Neoliberals claim that shareholders are the owners of companies. This is nonsense, argues Austin Mitchell MP and Prem Sikka, Professor of Accounting, University of Essex in this joint paper published in Left Foot Forward.
In its 2013 report, the UK Parliamentary Commission on Banking Standards concluded that “shareholders failed to control risk-taking in banks, and indeed were criticising some for excessive conservatism”. The Commission rightly recommended that company law should be changed to remove shareholder primacy in respect of banks, and require directors to ensure the financial safety and soundness of the company ahead of the interests of its shareholders.
No political party has had the good sense to follow up the above recommendations from the Commission. Instead, economic elites continue to preach the futile myths about empowering shareholders to check corporate abuses.
But do shareholders enjoy any of the powers that neo-liberals ascribe to them? As Prem and Austin point out, neoliberals equate “ownership” of shares with ownership of companies. Yet they provide neither theory nor evidence to support this claim. We can all enjoy a legal right to own a pen, a pencil, a car or a house, something which gives us rights, powers, liberties, duties and liabilities. We can use and destroy a pen. If a car that we own injures someone then we can be held liable. If we hold late-night parties at our houses which disturb others, police can be called to remind us of our obligations to neighbours. But ownership of shares in large companies is not like that. Read why here.