The Feeling Is Mutual

OHN LEWIS, an upmarket department store, has a special place in the minds of Britain's consumers. In a speech to City folk on January 16th, Nick Clegg, the Liberal Democrat leader and deputy prime minister, called for “more of a John Lewis economy”. Yet he was enthusing not about the chain's pretty teapots and bed linens or even its fair pricing and kindly service, but the company's partnership model. It is owned by its 76,500 workers—or, to be more precise (which Mr Clegg was not), an independent trust holds all the shares and allots staff an annual bonus.

John Spedan Lewis (pictured), son of the store's founder, formed the partnership in 1928 partly to head off rising communist sentiment. But despite his belief that the model could replace traditional capitalism, few have adopted it. Even Charlie Mayfield, John Lewis's boss, says it is “not the answer to all ills”.

In this section

Nation of shop critics

The feeling is mutual

The ties that bind

Down in the valleys

Plan B

The Street of Shame responds

Made in Britain

The beauty of the boring

Alex Salmond, Little Englander

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Nick Clegg

John Lewis

The idea of a more caring, cuddly capitalism has long appeal. Staff share-ownership schemes emerged in America in the 1920s. In 1998 Gordon Brown, then Labour chancellor, preached of stakeholding workers in a “new enterprise culture”. In Britain, tax-efficient share option plans started in 1980; 12,500 companies now have one, double the number in 2000, reports Her Majesty's Revenue and Customs. Mr Clegg wants to give staff a broad right to request shares. David Cameron expanded on that theme in a speech on January 19th, hinting that the government would encourage the formation of co-operatives.

Giving workers shares in a firm may have commercial benefits. Employee-owned companies are more productive and hardier in a recession, according to a 2010 study by Cass Business School. John Lewis, which also owns Waitrose, a posh grocery chain, seems to bear this out. Staff turnover is low; the shop beat many competitors on Christmas sales. Firms with similar structures concur: Arup, an engineering outfit, attributes its business range and “family feel” to being owned by its 10,000 employees.

All of which seems less likely to make the blood boil than reports of huge executive pay-offs. But there is little evidence that shared ownership makes capitalism more “responsible”, as Mr Clegg hopes. It does not prevent bad decisions: having a quarter of shares in employees' hands did not save Lehman Brothers from bankruptcy. And the benefits for staff are questionable. It is rash to put a worker's livelihood, savings and pension in one basket case; many employees lost everything when Enron, an energy-trading company, collapsed in 2001.

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