London Daily

Focus on the big picture.
Saturday, Sep 19, 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
Addison Lee Founder Loses £20.5 Million Non-Domicile Tax Case
BrewDog Creditors Face Heavy Losses After Collapse
Thirteenth Metropolitan Police Officer Dismissed Over Charing Cross Conduct
Oxfordshire Village Votes Symbolically to Leave UK Over Asylum Accommodation Plan
NHS Approves Life-Extending Treatment for Women With Incurable Breast Cancer
Software Defect Blamed for Major UK Air Traffic Disruption
Twenty Women Underwent Unnecessary Mastectomies at County Durham NHS Trust
British Steel Costs Taxpayers £1.3 Million a Day as MPs Demand Long-Term Plan
UK Parliament Advances Sovereign Grant Reform Setting Royal Funding at £99.9 Million
King Charles Urges Human-Centred Approach to Artificial Intelligence at Scotland Summit
House of Lords Begins Scrutiny of Voting-Age and Political Finance Reforms
UK Labour Market Shows Growing Divide Between Younger and Older Workers
Nearly Seven in 10 UK Small Businesses Delay or Cancel Growth Plans as Costs Rise
Andy Burnham Reaffirms UK Net-Zero Target Amid North Sea Energy Debate
UK Parliament Demands Credible Financial and Decarbonisation Plan for British Steel
MPs Urge Government to Reject Thames Water Rescue Deal and Prepare Special Administration
Bank of England Holds Rate at 3.75% as Energy Shock Raises Inflation Risks
TUC Calls for Social Energy Tariff Funded by Higher Taxes on Bank Profits
UK Parliament Enters Conference Recess After Advancing Sovereign Grant Legislation
King Charles Hosts Artificial Intelligence Leaders at Dumfries House Summit
Nearly Seven in Ten UK Small Businesses Delay or Cancel Growth Plans as Costs Rise
Anthropic Details Malicious Use of Claude in Cyber, Weapons and Influence Operations
McLaren Announces £500 Million UK Investment and 1,000 New Jobs
Scotland and Wales Sign Cardiff Agreement to Deepen Cooperation on Shared Policy Priorities
UK Government Moves to Fully Fund Teacher Pay Award as Strike Threat Recedes
UK Competition Regulator Deepens Scrutiny of Microsoft’s Business Software and AI Market Position
NHS England Reforms Focus on Cutting Waiting Lists and Improving Digital Care
England Maintains Mandatory Housing Targets in Push for 1.5 Million New Homes
UK Government Plans Statutory Industrial Strategy Council to Strengthen Long-Term Economic Policy
Asthma Charity Warns of Major Gaps in Childhood Diagnostic Testing Across England
TUC Chief Paul Nowak Appointed to Bank of England Court
Bristol Opens £35 Million Deep-Tech Innovation Hub at Temple Quarter
Oxfordshire Village Votes Symbolically to Leave UK Over Asylum Housing Plan
Andy Burnham Deepens UK Defense and AI Cooperation With NATO and Canada
UK Government Announces Neonatal Safety Reforms After Thirlwall Inquiry
Bank of England Weighs Rate Decision as UK Inflation Rises to 3.1%
UK Health Unions Warn of Staffing Pressures as Public and Private Pay Growth Diverges
Rockstar Games Faces Tribunal Claims From 23 Former Grand Theft Auto VI Developers
UK Treasury Faces Tighter Budget Constraints as Borrowing Costs and Pension Spending Rise
Prime Minister Andy Burnham Sets Out Ten-Year Plan for Greater Public Oversight of Utilities
UK Economy Grows 0.4% in July as Services and Technology Activity Strengthen
Scotland, Wales and Northern Ireland Leaders Coordinate Push for UK Constitutional Change
Police Tighten Public-Order Measures After Anti-Immigration Protests in Dover and Portsmouth
UK Ministers Pressed for Answers After US Diplomat Accused of Child Abuse Images Leaves Britain
Jaguar Land Rover Pursues NATO Defense Contracts for Defender Vehicles
British Service Member Dies in Road Accident While Deployed in Ukraine
George Osborne Calls for Britain to Rejoin EU Customs Union
Anthropic Chief Dario Amodei Urges Faster UK Action on Advanced AI Risks
UK State Pension Set for 3.9% Rise Under Triple Lock
UK Labour Market Cools as Payrolled Employment Continues to Decline
×