Democratizing the Workplace through “Worker Self-Directed Enterprises”


This article originally appeared at artsforum.ca

Contemporary capitalism no longer “delivers the goods” (which is understood as a rising standard of real wages) to the majority of people.  That classic defense of its instability (e.g. recurrent bouts of unemployment), its deepening economic, political, and cultural inequalities, and its attendant injustices is no lon­ger plausible.  In the U.S. since the 1970s, and especially since 2007, those who control the dominant capitalist enterprises have made decisions that undermined the delivery of rising standards of living to the mass of people.

Post 1945, key decision-makers also made sure to disconnect government from what meager accountability to the mass of the citizenry it then had.  That was their response to the Great Depression, when pressure from below forced the New Deal’s combination of high taxes on wealth and business to fund mass relief from capitalist depression (via Social Security, unemployment compensa­tion, and a massive federal jobs program).  That disconnect enabled the comput­erization [automation] of the U.S. workplace, alongside the massive export of jobs to low-wage regions of the world – both of which took place without opposition, or even compensation for the resulting dislocation (e.g. Detroit).

Who made the key decisions and why?   The ‘who’ is straightforward: large corporations’ major shareholders (shareholding is highly concentrated in the U.S.) and the boards of directors they elect made the decisions.  Profit rate and growth plus market-share were ‘why’ they made the key decisions.  When, after the 1970s, computerization and job exports altered the long-term supply and demand balance of labor power, long-term real wage stagnation set in; it lasts through the present.  Meanwhile, those same factors contributed to steadily rising productivity.  The result was (and remains) fast deepening income and wealth inequality punctuated by debt bubbles, bursts, and resulting cyclical downturns.

Virtually all the laws, rules, and regulations imposed in the New Deal have been weakened, neutered, or eliminated.  Capitalism’s second worst depression has seen nothing remotely like the New Deal.  That turn to the government made from below by the New Deal coalition of the labor movements, socialists, and communists has now proved partial and temporary.  To achieve a fuller and more durable outcome requires us to do what the New Deal coalition did not.  That is:  to change the ‘who’ and ‘why’ of key economic decision-making at the basic enterprise level.  For the economic system to serve the people, the people need to be in charge.  Historical efforts to do that at the macro level through government either failed when confronted by determined private capitalist opposition (in the U.S.) or by giving too much power to too few in the government itself (in the U.S.S.R.).

We therefore propose reorganizing enterprises such that workers become their own bosses.  That means placing the workers in the position of their own collective board of directors, rather than having directors be non-workers selected by major shareholders.  This is not primarily a matter of workers as own­ers of these enterprises, nor primarily as managers.  It is the tasks of direction—the decision-making now assigned usually and primarily to corporate boards of directors and only second­arily to the major shareholders who choose them—that must be transferred to the workers collectively. We call such enterprises worker self-directed enterprises (WSDEs). They embody economic democ­racy by locating it first and foremost inside the enterprises producing the goods and services upon which society depends.  WSDEs represent the goal; and their growth and proliferation represent the mechanism to transition from the present capitalist system to a far better next system.

The strategic focus, then, is not upon the government, as in traditional liberal and socialist thinking.  Rather, the emphasis is on working people, who either convert existing enterprises into WSDEs or start new enterprises as WSDEs.

Our core goal is the development of a major (and, if possible, prevailing) sec­tor of the economy that is comprised of enterprises (offices, factories, farms, and stores) in which the employees democratically perform the following key enter­prise activities: (a) divide all the labors to be performed, (b) determine what is to be produced, how it is to be produced, and where it is to be produced, and (c) decide on the use and distribution of the resulting output or revenues (if output is mone­tized).

A large portion of existing capitalistically organized enterprises would have to transition out of structures in which owners, top managers, or boards of directors perform the key enterprise activities mentioned above.  Laws would need to be enacted or changed to facilitate the conversion of capitalistically organized enterprises into WSDEs, the formation of new WSDEs, and the functioning of WSDEs.  School curriculums would need to explain, explore, and study WSDEs systematically as alternative-enterprise organizations alongside their traditional capitalist counterparts (corporations, partnerships, and family enterprises).  Political parties and platforms need to emerge to represent the interests of WSDEs (the WSDE sector) in terms of state policies, much as now the Democrats and Republicans both represent the inter­ests of the capitalist sector.  WSDEs already exist in many places, but whole WSDE sectors much more rarely.  Transitions to economies in which WSDE sectors exist can begin as soon as social conditions make it possible.

Long-term capitalist development is the major force behind the change towards a significant (or prevalent) WSDE sector.  The development has four key features: (a) its tendency towards deepening gaps between the rich and the poor, (b) its instability (business cycles), (c) its environmental unsustainability, and (d) the stark contradiction between capitalism and workplace democracy.  The biggest obstacle to transition to economies with significant or prevailing WSDE sectors is political and ideological opposition; fears about undertaking transition to WSDE sectors are often expressed as disbelief in their feasibility.

Ownership could be diversified among both workers and non-workers in each WSDE.  Central, regional, and local governmental bodies could be owners.  Communities and neighborhoods could be collective owners.  The workers in a WSDE could collectively own the means of production.  They could likewise be owned by individuals and social institutions, such as schools and churches, functioning as active or passive investors and creditors.

WSDEs’ investment decisions occur via deliberation of both WSDEs and the democratic organizations of the residential communities interdependent and interactive with the WSDEs.  Such conjoint decisions would cover both the raising of funds for the WSDE and the investment of those funds.  Economic planning and deci­sion-making, now left to individual corporate boards of directors interacting in markets, would be democratically coordinated.   The surplus in WSDEs is strictly controlled by the worker-members.  In WSDEs, the profit motive is reduced to one among other motives governing decisions, and is ranked below job security and social cohesion.

WSDEs would buy and sell in a market international economy.  They could establish foreign subsidiaries (although Mondragon’s* experience with them is mostly unattractive). The primary loci of economic life (where social goods and services are produced or distributed) are enterprise, household, and residential communities at local, regional, and national levels.  Cooperation is the dominant theme of WSDEs.  The rewards of competition would be more social than individual, and, likewise, competition’s costs would not borne by individuals.  While this may somewhat reduce incentives to compete, it also reduces incentives for people to oppose or thwart competition.  WSDEs are compatible with both private and public property in endlessly variable com­binations.

We anticipate a shortening of the workweek. The WSDE form supports and encourages democratic decision-making, and production conditions will likely change in response to these questions: (1) do the changes make possible a diminution of work effort, and if so, (2) do we respond by sustaining the same effort as before the changes, thereby producing more out­put, or by reducing effort?  In response to a technical improvement in efficiency, do we respond socially with more produce or more leisure?

Where the size of WSDEs permit, all the workers will directly function as their own board of directors.  No separate organization of workers into unions will be needed. Where the size of WSDEs yields a governing executive, however tem­porary or rotated among members of the enterprise, a union of all members not on that executive would be appropriate and necessary.

GDP growth is not the major goal or measure of economic success in the post-capitalist economic system we envision.  As described above, we envision a gradual reduction in GDP output in favor of more leisure time.  Growth of technical effi­ciency, as well as ecological considerations, will enable sustained output with grow­ing leisure.  WSDEs make the decisions of how to distribute the net earnings of enterprises democratically.  Major owners and top executives will not be in the position to decide on a distribution that favors them, an attribute at the root of growing inequality within capitalism.  Worker decisions will also determine the range of wages and salaries for different enterprise tasks; so, we expect less inequality there as well.  Finally, a job and decent income will be considered rights for all citizens, while equality will be a social goal.  The organization Democracy@Work envisages meaningful work and income flows for all citizens, alongside leisure time.  The balance between the two would be itself democratically determined.

WSDEs seek to achieve much less inequality in income and wealth distributions among members of society, as well as strict equality across different ethnic, racial, and gender groups.  The goal is for democratically self-governed communities to share social decision-making with democratically self-governed enterprises.  Health, wealth, and solidarity are then all considerations that will govern such conjoint decision making, alongside but not subordinate to enterprise profitability.

Our work is not specifically directed to environmental concerns.  Indirectly, it is.  For example, workers democratically decide whether to install a new technol­ogy that enhances profitability at the cost of pollution.  They will take seriously the social costs of the pollution for themselves, their family, and their neighbors in ways that capitalists—driven by profits and capable of evading pollution’s effects—would not.  The two different organizational structures weigh the costs and benefits of production differently and so reach different decisions on what and how to produce.  We challenge ‘profit qua bottom line’ and substitute a long list of goals, criteria, and standards, which include environmental concerns and sustainability.

There are many past and present examples of worker and producer cooperatives that are close to what we mean by WSDEs.  They are found in many countries and range from small to large (i.e. Mondragon).  Our project is not about some potential, future, utopian possibility, but rather the extension of a model that has attracted workers in many different circumstances, and that has proved successful.  The project of transition to worker cooperatives can align with other sorts of cooperatives (consumer cooperatives, sales cooperatives, and property-owning cooperatives) in a kind of generalized cooperative economy.  This model can align with candidates or parties that advance the conditions needed for successful worker cooperatives to form and grow.

The foregoing is a heavily condensed version of a much longer essay (under the title “Start with Worker Self-Directed Enterprises”) originally published on August 10, 2016 by “The Next System.”  It appears in Artsforum Magazine’s online edition with the permission of its author.  To see the full essay, visit:   https://thenextsystem.org/start-with-worker-self-directed-enterprises

*Allusions in the preceding essay to “Mondragon” refer to a successful federation of worker cooperatives in Spain.  Taking its name from the town in the Basque region where it was founded in 1956, Mondragon is now the tenth largest company in Spain.  By 2015, it was employing over 74,000 people in 275 companies, which are active in such sectors as industry, finance, retail, and educational training.

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