John Lewis partnership an Island of Socialism?

[Expounder]

Now here's a thought, if a firm operating on the lines of John Lewis opened in the US do you think that the rabid right wing would condemn it as a thin end of the wedge for the introduction of Socialism. It's a self contained retail outlet which shares profits with it's workers annually after putting aside funds for future development. This is a system which in it's own unique way is based on a socialist principle.

Agreed the share out is based on the percentage of an individuals salary which means the board and managers get a bigger cut the shop floor workers, but it is not based in or dependant on the stock market and is not in effect a part of the capitalist system but a business Island operating within it.

Supporters of super efficient capitalism who say the system can only work through ruthless efficiency with no room for mistakes, have been disproved by the highly successful John Lewis partnership, whose director has admitted that if the organisation had been operating within the normal cut and thrust of the capitalist system he and others on the board would have been sacked.

He said "Mistakes have are regularly made and it doesn't operate at maximum efficiency", but here after all these years it's still going from strength to strength.

This is an experiment started in the last century that is proof that ruthless maxim efficiency is not a necessary rule to success, and proves that a type of Socialism can exist successfully and thrive in one form or another.

To answer to my own question, my guess is that if it became a success in the US the right would see this as a communist seed being planted on American soil and would stifle it by means of dirty tricks.

Department Stores - Oxford Street: History of Oxford Street - John Lewis

[Don]

Profit sharing is common in the US. The company I worked for previously put over $90K in my 401K account, out of profits, over 10 years. It had a vesting scheme that saw me fully vested in 4 years. Granted, because it was a 401K (deferred taxation), any monies I withdraw before age 70.5 are taxed and penalized, but the point is that the company contributed the amount and it was not dependent on my own contribution to the fund as was independent of my salary and bonuses/commissions. It's not socialism, it's incentive and reward.

I should also add that the funds are taxed when I start withdrawing them at the government mandated age, but they are not additionally penalized.

Methinks you should find something else to take a swing at us about, as clearly you failed this time. The count is 0 & 1, 3 strikes and you're out

[Barry]

I went to John Lewis's in Milton Keynes in the early 1990s as I was looking to buy a Marantz stereo separates system.
I was expecting to spend around £1000 including some excellent Wharfedale speakers.
Me and Mrs spent quite some time in the shop and eventually decided to buy. I produced my credit card and they refused to take it!
They said I could pay with a John Lewis credit card, which I had to apply for and come back in a few days, or I could pay with cash.

I chose the 3rd option, which was to leave the store and buy elsewhere.
I thought that this policy was rather elitist and when I saw your post, expounder, suggesting that they are socialist, I was somewhat surprised.
I thought they were as capitalist as Margaret Thatcher. Oh well, I live and learn.

[Midas]

I've just had a quick look through John Lewis's 2009 annual accounts, and although the percentage of profits given to staff by way of bonuses is certainly higher than average, in all other respects they have a perfectly standard company structure and operation. I fail to see where the payment of bonuses to staff as an incentive to work harder and to retain loyalty qualifies as 'a type of socialism'; for that there would need to be co-operative ownership and management which there clearly isn't.

[Expounder]

I've just had a quick look through John Lewis's 2009 annual accounts, and although the percentage of profits given to staff by way of bonuses is certainly higher than average, in all other respects they have a perfectly standard company structure and operation. I fail to see where the payment of bonuses to staff as an incentive to work harder and to retain loyalty qualifies as 'a type of socialism'; for that there would need to be co-operative ownership and management which there clearly isn't.

You missed the point I was making Midas, had J.Lewis been a public company the director admitted he would have been sacked for inefficiency because of errors made. The points made by various people in previous posts is that inefficient societies can't survive.

John Lewis proves [although in a miniscule way] that ruthless efficiency is not necessary in society in order to operate. It just depends on the degree of inefficiency. Capitalism demands ruthless efficiency for maximum profit the dog eat dog maxim. John Lewis proves a society operated on similar principles could survive given a reasonable degree of efficiency

The socialist John Lewis comparison was a bit tongue in cheek.............................

[Expounder]

I went to John Lewis's in Milton Keynes in the early 1990s as I was looking to buy a Marantz stereo separates system.
I was expecting to spend around £1000 including some excellent Wharfedale speakers.
Me and Mrs spent quite some time in the shop and eventually decided to buy. I produced my credit card and they refused to take it!
They said I could pay with a John Lewis credit card, which I had to apply for and come back in a few days, or I could pay with cash.

I chose the 3rd option, which was to leave the store and buy elsewhere.
I thought that this policy was rather elitist and when I saw your post, expounder, suggesting that they are socialist, I was somewhat surprised.
I thought they were as capitalist as Margaret Thatcher. Oh well, I live and learn.

The point is Barry, what ever you may say John Lewis is a success in the middle of this crisis when other retail outlets going into liquidation and closing. They are preparing to open new department stores in the face of a severe down turn in consumer spending so I don't think they missed your purchase. I love to see an organisation like John Lewis sticking two fingers up to the rest of the stock market losers.

[Jim Franklin]

The point is Barry, what ever you may say John Lewis is a success in the middle of this crisis when other retail outlets going into liquidation and closing. They are preparing to open new department stores in the face of a severe down turn in consumer spending so I don't think they missed your purchase. I love to see an organisation like John Lewis sticking two fingers up to the rest of the stock market losers.

Got to agree there. Waitrose is part of the JLP and operates in exactly the same way. Both retailers have the best staff retention records in the UK market and also the lowest dismissal rate for any comparable sized employers in Europe.

[Expounder]

Profit sharing is common in the US. The company I worked for previously put over $90K in my 401K account, out of profits, over 10 years. It had a vesting scheme that saw me fully vested in 4 years. Granted, because it was a 401K (deferred taxation), any monies I withdraw before age 70.5 are taxed and penalized, but the point is that the company contributed the amount and it was not dependent on my own contribution to the fund as was independent of my salary and bonuses/commissions. It's not socialism, it's incentive and reward.

I should also add that the funds are taxed when I start withdrawing them at the government mandated age, but they are not additionally penalized.

Methinks you should find something else to take a swing at us about, as clearly you failed this time. The count is 0 & 1, 3 strikes and you're out

Don, I do apologise for my ignorance of profit sharing companies in the States. My reference to Socialism in relation to our own John Lewis partnership was a knock at the right wing on the forum who think that any large company or society that is not run on free market lines and is not 100% efficient, must go to the wall.

The John Lewis partnership is not a part of the mainstream free market retail outlets in Britain and the principle it is run on flies in the face arrogant free market capitalist ideology. Proving fair sharing can work.

Out of interest what is the attitude of American public to profit sharing work schemes? I would imagine it's not widely encouraged.


Regards Exp............................................... .....

[Expounder]

Got to agree there. Waitrose is part of the JLP and operates in exactly the same way. Both retailers have the best staff retention records in the UK market and also the lowest dismissal rate for any comparable sized employers in Europe.

Why can't a country be run along along the same lines?.

[Midas]

Don, I do apologise for my ignorance of profit sharing companies in the States. My reference to Socialism in relation to our own John Lewis partnership was a knock at the right wing on the forum who think that any large company or society that is not run on free market lines and is not 100% efficient, must go to the wall.

That's a bit of an assumption Expounder, I can't say that I or anyone else on the right wing has ever said, or even implied, quite that. Granted there are degrees of efficiency and the free market is the ultimate arbiter of who will remain in business and who doesn't; it's only right and proper that customers should get the best deal they can in terms of either price or quality or service - or a combination of all three - and those companies who can't or won't provide what customers want, must expect to lose them and ultimately their own business.

Unlike under socialism where the failing are propped up by the successful to the ultimate detriment of all, free market capitalism focuses on providing the best rewards for those who take the most risks and who offer their customers a good deal along the way. John Lewis is a good example of this, and as Jim points out, has the best staff retention records in the UK market and also the lowest dismissal rate for any comparable sized employers in Europe. OK, their efficiency might not always be what it might could, but given it's a private company and they're making good profit margins and offering their customers what they want, I'm sure that even the most rabid right winger wouldn't have too many grounds for complaint.

[Midas]

Why can't a country be run along along the same lines?.

Because it's the socialists who are in charge

But it's a very good question, and ultimately there's no reason why it couldn't be, but for that to happen we must take ideologically driven party politics completely out of the equation at both the policy making and legislative levels and confine them to discussions on what's best for the country as a whole. Only when a consensus on that has been reached by informed debate on all sides (and taking account of public opinion on many matters) should policies move forward to be implemented. Perhaps then we'd see some real improvements all round.

[Don]

Don, I do apologise for my ignorance of profit sharing companies in the States.

Your, unnecessary, apology is gratefully acepted. Please accept mine for the unnecessary swipe I took at you. The opportunity presented its self and I took it, proving that just because we can do something doesn't mean we should.

My reference to Socialism in relation to our own John Lewis partnership was a knock at the right wing on the forum who think that any large company or society that is not run on free market lines and is not 100% efficient, must go to the wall.

The John Lewis partnership is not a part of the mainstream free market retail outlets in Britain and the principle it is run on flies in the face arrogant free market capitalist ideology. Proving fair sharing can work.

I would consider John Lewis to be a 'free market' company. They exist to make a profit - it is their raison d'etre, they are not employee owned, they reward effort. Sounds like capitalism to me.

Out of interest what is the attitude of American public to profit sharing work schemes? I would imagine it's not widely encouraged.

I'm not aware of any 'attitude of the American public', it's not a huge topic of discussion, although I cannot imagine any American worker, or for that matter any worker anywhere, who would oppose profit sharing. As far as companies go, it's not a 'trend' necessarily, merely another tool in the box. Contrary to the opinions of some, I don't see some conspiracy on the part of employers to keep labor down.

[Jim Franklin]

I would consider John Lewis to be a 'free market' company. They exist to make a profit - it is their raison d'etre, they are not employee owned, they reward effort. Sounds like capitalism to me.

The above sentence is essentially correct except that the employees of the JLP do actually "own" part of the company. It is not so much stocks and shares as you would have with WalMart, t esco, Sainsbury's etc, but they are all partners in the business though. The job they do and length of service determine their position in the chain of gain so to speak.

I'm not aware of any 'attitude of the American public', it's not a huge topic of discussion, although I cannot imagine any American worker, or for that matter any worker anywhere, who would oppose profit sharing. As far as companies go, it's not a 'trend' necessarily, merely another tool in the box. Contrary to the opinions of some, I don't see some conspiracy on the part of employers to keep labor down.

I would be very surprised if there were not more companies in the US that profit share..For a start Microsoft do once you reach a certain level in the company (or they used to) and I believe Intel does to. I saw recently that both Catapiller and Boeing operate opt in profit share schemes for employees after a certain length of service. I don't believe, from my experience in the US and from those I know, that Americans would see this as a "thin end of the wedge" toward socialism, I think most would see it as the company recognising that they and the employee have a symbiotic relationship at a certain level and it is reward for work and effort. Any good manager or company owner will tell you that if you have happy and contented employees you will have an efficient and helpful workforce, and that benefits the company and the employees. The old paranoia about Socialism in the US is so misunderstood outside of the US. People imagine that the Yanks are still like the muppets of the MacArthy era where anything and anyone that looked like socialism was jumped on..these days are long gone and the overwhelming majority of Americans were pleased to see them gone too.

[Expounder]

Your, unnecessary, apology is gratefully acepted. Please accept mine for the unnecessary swipe I took at you. The opportunity presented its self and I took it, proving that just because we can do something doesn't mean we should

.

Be free at any time to take a swipe Don, if I stick my chin out in a debate and I'm wrong I'm bound to recieve a right or left hook [excuse the pun]

I would consider John Lewis to be a 'free market' company. They exist to make a profit - it is their raison d'etre, they are not employee owned, they reward effort. Sounds like capitalism to me

I'm not aware of any 'attitude of the American public', it's not a huge topic of discussion, although I cannot imagine any American worker, or for that matter any worker anywhere, who would oppose profit sharing. As far as companies go, it's not a 'trend' necessarily, merely another tool in the box. Contrary to the opinions of some, I don't see some conspiracy on the part of employers to keep labor down.

The thread was started to provoke an argument on the need for total efficiency to survive which is a mantra of the free marketeers. The Socialst comparison bit was a red rag for the free market bulls.

[Expounder]

That's a bit of an assumption Expounder, I can't say that I or anyone else on the right wing has ever said, or even implied, quite that. Granted there are degrees of efficiency and the free market is the ultimate arbiter of who will remain in business and who doesn't; it's only right and proper that customers should get the best deal they can in terms of either price or quality or service - or a combination of all three - and those companies who can't or won't provide what customers want, must expect to lose them and ultimately their own business

.

Your argument obviously doesn't apply to a firms like John Lewis whose director has admitted had he been in control of a quoted firm he would have been out on his ear. Not only that, the firm is expanding. Whats the explanation?

Unlike under socialism where the failing are propped up by the successful to the ultimate detriment of all, free market capitalism focuses on providing the best rewards for those who take the most risks and who offer their customers a good deal along the way. John Lewis is a good example of this, and as Jim points out, has the best staff retention records in the UK market and also the lowest dismissal rate for any comparable sized employers in Europe. OK, their efficiency might not always be what it might could, but given it's a private company and they're making good profit margins and offering their customers what they want, I'm sure that even the most rabid right winger wouldn't have too many grounds for complaint.

I'm sorry Midas, but isn't inefficient capitalism being propped up the state in Britain and in America and other capitalist countries, a reversal roles wouldn't you say, where ordinary people are being the scape goats made to pay for the rapacious greed of scoundrels?.

It's ok to put failed capitalism back on it's feet with state assistance and hand back rescued banks to the very people caused the problem. No qualms about that then?.

What is needed root and branch sort out of the city slickers and bankers activities before you start talking about root and branch sort out of the NHS and other public funded sectors. MPs have been put in the dock over miserly amounts of expences, but not only hasn't there been a proper investigation into bankers and financiers who ripped us off for millions, but they actually been rewarded millions for doing so, paid for by the taxpayer .Democracy is ruled by finance, the tail wagging the dog.

[Midas]

Your argument obviously doesn't apply to a firms like John Lewis whose director has admitted had he been in control of a quoted firm he would have been out on his ear. Not only that, the firm is expanding. Whats the explanation?

Many firms are less than efficient in a number of respects; it's a human failing when you're dealing with people, and it's generally far more tolerated in private companies, whatever their size, than in publicly owned ones. If you look at the annual accounts of JLP you'll see that despite whatever these inefficiencies were, they're still making healthy profits which enables them to expand.

I'm sorry Midas, but isn't inefficient capitalism being propped up the state in Britain and in America and other capitalist countries, a reversal roles wouldn't you say, where ordinary people are being the scape goats made to pay for the rapacious greed of scoundrels?.

It's ok to put failed capitalism back on it's feet with state assistance and hand back rescued banks to the very people caused the problem. No qualms about that then?.

What is needed root and branch sort out of the city slickers and bankers activities before you start talking about root and branch sort out of the NHS and other public funded sectors. MPs have been put in the dock over miserly amounts of expences, but not only hasn't there been a proper investigation into bankers and financiers who ripped us off for millions, but they actually been rewarded millions for doing so, paid for by the taxpayer .Democracy is ruled by finance, the tail wagging the dog.

If a company is offering its customers what they want at a price they like, any inefficiency is only likely to be noticed by the shareholders of that company. If they're satisfied that other factors over-ride those inefficiencies, who's being propped up by whom?

As for state assistance generally I'm very much against it, and in theory at least I'd like to have seen those banks and other financial institutions who failed be responsible for their own failures. But that would have been politically unacceptable under any party because it would have created financial turmoil and distress on a scale we've not seen here. That, and in part I suspect because the government recognised that its own regulation had been so abysmal, we all had to bear the brunt of the problem. But although I quite acknowledge there was greed by a tiny number of people, it was government itself, initially in the USA but latterly here, at whose door the start of the unfettered trading in and buying of, derivatives can be lain.