Tue, Aug 25, 2015 - Page 9 News List

Amazon’s attitude to its workers is typical of new capitalism

By Will Hutton  /  The Observer

A critical doctrine at the time was that they were held back by trade unions and soft economic policy that encouraged inflation. The proof that inflation was so damaging is scant and beyond the print, coal, rail and motor industries, British trade unions were pretty weak and pliant. What instead held these companies back was the evaporation of the guaranteed markets of empire. Second, a short-term, gentlemanly, disengaged financial system was unable to mobilize resources behind these companies and their greater purpose as imperial markets shrank. That was not widely understood then — and certainly not now. Instead, the economic problem was defined as pampered, unionized workers, a view further entrenched by an avalanche of free-market economics from the US. Worker privileges and rights must cease.

So to the firm of today. The new model firm no longer has workers who are members of the organization in a relationship of mutual respect and shared mission with committed, long-term owners; rather, the new ownerless corporation with its tourist shareholders employs contractors who have to pay for benefits themselves and can be hired and fired at will.

They are throwaway people, middle-class workers at risk as much as their working-class peers. Unions are not welcome; pension benefits are scaled back; sickness, paternity and maternity benefits are pitched at the regulatory minimum. Last week, Britain’s Citizens Advice Bureau said it estimated that 460,000 people nationwide had been defined by employers as self-employed (and thus entitled to no company benefits), even though they worked regularly for one employer, often in office roles. It is the same approach that has delivered 1.4 million zero-hours contracts. All this is allegedly to serve growth. Except over the past 20 years, growth, productivity and innovation in both Britain and the US have collapsed. These new firms, whose only purpose is short-term profit with contractualized workforces, turn out to be poor creators of long-term value. The exceptions, paradoxically, are the great high-tech companies, such as Amazon, Google, Apple and Facebook.

The alchemy of their success is that they combine innovative technology, produce at continental scale, invest heavily and commit to a great purpose, usually because of the powerful personal commitment of the founder. Bezos might have constructed a Darwinian work environment, but it is all “to be the Earth’s most customer-centric company.” He has invested hugely to achieve that end, but his workplaces, by contrast, seem terrible.

However, even Bezos does not want to be depicted as an employer with no moral center: He urged his employees to read the offending article and refer examples of bad practice to his human resources department.

Ultimately, long-term value creation cannot be done by treating workforces as cattle. It is a great debate about today’s capitalism. It would be a triumph if it was taken seriously in Britain.

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