Letter: Co-partnership, Fact or Fantasy? (1962)

Letter to the Editors from the July 1962 issue of the Socialist Standard

‘John Lewis’ replies

Dear Sir,

In the article in your March issue on Co-Partnership—with particular reference to the John Lewis Partnership—there are so many statements which are not in accordance with the facts, that I should be grateful if you would publish this letter in order to correct the quite erroneous impression which your article might create.

The Partners—and the definition you quote is a perfectly happy one, “persons associated with others in business of which they share risks and profits’—are, in fact, joint owners. All the ordinary share capital—the equity—of all the companies is held, either directly or indirectly, by the John Lewis Partnership Trust Ltd. on behalf of all members of the Partnership. You say “the workers in the J.L.P. no more share the profits than do the employees of various concerns who have in recent years taken up the idea known as profit sharing”, This is palpably and demonstrably untrue. Several companies in recent years have issued shares to their employees as a means of profit sharing, but the number of shares so issued is fixed arbitrarily by the Board concerned and the balance of the profit is distributed amongst the holders of the ordinary shares, who may be, and usually are, members of the general public. In the J.L.P. none of the general public can own a J.L.P. ordinary share—they are all held in trust for the “Partners ’—and all of the profit that would otherwise go to ordinary shareholders goes, under irrevocable settlements in Trust, in one way or another to the Partners themselves.

You go on to say that ’’the so called profits are no more than part of their wages—a bonus and an incentive for harder work”. Entirely untrue. The J.L.P. pays wages which are at least as high, if not higher, than their competitors pay and this sharing of profits is something entirely additional and is given pro rata according to their salaries whether they work harder or not. This is pure profit which in most other businesses would go to outside shareholders. It is not irrelevant in this connection to note that last year profits distributed to Partners or applied; for their benefit amounted to £1,500,000—a sum of money which could, had the Founder of the J.L.P. —Mr. J. Speden Lewis—decided to retain the business himself, have gone into his own pocket or, had he decided to float the Company in the normal way, into the pockets of outside shareholders of ordinary shares.

You dismiss gaily the amenities which the J.L.P. offers on the grounds that most of the amenities are also offered—and sometimes bettered—by their competitors. This clearly is no place to go into the detailed merits of amenities offered, but it can be confidently stated that no other comparable organisation offers better or even as wide a scope of amenities. Virtually every type of leisure time activity both intellectual and sporting is catered for and subsidised, e.g.. music, drama, chess, painting, sailing and all normal sporting activities. In addition there are residential clubs at Cookham on the Thames, at Stockbridge in Hampshire and at Liverpool. Partners can also buy subsidised tickets for operas, plays and concerts.

You seem to find it strange that Partners should be prosecuted for alleged dishonesty. This is quite incomprehensible. If, for example a Partner steals, that Partner is stealing from his fellow workers—universally regarded as being one of the most despicable forms of anti-social behaviour. It is surprising that it appears that you take exception to such a course of action.

The committees and councils of the J.L.P. are, you say, “supposed to be democratic bodies but in fact have a large percentage of members nominated by management and in every case are nearly always biased in favour of management This is particularly true of the General Council of the firm". Here the figures speak for themselves. In the Central (Not General) Council of I36 members, 28 are “nominated” by the management and 108 are freely elected by the members of the Partnership.

Legal ownership of the Partnership is vested not in ’’the Board of Directors and the Chairman”, but in the Trustees of the Partnership, who hold it for all present and future members of the Partnership. The powers of the Chairman are certainly wide, but they are limited by a written constitution and a breach thereof on his part could lead to his displacement by the democratically elected Central Council.

Despite your remarks that “J.L.P. workers are. if anything, worse off than workers employed elsewhere”, it is a fact that of our 15.000 members. 55%, have been with us over 3 years and 41% over 5 years. They are all at liberty to go elsewhere anytime they please.

The Founder of the John Lewis Partnership has said that the Partnership is a possible advance in civilisation and perhaps the only alternative to communism. Could it be that the success of this experiment has got “under the skin” of the Socialist Standard?

Yours faithfully.

H. C. Pugh

Public Relations Department.

John Lewis and Company Ltd.

Our reply

Mr. Pugh says “there are so many statements which are not in accordance with the facts” that the article on co-partnership might create an erroneous impression. In fact, the only error was our reference to the Central Council as the General Council.

Apparently Mr. Pugh is happy to accept our definition of “partners" taken from the Concise Oxford Dictionary, but he has ignored the important qualification which we were careful to stress. So, let us repeat that partners have definite—tangible-legal ownership in Capitalist enterprises and in the surplus value extracted from their employees. If this is borne in mind, it is quite clear that J.LP. workers have no stake in that concern.

Even accepting the definition from the Concise Oxford Dictionary without any qualifying statement, however it is still impossible to fit J.L.P. workers into the category of “partners" unless you want to go into an “ Alice in Wonderland " realm of fantasy and double-talk. For years now the J.LP. has referred to its employees as partners, even though they have come and gone as in any other capitalist concern and in all that time have had no legal ownership in the firm any more than workers have for example in the nationalised industries.

The fact is of course that the J.L.P. workers, like workers anywhere in the world, sell the only thing they have to sell, their ability to work. The wage they receive for expending their energies on behalf of the J.L.P. takes into account not only the actual money received, but includes the various amenities referred to by Mr. Pugh, and part of this wage is the so-called "profits" which we repeat are but a bonus and an incentive to harder work; it is actually referred to by the J.L.P. as a “general bonus" in various issues of their Gazette. Profit is unearned income—money which is realised by investing in industry and it only goes to those who have the necessary legal title. In other words, to those who possess stocks and shares etc. This obviously has no relevance to the mass of J.LP. workers.

Dividends

Mr. Pugh says that “none of the general public can own a J.LP. ordinary share . . ." by which he presumably means that no one can hold any of the 612.000 deferred ordinary shares of J.L. Partnership Ltd.. 6,995 ordinary shares of the Odney Estate Ltd., and 75 shares of the Leckford Estate Ltd. These are held by the J.L.P. Trustees who are also represented on the J.LP. Board. The implication to be drawn from the above statement apparently is that there is no exploitation of the workers in the J.LP. But Mr. Pugh does not mention the £287,000 paid out as dividends upon the preferred ordinary and preference stocks of the company and its subsidiaries, and no mention is made of the actual amount of debenture interest paid out in 1961. According to the Gazette of 3rd June. 1961 Loans and Debentures amounted to £10,227,619 and the interest of Outside Stockholders in Subsidiaries amounted to £6,841,389.

Mr. John Bedford. Chairman of Debenhams Limited, in an interview given to the Gazette touched upon this. He was asked about the efficiency of the Partnership by comparison with Debenhams. He said he thought "his own group's profitability was higher, but it was difficult to make a comparison without knowing exactly what capital was tied up to produce the Partnership’s results. Debenhams made a return to the Stock Exchange giving such information; the Partnership, he thought, did not."

We have already touched upon amenities, but as Mr. Pugh maintains that no other "comparable organisation offers better or even as wide a scope of amenities", it would be as well to deal with some of his figures. 55% of the 15,000 staff have been with Lewis's over 3 years and 41% over five years. “They are all at liberty to go elsewhere any time they please". Apparently they do so, for these figures from another angle show that out of 15,000 staff, 45% have been less than three years with the J.LP. and 59% have been there less than five years. Making allowance for normal wastage for retirement and other reasons it would seem that quite a large numbercome to Lewis's, find they do not like it, and go elsewhere. If on balance pay and conditions are so favourable in the J.L.P. they should be able to maintain a labour turnover much lower than this.

It can happen, of course, that a firm competes for labour by offering a combination of pay and amenities which really are above the average. What happens in that case is that they get a large number of applicants for vacancies and are able to pick the best: best qualified, best trained, and best from a health point of view. They are, therefore, paying above average wages but getting above average efficiency. The other side of the picture is that some other firms cannot or do not want to compete in this way, so they get the least efficient workers and pay wages below the average. Whether the J.L.P. fits into the latter category is anybody’s guess, but one thing is certain and that is that they do not fit into the first category; the staff wastage figures make that crystal clear.

Special Facilities

Mr. Pugh gives information about the special facilities offered to J.LP. staff. Different firms of course use different attractions. Some offer their employees four weeks holiday, luncheon vouchers, and so on. Other employers are able to offer free or cheap travel. Some workers have free or very cheap accommodation, food, clothes, shoes etc., or loans for house purchase at very low interest rates. But it is only necessary to look at the consequences to see that these are not additions to wages. It is obvious that free travel for railwaymen is a necessary accompaniment of low money wages, and the same thing can be found elsewhere.

Mr. Pugh says that we “seem to find it strange that Partners should be prosecuted for alleged dishonesty." But he has again missed the point we were trying to make. A man cannot steal from himself and the very fact that prosecutions take place means that someone else is the legal owner of the stolen goods, not the J.L.P. workers. Apparently Jones Bros, of Holloway (a member firm of the J.L.P) are under no such illusions as Mr. Pugh. They have installed a buzzer theft trap and anyone caught between two white lines near the staff exit when the buzzer goes, is asked by the watchman to empty his pockets, or may even be taken to a private room to be searched. (See Observer 22-4-62).

Regarding the Councils, in particular the Central Council. Mr. Pugh himself tells us “In the Central Council of 136 members. 28 are ‘nominated’ by the management and 108 are freely elected by the members of the Partnership." The nominated members amount to just over one fifth of the Council; in other words, one in five are there on behalf of the management. In actual fact, as many as a third of the members of the Central Council could be appointed by the management, according to the J.L.P. rules. This still doesn't take into account the very high percentage of management members amongst the "freely elected”. A quick glance through the Gazette reveals that this year's council is no different from previous councils, the majority of them being management employees.

Council representation and the percentage of nominated councillors have in fact been the subject of some discussion on the Central Council only recently. The following was reported in the Gazette of 25th November as part of the discussion of the Central Council:—“Ex-officio members are also a matter of concern to a number of Councillors. Need they be so large a proportion? ” "While they could number over thirty in the Central Council when Rank and File Councillors only numbered thirteen the situation was appalling, said one Councillor.” It can be seen from this that our statements in the article on co-partnership were perfectly correct and that Mr. Pughs’ phrase “freely elected” amounts to precisely nothing.

Says Mr. Pugh “Legal ownership of the Partnership is vested not in the Board of Directors and the Chairman, but in the Trustees of the Partnership . . ." What we actually said—we were referring to the Councils at the time—was that the Councils have no real power and that this is vested as in all capitalist concerns in the people who have legal ownership represented in this case by the Board of Directors and the Chairman. The Central Board and its Chairman have the real power; the real decisions are taken by the Central Board. Surely we do not have to cite the various decisions taken by the Board which are printed so regularly in the Gazette?

In conclusion Mr. Pugh along with Mr. Lewis apparently thinks “that the Partnership is a possible advance in civilization and perhaps the only alternative to communism" and that the success of this experiment has got "under the skin of the Socialist Standard." To which we would say that co-partnership, like nationalisation both at home and abroad, and in Communist Russia in particular, is just another way of running capitalism. One can certainly not consider co-partnership therefore as a “possible advance in civilization”. That will only come with Socialism.

In the meantime' no amount of word juggling is going to conceal the degrading business of the exploitation of the working class even though it may go under the guise of co-partnership and claim to he an "advance in civilization”. We say again that co-partnership schemes have nothing to offer the working class.

JONQUIL.

Co-partnership: Fact or Fantasy? (1962)

From the March 1962 issue of the Socialist Standard

To be a partner, or not to be! Well might Mr. John Spedan Lewis have soliloquised if he had thought at any great length upon the economic and legal implications of the term. Especially, when it is associated with ownership of a Capitalist undertaking, in particular the business known as the John Lewis Partnership which was founded in 1914.

JLP (John Lewis Partnership) employees arc all referred to as "Partners" so it might be as well if we take a look at what exactly a partner is. There are, of course, all sorts of partners. Marriage partners, partners in crime, whist partners, dancing partners. There are partners too such as those defined in the Concise Oxford Dictionary: “person(s) associated with others in business of which he shares risks and profits; . . ." That is, people who have definite tangible—legal ownership in Capitalist enterprises and in the surplus value extracted from their employees.

It is fairly obvious that most of the JLP employees do not fit into this last category. If they did, then this would apply to all Capitalist ventures and therefore, all workers would be partners!

Mr. Lewis and the present Chairman, Mr. O. B. E. Miller, would no doubt reply that the employees of the JLP are partners because they share the profits and the risks and have a variety of amenities which they would not get elsewhere. This, however, is so much nonsense; most of the amenities that the JLP has to offer are also offered—and sometimes bettered—by their competitors, who do not call their employees partners. Likewise with profit sharing. The workers in the JLP no more share the profits than do the employees of any of the various concerns who have in recent years taken up the idea known as profit sharing. Workers do not receive profits, unless they have money invested, which generally they haven't. In the few instances where they have, the amounts are so small as to be negligible and certainly would not be large enough to change them into “partners." The point is that workers sell the only thing they have to sell, their ability to work, and the wage or salary they receive is generally speaking roughly what is necessary to maintain them as the particular grade of workers they are; to maintain a family and to produce further potential wage slaves to take their place when they arc too old to work any more.

The so-called profits that the JLP workers receive are no more than part of their wage—a bonus as an incentive for harder work. From an employers view “profit-sharing" is a good gimmick. For if you can convince workers that they are getting a share of the profits, they are more likely to identify their interests with yours.. The worker who thinks in terms of “my business" is less likely to come to work late and go home early; to take a long lunch hour or stretch his coffee and tea breaks; to slack on the job; to scamp his work or to pilfer. He is the sort who is going to switch off unnecessary electric lights or machinery; make sure that stationery and other materials are not wasted; and report to the management the people who do those things. With a bunch of workers like this, any management is likely to see an increase' in its profits. This type of worker would, o! course, never dream of striking, for he would conceive it as being against his interests.

Profit is unearned income—part of surplus value—something for nothing. It is the wealth produced by workers which is unpaid and only goes to those who have money invested in stocks and shares. This hardly applies to the JLP workers. They are taken on in the same manner as other workers. They are hired and fired according to the dictates of Capitalism. If a particular branch of the JLP proves to be unprofitable, it may be sold and the employees fired, with the possible exception of a few higher executives who can be usefully transferred elsewhere. If any of the workers employed by the JLP fail to make the grade as surplus value producers, they get their cards, or as they say “their membership is terminated." When this happens, it is no good pleading that you are a partner, for the JLP is only concerned with economic facts, not fantasies.

If any of the so-called partners are caught taking some of the wealth they are supposed to own, or even suspected of doing so, they are sacked—just as they would be by any other Capitalist employer. The truth of this was recently rammed home to a few misguided employees of the JLP who apparently took the “partnership" gospel a little too literally, for according to the Guardian (11/9/61): “ During the past six months the John Lewis Partnership prosecuted eight partners for dishonesty, and all of them were convicted . . . In addition, 15 partners lost their membership for similar reasons."

Another aspect that is supposed to set the JLP apart from other Capitalist concerns is its committees and councils. These are supposed to be democratic bodies, but in fact have a large percentage of members nominated by the management, and in any case are nearly always biassed in favour of the management. This is particularly true of the General Council of the firm. However, even if they were democratically based and the JLP workers tried to use them to further their interests, it would not make a lot of difference, for none of these bodies has any real power. This is vested—as in all Capitalist concerns in the people who have the legal ownership; in this case in the Board of Directors and the Chairman. This is the body that makes the real decisions, the financial decisions, and decides whether a business shall be bought or sold, and so on.

It can thus be seen that JLP workers are, if anything, worse off than workers employed elsewhere, for in addition to the economic hazards of Capitalism, they are continually confronted with that diabolical device, the dossier.

However, the workers of the JLP are not “burdened” (if that is the expression) with the risks of the business, any more than any other employees are. If JLP went bust, the workers would obviously seek re-employment elsewhere. The risks of the business belong to the people who invest their money in the JLP as a going Capitalist concern, and who receive interest in return for such investment. This interest does not come out of thin air; it is wrung from the labour of the workers in JLP.

Although it is highly unlikely that such a successful profit-making concern as the JLP will wind up its affairs in the foreseeable future, one can be sure that if this did happen, the ex-workers would really be able to see who actually owned the company. It would be those people who had the necessary legal documents proving their ownership, not workers who happen to be called partners. Imagine applying to the Official Receiver for a share of whatever was realised when the assets were liquidated, on the strength of having been called a partner during the period of your employment!

It would do the workers in the JLP and other co-partnerships a lot of good if they were to think deeply and to ask themselves why their employers refer to them as partners and not employees. It is rather like the fox telling the chickens that they are foxes. The main reason for co-partnership is, of course, to help keep Capitalism running as smoothly as possible. The aim is to reconcile some of the system's class antagonism. For while workers accept Capitalism they will not be looking for an alternative.

JONQUIL.

Blogger's Note:

This article received a critical letter of reply from the Public Relations Department of John Lewis in the July 1962 issue of the Socialist Standard.

Figuratively speaking (1952)

From the September 1952 issue of the Socialist Standard

A report of wage cuts by the John Lewis multiple stores is given by the " Liverpool Post ” of 30th June in a quotation from the house magazine of that 60 store concern, and Mr. John Spedan Lewis is quoted as follows

"Our sales this year are at the rate of 20 per cent. below last year. Obviously you cannot go on like that without making some adjustment . . .

“The shareholders in our group get only moderate fixed dividends. The average rate is under 4½ per cent. Everything beyond that goes to our workers.

“ Over the last 23 years since I introduced the scheme they have had more than £2,750,000 additional to what they would otherwise have got. In other words, they have had the amount which would have been my income less taxation and I have worked gratis for them ever since it started."

(Our Italics.)

On perusing this literary bombshell, the 10,000 wage slaves of Messrs. Lewis’ may consider themselves rather fortunate in having a boss like Mr. Lewis and accept the reduced price of their labour power pacifically, whilst no doubt, vaguely wondering why they have not noticed Mr. Lewis working so hard for them ! If, however, they carefully consider the figures quoted, as we shall show below, they may then realize the deception served on them as a “ softening up ” process for wage cuts.

The shareholders “only” got a “ moderate ” 4½ per cent. from this 60 store, £14,000,000 organisation, but the 10,000 greedy workers have grabbed £2,750,000 over and above their wages during the last 23 years. This represents, roughly, about 5s. each per week. At the present cost of living, of course it would pay for the cat’s milk.

As a single salary, the amount would be, again roughly speaking, about £5,000 per annum, a “useful addition’’ to Mr. Lewis’ present income. Obviously he must have a “present income” otherwise he could not have existed working so hard for his workers. Here we see why these figures mean so much to Mr. Lewis and so little to his wage slaves.

In passing we wonder what the high pressure salesmen have been doing, to “allow” that 20 per cent. drop in sales ? Shades of Henry Ford, Bedaux and the rest, this won’t do, Mr. Lewis, bad for “morale” and all that. But we shed no tears over the drop in sales, that is Mr. Lewis’ concern and whilst he advocates wage cuts to offset the reduction in sales, we advocate Socialism to cut the wages system out of existence, thereby dropping sales (not an alarming 20 per cent. Mr. Lewis), but altogether. No selling, no buying of labour power or any other commodity. Just plain simple production for use.

Get the idea, Buddies ? What about it

G. R. Russell.

Material World: Co-operatives no way to socialism (2018)

The Material World Column from the August 2018 issue of the Socialist Standard

The International Cooperative Alliance was founded in London on 19 August 1895 by delegates from cooperatives in Argentina, Australia, Belgium, England, Denmark, France, Germany, Holland, India, Italy, Switzerland, Serbia, and the USA. Co-operatives Unleashed  is a recent report from the New Economics Foundation which calls for a co-operative development agency and a 'John Lewis law' compelling larger private companies to transfer a proportion of profits into a worker or a wider stakeholder-owned trust. In the report is a call for a 'profound transformation in business ownership'. 

Under this proposal:

   'All shareholder or larger privately-owned businesses would transfer a small amount of profit each year in the form of equity into a worker or wider stakeholder-owned trust. Once there, these shares would not be available for further sale. 'Partnership stakes carry with them democratic control rights over the management and direction of the business. In many respects, our proposal for an Inclusive Ownership Fund can be thought of as a John Lewis law.'

Our fellow-workers should, rather, face up to the reality that socialism is the only remedy for the poverty problem yet too many seek merely to ameliorate the misery of their lives under capitalism and one such palliative that continues to persist is cooperatives. Some have viewed the cooperative as an aim in itself, as a means of self-defence against management repression. Our job in the Socialist Party is not to tell fellow-workers the way to live, but to demonstrate that a genuine non-capitalist society is actually possible to achieve. 

 We do not see socialism coming about by 'socialistic' cooperatives gradually becoming more and more self-sufficient and eventually squeezing out the entire capitalist production-for-profit system. This argument goes right back to the origins of the workers' movement in the first part of the 19th century. 

 However, the our view is that political action for social change is the most effective way to achieve a co-operative commonwealth. We are not saying that people shouldn’t establish cooperatives if they want to, but that it’s not the way socialism is going to come.

We can imagine that, when socialists are in the millions rather than thousands and it is clear that socialism is imminent, people will be making plans and projects in anticipation of the coming of socialism, but we are not there yet. Cooperatives by themselves are insufficient to challenge the capitalist system. 

 So at the moment, we need to concentrate on spreading socialist ideas rather than promoting experiments in lifestyles.

While many cooperatives’ administrative structures are admirable, in the marketplace they become simply another kind of small enterprise operating in their own interests, competing with other enterprises and even with other cooperatives and which are obliged to conform to marketplace dictates, regardless of the intentions of their advocates and founders. 

 As long as capitalism exists, competition will always require the enterprises within it to look for lower costs, including the cost of labour. A cooperative must still buy its raw materials and other inputs and sell its products on the market, competing with every other producer of the same product, even if the members of cooperatives are nominally their own bosses. There cannot be socialism in one country, much less in a single business or a chain. Cooperatives cannot break the laws of capitalist production. The most important such law compels an enterprise, whoever owns or 'controls' it, to minimise costs in order to remain competitive. Society remains under the despotic direction of capital – even if it is the workers’ themselves rather than CEOs who serve as the new 'personifications of capital'.

 Although Marx mentioned workers’ cooperatives as possible harbingers of the new society, he cautioned that, as long as they exist within capitalism, the cooperatives 'naturally reproduce in all cases… all the defects of the existing system, and must reproduce them… the opposition between capital and labour is abolished here… only in the form that the workers in association become their own capitalist.' In other words, the workers end up exploiting themselves. When Marx turns to socialist society, he envisions a sweeping revolutionary transformation of the relations of production, from the very start. Although cooperation of some sort is a necessary part of production cooperatives by themselves are insufficient to challenge the capitalist system.

ALJO

Cooking the Books: Riding for a fall (2018)

The Cooking the Books column from the July 2018 issue of the Socialist Standard

John McDonnell is portrayed by his critics as an opponent of capitalism. He goes along with this but is riding for a fall. An interview with the BBC on 20 May was reported the next day in the Times under the headline ‘McDonnell: I’d overthrow capitalism’:

  ‘The shadow chancellor said he wanted to transform society “in a way that radically changes the system”. Asked if his job was the overthrow of capitalism, he replied: “Yes it is. It’s transforming the economy.” Pressed on whether there was a difference between transforming and overthrowing capitalism, he said: “I don’t think there is . . . I want a socialist society.’

These days, this sounds quite radical but in fact is merely what previous generations of Labour Party reformists have held. They envisaged the state capitalist economy adopted as their long-term aim in 1918, and which they called ‘socialism,’ coming into being gradually through a series of nationalisations and social reforms enacted by successive parliaments and Labour governments. This is what McDonnell means when he talks of ‘transforming the economy’; this to be a gradual process, ‘overthrowing’ capitalism piece by piece. It’s the classic reformist position.

This involves presiding over the operation of capitalism for a long period. However, capitalism cannot be reformed so as to work in the interest of ‘the many’. Capitalism runs on profits and any government which takes on the task of presiding over its operation is sooner or later forced to recognise this and, in the end, to allow and even encourage profit-making to take priority over pro-worker reforms. This has been the fate of all Labour governments.

A Labour government, with McDonnell as chancellor, would be in an even weaker position than previous ones. His ‘transformation of the economy’ is to begin while leaving production entirely in the hands of private profit-seeking businesses:

  ‘Asked by the BBC what he would do to private businesses Mr McDonnell replied: “We’d follow France’s example – they legislate for profit-sharing. We’d expect companies to profit-share as well as ensure they have a decent wage policy.”’

Profit-sharing, that old swindle! It’s what the Tories used to promote as ‘people’s capitalism’ and as a way to get workers to believe that their interest was the same as their employer’s. Trade unionists opposed this as it substituted a contracted wage of a regular amount by one in which a part of wages varies with the profitability of the employer’s business.

The best known profit-sharing business in Britain is the John Lewis 'Partnership ' (as it calls itself). Its latest annual report shows how profit, and so the ‘profit-sharing’ part of wages, can go down – and down – as well as up:

   ‘John Lewis Partnership (JLP) has cut its annual staff bonus to the lowest level in 64 years after profit plunged at the group, which owns Waitrose and a chain of department stores . . . Sir Charles Mayfield, the chairman, said it had been a “challenging year”. He blamed the downturn in profit and the staff payout – which has been cut for five years in a row – on subdued consumer demand and “significant changes to operations across the partnership, which affected many partners”. Mayfield said the coming year was likely to put further pressure on profit’ (Guardian, 18 March).

McDonnell, apparently, regards schemes which allow take-home pay to be cut five years in a row as ‘a decent wage policy’. And, of course, ‘profit-sharing’ implies that production for profit continues.

Democracy By Decree (1968)

Book Review from the October 1968 issue of the Socialist Standard

Experiment in Industrial Democracy by Flanders, Pomeranz and Woodward (Faber and Faber, 45s.)

This book studies the John Lewis Partnership, a group of department stores and supermarkets employing 17.000 people, that has for fifty years run “an experiment in industrial democracy”. Its introduction did not come as a result of pressure from below. Rather it was the brain-child of Spedan Lewis, the son of a store-owner. The scheme was introduced at Peter Jones, an unsuccessful shop Lewis had taken over from his father. Spedan Lewis believed his father’s shops had prospered by giving good value. It could be improved “if more of its resources were allocated to better pay and conditions, which would attract good workers and encourage them to work well”. The scheme succeeded and was extended to the stores he inherited from his father in 1928. The group has continued to prosper so that:

   Turnover has more than doubled over the past ten years, and profits have more than kept pace . . . Partnership department stores have also been more successful in increasing sales than comparable stores outside.

In a society where goods arc produced to be sold with a view to profit, success can only be measured in terms of sales and profits. In this respect Lewis' scheme has made the grade.

What about the “industrial democracy", then? It consists in the main of elected councils, journals, profit-sharing and welfare schemes. The study shows that employees are more concerned with questions of wages and working conditions than with commercial policies. In fact they have the normal attitude of workers rather than of “partners”. Not that we would expect it to be otherwise. The workers' attitude to trade unions is fairly representative of the industry. Few of the shop workers are believed to be members of USDAW. while the most highly organised are the central London delivery van crews in the TGWU.

The profit-sharing part of the scheme comes up against the same snags in that the workers, having to look after their daily needs, tend to sell the shares issued them. So that whatever the intentions of the firm, it forms part of their wages rather than a stake in the company. Partners opt out:

  The partnership now operates a licensed stock-dealing pool which handles small transactions and arranges to place the considerable quantity of stock which is 'renounced' each year .by partners as soon as they become entitled to it.

One table shows that in January 1966 £13,999,090 or 29.5 per cent of the firm’s capital was issued to outside investors. £5,136.120 was 5 per cent Second Cumulative Preferred Ordinary Stock "most of which was originally issued to the partners under the profit-sharing scheme". This benefits the business and safeguards outside shareholders as follows:

  This part of profit-sharing mainly takes the form of shares which provide a continual flow of new capital, and which rank last in the capital structure, so that the Partnership can offer the best possible security to outside investors, while remaining independent of them for a considerable part of the fresh funds required by an expanding business.

In practice the scheme has served as a means of regulating the employer-employee relationship to get the co-operation of the latter for the benefit of the former.

Capitalism nowadays needs an efficient and enterprising working class running production. Their participation in making decisions has to be tolerated to the extent that it aids the smooth running of industry. It is nonsensical to think in terms of industrial or political democracy in isolation from social activity as a whole. Only in a society which the means of life are held in common will democratic control by society over its affairs be achieved.

Joe Carter