The Political Economy of Employee Investment Funds

Abstract

‘No man is good enough to be another man’s master’ (William Morris). Economists frequently describe efficiency and equality as two separate, yet potentially conflicting, objectives. While in some circumstances the achievement of one of these objectives might preclude attaining the other, the evidence suggests that the post-war British economy has suffered a decline in relative efficiency with no progress towards greater equality. Faster growth rates, full employment and higher living standards are most likely to occur as a result of increased and sustained capital formation. The currently dominant economic philosophy of monetarism seeks to satisfy this requirement by redistributing income towards capitalists in the hope that they will then find investment attractive. The British left urgently requires an alternative strategy that generates new investment, while simultaneously establishing an ongoing egalitarian trend. As the political conditions for a revolutionary transformation of society are unlikely to prevail in the foreseeable future, socialist governments need to fulfil three crucial economic objectives:- (i) to restore full employment while maintaining approximate price stability, (ii) to accelerate the rate of capital accumulation in order to boost future increases in living standards, (iii) to redistribute income and wealth in the direction of greater equality without imperilling future economic growth.