Facebook is being fined £500,000 by the Information Commissioner, the maximum amount possible, for its role in the Cambridge Analytica scandal. The fine is unlikely to change Facebook’s behaviour. The company is worth an estimated $540 billion, and in the first quarter of 2018 took £500,000 in revenue every five and a half minutes. Some claim the fine is symbolically important. In reality it is essentially meaningless, mattering little to a company run by a man who didn’t even bother to appear before Parliament when asked to explain his company’s actions.

If we want real change, we can’t rely on small, after-the-fact fines. Instead, we will need to undertake deep, structural reform of how data is created, governed and used to ensure all of us gain the benefits from digital technology and its revolutionary potential.

The fine is being levied for two breaches of the Data Protection Act over the Cambridge Analytica scandal. The Information Commissioner has concluded that Facebook failed to adequately safeguard the information of users and it was not transparent in how data was being harvested by others, including the apps used to extract data to build the influencing mechanisms used by Cambridge Analytica. The result was substantial and widespread breaches of privacy and, ultimately, the erosion of democratic principles and norms.

Clearly, it was a scandal. But was it also the beginning of a crisis, a moment that can generate support for deep and significant reform of both Facebook’s behaviour and how we regulate the platform economy more widely? This is less clear.

Critically, as the Information Commissioner’s analysis reveals, the deep scandal didn’t lie in the activities of Cambridge Analytica, but in Facebook’s business model and the outcomes this generates. The revenue model of Facebook and other major digital platforms is simple: the extraction and analysis of user data to generate insights that are sold for profit. These insights – from political preferences to how you react to certain emotions – are also used to fine-tune the platform and make it more effective at further extracting and analysing data for profit. Ultimately, the technologies that do this are a form of artificial intelligence. All our data is now providing the raw material for training this intelligence until it becomes mature enough to offer new products that provide extraordinary services to users, and gargantuan profits and market advantage to digital platforms.

This voracious appetite for data generates an expansive and circular dynamic of expansion and ‘enclosure’. Facebook expands into new sectors and offers new services to attract more users and acquire more data. These users are in turn incorporated into Facebook’s systems (enclosed) and analysed, generating huge profits and providing a growing data comparative advantage over data-light competitors. Why use NatWest when you can send money over Facebook messenger? Isn’t it convenient to be able to access commuting information from Google maps through your Google home speaker? The service works for you, by offering useful, free products, and for the platform, by providing a means in which you provide more and more personal data through a multitude of devices and services, all of which make it less desirable to leave and become the user of another platform. These companies have a universal ambition reflected in their increasingly universal platforms.

This business model concentrates economic power in the hands of the data oligarchs who control the platform monopolies. It puts at risk notions of privacy and democratic communication, when these companies seek to ‘data-ify’ all of society, from its physical infrastructure to our social relationships, making profit from the resultant insights. And it risks slowing innovation and accelerating inequality as the rewards of the digital economy flow to the data hoarders.

So fining Facebook the equivalent of five and a half minutes of revenue simply isn’t enough. What is required is structural reform to address the platform business model. This in turns requires rethinking the ownership and governance of data and the underlying, increasingly ubiquitous digital infrastructure of our economy and society. Whereas today the digital economy increasingly operates under conditions of data enclosure, where information is siloed and controlled by the digital monopolies, we need to move towards a ‘digital commonwealth’ where data is a collective resource that drives equitable innovation, and digital infrastructure – from the cloud to analytical capabilities – is a public good.

From regulating the tech giants as utilities, to new ways of curating and accessing public and private sector data, to strategies for building a digital commonwealth – drawing inspiration from innovative cities like Barcelona – our forthcoming IPPR paper will set out the concrete steps we can take.

We are now at a crossroads. We can either realise a world of digital plenty, with new technologies mobilised to solve the great problems of the day, or settle for one in which data oligarchs rule and society and economies become more fragmented, private and unsustainable. Small fines guarantee the latter. If we are serious about reining in the universal platforms, we need to rethink the deep institutional underpinnings of digital economy.

Mathew Lawrence and Laurie Laybourn-Langton are co-authors of forthcoming paper, ‘The Digital Commonwealth: from enclosure to a data commons’.

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Deep and intersecting crises confront us. Growth is anaemic; wages and productivity are stagnant; inequality is stark; investment is low; consumer debt is high; and asset bubbles are frequent. Future trends, from the rise of the data oligarchs to the disruption of automation, threaten to deepen the inequalities and inefficiencies of neoliberalism. Overarching everything, an extractive model of capitalism is driving escalating environmental collapse, threatening the conditions upon which all of human society ultimately depends.

In the face of a failing economic model, tinkering won’t suffice. Our future will depend on our capacity for institutional reimagining, on our ability to rethink and reshape how we produce and distribute wealth in more democratic and sustainable ways than present. Fundamental to this must be a new architecture of ownership. Co-operatives Unleashed, our new report for the New Economics Foundation (NEF), not only looks at how to grow pure co-ops, but also how to transform patterns of business ownership across the economy.

Ownership matters. Who owns and controls the productive wealth of nations and communities is fundamental to how an economic system operates and in whose interests. The nature and distribution of ownership intimately shapes the distribution of power and reward within society, undergirding the present and shaping our economic futures.

For 40 years, the economy has been a one-way-street. Assets and equity have flowed upwards and outwards, and with them wealth. Margaret Thatcher promised a world ‘where owning shares is as common as having a car’. But the grand promise of a share-owning democracy, and with it broad-based economic power, has crumbled. Now, more than half of UK company equity is owned abroad and only just over 12% by individuals, while the richest 10% own more than 60% of the nation’s financial wealth. The interests of those who own Britain’s businesses, moreover, are often misaligned with those of other stakeholders, such as employees, customers, service users and local communities. And even where they are better aligned, a concentration of shareholding and the distant power of capital markets hollows out the agency of individual shareholders and workers.

Piecemeal reform that leaves current models of ownership and the distribution of economic assets untouched will leave the fundamental values, operations, and outcomes of our economic system unchallenged. In place of extractive, disconnected and short-termist forms of ownership, we have to build forms of ownership that are distributive by design, generative in purpose, democratic in orientation, and have a sense of connection to place.

There is no single step that can achieve this. What is required is a pluralistic and proactive strategy to scale alternative models of ownership that can reorient enterprise towards the common good, shape production toward democratic needs, stem financial leakage and build a future of shared economic plenty by sharing the rewards of our collective economic endeavours.

The co-operative advantage

Co-operatives – a tried and tested means of democratising and equitably sharing the benefits of enterprise – must be central to this agenda. At their heart, they are free and democratic enterprises. Indeed, in the countries in which they have thrived, they are often rooted in resistance to oppressive government or the march of a market economy that is prejudiced in favour of an extractive and financialised model. Co-ops are by nature organisations with a purpose, and are very often established to achieve a specific social or environmental goal by pooling the resources of a defined group of people.

Co-ops exist to share risk, power and reward. They are therefore more democratic and accountable forms of business that cannot sell equity on capital markets and so are beyond the influence of the shareholding conglomerates. Recent studies have also shown them to be more enduring and resilient in the face of market disruption, more profitable, more productive, happier and longer-lasting than non-co-operative forms of enterprise.

A hostile economic environment

Yet co-operatives – and indeed all alternative forms of ownership – operate in a hostile economic environment. From challenges in accessing finance to poorly tailored regulatory and legal systems to an underpowered supportive infrastructure, they face an uphill challenge. By contrast, the most successful co-operative economies such as Italy, France, and the USA, provide the legal, financial and operational arrangements for the sector to thrive. It is not surprising then that the co-op sector in those countries is much deeper than our own.

Given this, we should not expect significant co-operative expansion to happen in the current institutional context. Nor can or should we expect co-operativism to expand dramatically through the force of ethical example and exceptional effort, not least because co-operatives are currently subject to intense external pressures due to their operating in a wider, extractive and dysfunctional economy.

Instead, it should be because they are a form of purposeful, successful enterprise that most effectively brings together the ability and interests of ordinary people backed by a supportive institutional, financial and legal framework. Co-operatives should thrive, in other words, as a form of economic organisational ‘common sense’.

A winnable future

Public policy – and an ambitious politics for a new economy – are crucial to creating the conditions for this to occur. NEF’s new report, Co-operatives unleashed, sets out how this can be done.

First, a new legal framework for co-operatives should be established, including a statutory underpinning for the creation of co-operative indivisible reserves and an asset lock, and the introduction of a ‘Right to Own’ to support employee buyouts and the co-operatisation of existing businesses.

The second step is to develop a range of financial instruments and institutions tailored to the needs of the co-operative economy. This should include the creation of mutual guarantee societies, common across Europe, that help co-ops and SMEs pool risk and access funding, as well as the introduction of tax relief on profits reinvested in asset-locked indivisible reserves and on profits paid into a co-op development fund to incentivise common wealth creation.

Third, to develop and extend the capabilities of the co-operative movement, a new Co-operative Development Agency for England and for Northern Ireland should be established. These would seek to replicate and expand on the success of Cooperative Development Scotland and the Welsh Cooperative Centre in developing the capacity of the co-op movement across the rest of the country. It should focus on facilitating knowledge exchange and sectoral co-ordination, supporting co-op business development, and help replicate, shelter and expand successful co-op models by providing an accessible co-op replication service.

Finally, cooperatives must be supported to thrive in their communities and localities as genuinely rooted businesses capable of retaining power and control within that place and returning value to communities. This requires creating real life contexts across the UK where people can come into contact with coop ideas and realise how they can be applied to their livelihood and community. Innovative place-based community wealth building and local industrial strategies are crucial to this and hence to co-operative development. This could include encouraging local procurement and commissioning strategies to support, where appropriate, co-operatives and social enterprises, and local authorities, in combination with the community, social oriented enterprises and unions, should work together to increase the capacity of co-ops and other local businesses to bid for anchor institution contracts.

Scaling democratic ownership

As the political sun sets on neoliberal economics, and demand grows for greater wealth-building and sharing of value with those that add it, there is a real need for policy that creates the kind of enterprises that can fulfil this demand.

What is needed – alongside an expansion of the co-operative sector – is a deep economic heartbeat that consistently and over time transfers the ownership and control of businesses to workers and other key stakeholders. Alongside the co-operative specific proposals, we therefore set out a new institution called an Inclusive Ownership Fund to do just that. 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.

When the fund reached a controlling level of ownership of a firm (or, in the case of businesses succession, proposed takeover or crisis, a lower but significant level of ownership) the stakeholders controlling the fund could opt to assume control of the business. But prior to that, steps could be built into the fund that would see incremental improvements in worker or wider stakeholder participation when the fund reached certain levels. In other words, the Inclusive Ownership Fund would act as a mechanism for transforming ownership over time, putting power and control in the hands of people rooted in places that depend on the success of purposeful business rather than remaining the preserve of rootless capital.

Ownership matters. It is both a force and fulcrum; it is no coincidence that the two major transformations in the UK’s political economy were undergirded by changes in ownership models, with nationalisation securing the post-war settlement, and privatisation driving its undoing. As we urgently seek a third transformation, new models ownership – as today’s report sets out – must be at the heart of our economic reimagining.

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The evidence of our broken economic model mounts. This week, the East Coast Mainline was taken back into temporary public control from Stagecoach and Virgin Trains. As a potent symbol of the failure of rail privatisation, where franchise operators win regardless of their performance but the costs are borne by passengers and taxpayers, it is striking. At the same time, Royal Mail year end results saw another record dividend payment to shareholders, with almost a billion pounds extracted from the company since privatisation, despite the sale promising increased inward investment. Meanwhile, the Business, Energy and Industrial Strategy Committee released a devastating report into the failings of Carillion, exposing the flaws of the outsourcing model.

Parasitic, over leveraged, weakly accountable, and delivering little value, these companies and their relationship to the state epitomise the inefficiencies and inequalities of our neoliberal political economy.

Critically, these are not isolated symptoms of failure. We are in the middle of the longest stagnation in earnings for 150 years. Average weekly earnings have decoupled from GDP growth for the first time since comparable data has been available. Young people are set to earn less than the previous generation for the first time. We have the richest region in Europe – inner London – but most British regions are poorer than the European average. The UK’s productivity performance has been abject for a decade. The cumulative environmental impacts of our economy are damaging and unsustainable. In short, our economic model is broken and needs radical reform.

Piecemeal tinkering won’t suffice. What is required is an urgent rethinking of how our economy is organised, and in whose interest. Fundamental to this must be an ambitious new agenda on ownership, one that isn’t satisfied with the piecemeal nationalisation of railway franchises, or indeed the railway system as a whole, but instead seeks to transform how our economy as a whole is owned and governed, and in whose interests.

Scaling up alternative models of ownership – new ways of owning and governing enterprise to give workers and communities a stake and a say – is critical. This is because ownership is the key to unlocking systems change. Indeed, we cannot achieve the paradigm shift we need in how we run the economy and for whom without changing how our economic assets and institutions are owned. From the post-war consensus undergirded by the nationalisation of the economy’s commanding heights, to the role privatisation played in shattering of the Keynesian settlement and popularising Thatcherism, history teaches us ownership matters.

The reason is because ownership of capital shapes the distribution of power and reward in a business and the economy as a whole. It structures how enterprise is organised, granting powerful control rights to the exclusion of labour’s interest. Ownership also generates income rights, which as capital’s share of national income has risen over time, has benefited business owners at the expense of the incomes of workers.

If capital was broadly owned or democratically governed, the growing share of national income going to capital would not matter for inequality and living standards, since the benefits would be widely distributed. In fact, the ownership of capital is highly unequal. The wealthiest 10 per cent of households own 45 per cent of the nation’s wealth, while the least wealthy half of all households own just 9 per cent. Property, the most widely spread form of wealth, gives people little control over the productive forces of the economy. Financial wealth which does, including stocks and shares, is particularly unequally held: the wealthiest 10 per cent own almost 70 per cent. Indeed, a striking paradox of the ‘shareholder democracy’ revolution of the 1980s was that it led to the concentration, not dispersal, of economic ownership. Compared to most other advanced economies the UK now scores poorly on economic democracy indexes measuring ownership and economic voice.

Powerful trends are set to increase the importance of ownership in the context of unequal levels of ownership. Technological change risks creating a paradox of plenty: society is likely to be far richer overall due to the material abundance generated by automation and digitalisation, but for many individuals and communities, technological change could reinforce inequalities of power and reward as the benefits are narrowly shared, flowing mainly to capital owners and the highly skilled. From the ownership of data that fuels the platform giants of surveillance capitalism, to ‘who owns the robots’, ownership of capital will become ever-more pivotal.

This is why IPPR’s Commission on Economic Justice has set out a radical agenda for broadening and democratising ownership of business equity. The goal of our proposals are two-fold: to give everyone a share of capital, both as useable wealth and for its income returns; and to spread economic power and control in the economy, by expanding the decision rights of employees and the public in the management of companies.

Our report, Capital Gains, proposes three mechanisms that can help broaden the ownership of companies and spread economic rewards and power more widely.

First, we propose establishing a Citizens’ Wealth Fund that would own shares in companies, land and other assets on behalf of the public as a whole, and pay out a universal capital dividend of £10,000 for every 25-year old.

Second, we propose a series of measures to expand employee ownership trusts, which create a form of employee common ownership that provides the basis for employee participation in both profits and corporate governance, giving employees both distributional and control rights. The effect is to turn the traditional company ownership hierarchy on its head: whereas capital normally hires labour, in an EOT-owned company the employees hire capital. We estimate that the UK could create 3 million worker-owners by 2030 with an ambitious reform agenda.

Finally, we set out steps to scale the co-operative and mutual sector, which are democratically owned and governed, through new financial and legal measures to support forms of enterprise in common.

Our crisis consists in the mounting evidence of deep structural failure, whether Carillion or the rail debacle, without yet generating overwhelming momentum towards much needed and systemic reform. An alternative ownership agenda must be critical to this.

From the national to the firm level, new models of ownership can begin to reshape how our economy works and for whom. It gives us a chance to own the future.

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The UK is a wealthy nation, but an unequal one. Tinkering will not address the entrenched inequalities that disfigure society. Instead, we will need to reimagine the foundational economic institutions that shape how wealth and power are produced and distributed. Central to this must be the development of new models of ownership that ensure everyone has a stake and a share in the economy. Our new report – Our Common Wealth: a Citizens’ Wealth Fund for the UK – shows how a Citizens’ Wealth Fund can play a crucial role in building a new architecture of ownership, one capable of transforming narrowly held private wealth into public, shared prosperity, and providing a universal minimum inheritance.

The nation’s wealth continues to grow, totalling £12.8 trillion by the end of 2016. Yet the distribution of that wealth is deeply unequal. The wealthiest 10% of households own 44% of the nation’s wealth, around five times more than the wealth of the bottom half of all households combined. These stark inequalities exist between individuals and families, between areas of the country, generations and genders, and between people from different ethnicities and class backgrounds.

What’s more, powerful trends are set to deepen wealth inequality. Automation risks creating a ‘paradox of plenty’: the integration of artificial intelligence and robotics could make society far richer in aggregate, but, for many individuals and communities, technological change could reinforce inequalities of power and reward as the benefits flow disproportionately to capital owners. At the same time, the boundless ambition of the digital platform giants is resculpting society into a giant space for the extraction and monetisation of data, and is also likely to drive a rising share of national income going to capital.

If capital was evenly distributed, this would not matter. However, as capital ownership is extremely unequal and capital’s share of income is rising at the expense of labour, wealth inequality is likely to rise. This is particularly the case as financial wealth, such as stocks and shares, is highly unequally divided. Absent policy intervention then, we risk ever greater economic polarisation as wealth begets wealth, leaving the asset poor far behind.

In this context, there are three crucial measures that can broaden the distribution of wealth and reverse the entrenched inequalities facing the UK. First, we can increase labour’s bargaining power, to help boost its share of income relative to capital and reshape corporate governance. Second, we can more effectively tax capital and income from capital, using the receipts to distribute income and wealth. And finally, we can broaden ownership of capital, to ensure everyone benefits from rising returns to capital. Our new report, Our Common Wealth, sets out the case for the final approach via a Citizens’ Wealth Fund, an institution of collective ownership that transforms a part of private wealth into shared public wealth.

A Citizens’ Wealth Fund is a kind of sovereign wealth fund owned by and managed in the interests of citizens. By owning wealth in common in the form of economic assets, the fund would act as a force for economic equality by distributing returns to capital more widely and broadening control rights. Indeed, if current patterns of ownership act as a dynamic of divergence, the Fund would be a force for equalisation.

There are already over 70 sovereign wealth funds, at both national and regional level, capitalised from a range of sources, and with differing governance structures and distributional purposes. Of course, the UK has already missed a golden chance to establish a wealth fund when we squandered the economic windfall from North Sea oil. Indeed, if the revenues generated had been invested in a sovereign wealth fund in the 1980s, such a fund would have been worth over £500 billion today, and would act as a considerable force for intergenerational equality.

A successful Fund would require three elements: effective capitalisation, robust and sustainable governance, and broad social support. Our report shows how a Fund could be worth £186bn by 2029/30, if started from 2020/21, capitalised using a mix of planned asset sales, capital transfers, a small amount of borrowing and returns reinvested through the decade. We also suggest new potential revenue streams, such as a scrip tax requiring firms to issue equity to the Fund, and new wealth taxes through the introduction of a gift tax and reform of inheritance tax.

To ensure that the Fund is genuinely an institution owned by the people and for the people, the Fund’s investment mandate and ethical obligations should be defined by Parliament. The Fund should be independently managed but be accountable to Parliament.

The public should also directly benefit through the distribution of a capital dividend, as the ultimate owners of the Fund. Indeed, through careful stewardship we believe the Fund would be large enough to pay all 25-year-old UK citizens a one-off capital dividend of £10,000 from 2030/31, providing a universal minimum inheritance for all.

This could grow over time, if tax revenues such as reformed inheritance tax or scrip tax continue to be invested in the Fund. A substantial universal capital dividend would provide a basis for economic security, give everyone the resources to pursue opportunities such as lifelong learning or creating a business, reduce intergenerational inequality, and help cultivate a coalition of public support for the Fund.

The importance of ownership has never been more apparent. In communities, workplaces and households across the country, people lack meaningful control over their lives as neoliberalism has hollowed out institutions of collective control and excavated sites of democratic power in the economy. Wealth inequality has risen and is set to rise further, and capital has become overmighty. In the face of this, we urgently need a new architecture of ownership to give people genuine control and economic power. IPPR has previously made two recommendations alongside a national Citizens’ Wealth Fund to counteract rising inequality: new legal and tax incentives to encourage employee ownership trusts that are a form of collective worker ownership and new support for co-operative and mutual businesses. Taken together, the Fund at a national level and the others at a firm level, these proposals would help broaden and democratise the ownership of capital at scale, giving everyone a stake and a say in the economy. It is time we shared in our common wealth.

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Ownership is back on the agenda. Labour’s commitment to taking utilities back into public ownership has reopened questions of governance and control that had been dormant for a generation. But the debate is currently too narrow, focused on specific sectors rather than ownership across the economy more generally. This needs to change. Sharply unequal levels of capital ownership in the UK are a driver of inequality, powerfully shaping the distribution of reward and power in the economy and society.  As IPPR’s new report, Capital Gains, argues, to reverse this, we need to build models of common ownership – from the national to the firm level – that give people a stake and a say in our national wealth.

A defining feature of the last 40 years has been the rising share of national income going to the owners of capital in the form of profits, while the share going to labour, in wages and salaries, has declined.  This trend has been observed in most advanced economies, driven by a combination of the management of global economic integration and technological change, and their impact on both capital and labour markets, and political choices on the regulation and taxation of labour and capital. A declining labour share reflects a major shift in how economies generate growth and distribute their rewards, with a growing proportion of the gains from growth flowing to capital rather than labour.  The economic and political consequences of this transformation are all around us.

Three powerful trends make it likely that capital’s share of national income will continue to rise. First, the value of land continues to increase faster than economic growth, with the value of UK land having grown more than fivefold since 1995. At £5 trillion it now represents more than half of the country’s total net worth (ONS 2017a).  Second, growing automation in the economy represents a substitution of capital for labour. If it becomes easier and cheaper to replace human work by increasingly capable robots and artificial intelligence, automation could accentuate existing trends in the capital and labour shares. Finally, the rise of highly profitable digital platform monopolies is also likely to put downward pressure on labour’s share of income. These ‘superstar firms’ aggregate, analyse and monetise ever-growing amounts of data to make supernormal profits, and are set to dominate not just current digital markets but future ones in artificial intelligence and machine learning.

Technological and economic trends therefore risk creating a ‘paradox of plenty’: society will be far richer in aggregate, but for many individuals and communities, technological and economic change could reinforce inequalities of power and reward as the benefits flow disproportionately to the owners of capital.

Of course, if capital was broadly owned or democratically governed, the growing share of national income going to capital would not matter for inequality and living standards, since the benefits would be widely distributed. In fact, the ownership of capital is highly unequal. The wealthiest 10 per cent of households own 45 per cent of the nation’s wealth, while the least wealthy half of all households own just 9 per cent. Property, the most widely spread form of wealth, gives people little control over the productive forces of the economy. Financial wealth which does, including stocks and shares, is particularly unequally held: the wealthiest 10 per cent own almost 70 per cent. Indeed, a striking paradox of the ‘shareholder democracy’ revolution of the 1980s was that it led to the concentration, not dispersal, of economic ownership. Ownership of UK quoted shares by individuals and British pension funds has collapsed in the past three decades. Compared to most other advanced economies the UK now scores poorly on economic democracy indexes measuring ownership and economic voice.

Crucially then, given the concentrated and highly unequal distribution of capital ownership in the UK a rising share of national income going to capital has become a major driver of inequality. Moreover, it is a dynamic for growing economic divergence.

Given this, if we are serious about building a different type of economy, where prosperity is underpinned by justice, we need a new ownership agenda.  The goal of reform should be two-fold: to give everyone a share of capital, both as useable wealth and for its income returns; and to spread economic power and control in the economy, by expanding the decision rights of employees and the public in the management of companies.

Expanding ownership helps ensure we all have a claim on our common wealth. This matters for more than distributional reasons. Scaling alternative models of ownership also helps address some of the UK’s longstanding structural weaknesses, including productivity and inequality. This is because different models of ownership produce differing distributions of power and control within a firm, creating different purposes and outcomes within a business. While extraordinarily successful in some respects, the conventional company model has clear limitations, with a narrow focus on private, investor ownership which contributes to wider economic and social injustices in the contemporary UK political economy.  New models of common ownership, that give individuals and communities a meaningful stake and say in their workplace and local economy, is a critical route to redressing these weaknesses and building a more productive, just and democratic economy.  It is the most durable and effective way for people to ‘take back control’.

Our new report, Capital Gains, proposes three mechanisms that can help broaden the ownership of companies and spread economic rewards and power more widely. (We do not consider in this report the very specific sectoral questions arising from proposals to bring back into public ownership firms in fields such as railways, water and energy.)

First, we recommend the establishment of a Citizens’ Wealth Fund. Like other sovereign wealth funds around the world, this would own shares in companies, land and other assets on behalf of the public as a whole. It would thereby manage existing public assets and transform a part of national private and corporate wealth into shared public wealth. The Fund could be capitalised by a combination of capital receipts from the sale of public assets, revenues from a ‘scrip tax’ on corporate stocks, and the hypothecation of wealth taxes. The Fund’s investment mandate would be set by Parliament but it would be managed by an independent board on behalf of the public. The Fund would act to spread wealth by paying out a universal citizen’s dividend to all or particular groups of the population, and by investing in the provision of universal basic services.  A forthcoming IPPR report sets out in greater detail how a Citizens’ Wealth Fund could be established, capitalised and governed in the interests of the people.

Second, we propose a series of measures to expand employee ownership trusts. Employee ownership trusts (EOTs) are a form of business model in which a majority of a company’s ownership is vested in its workforce. Such trusts enable a considerable share of the returns to capital (company profits) to be distributed to labour, and for workers to exercise a much more significant role in the governance of the firm. The trust creates a form of employee common ownership that provides the basis for employee participation in both profits and corporate governance, giving employees both distributional and control rights.  The effect is to turn the traditional company ownership hierarchy on its head: whereas capital normally hires labour, in an EOT-owned company the employees hire capital.

A number of steps could incentivise the growth of EOTs, including stronger tax incentives for the transfer of business ownership and for external investment and measures to build individual capital stakes for employees. At the same time reform of pension auto-enrolment to increase minimum pension contributions would allow employers to credit company shares to their employees’ pension accounts. This would boost pension savings rates (which is urgently needed given the UK’s demographic trends), allow companies to use the working capital, and help transform the level of employee ownership in the UK. Indeed, we estimate that with these measures, the UK could create over 21,000 companies majority owned by their employees by 2030, with almost 3 million employee owners, a dramatic expansion of everyday common ownership.

Finally, we set out steps to scale the co-operative and mutual sector, which are democratically owned and governed. There are currently around 7,000 firms owned by their workers or consumers, with around 223,000 employees and a combined turnover of £35.7 billion. Strikingly, the five largest co-operatives paid 50 per cent more corporate tax than Amazon, Facebook, Apple, eBay and Starbucks in 2016. The number of co-operatives would be significantly increased if the financial, legal and infrastructure barriers currently facing them were addressed. Drawing on experience in other European countries with larger co-operative sectors, reforms should include establishing a Co-operative Capital Development Fund, financed by a levy on the profits of co-operative firms; a specialist Co-operative and Mutual Development Bank to finance co-operative enterprises; and the introduction of the same capital gains and inheritance tax incentives for companies at the point of sale to co-operatives as recommended for sales to employee ownership trusts.

Taken together, these models of common ownership – from the national to the firm level – can begin to reshape the ownership of economic assets and companies in society, distributing power and reward across the economy and society and producing differing distributions of power and control within the firm.  Without such reforms capital’s growing share of income risks a world of spiralling inequality; with them, we have a chance to own the future.

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Ownership is central to who has power, voice and reward in society.  Stark inequalities in wealth and assets underpin and reproduce sharp hierarchies in economic and social life. Unless we build new models of democratic ownership – more dispersed, more transparent, more public – we cannot create a new economy that works for everyone. We have to own the problem.

The sheer scale of inequality in ownership is staggering. For example, the richest 10% of households own 45% of the country’s wealth, the poorest 50% only 9%.  The median wealth of lone parents with dependent children is just £26,800, compared to £678,000 for a couple without children approaching retirement. While the scale of wealth a person enjoys is partly due to their age, it also reflects patterns of ownership that are structured by gender, class, ethnicity and geography.

Moreover, the mechanisms meant to disperse ownership are broken.  The so-called ‘shareholder revolution’ boasted of by Margaret Thatcher has failed.  Individual share ownership has collapsed since the 1980s, falling from nearly 40% of UK quoted shares to just under 10% today. UK pension funds – which are a form of indirect ownership – have experienced a similarly sharp decline.  At the same time, the UK’s broken housing market means that for the majority of young people, owning their own home is fast becoming an impossibility, further accentuating inequalities of asset ownership.

Added to this, coming down the track are a series of trends that, if unchecked, will accelerate inequalities in ownership of wealth and capital.  Increasing levels of automation will boost capital’s share of income at the expense of ordinary workers.  As human labour is progressively replaced by machines, the owners of the robots will cannibalise more and more of the returns of growth.  Unchecked and without reform, accelerating automation could lead to a new ‘Gilded Age’, in which economic power and reward concentrates in a way not seen since before the birth of democratic capitalism.  Compounding this, powerful network effects mean key sectors of the digital economy are trending towards monopoly, further accelerating the concentration of wealth.

A new, more inclusive economy cannot therefore be built on the foundations of our current models of ownership.  Hierarchical patterns of wealth concentrate economic power, cede the future to investors based on the ownership of capital not social utility, starkly divide life chances, and ultimately inhibit broader social flourishing.

By contrast, the benefits of a more democratically owned economy are multiple: greater power for ordinary workers and citizens in shaping economic decisions that affect their lives; greater democratic control over key resources, from energy and infrastructure and data to shaping investment in the technologies of the future; and critically, a more durable, egalitarian distribution of income and wealth that can meaningfully allow people to take control of their own lives.

A more democratically owned economy is possible in the here and now that can prefigure the wider changes we want. In fact, there already are a wide range of successful institutional forms that can extend democratic control over capital and wealth to ensure returns are more widely shared in the here and now. From worker ownership to municipally owned energy, from consumer co-operatives to democratically owned and managed public housing, there are a host of options that can accelerate democratic forms of ownership in the economy today with the right legal, financial and fiscal support.

Yet more radical options are also required to truly democratise ownership in the UK in the future.  IPPR is therefore exploring new institutional approaches that can better hold wealth in common.  First, we are proposing a new Citizens’ Wealth Fund, in which a new wealth tax could fund the purchase of a broad portfolio of shares in major companies, held on behalf of the people in an independently managed fund. The dividends from the shares could be distributed annually to the bottom two-thirds of the household income scale, ensuring the benefits of economic dynamism are widely shared.

At the same time, a new wave of modern ‘wage earner funds’ could allow workers to take a greater ownership stake and sense of control over the firms they work for. Inspired by the Swedish Meidner Plan, the funds would operate by the government requiring major corporations to share their profits with their employees by issuing new equity shares to the funds.  Without diluting their working capital, the funds would both broaden collective ownership and help empower employees to better influence decision-making at work.

The point with these institutional initiatives is not to return to older, centralising and not particularly democratic models of public ownership that underpinned post-war settlement.  Instead, economic democracy in the 21st century is about building institutions that can allow participation, disperse economic power, and allow for new ways for wealth to be held in common, for the common good.

It is clear we need a new type of economy. It currently stumbles along, kept alive by the use of heterodox, largescale monetary policy and the flow of private credit, yet unable to deliver rising, sustainable and inclusive prosperity, nor the deep structural reform our economic weaknesses demand. We shouldn’t be in any doubt that the UK’s economy is out of shape, reflecting deep structural flaws. However, we will only build a better future if we can reform the deep interlocking institutions and practices that underpin our economy.  If we are to own the problem, reforming and democratising ownership must sit at the heart of that agenda.

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