, everyone is a capitalist. The argument goes on to claim that therefore the working class are no longer the deprived majority of society.

W. S. Gilbert would no doubt have retorted “if everyone is somebody, then no-one’s anybody”. And of course, even if it were true that most people own a handful of shares it would not alter one iota of our fundamental criticism of capitalism. Our criticism is that capitalism is incapable of solving the major social ills that it constantly creates. All it does produce are profits for the capitalist class and problems for the working class.

But the claim is false. It is by the possession of shares that the capitalist class in advanced western capitalism (a different arrangement prevails under Soviet capitalism — no less anti-social) claims most of its ownership of the means of production and of the commodities that are produced. Shares are either owned by individuals or by companies, unit trusts (the so-called “institutional shareholders”) and the like.

As far as individual shareholdings are concerned, there is no doubt that the overwhelming majority of the population don’t own any. In his book Unequal Shares A. B. Atkinson says that 5 per cent of the population own over 96 per cent of the privately held shares and 1 per cent own 81 per cent. That does not leave much for the rest of us. Clearly the majority of workers have never seen a share certificate, let alone owned one.

With institutional shareholdings the position is more complicated. A good deal of the shares are owned by companies whose shares are themselves privately owned. “But what about pension funds and the like?” the defender of Capitalism plaintively bleats. “They are held for the benefit of the workers, for retirement money, injury pay etc. In effect, these are owned by the workers.” Rubbish.

According to the Royal Commission on Income and Wealth (Report No. 1, 1975) only 12.2 per cent of the total number of shares quoted are owned by Pension Funds. These funds are established by large firms like ICI or Fords for sound economic capitalist reasons. And they are set up to benefit the companies (i.e. the shareholders).

Indeed it is a well established principle of British Company Law that all moneys must be used by the company for the benefit of the shareholders only. When the old News Chronicle was closing down in the early 1960s the directors wanted to pay some of the money realised from the sale of the company’s assets to the work force as compensation for their loss of jobs etc. The high court stopped them. Money given to workers was not being used in the best interest of the company it said. The only way the money could be lawfully distributed was to the shareholders.

So in order for these “pension funds” to be lawful, the company must show that they are in the best interests of the company’s owners. And they are. There are many reasons why it is of direct benefit to the company to have pension funds and it would take a whole issue of the Socialist Standard to explain them fully. But some of the more obvious ones are these: —

1. It is another bait for the work force, just as luncheon vouchers or sports facilities etc. are. Workers know too well the miserable pensions the state will pay them when they retire and “non-contributory pension schemes” are one of the things the employer can offer to supplement a low wage.
2. Once employed the worker is encouraged to feel that he has a “stake” in the company and that if he leaves he will lose his right to a pension or it may be reduced.
3. Above all, the money in pension funds belongs to the company. Admittedly it cannot actually be spent by the capitalist class, but then neither can machines. When profits are “ploughed back” into a business these are not lost to the capitalist class. On the contrary, they represent a greater accumulated share of capital than was represented by the company’s assets before. A pension fund is as much a part of the capital of a company as is the factory or the stock-in-trade, and this will be reflected in the value of the shares on the stock exchange.

Capitalism doesn’t give workers shares, it only gives them crumbs. Socialism will mean free access, not unequal shares.

Ronnie Warrington