In the debate on so-called crony capitalism two things are clear. First there is genuine and widespread anger at corporate greed and irresponsible capitalism. Second, politicians from the left have been groping around, without much success, trying to come up with convincing responses. Ed Miliband drew a distinction between producers and predators. But he failed to offer any answers.
We see power and wealth concentrated in the hands of the few - the benefits of success going to those at the top rather than being fairly shared between all those who generated that wealth. Even worse, company bosses too often get far more than their performance could ever justify. Last year, total earnings of directors of FTSE 100 companies increased by 49% whilst their companies saw only a 3% rise in value.
As the world struggles to adjust to the shock that the economic system has faced over the last three years, we are searching for a more sustainable, more responsible and fairer form of capitalism. Yesterday, Nick Clegg came up with some answers. In particular, he argued that this should be the decade of employee share ownership. I hope that his speech comes to be seen as a seminal moment.
John Stuart Mill identified the 'standing feud between capital and labour'. He argued that employee owned firms could be the answer. Ever since then Liberals and Liberal Democrats have advocated this cause.
In opposition, as Shadow Secretary of State for Trade and Industry, I argued for Royal Mail workers to benefit from a John Lewis style Trust. Now in Government we have legislated for this. But the agenda is far wider.
Some traditionalists dismiss employee ownership as a woolly Liberal ideal which will always be peripheral. They are wrong. The economic evidence is clear.
Research by the Cass Business School shows that employee owned businesses are just as profitable as traditional companies. During the recession they proved to be more resilient. Their performance is more stable over the business cycle. When times were really tough employee owned businesses grew sales much faster than their traditional counterparts. Crucially, employee owned businesses consistently recruited more staff and rewarded them with higher wages. Other evidence shows that, invariably, the pay gap between the top and the average worker is much smaller - meaning that the fruits of their labours are shared more fairly.
Productivity also outshines the traditional company. Performance is best when a share in ownership is matched by empowering staff to play a part in decision making. And when you think about it, this isn't rocket science. In my time as an employment lawyer, I heard countless stories of frustration from staff who knew their workplace better than anyone, who had ideas about how you could work more efficiently, yet they were never listened to. This experience is commonplace in both public and private sectors. Give those people some autonomy in decision-making and they are likely to rise to the challenge. Give them a stake in the business and they will feel a sense of ownership. Motivation grows. Importantly, happiness at work can grow.
So, Liberals understand why this makes sense. But how do we spread the message? How can we make this more than peripheral to the economy?
Action is needed in three areas.
First, we have to increase the awareness of employee ownership in all its forms and break down the barriers which prevent growth. For those setting up a company, there must be an off the shelf option they can consider. And as Nick announced yesterday, the Government will appoint an independent adviser - an expert in the field - who will shortly report on how we can simplify employee ownership.
For existing employees, we must look at introducing a right to request that their company establish an employee share scheme. This is a good nudge in the right direction. Company owners may then be encouraged to consider, perhaps for the first time, the potential financial benefits of giving employees a stake.
Second, we have to look at tax incentives. If we have evidence of the value of employee share ownership to the economy, doesn't it make sense to improve the incentives for companies to set up share schemes?
Third, we have to examine the critical issue of access to finance. Companies need finance to grow but for businesses owned by employee benefit trusts - such as John Lewis - they face real difficulties, particularly in the early stages, in getting access to finance. What role can the banks and other institutions play? Should we consider a dedicated venture capital fund for mutuals and employee owned businesses?
This is an exciting moment. Liberal Democrats in Government are leading this debate. And the first steps set in motion by Nick Clegg this week could have a decisive, Liberal impact on our economy and in our workplaces that will be felt for years to come.