Recently I reviewed for The Independent David Erdal's book about employee ownership, Beyond the Corporation: Humanity Working. It was a positive review, welcoming the suggestion that more businesses should be run as employee-owned. However, I made two criticisms. One was that Erdal attacks economics in an ill-informed way, which just gets tiresome. The other was that the book doesn't address the reason for the absence of more employee-owned businesses even now – its examples are the same as in every book and article on the subject, John Lewis and the Mondragon co-operative.

These mild criticisms have annoyed an email correspondent, Hugh Donnelly of the Co-operative Educational Trust Scotland. He wrote:

[W]hilst I can live with your response that much of the problem is with self interested, corrupt postulations of perfect competition rather than the economic model per se (although I would still contend that it does not approximate the real world too often) I would have to take issue with the hoary old chestnut of why there aren’t more EO companies.  If we don’t educate people, if we don’t explain there are alternatives and don’t offer choices then why would there be.  Furthermore, the whole legal and financial system developed around the joint stock model makes it much more difficult to create and sustain a collective model of enterprise.
 
Part of what we are trying to do at CETS is to try to ensure that anyone spending 20 years in our education system (primary to MBA) is offered these options.  They might not all go for it but at least they should have the information necessary to make rational choices.  Something our business schools do not currently offer.

I don't accept that lack of education can be the main problem. John Lewis is a large and well-known company. Social enterprises have developed as a widespread phenomenon in recent years despite not being promoted in special courses. I don't know the legal position on employee ownership currently but there have been times when governments (Mrs Thatcher's was one) went out of their way to legislate in order to encourage it. Similarly, the law permits mutuals and credit unions, but they are few in number. So I continue to believe advocates of employee ownership need to offer an explanation.

Back to you, Hugh?