London Daily

Focus on the big picture.
Thursday, Jun 11, 2026

UK 'has particularly extreme form of capitalism'

The UK has one of the most extreme forms of capitalism in the world and we urgently need to rethink the role of business in society. That's according to Prof Colin Mayer, author of a new report on the future of the corporation for the British Academy.

Prof Mayer says that global crises such as the environment and growing inequality are forcing a reassessment of what business is for.

"The corporation has failed to deliver benefit beyond shareholders, to its stakeholders and its wider community," he said.

"At the moment, how we conceptualise business is, it's there to make money. But instead, we should think about it as an incredibly powerful tool for solving our problems in the world."

He said the ownership structure of companies had made the UK one of the worst examples of responsible capitalism.

"The UK has a particularly extreme form of capitalism and ownership," he said.

"Most ownership in the UK is in the hands of a large number of institutional investors, none of which have a significant controlling shareholding in our largest companies. That is quite unlike virtually any other country in the world, including the United States."

This heavily dispersed form of ownership means none of the owners is providing a genuinely long-term perspective on how to achieve goals while also making money.


Business shake-up

Established in 1902, the British Academy is the UK's national academy for the humanities and the social sciences. In Principles for Purposeful Business, it proposes a new formula for corporate purpose: "to profitably solve problems of people and planet, and not profit from causing problems."

The Academy's report comes a week after the Labour Party manifesto proposed the biggest shake-up of how business is owned and run in decades. It included the nationalisation of water, rail, energy, mail, broadband and the forced transfer of company shares to employees.

Prof Mayer agreed that the Labour manifesto was bold in its ambition, but said it was too traditional and old-fashioned in its way of achieving its aims.

"It's very much focused on one particular means of delivery, that is through the state," he said.

"Now, the state has an important part to play. But we should think about the state in a more imaginative way, as to how it can promote successful business, how it can reform the nature of business in society. That's what we're really looking for."

One thing on which he did agree with the Labour Party was the need to rewrite the Companies Act to specifically enshrine directors' duties to other stakeholders in law. Currently, the Act says that other stakeholders interests are subordinate to shareholders.

Where he doesn't agree is in the demonisation of billionaires: "It's not obscene to make a lot of money in the process of creating real solutions to the problems of the world."

But he hoped that such wealth would be recycled through foundations, for example, which could be the kind of long-term owners needed for the next generation of problem-solving companies.


Profit motive

Not everyone agrees, of course, that the pursuit of profit, within the confines of the law and social norms, is bad. Matthew Lesh, from the Adam Smith Institute, says we should be cautious before we dismantle a mechanism that has produced innovation and a rise in absolute living standards.

"The profit motive has raised literally billions of people out of poverty by encouraging innovation and ensuring our finite resources are used exceedingly productively," he said.

"Mandating alternative purposes for business raises more issues than it solves. It removes the essential accountability between shareholders, whose investments are at risk, and corporate executives."

Some of these are age-old arguments between the Left and Right, but there is plenty of evidence that something fundamental is changing deep in the heart of capitalist economies.

Since 1978, the American Business Roundtable of top chief executives has periodically issued Principles of Corporate Governance. For the last 40 years, all of them have reiterated the orthodoxy that corporations exist principally to serve shareholders. Until now.

In August it issued a new Statement on the Purpose of a Corporation, signed by 181 chief executives who committed to lead their companies for the benefit of all stakeholders - customers, employees, suppliers, communities and shareholders.

Even the famously private family that owns Mars has recently popped its head over the parapet to talk openly about the way it runs the chocolate-to-pet-food giant with annual sales of $35bn.


'Whatever it takes'


Mars chairman Stephen Badger admits things are different now.

"We've never felt the need to be public but times have changed," he said.

"The talent [employees] really want to know what the company they work for, stands for.

"Equally important is that the magnitude of the challenges facing the world - climate change, poverty, biodiversity loss - these are issues that we care deeply about.

"We've got less than 10 years to get this right - incremental change is not enough. We are prepared to spend serious money on this and if that means lower profits, so be it. Whatever it takes to get the job done,"

The challenge to companies is threefold. Staff who want to believe in the company they work for, consumers who may boycott the products of companies that don't get it and, of course, politicians who may legislate, tax or nationalise them out of existence.


Do the right thing?


But we should be cautious about announcing the death of shareholder power.

Unilever - the Anglo-Dutch makers of Marmite, PG Tips and 400 other consumer brands - has long been admired for its enlightened approach to its societal impact. In 2017, it received a surprise takeover bid from Kraft Heinz.

Its response was to accelerate the sale of some businesses, increase its dividend, cut costs by 12%, raise the amount of debt in the company and give a further €5bn to shareholders through share buybacks. Steps the then chief executive, Paul Polman, now says he would rather not have taken.

"Feel free to be responsible - but don't be complacent about the interests of your owners" was the clear message and lesson learned.

Alan Jope, the current Unilever chief executive, told the BBC that its focus on doing right by society and the environment was not out of fear of nationalisation, taxation or regulation, but out of fear that its products would be shunned by a new generation of consumers unless they got this stuff right.

Is that doing the right thing for the wrong reason? Not really. Does it matter if it is? Probably not.

Unilever's Mr Jope did have a supportive message for the Labour Party. When asked if he supported company law changes to discourage firms from placing shareholders above others, he gave a clipped and clear response: "Yep."

One thing is certain. No matter who wins the UK election, you can expect to hear the word "purpose" a lot in the next few years.

Newsletter

Related Articles

0:00
0:00
Close
Office for National Statistics Adopts Supermarket Checkout Data for Inflation Measurement
Applied Atomics Launches With $500 Million Space Infrastructure Order Book
BYD Plans Nationwide Rollout of Ultra-Fast EV Charging Network
UK House Prices Unexpectedly Fall in May
CBI Warns UK Growth Is Becoming Increasingly Dependent on Public Spending
Makerfield By-Election Fuels Speculation Over Labour’s Future Leadership
Britain Declines to Join EU SAFE Defence Fund
UK Unveils 2040 Emissions Target Despite Strong Political Opposition
Government Orders Full Review of Palantir’s NHS Data Contract
UK Borrowing Costs Climb as Markets Price in Further Bank of England Rate Rises
Resident Doctors Confirm Five-Day NHS Strike Across England
Violent Anti-Immigrant Riots in Belfast Spark Political and Diplomatic Tensions
United Kingdom Sees Recovery in Horizon Europe Research Funding Share to 9.3 Percent
UK Inflation Holds at 2.8 Percent as Office for Budget Responsibility Flags Persistent Price Pressures
United Kingdom Launches National Anti-Fraud Framework to Combat Rising Pension Scam Losses
United Kingdom Expands Sanctions on Israeli Groups While Funding Palestinian Authority Salaries and Gaza Mine Clearance
United Kingdom Issues Three-Month Ultimatum to Major Technology Firms Over Child Online Safety Controls
United Kingdom Government Moves Toward Blanket Social Media Ban for Children Under Sixteen
Widespread Anti-Immigration Rioting Erupts Across Belfast After Knife Attack Linked to Asylum Seeker
Farmers Warn of Crop Losses Following Months of Unseasonal Rainfall
Civil Aviation Authority Launches Review of Regional Airport Operations
Met Office Issues Heat-Health Alert Across Parts of England
National Grid Introduces New Measures to Protect Winter Energy Supply
Northern England Rail Upgrades Receive Additional Government Funding
Wales Advances Green Hydrogen Strategy to Decarbonize Heavy Industry
UK Expands Recruitment Incentives to Address Shortage of STEM Teachers
High Court Opens Door to Climate Liability Claims Against Major Industrial Emitters
Police Service of Northern Ireland Investigates Major Personnel Data Breach
Defense Ministry Overhauls Procurement System to Accelerate AUKUS Submarine Program
Net Migration Remains Above Government Expectations, New Data Shows
UK and Scottish Governments Agree Framework for Expanded North Sea Wind Development
UK Treasury Launches New Tax Incentives to Boost AI and Semiconductor Investment
Bank of England Signals Continued Caution on Interest Rate Cuts
UK Unveils £10 Billion NHS Digital Modernization Plan Centered on AI Integration
Nebius Opens Major Robotics and Physical AI Laboratory in London
Bank of England Data Shows Strong Rise in New Mortgage Approvals
Network Rail Completes Landmark Upgrade of Severn Tunnel Rail Infrastructure
East West Rail Passenger Services Between Oxford and Milton Keynes Set for December Launch
GlaxoSmithKline Reportedly Pursues £7 Billion Acquisition of US Cancer Drug Developer Nuvalent
Bank of England Signals Interest Rates Likely to Remain Unchanged Despite Energy Market Risks
NHS Trusts Launch Job-Cutting Programmes as Financial Pressures Intensify Across England
More Than 130 Labour MPs Urge Ban on Trade With Israeli Settlements
Keir Starmer Orders Technology Firms to Introduce Smartphone Nudity Controls for Under-18s
UK Unveils £400 Million National AI Supercomputer Fund and New Economics Institute
Japanese Technology Firm Fujitsu Launches Advanced Artificial Intelligence Tool for Corporate Disclosures
South Africa Officially Launches Nationwide Campaign for Highly Contested Local Government Elections
United Kingdom Commits Additional Funding for Unexploded Ordnance Clearance in Laos
Singapore Announces Stringent New Greenhouse Gas Regulations for Commercial Cooling Systems
Cambodia and Thailand Hold High-Level Border Security Talks at United Nations Headquarters
Myanmar Military Government and China Sign Major Agreement to Upgrade Media and Cultural Cooperation
×