Pitfalls and promises for workplace democracy.

AuthorMcCarthy, Michael A.

If democracy in the firm were organised on the right principles, it could have profound consequences for corporate influence on politics as a whole.

The corporation is political in at least two distinct ways. First, corporations, individually, sectorally, and collectively, are key players in politics. Directly, they expend extraordinary amounts of resources in lobbying and other forms of political action to exert influence on the policy-making process. Indirectly, they provide the employment that so many constituencies depend upon, which means that at least in the short term the welfare of most people depends on the profitability of firms. This dependence makes their interests radiate into policy-making even without their direct involvement in it.

But second, and maybe even more fundamentally, the inner life of the firm itself is political. The shop floor, the office space, and the boardroom are frequent sites of conflict between the workers, managers and owners that constitute the firm. How resources should be allocated, how the organisation should be designed and operated, and how the firm's activities should be directed--these are questions that can only be ever be answered by another question: 'for whom?'

Underlying the internal conflict over how firms answer the 'for whom' question is the ever-present exercise of power. On the one hand, the board and management have the power to fire and discipline employees, or to pass over someone for a promotion or a raise. On the other hand, albeit it in ways that are significantly harder to exercise, employees exercise individual and collective voice through threats of exit, work stoppages and slowdowns.

In the UK and US, leading left politicians are offering two bold new policies that directly pertain to both forms of corporate power. Jeremy Corbyn and John McDonnell's 'Inclusive Ownership Funds' in the UK, and Bernie Sanders's 'Corporate Accountability and Democracy' plan in the US, each aims to redistribute and reallocate corporate profits to address the yawning gap between large shareholders and ordinary workers. But both also propose to take on corporate political power, both on the terrain of state politics and within the firm itself.

Much has already been said about how these proposals might matter for redistribution. I won't further address that here. Instead, I offer some brief thoughts on democratic dilemmas that might be confronted once these plans are implemented. Though much of the discussion thus far has concerned the technical aspects of plans themselves, an examination of power and politics is also of critical importance. If employers and corporate boards are able to subvert democratisation within their firms, despite these plans being installed, they will also wreck their impact on broader democracy in state politics. Two issues concern me here: how might worker funds generate workplace democracy? And how might that ratchet up to transform democratic institutions more broadly? These cautious remarks aren't damning ones; they point to both risks and promises. Any path to economic democracy will be filled with pitfalls. Our task is to look out for them--and to avoid them when we can.

Democratising work

In very broad strokes, both the Sanders and Labour plans require large companies to gradually dilute their company shares by issuing new shares into a fund for employees. Labour's plan aims to issue a total of ten per cent of company shares over five or ten years--while the Sanders campaign has a target of twenty per cent.

These proposals are very different from the employee stock ownership plans (ESOPs) that are common in the United States. In the US nearly 1.75 million workers are in an ESOP, with the bulk...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT