As a Labour activist in Jeremy Corbyn’s own constituency party during the 1980s and 1990s, I had my own insight into his ideological enthusiasms.
During local meetings, as he propounded his gospel of radicalism, he continually denounced the iniquities of the Western economic system.
‘Our job is not to reform capitalism but to overthrow it,’ I once heard him proclaim.
Even at the time, I thought his outlook was absurd, and it was a judgment that has only been reinforced by his subsequent political career, where extremism has been mixed with irresponsibility.
Meanwhile, more than a decade ago his Shadow Chancellor John McDonnell was asked in an interview with the ultra Left-wing group Alliance for Workers Liberty: ‘Who has been most significant in terms of your thinking?’
Shadow Chancellor John McDonnell is the man who now aspires to take charge of our national economy and your finances
He replied: ‘The fundamental Marxist writers: Marx, Lenin and Trotsky.’
This is the man who now aspires to take charge of our national economy and your finances.
That’s why Corbyn and McDonnell are the two most dangerous figures to have led a major party in our modern political history.
Their quasi-revolutionary agenda, based on uncompromising socialism, is entirely alien to the pragmatic traditions of British Parliamentary democracy.
Theirs is a programme of undiluted socialism, including confiscatory taxation, massive extensions of trade union power, accelerating nationalisation and profligate expenditure.
Nothing better exemplifies this than McDonnell’s proposal to force every large British company to hand over 10 per cent of its equity to its staff.
That’s why Corbyn and McDonnell are the two most dangerous figures to have led a major party in our modern political history
Dressed up in the Shadow Chancellor’s soothing language, this sounds on the surface like a reasonable idea, apparently similar to the employee share ownership schemes run by admired companies like John Lewis and the Co-op.
Indeed, the Conservative Government has been actively encouraging the creation of workforce equity initiatives.
But McDonnell’s plan is very different. It is a vehicle not for greater employee co-operation, but for more taxation, greater State intrusion and further exploitation of businesses.
Far from enhancing workers’ rights, it will undermine them by discouraging wealth creation and employment.
Under McDonnell’s plan, every British company with at least 250 employees will be required by a future Labour Government to set up an ‘Inclusive Ownership Fund’
Under McDonnell’s plan, every British company with at least 250 employees will be required by a future Labour Government to set up an ‘Inclusive Ownership Fund’.
Each company will have to transfer at least 1 per cent of its equity every year into this fund, building up to a maximum stake of 10 per cent over a decade.
The shares would be collectively managed by a board made up of elected workers’ representatives.
Although the staff would not be allowed to buy and sell these shares, they would receive annual flat-rate dividend payouts up to a limit of £500, with anything beyond that threshold taken by the Inland Revenue.
Labour estimates that the funds could bring in £2.1 billion a year for the Government once properly established, and provide dividends to 10.7 million workers.
As presented by McDonnell, all this sounds like innovation both to boost social justice and Treasury coffers.
‘It is the collective investment that we as a society make that enables entrepreneurs to build and grow their businesses,’ he declared in Liverpool. But there is nothing fair or dynamic about his scheme.
On the contrary, it represents aggressive, heavy-handed socialism at its worst, denying companies the right to manage their affairs in their own commercial interests.
Business owners will be forced to hand over 10 per cent of their stakes simply by an edict of the State, an authoritarian policy that is the antithesis of the free market.
(And by the way, would every worker enjoy a £500 windfall, including bosses on hundreds of thousands of pounds – or would it be limited to those below a certain salary threshold?)
This is nothing like the John Lewis model, where dividends are not capped, so there is a much greater incentive for staff to improve performance.
Moreover, the John Lewis approach was developed by the company itself in accordance with its own ethos and needs, whereas McDonnell’s scheme will be universally imposed, a classic example of unnecessary centralisation.
Inclusive Ownership Funds have all the usual faults of socialist doctrine. They will deter enterprise, investment and job creation, with the inevitable result that a future Labour Government will get far less revenue than it expects.
If you have a company with 240 employees, why would you take on another ten staff and lose a tenth of your equity?
Indeed, McDonnell’s plan provides a huge incentive to break up companies into small parts. Those that have to comply will find it absurdly bureaucratic, from the administration of the funds to the computation of tax liabilities.
Unfortunately, this idea is just one element of wide-ranging Corbynista socialism that will send a shiver down the spine of businesses.
Further economic damage will be created by the return to public ownership of a host of companies, starting with the water utilities and train operators.
There will be more anti-business intervention, not least with the demand that a third of seats on the boards of big companies are reserved for workers.
Equally worrying is McDonnell’s pledge to introduce a major expansion of trade union power, which is likely to drag us back to the dark days of the 1970s when union muscle held the country to ransom.
That is the catastrophic experiment this blinkered Labour pair now want to inflict on modern Britain.