Is ‘inclusive capitalism’ – a return to individual share ownership – the way forward?

The Acid House, a film based on three short stories by Irving Welsh of Trainspotting fame, may not be the most obvious place to look for insights into popular capitalism.

Boab Coyle, one of the main characters, has a terrible day: he gets kicked off his soccer team, kicked out of his parents’ house, and when he calls his girlfriend from a phone booth, she dumps him.

Our dejected anti-hero vents his anger by vandalizing the phone box, only to be beaten up by a police officer, who is furious at the vandalism as he owns shares in BT.

Fortunately, very few small investors would have such a visceral sense of ownership.

The problem, four decades after the Thatcher-era privatisations, is the opposite: small retail shareholders are increasingly detached from the companies they own.

Private investors were once a real force, with real influence in boardrooms.

Sixty years ago, private individuals owned 54 percent of the UK stock market. By 1981 this had shrunk to just under 30 percent and by 2020, the latest figure available, it had fallen to 12 percent.

It matters a great deal that ties between British companies and small investors have weakened in recent years.

The narrowing of shareholdings has been accompanied by a more divisive and angrier version of capitalism and more unstable relationships between companies and society.

So all credit to Archie Norman, the president of Marks & Spencerwhich, as we reported in the Mail on Sunday, has launched a ‘Share Your Voice’ campaign to promote shareholder democracy.

Some of his proposals will be provocative. The most glaring is to allow companies to hold shareholder meetings digitally only, which would rob some agm addicts of their hobby of berating the board and then feasting on free food and drink.

The demise of the AVA, which over the years has provided a stage for a large corporate theater, including M&S, is a great shame.

Something is certainly lost if shareholders can’t interview directors in person, and we should remember that not all investors are comfortable with technology.

However, online events are more inclusive for those who can’t travel or take time off from work, and likely less intimidating for shareholders who don’t like public speaking.

Perhaps a hybrid of physical and digital is the way forward.

Few, however, would argue with Norman’s points on nominee accounts. Most of us now buy shares through nominee platforms, which means that in most cases we do not automatically have the right to attend the meeting, vote, or even receive information from the company.

This amounts to a mass disenfranchisement.

As Norman rightly points out, digital innovation must be harnessed to break through these communication barriers.

Companies spend a lot of time and effort on approaching large investors. The same goes for activists and hedge funds, who are often vocal but don’t always have a real ownership interest, let alone a real long-term interest.

Building a relationship with small investors, whether through annual meetings or digital communications, can be beneficial in a number of ways.

Their views would be an astringent antidote to boardroom bubble syndrome.

Individual shareholders have a direct and personal interest in the company. Often they are long-term holders, as opposed to institutions that play professionally with other people’s money.

Private investors are more likely to be animated by poor strategy, poor governance and fat cat wages than fellow members of the City club.

There has been much hand wrestling in the Square Mile that the London markets are losing attractiveness compared to the US.

The reasons for this are diverse and complex, but it seems reasonable to me to speculate that one factor in the US rise is the vibrant retail investor culture on that side of the Atlantic.

Sometimes this is overly exuberant, as we’ve seen with the tech stocks and with cryptocurrencybut it is part of an ambitious and entrepreneurial value system that seems to be missing here.

We lose the power of the small investor at our peril.