Recent decades have seen a rapid and little discussed transformation in corporate ownership structure, with vital consequences for company behaviour and inequality. The percentage of UK listed shares owned by UK individuals has fallen to 12.3%, with ownership concentrated among the wealthiest. UK pension institutions own just 3% of total equity. By contrast, over half is now owned by overseas investors.1 Though many of us are indirect shareholders through savings, distant financial institutions monopolise control rights, often exercising them directly against the interests of ordinary savers and workers. In the US, ownership is less internationalised, but inequality in shareholding is also extreme - 94% of business equity is owned by the top 10%, and a startling 63% is owned by just the top 1%. 2

In the UK, real term median wages have still not recovered to their pre-financial crisis peak, productivity has only risen by 2% since 20073 and business investment remains stagnant.4 In the US, real average wages have the same purchasing power as they did 40 years ago. As workers’ pay has stagnated in both the US and the UK, dividends to wealthy external shareholders have soared to record levels.56 Ownership shapes the distribution of control and income within a company – and therefore the society-wide concentration of ownership among a wealthy few has resulted in a concentration of wealth and power.

A combination of concentrated wealth, the primacy of shareholder interest in shaping company behaviour, and the institutional weakness of labour has helped turn many companies into engines of wealth extraction for external owners, institutional investors, and senior management, often at the expense of the workers and communities who generate value. Any attempt to transform our economy will therefore require reshaping company ownership so that it is democratic, inclusive, and purposeful by design.

That is why the growing interest in “ownership funds”7 on both sides of the Atlantic is an exciting development, part of a wider debate on how to transform our unequal and dysfunctional economies. In the UK, the Labour Party adopted a policy of ‘inclusive ownership funds’ at its autumn conference; and presidential candidate Sen. Bernie Sanders recently announced that he would require large companies to issue shares into worker-controlled funds, a similar concept. This briefing note has been prepared by the Democracy Collaborative and Common Wealth to introduce readers to the various (and often complementary) models for creating ownership funds at different scales and with different characteristics. We will publish our own independent contribution to the debate – with both UK and US papers, the latter with researchers from The Roosevelt Institute – later this summer.

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