Karl Marx, Michael Otto and the “ownership of responsibility

Verantwortungseigentum

The initiative for a new legal form meets with resistance – because of an unfortunate choice of name and biting reflexes. At its core, it is about optimal conditions for good corporate governance.

If Karl Marx had still experienced this: Capital is struggling to be allowed to expropriate itself. Because the “GmbH in Verantwortungseigentum”, which wants to establish an entrepreneurial and expert initiative as a new legal form, is supposed to belong to itself. No one would have access to company assets and profits, shareholders would act as trustees.

This may sound unusual, but in the end it is nothing other than the model used by numerous German foundation companies. However, foundations are often not an option for start-ups and SMEs because the complex foundation law creates high hurdles.

Supporters of the initiative include prominent supervisory board members such as Ann-Kristin Achleitner, Michael Otto and Verena Pausder, but also economists like Michael Hüther. Since they are not suspected of socialist activities, we are surprised by some of the criticism from the liberal side. There is a danger that “property of responsibility will become the property of the people,” as the Handelsblatt wrote.

Everyone can, no one must

Responsible owner as the fifth column of socialism? With respect: Entrepreneurs have a free choice – everybody can, nobody has to. But those who want to would no longer be confronted with insurmountable bureaucratic hurdles. Ownership rights would thus be strengthened, and responsibility, ownership and liability would no more be decoupled than in foundation companies.

Moreover, the model is the consistent further development of a central corporate governance principle: with the “GmbH in Verantwortungseigentum” (limited liability company in responsible ownership), the well-being of the company would automatically be at the centre of attention – and not the interests of individual shareholders. Nobody could push for high dividends; there would be no pressure to maximize profits in the short term.

This is social market economy, but not socialism – especially since the shareholders would continue to have full voting rights and decide for themselves who they accept into the circle of “responsible owners”. Self-expropriation therefore remains pecuniary. Nor is it a matter of “collectivisation”, as Juso boss Kevin Kühnert has brought it into play with regard to BMW.

On the tracks of Bosch & Cewe

One thing is certain: responsible ownership is not suitable for every company, nor is it a guarantee of good corporate governance. This too is a parallel to the foundation model: We have already pointed out the serious design flaws in the Krupp Foundation that fueled the decline of the industrial icon ThyssenKrupp.

On the other hand, successful foundation companies like Bosch or Cewe prove that the construct can create good framework conditions for responsible companies. So why should we deny medium-sized companies the chance to follow in the footsteps of Robert Bosch?

We therefore hope that the initiative will be successful – but recommend a new name. After all, the current term suggests that other small and medium-sized enterprises run their businesses without a sense of responsibility. This seems presumptuous and has triggered biting reflexes, especially among representatives of family-owned companies. We will gladly pass on suggestions.