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After Occupy: Economic Democracy for the 21st Century Tom Malleson

Print publication date: 2014 Print ISBN-13: 9780199330102 Published to Oxford Scholarship Online: April 2014 DOI: 10.1093/acprof:oso/9780199330102.001.0001

Should Workplaces be Democratized? Tom Malleson

DOI:10.1093/acprof:oso/9780199330102.003.0002

Abstract and Keywords The central argument of this chapter is that the current system of hierarchical work is deeply unjust because the majority of workers are compelled to join workplaces within which they are fundamentally unequal—in their functional role, essentially servants. It is very difficult for the average person to choose an alternative to hierarchical work in the form of a democratic workplace. The argument here is that no one should be compelled to be subservient at work and so everyone should have a meaningful choice of workplace democracy. For such a choice to be real, the state needs to foster and facilitate the expansion of worker cooperatives.

Keywords:   economic democracy, workplace democracy, worker cooperatives, workers’ cooperatives, hierarchy, justice, democratic workplace, equality, liberalism

The modern corporation may be regarded not simply as one form of social organization but potentially (if not yet actually) as the dominant institution of the modern world.

(Berle & Means, [1932] 1962, p. 356)

Introduction In many ways these words of Berle and Means have now come true. Large corporations today are vastly influential and massively powerful. They are among the most powerful organizations in the contemporary world, central features of liberal-democratic societies, yet they themselves are fundamentally undemocratic, since the people at the top of the structures are unaccountable to the people at the bottom. This means that a dominant institution of modern

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“democratic society” is not democratic itself. Is this justifiable? Although we are appalled at states that do not allow their citizens to elect their leaders, we take it for granted that workers should have no ability to elect their bosses. Why is this so? The present authoritarian structure of workplaces means that the majority of the population spends the majority of their lives in associations that are severely undemocratic and hierarchical, yet we unhesitatingly call our societies “democracies.” This is a puzzle and a paradox.

But the lack of democracy at work is not simply an academic puzzle. It is also a fact of life, and an often terrible one at that. Many workplaces in our society, particularly for working-class jobs, are organized so hierarchically that they are deeply unpleasant if not outright oppressive. Almost everyone has experienced at some time or another the degradations of workplace hierarchy—yelling bosses, managers who act like petty tyrants, supervisors who stonewall and stifle feedback, arbitrariness and inequality, favoritism and snobbery, privilege and superiority. In such ways hierarchical work can undermine the freedom of large numbers of working people to adequately control their own lives. (p.28)

Arguments for workplace democracy are not new and tend to reappear every generation or so. The first theoretical defense of cooperatives as “working men’s associations” appeared in the writings of Phillipe Buchez in France in the 1830s and 1840s (Estrin, 1989, p. 169). More recently, most countries in the West experienced a wave of substantial enthusiasm for workplace democracy starting in the 1960s, galvanized by the student movements. From that generation, some of the most well-known political theorists—Carole Pateman (1970), Michael Walzer (1983), and Robert Dahl (1985)—came to advance justifications for workplace democracy. In recent years we are perhaps witnessing another wave of interest (e.g., the international Occupy movement) galvanized in part by the global financial crisis and in part by unprecedented levels of economic inequality.

The central argument of this chapter is that the current system of hierarchical work is deeply unjust because the majority of workers are compelled to join workplaces within which they are fundamentally unequal—in their functional role, essentially servants. It is very difficult for the average person to choose an alternative to hierarchical work in the form of a democratic workplace. The argument here is that no one should be compelled to be subservient at work and so everyone should have a meaningful choice of workplace democracy. For such a choice to be real, the state needs to foster and facilitate the expansion of worker cooperatives.

The argument proceeds by first examining the hierarchical nature of most workplaces, and then showing the degree to which people are compelled to join them due to a combination of material pressure, cultural pressure, and lack of alternatives. The following section differentiates workplaces from purely private

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associations, such as clubs, to clarify why the state should be involved in fostering the expansion of democratic workplaces. The next section examines what this concretely means in terms of spreading worker cooperatives. The final sections consider some common objections to workplace democracy.

Workplace Hierarchy and the Compulsion to Accept Subservience Perhaps the most common perspective on work in contemporary capitalism is that it is structured on the basis of voluntary contracts so there are no problems of “power” or “hierarchy.” Alchian and Demsetz (1972) are among the most influential defenders of this position. They argue that there is no question of authoritarian control at work because work is simply a series of voluntary contracts that the worker can terminate at any point: “the employee ‘orders’ the owner...to pay him money in the same sense that the employer (p.29) directs... [the employee] to perform certain tasks. The employee can terminate the contract as readily as can the employer” (1972, p. 783). The intuition behind Alchian and Demsetz’s argument is that because work involves a voluntary contract there can be no exercise of power of one over the other. The employer and worker are just exchanging something for something in a deal that both agree to. This is why they do not see any difference between the standard employer-employee relationship and the standard customer-seller relationship.

[The firm] has no power of fiat, no authority, no disciplinary action any different in the slightest degree from ordinary market contracting between any two people... telling an employee to type this letter rather than to file that document is like my telling a grocer to sell me this brand of tuna rather than that brand of bread. (1972, p. 777)

I find this portrayal of contemporary society highly inaccurate. In general, workplaces in capitalist society are hierarchies: they are based on structural inequality in a way that gives employers significant and unaccountable power over their employees, and are therefore deeply damaging to most workers’ freedom. In stark contrast to Alchian and Demsetz, I will argue that the average person in our societies faces intense material and culture pressure to get a job. But due to the large inequality in ownership of productive assets and skill levels, most workers apply for jobs in situations where they have significantly less bargaining power than their employers, and so are compelled to sign contracts handing over large discretionary power. This means that the average working person in developed societies is, in his or her functional role at work, essentially a servant.

Most workers are compelled to join hierarchical workplaces because of two essential factors: (i) pressure to get a job, and (ii) lack of alternative democratic options.

(i) Generally speaking, pressure to work comes in two forms: material and cultural. The precise degree of material pressure that individuals face

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varies from country to country and depends on a number of factors, most importantly, the level of unemployment, one’s bargaining power in the labor market, and the generosity of social security. For our purposes, the simplest way to think about the labor market in developed countries is to recognize that the working population can be divided into three main categories, which we might label, “owners, ” “professional workers, ” and “average workers.” In the United States, for example, owners represent roughly 8% of the population; they are the richest portion of society, defined by their ability to live off the income generated by their private property. Professionals are highly skilled (p.30) workers representing about 25% of the population, while what I am calling “average workers” are medium or low-skilled and constitute about 60% (the remaining 7% are self-employed).1 The point of this distinction is that it gives us some nuance in terms of the degree of material pressure different people face in our societies. While all workers (or non-owners) are compelled to work to make ends meet, professionals clearly face less intense pressure than other workers because they possess scarce skills that put them in a stronger bargaining position. Material pressure is also clearly contingent on the level of social support. While no developed country yet provides their citizens with a guaranteed basic income, material pressure to work is particularly severe in the United States due to the weak welfare supports. The average welfare provision is about $17, 000/year for a family of four, whereas a living wage is calculated to be close to $50, 000.2

In terms of cultural pressure to get a job, it is well known that the lack of work in the form of chronic unemployment often leads to severe psychological suffering. We cannot be flippant about the seriousness of this deprivation when we recall that there is a strong correlation between unemployment and suicide (Lewis & Sloggett, 1998). Work is often an important element of one’s social status and is crucially important for many people’s sense of dignity and self-worth (Jahoda, 1987). This means that the pressures of finding work can extend far beyond purely financial ones. (ii) The final important factor is that there are very few alternatives to hierarchical work. (Again, by “hierarchical work” I mean workplaces where managers are structurally unequal and unaccountable to workers.) Most workers are unable to choose to work in a democratic firm for the simple reason that there are basically no options to do so. In most Western countries (Italy is a partial exception), genuinely democratic workplaces (i.e., worker cooperatives) make up only about 1% of firms. In the United States, 99.9% of private workplaces employing more than one person are, strictly speaking, hierarchical firms (Dow, 2003).

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That said, over the years there have been occasional waves of interest in trying to soften workplace hierarchy through experiments with worker participation in management (Strauss, 2006). The best overview of the contemporary US economy comes from Blasi and Kruse (2006), who analyzed a large, random sample of survey data from 3, 081 firms in 1997. They found that in 11.9% of firms the majority of nonmanagerial employees worked in self-managed teams. Moreover, in 47.2% of firms, a majority of employees regularly participated in meetings covering workplace issues. Although this sounds impressive, it must be recalled that meetings by themselves need not mean very much. The simple fact of having a meeting does not imply (p.31) any democratic equality or accountability between the participants, as managers in all of these firms are perfectly within their rights (though perhaps unwise) to completely ignore workers’ complaints if they wish. Overall, the authors find that only 1.10% of firms in the United States are what they call “high-performance workplaces, ” meaning they make use of at least half of the following eight participatory and good management practices (self-managed work teams, work-related meetings, training, benchmarking, job rotation, flatness of the organization, advanced practices of recruitment, and pay/benefits). So we can see that the US economic landscape does contain some opportunities for limited participation within the overarching hierarchical management structures (the 11.9% of firms with self- managed teams is not meaningless), but very few opportunities to escape hierarchical, undemocratic work itself.

So other than the minimal number of worker cooperatives, are there any other ways to escape hierarchical work? One potential route is to become self- employed. This is, at present, the most institutionally plausible path for some people to achieve self-determination at work—roughly 10% of the labor force do this—but, of course, it is only available to those who can afford to start their own business, are willing to take the substantial financial risks, and able to dedicate the requisite time and energy. For everyone else, the only way that is currently institutionally possible for workers to acquire democracy at their present workplace is to become co-owners, through buying enough shares from their employers that they acquire equal decision-making power with the other owners. But, of course, for most people this is merely a formal possibility. Many firms are private and will not sell their property rights, and even if they would, most workers could never afford to buy sufficient shares to acquire equal decision- making power. It is estimated that 80% of families have an average net worth of only 50% of the capital stock of their firm per employee; and of this, about half again is tied up in cars and homes (Dow, 2003, p. 189). The bottom line from all of this is that democratic alternatives to workplace hierarchy are, in general, highly inaccessible.

So force of circumstance and lack of alternatives mean that most workers find themselves compelled to join hierarchical workplaces. Due to the large inequality in ownership of productive assets and scarce skills, average workers

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apply for jobs in situations where they have significantly less bargaining power than the owners, and so are compelled to sign contracts handing over large discretionary power to the employers. It is standard for contracts to give management not only the power to fire and discipline but also to determine the rules and regulations by which employees are expected to abide. Workers who are unionized may have some general level protections, especially around wages, but most union contracts include a so-called “management clause, ” (p. 32) which reserves essential powers and decision-making ability to management alone.3 The broad discretionary powers given to managers allow them to compel workers to do things that they would not otherwise do—to do this task, in this way, at that pace, and so on. This is the sense in which contracts typically establish the governing of workers. The most important point about contracts for regular kinds of work is that since all the precise tasks and minutiae that a worker must do can never be fully described in all the specific details, what contracts really establish is the general parameters of authority and obedience (we might say, parameters of government) that are expected to be followed. If workers simply followed the contract to the letter, doing nothing more and nothing less, the workplace would grind to a halt almost immediately— which is precisely the rationale behind work-to-rule strikes. In other words, a fundamental purpose of the standard employment contract for low-skilled work is formalizing inequality by establishing power and authority over the worker in order to extract a variety of particular work from an inevitably general contract (Simon, 1951).

Of course, we should not overgeneralize about the position of workers in their firms. At the very least, we need to recognize a spectrum between highly skilled professionals and low-skilled workers. Professionals (e.g., university professors or programmers at Google) can sometimes bargain for increased levels of decision-making autonomy at work and often have a choice about the kind of job they take. However, the average low-skilled worker typically lacks this bargaining power and so is compelled to accept unequal voice at work. (As a spectrum there is no sharp demarcation between “high” and “low” skill—in the middle they may blur into each other—but for the most part the distinction is clear.) The average worker is, in a functional sense, essentially a servant. Since the collection of work tasks can never be definitively adumbrated, a central duty of every non-professional job in a hierarchical workplace is obedience to whatever the boss or manager wants (within, of course, legally defined boundaries).

This is not to say that all jobs in hierarchical workplaces are terrible or that all employees in such firms are oppressed or powerless. Not at all; professionals are often able to demand an important degree of autonomy at work, and managers sometimes initiate worker participation schemes (usually with the hope that it will increase productivity). The point is rather that as far as formal structures of power are concerned, average workers are fundamentally unequal in decision-

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making power with respect to their employers. In the rich societies of the West average workers are, in a functional sense, like Alfred—the butler of Bruce Wayne (Batman’s alter ego); they are not starving or living terrible lives (indeed, by global standards they are quite rich). And they are (p.33) definitely not slaves, since there are clearly defined limits to employer power and even the most dependent worker is not usually utterly dependent on her employer for life and limb. But neither are they equals. When Bruce Wayne calls, Alfred comes running.4

The reason that it is so important for average workers to have a choice about democratic alternatives is that workplace hierarchy can be terrible. Hierarchical workplaces deprive individuals of freedom in the two senses mentioned in the last chapter—first, they make workers unfree from the (potentially) arbitrary power, coercion, and bullying of those in authority. This is the sense of unfreedom as subservience. It is the result of inequality in terms of formal decision-making power. This kind of unfreedom often manifests itself in hierarchical workplaces through arrogance and caprice, on the one hand, fear and fawning, on the other. Additionally, workplace inequality tends to make workers unfree in the republican sense of lacking self-determination or sovereignty. This is the sense of unfreedom as helplessness and dependence, marked by the inability of workers to collectively manage the direction of the firm themselves. This is unfreedom as impotence, the stultifying of creativity and the stifling of enthusiasm that results from disempowering work.

Overall, it is clear that Alchian and Demsetz’s claim that workers can fire their bosses just as easily as the reverse is a strange perspective as it implies that the employee is in general in a position of equal bargaining power vis-à-vis the employer—a perspective that flies in the face of practically all the evidence of recorded capitalist history. They mistake the formal truth that a worker may legally terminate a contract just as well as the other way around, with the substantive truth that an average worker is usually far less able to do so. The standard situation in the Western world is that inequality of resources (in terms of money and skills) compels the average worker to accept unequal authority relations stipulated by standard employment contracts. So employers’ power over workers comes de jure from the employment contract but de facto from unequal bargaining positions. This produces the paradox that the typical worker is largely compelled by force of circumstance to be subservient at work in a society that prides itself on its democratic equality.

Free to Choose? When Milton and Rose Friedman named their book Free to Choose (1980), they were attempting to advance their conservative arguments by appeal to a widely held sentiment that a core goal of liberal societies is that individuals should be free to choose the products, services, and kind of employment that they desire. In an important article, Ian Maitland (1989) argues in a similar (p.34) vein that

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there is no need for the state to foster workplace democracy because workers can freely choose to have meaningful work if they so desire. In a competitive market system, he argues, workers are free to bargain for whatever kind of benefits they want; if they desire more meaningful work they can trade it off against lower wages so that firms have an incentive to offer it to them. And the fact that this does not seem to happen very frequently is taken as evidence that in fact workers do not want more meaningful work. The upshot of his argument is that workers are presently free to choose and indeed have chosen en masse to stick with subservience.

Now while Maitland’s argument focuses on “meaningful work” we can easily imagine a similar argument about “democratic voice.” The argument would go as follows: workers are free to choose the degree of democracy at work that they want by bargaining with employers for more/less democracy in exchange for lower/higher wages. There is no reason that workers cannot bargain for more democracy just like they commonly do for more vacation time or better benefits. A competitive labor market allows for workers to bargain for any particular package of benefits that they may want.

In fact, democracy at work is not something that workers can easily bargain for. There are two basic reasons why. The first is that it is not institutionally available. It is simply not common practice anywhere for firms to offer varying degrees of democratic rights to prospective workers. This does not mean that it would be impossible for them to do so (the current practices of limited worker participation in management could conceivably evolve into more robust forms of democratic equality and power sharing), but it does mean that there is currently no well-functioning market for democratic rights. There is a market failure, in other words, in the sale of democratic rights, and this is precisely one of the reasons why the state should help to expand democratic workplaces—in order to provide a choice for democratic work that the market is failing to provide. The broader point is that choice always happens against a set of background conditions. Think about a cafeteria in a university. If there are ten restaurants all of which are corporate fast food chains, and after a year 99% of the students have eaten at one of the chains at some point, we cannot sensibly conclude that this proves that students overwhelmingly prefer fast food to healthy or fair-trade alternatives. People’s choices are inherently constrained by the existing institutional options.

The second, and more profound, issue is that workers have not generally been strong enough to put the issue of firm governance on the bargaining table. The lack of widespread bargaining for democratic voice that we see today does not, I think, reflect a lack of interest in democratizing work (pace Maitland) but rather reflects a lack of bargaining power. The reason that the (p.35) shark and the tuna do not harmoniously share the sea has little to do with the wishes of the tuna. The evidence for this is clear: at the height of workers’ bargaining power—

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in the 1970s in social democratic countries—governance issues and economic democracy were firmly on the bargaining table. Indeed, it was precisely at the height of this union power that major moves toward economic democracy were made in the form of co-determination in countries like Sweden and Germany, the Auroux laws facilitating autogestion in France, Tony Benn’s call for industrial democracy in the United Kingdom, and so on (Sassoon, 1996).

In other words, I share the liberal sentiment that people should be free to choose. The choice of workplace governance structures, of whether to spend thousands of hours of our lives in associations in which we are formally equals or in which we are formally subservient, is a very important one with profound consequences for our freedom, happiness, and well-being. But I disagree that such a choice is currently open or institutionally accessible for the majority of people. In fact, as we will see below, there is strong evidence that many people do desire more democracy at work; the problem is that there are so few avenues for people to actually choose this option.

Are Workplaces Private Associations? So far the argument has been that the average person is compelled to join hierarchical workplaces due to force of circumstance and lack of alternative options. Widespread inequality in the possession of skills and ownership of productive assets leads to unequal bargaining positions which in turn lead to inegalitarian contracts that establish hierarchical relationships where most workers are essentially servants. This, I believe, is unjust and so requires that the state foster democratic alternatives to remedy the situation. Implicit in this argument is that workplaces are different kinds of associations than, say, clubs. They are not “private” in quite the same way.

It is a widely accepted liberal notion that private associations such as clubs do not need to be democratically organized. Liberals have long maintained, and rightly so, that people should be free to start or join any kind of association that they choose, and that there is nothing wrong with undemocratic kinds of clubs as long as one can always exit easily. As Mayer (2001) says: “Clubs do not have to be democratic, even in a democratic society. Founders are free to craft the governance structure they deem best, and new members have no moral right to require political equality where it does not exist” (p. 240). Rawls (1971) echoes this sentiment, “Particular associations may be freely organized as their members wish, and they may have their own internal life (p.36) and discipline subject to the restriction that their members have a real choice of whether to continue their affiliation” (p. 212). Liberals are quick to point out that if the state were to mandate particular kinds of club structures (such as democratic ones)— this would be deeply paternalistic (Rosenblum, 1998). Forcing democracy on private associations (e.g., mosques or churches) would drastically and dramatically undermine the freedom of individuals to associate together through whatever governance structure they prefer. It would limit individuals’ choices

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and require the state abandoning neutrality to impose a particular vision of the good life on the civic lives of its citizens.

Several critics of workplace democracy have made the same kind of argument vis-à-vis workplaces. For example, Arneson (1993) implies, and others are more explicit (Mayer, 2001, p. 240), that workplaces should be seen as analogous to clubs. The implication being that since workplaces are private, workers and employers should simply be left alone to associate however they please, democratically or not; the state should not be involved.

This, I think, is wrong because workplaces are fundamentally different kinds of associations than clubs. First, it is not nearly as easy for workers to exit their workplace as it is for people to exit their clubs. Most people are compelled to join workplaces for a variety of material and cultural reasons that are simply not the same with joining, say, a typical bowling or bird-watching club. That means that the power that is exercised in hierarchical workplaces cannot be easily avoided. This is not to say that people are completely bound to any particular workplace—I accept the general empirical claim that most people can exit their workplace easier than they can exit their state, for example.5 And so there may well be a deeper inalienable right to democracy in the state that does not exist in the workplace (see Arneson 1993 and Malleson 2013a for this argument). Nevertheless, it is also true that, generally speaking, it is significantly harder to exit workplaces than clubs. While people can exit particular workplaces (one can leave a hierarchical job at McDonalds for an equally hierarchical job at Burger King), it is much more difficult to avoid hierarchical work altogether. The compulsion to join a workplace is of a different order of magnitude than for clubs.

Second, workplaces occupy a position of central importance to people’s lives that is largely different from private clubs. On the one hand, people typically spend much more time and energy at work than they do at clubs. The average employed American, for instance, spends about 35 hours per week working, compared to only 2 hours per week involved in religious or other associations (Estlund, 2000, pp. 8–9). Moreover, work plays a crucially important role in determining one’s social status. One’s position in the workplace has broad implications for one’s overall social standing, sense of self-respect (p.37) and dignity, in ways that are not all comparable to most clubs.6 For these reasons, the power that is exercised in workplaces and the significance of the internal governance relationships are much more “socially consequential” than in clubs (Bowles & Gintis, 1986). The state cannot be totally “hands off” vis-à-vis workplaces because ignoring long-term inequality in such associations means abandoning people to second-class status. For this reason it is not quite right to characterize workplaces as either straightforwardly “public” or “private”

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associations. We might more accurately call them “socially consequential private associations” (Malleson, 2013a).

The fact that workplaces have these differences from clubs means that we must be much more concerned and proactive to ensure that, as Rawls puts it, people have “a real choice of whether to continue their affiliation” to their workplace (emphasis added). Unfortunately, the current state of affairs is one in which people generally do not have such a choice; the typical working person is compelled to join a hierarchical workplace where she is essentially a servant. Because of the centrality of work to people’s lives this is a serious problem. Long-term involuntary subservience at work can be detrimental to one’s self- respect, damaging to the full development of one’s moral powers, and an affront to one’s ability to exercise meaningful control over one’s own life. Since work is so socially consequential the state does need to be involved in order to ensure the background conditions are such that an individual’s choice to enter such associations is genuinely voluntary: the choice of joining a hierarchical workplace must be “real.” There is nothing particularly radical about this. All liberals would agree that it is unjust to compel people to join other kinds of hierarchical associations—such as churches or mosques—since a compulsion to join such organizations would curb one’s personal pursuit of the good life. Likewise, we need to ask: Does it not restrict people’s pursuit of the good life when so many people are systematically denied the opportunity to be equals at work (in the sense of possessing formally equal governing influence)?

To clarify the underlying argument, consider another important association: that of marriage in the 1930s or 1940s. Recall that the “governance structure” of the family at this time was often intensely patriarchal. The husband was the head of the family—making the important decisions and controlling the family’s resources—while the wife was informally but substantively subservient. Women were the second sex. They could be raped by their husbands without legal repercussion; they married young, were expected to have children, and devote themselves to care-giving and life within the home.

The essential fact about marriage in this era is that it was characterized by a limited degree of exitability. Although divorce was legal, there was nevertheless (p.38) substantial pressure—both material and cultural—for women to get married. In 1940, for example, white married women relied on their husbands to provide an average of 86% of their economic support (Sorensen & McLanahan, 1987, p. 669). Moreover, while marriages were (and still are) intensely private affairs, they were also deeply socially consequential—one’s position in family life was often a central locus of one’s time and energy and an important determinant of one’s social standing, self-respect, and sense of moral worth.

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So what does justice require for the internal governance relationship of the marriage? This is a thorny question because the family has characteristics of both private and public associations. On the one hand, marriage is an intensely private affair; we clearly do not want to paternalistically tell families how to organize their internal relationships because it is important that we respect people’s choices about organizing their private family life as they see fit. On the other hand, the personal is the political; we cannot in good conscience abandon women to a lifetime of subservience in hierarchical marriages, which they may deeply dislike, but are constrained to remain in due to the lack of viable alternatives. We should neither abandon women to subservience nor mandate democratic equality.

I would argue, and suspect that many liberals would agree, that justice in such cases requires that the state should foster the background conditions so that women are empowered to choose alternatives; they should be free (but not forced) to choose egalitarian relationships if they so desire. Concretely, this requires a range of state policies—facilitating divorce, ensuring child support, alimony, and pension sharing, instituting laws against physical abuse or rape within marriage, facilitating material independence by outlawing discrimination at work, legalizing maternity leave, providing affordable daycare, and so on.

Historically, what has happened in most developed countries is that state policies such as the above helped to increase the bargaining position of women (by reducing women’s dependence on a husband and increasing the economic ability to leave). Such policies, combined with a growing culture of gender equality galvanized by second wave feminism, allowed women to leverage their new bargaining power to insist on more democratic equality. So, state policies that fostered women’s ability to leave had the indirect effect of simultaneously fostering egalitarian voice.

Moreover, it is worth noting that as the background conditions have changed over the last 70 years (though perhaps not as much as we would want), and as women’s choices about marriage have become less constrained, we have concurrently witnessed a corresponding surge in egalitarian relationships. Today the egalitarian marriage is (for the most part) the norm. The (p.39) more the choice of equality has become a real possibility, the more that such a choice has actually been made.

Now I want to argue that the same argument holds in the case of workplaces. Workplaces today are likewise characterized by a limited degree of exitability. While exit is legal, the average worker is nevertheless largely compelled to join a hierarchical workplace due to force of circumstance and lack of alternative options. Additionally, workplaces, like families, are deeply socially consequential since they constitute a central locus of people’s time, energy, and social standing. And just as justice requires that women should not be compelled to be

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subservient in their marriages, justice requires that workers should not be compelled to be subservient at work. This does not mean that people should be forced to adopt workplace democracy; people should be allowed to sign up for subservience at work if they so choose (just as consenting sexual partners can choose to engage in BDSM). The point is only that the choice needs to be genuine; people must have a real choice about whether to work in a hierarchy or a democracy. And for that to happen there need to be real alternatives. The bottom line is that justice requires the state to foster the background conditions so that just as women are free (but not forced) to choose egalitarian relationships, workers become likewise free (but not forced) to choose democratic workplaces. Concretely this requires that the state foster the expansion of workplace democracy so that this choice becomes readily accessible (in ways that are discussed below).

It is important to realize that while the argument advanced here is not standard among liberals, it is in no way illiberal. It is based on standard liberal convictions that long-term relations of subservience are dangerous (because they risk undermining human autonomy and dignity) and that free choice is important for safeguarding people’s freedom. Liberals are right to be wary of forcing a particular form of association (democratic or otherwise) on people because of a respect for individual free choice. But the intuition that says “people should be free to associate however they want—even subserviently” must be balanced by another intuition—just as rich in the liberal tradition—that says with Kant and John Stuart Mill “sapere aude!”7 Subservience conflicts with human dignity. Free men and women cannot be content and are unlikely to develop their capacities and moral powers to their full potential in long-lasting relationships of subservience. We cannot force people to be free. But we can and should arrange the background conditions so that those people who desire democracy at work are genuinely able to choose it. Granted, this is no strict state neutrality. A state that acts to foster opportunities for people to replace hierarchical relationships with democratic ones is not strictly neutral, but it is nevertheless entirely defensible on a relatively (p.40) thin account of the good life that many people can endorse—based only on common liberal-egalitarian values of the importance of equal opportunity, self-determination, and individual choice.

Fostering Workplace Democracy What would it mean for a workplace to be organized democratically? While democratization can take multiple forms, the standard model of a democratic workplace is that of a worker cooperative where ultimate authority resides with the general assembly on a one-person one-vote basis. This means that, although different jobs may have different roles and pay different wages, the management of the firm is decided on a strictly egalitarian basis. In small firms, decisions might be made collectively through direct participation of all members. Many small cooperatives, such as co-op cafes, restaurants, bike shops, and so on work in this way. For instance, the Mondragon Bookstore in Winnipeg (named after

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the famous Mondragon co-op) has used its democratic structure to implement a system of balanced job complexes (BJCs) (Burrows, 2008). The idea here is that normal capitalist firms tend to have a stark division between workers with more empowering jobs at the top of the hierarchy and those that get stuck with the less empowering “drudgery.” The basic idea behind BJCs is that an attempt is made to share out the unpleasant work as well as the more empowering work so that neither falls entirely on one group of people, without meaning that everyone is expected to do everything (Albert, 2003).8 What is crucial about the democratic structure of the workplace is that it has allowed the Bookstore to experiment with new ways of organizing things in an attempt to improve the quality of people’s working lives.

Larger co-ops with high levels of complexity and specialization can clearly not make all their decisions through general participation—they require delegation of authority by electing representatives in the familiar ways of representative democracy. For example, the 40, 000 or so worker-members of the Mondragon co-ops meet as a whole in a Cooperative Congress, which acts like a mini- parliament, composed of elected representatives from every co-op (in rough proportion to their size).

Co-ops often hire new workers on a temporary basis who do not have equal democratic rights. Of course, this may not be a problem for those workers who want to be only temporary, but it is important that a significant majority of the workers in a co-op be full members so as to prevent the emergence of an exploited subgroup of disenfranchised workers. I would argue that for co-ops to be genuine they must fulfill two standards: the significant majority of the workers are full members (perhaps 75% or more), and, even more importantly, (p.41) the nonmembers are able to become members should they wish to do so (after a reasonable probationary period and a not prohibitively high investment stake). It is hard to characterize workplaces with less than 50% members as genuine co-ops; they are more accurately seen as “capitalist partnerships” (Malleson, 2013b).9

Large co-ops that meet these specifications will still require specialization and so still have order-givers and order-takers. But those who give orders are now fundamentally accountable to those who take them. This is what makes a co-op a democracy and not a hierarchy. The democratic structure of the firm creates an important basis of formal equality in terms of decision-making power and basic freedoms. The basic parliamentary structures protect workers’ freedom in the negative sense, while the avenues that exist for direct participation enable workers’ self-determination in the positive sense. Participation is easy in small co-ops but it must be cultivated in large ones (we examine how this can be done in the next chapter). Ideally, a co-op structure means that all people in positions of power and authority are elected, revocable, and accountable to the rank and file. Authority no longer derives from shareholding and property rights, but,

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ultimately, from the consent of the workers themselves. Whereas capitalist firms are characterized by the fact that capital hires labor and uses it for its benefit, cooperative firms are characterized by what Mondragon workers call the “sovereignty of labour.” This explains the fact mentioned above that workers in hierarchical firms are, in a functional sense, “servants”—a word that I use purposefully in order to highlight the heteronomy or subservience of work for the average worker. In most cases, average workers are tools; their hands and brains are directed by others, for projects determined by others, toward goals selected by others. Whereas servants are functional tools of their bosses, co-op members are, at root, self-determining equals who have chosen managers for their purposes (and can remove them should they wish).

However, it must be immediately pointed out that it is entirely possible for structural equality to coexist with informal hierarchy. Most real-world co-ops and democratic organizations are negatively affected to a greater or lesser degree by the informal hierarchies that can stem from expertise, control of information, patriarchy, and so on. But this does not diminish the importance of formal equality. Creating formal equality is an absolutely necessary (if not sufficient) step toward developing genuinely empowering workplaces, which will be discussed further next chapter.

Notice that workplaces have the potential to be substantially more democratic than contemporary states. In particular, workplaces have the potential to be much more deeply democratic than states because they are much (p.42) smaller and so have much more scope for direct participation and therefore more possibility for meaningful self-determination. In 2007 the American economy had a total of 6.05 million firms (involving more than one person). Of these, 5.41 million had fewer than 20 employees. In other words, 89% of all American businesses (discounting single-person businesses) involved the cooperation of fewer than 20 people (and 99.7% involved fewer than 500 people) (SBA, 2010, p. 121). The economy with its millions of small firms thus provides fertile ground for democratic participation, and therefore meaningful self- governance at a scale and scope that is simply unimaginable in the political arena. Additionally, the fact that there are huge numbers of workplaces means that there is vastly greater opportunity for democratic experimentation— workplaces can experiment with different kinds of governing structures, different organizations of work (such as using BJCs), different patterns of remuneration (such as according to effort instead of productivity), and so on. In this respect workplaces offer much more fertile ground for the flourishing of democracy than the state which has been its historical pasture.

Concretely, what is required to foster the expansion of opportunities for democratic work? There are two broad public policy paths available. The first is to follow the same route as with marriages: increase the bargaining power of workers in relation to hierarchical firms. This could be done by facilitating the

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growth of the union movement or by facilitating workers’ ability to leave undemocratic work. Over the short term this latter possibility could be accomplished by enhancing the welfare system, and over the long term by implementing a guaranteed basic income.10 The higher a basic income is set, the less compulsion workers face to accept the first job that they are offered, thus providing them increased bargaining power to demand increased democratic say from conventional employers.

The second public policy route is for the state to encourage the formation of democratic workplaces in the form of worker cooperatives. This requires both legal and material support. Legal support ranges from short-term objectives of establishing a robust legal framework within which cooperatives can operate (some American states still lack this); the most important long-term legal objective would be for the state to pass legislation giving a majority of workers the right to transform their workplace into a cooperative if they so wish. What would this require? In the majority of cases, this would require a legal right for workers to buy out their workplace from their employers. Theoretically, workplace democracy can be achieved without direct ownership, for instance, by workers collectively renting the facilities and capital stock of the firm from the bank or from old owners (Ellerman, 1992). This might be possible for small NGOs or service-oriented businesses with little reliance on physical (p.43) infrastructure. However, in practical terms, it is an empirically robust fact that generally cooperative businesses require collective ownership of the business property to succeed.11 So in order for workplace democracy to become a meaningful option for large numbers of people, workers require a right to buy out their employers or shareholders in order to transform their workplace into a co-op.

These legal rights require material support for them to be fully meaningful since such buyouts would clearly be expensive. Over the short term, material support could include tax breaks or the establishment of a cooperative bank to provide financing help. Over the long term, an economy-wide profit-sharing program, such as a variant of the Meidner Plan, would have the most potential for greatly increasing workplace democracy. Such proposals are discussed more fully in the next chapter.

While I have been arguing in favor of democratization, I do not mean to imply that such reforms would be costless. Arguably the democratization of families had costs associated with it. For instance, the increased ability of women to leave their husbands has likely led to an increase of single-parent families. Although not ideal, I think most would agree that such costs are clearly outweighed by the benefits of female independence. Similarly, democratizing work is sure to have costs (most obviously the financial costs associated with paying for its expansion). It is important not to sweep these costs under the rug. Indeed, a central goal of this chapter and the next is to provide a full picture of

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the relative costs and benefits, so that we are in a position to sensibly decide whether expanding workplace democracy is worth it.

A Caveat At this point we need to introduce an important caveat into the argument. Although I have argued that workers should have the option of transforming their workplace into worker co-ops, there are several sectors of the economy where this is not appropriate (Nove, 1991). The two main areas where worker cooperatives are not an appropriate model are the public sector12 and areas of very high capital intensity.

Workplaces that are public tend to be so because they are thought to directly fulfill a general public interest that the market would be unlikely to satisfactorily provide (e.g., hospitals, schools, post offices, water, electricity, transportation, etc.). Such workplaces are particular in that they significantly affect two different constituencies—the smaller association of internal workers and the larger association of the community itself. How a school operates, for instance, is obviously of concern to the internal teachers as well as to the (p.44) broader public. Public workplaces today are partially democratic in that they are supposed to be accountable to the citizenry at large via their elected representatives who ultimately control them, but they are not currently democratic with respect to the internal workers. The denial of democracy to the internal workers seems to me unjust for all the reasons of freedom and equality articulated above. But in cases like this, it does not make sense for such workplaces to be entirely controlled by the workers. We would not want all the electricity in a country to be controlled by the handful of workers who worked the plants, nor the school curriculum decided unilaterally by the school staff, since this would be undemocratic from the perspective of the larger community who genuinely do have a public interest in such things. So, in these cases, some broad type of co-management seems appropriate. This might mean having a board of directors for public firms which splits authority between state and worker representatives,13 or having certain public sector workplaces (such as schools or hospitals) reorganized as cooperatives, but with their funding remaining contingent on meeting state-specified objectives (Hirst, 1994). Indeed, in northern Italy, many social services are provided by this kind of “social cooperative” (Restakis, 2007).

The final sector that is inappropriate for co-ops consists of firms with large capital intensity (i.e., few workers but very expensive equipment) (Drèze, 1993). These kinds of industries (oil, steel, auto, pharmaceutical, etc.) are inhospitable for cooperative governance because it is basically impossible for a group of average-income workers to acquire ownership of firms like this. Nor would we want the state to help fund a small group of workers to take over multi-million- dollar capital stock, since far from increasing societal equality, this would simply create a handful of new elites. So in this sector too, a better solution is that of

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co-management: firms like this could be bought by the state, but instead of being run in the usual way, management should be divided between representatives of the internal workers and representatives of the community. This kind of nationalization-with-democratization need not be costly for the state (indeed it can be very profitable) provided such firms are run well.14 It would give workers some control over their workplaces without requiring the enrichment of a handful of workers to render such control possible.

The Social Democratic Objection At this point it is important to consider the social democratic objection. Think of Sweden or another social democratic country where workers have heightened bargaining power due to a combination of a strong welfare system, (p.45) powerful unions, and state regulation of business. In such a context is there still a need for workplace democracy?

While social democratic institutions are an important advance over neoliberal ones in the increased protections they offer to workers, they still do not address the fundamental issue which is that workers do not have a genuine choice of working in democratic workplaces; the option of equality at work remains largely unavailable.15 It is true that there is less compulsion to take a job in, say, Sweden because the safety net makes it easier to leave. But the average Swedish worker who does not want to be on welfare her whole life (i.e., the vast majority) is still effectively compelled to join a hierarchical firm because there are so few democratic alternatives. The worker cooperative sector accounts for a miniscule amount of the economy (about 0.2%), and given that only about 0.12% of the adult population stay on welfare for long periods of time, the vast majority of the population clearly has little alternative to hierarchical work.16

Social democratic institutions do indeed increase workers’ freedom in the negative sense of protection. This is a good thing, but it is still inadequate for two basic reasons. First, workplaces within social democracies retain deep- seated structural inequality. Protective regulations do not change the basic fact that business owners have power over workers not because they were elected, but because they own property. Perhaps they acquired their property through inheritance; perhaps they were frugal all their lives and saved it; perhaps they won the lottery. Whatever the case, it is fundamentally unfair for some to have substantial decision-making power over others simply on the basis of their wealth. Walzer (1983) is right to insist that “what democracy requires is that property should have no political currency, that it shouldn’t convert into anything like sovereignty, authoritative command, sustained control over men and women” (p. 298). The idea that legitimate decision-making power over other people can stem from property ownership is a feudal anachronism that we need to outgrow. Getting rid of the last remnants of feudalism, which we have not yet fully done even in the progressive social democracies, means recognizing that legitimate authority can only rest on agreement between equal human beings.

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No matter how strong unions are in social democracies, the workers are never the equals of managers and owners. In a co-op, however, workers and managers are fundamentally equal. Although elected managers have more decision-making power, both managers and workers are subject to the same rules and enjoy the same fundamental rights and status. In other words, social democratic workplaces retain structural inequality in the form of hierarchy. As long as they do so, there is a constant and ubiquitous danger of workers getting abused, mistreated, and oppressed. Unions and regulations (p.46) may soften the dangers, but they cannot alleviate their source. They are like taking aspirin for cancer: painkillers but not a cure.

Second, unions and state regulations are fundamentally inappropriate institutions for enhancing the freedom of self-determination. Unions (ideally) are defensive organizations.17 They exist to soften the work hierarchy and make inequality bearable. Although they are responsible for most of the freedoms that citizens in the Western world now enjoy (from public pensions to universal healthcare to the existence of the weekend), they are not designed to transform the management of the workplace or to challenge who is in ultimate control. Fundamentally, G. D. H. Cole (1920, p. 20) is right to say that unions have in their hands only a brake and never a steering wheel. They maintain workers in the passenger seat of history—unable to steer for themselves and able only to pull the handbrake in times of emergency. In contrast, co-ops (ideally) are organizations for workers’ self-management and self-determination. They are not designed to soften work hierarchy, but to abolish it (in the sense of removing formally unaccountable power). They are not simply defensive organizations but are active ones, enabling workers increased power to navigate their own path. This is not to say, of course, that co-ops are always successful at doing so. Too often they prove inadequate in their defensive role (as the strike in 1974 at Mondragon famously demonstrated) and equally inadequate in their active role of providing meaningful avenues for widespread participation (as we will see in the next chapter). Nevertheless, co-ops offer a real potential to foster the freedom of self-determination that is lacking in social democracy.

Notwithstanding the welfare system, the unions, and the state regulations, workplaces in the social democracies do not allow for egalitarian self- determination. This is a major problem. Having the power to influence the direction of your workplace, being able to participate as an equal in the evolution of a project, these are things which are currently a privilege in our society, available only to a lucky few. Cooperative workplaces are hardly paradises. But, when they work well, they provide definite improvements by fostering broader avenues for participation than conventional firms, as well as significantly reducing the alienation and powerlessness from which the bulk of workers suffer in a manner of quiet frustration which for too long has simply been accepted as the norm.

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Further Objections The skeptical reader will likely have a number of further objections to the idea of workplace democracy. Three in particular deserve our attention. First, there (p. 47) is the objection that people do not really want democracy at work. Second, one might worry that workplace democracy undermines the freedom of the entrepreneur to direct her business as she sees fit. Third is the Platonic or technocratic objection that employers and/or managers should have superior say because of their expertise in running the business.

The Desire for Workplace Democracy

It is sometimes suggested that talk of workplace democracy is moot since most working people do not actually want it. Indeed, it is true that there are valid reasons why one may well feel hesitant toward the prospect of increased democracy at work. Most obviously, people may not want to risk the money required to buy out their firm or start a new one.18 But beyond the familiar material restraints, there may be other reasons why people are resistant to democracy itself. They may not want the time commitment that democracy requires—reflecting Oscar Wilde’s quip that the chief defect of socialism is that it would take too many evenings; they may not want the responsibility and stress that comes with being “in charge”; all in all, people may feel that self- determination is simply too hard work for it to count as “freedom.”

Those who value increased democracy at work do so because they subscribe to the ethic that self-governing through participation in decision-making is an important aspect of freedom (though not the only kind of freedom, since being left alone to engage in one’s own pursuits is clearly an important kind of freedom too). Yet if there is one critique that I find most difficult to answer, it is the rejection of the notion that self-determination counts as a type of freedom. For some, this simply cannot be freedom. Freedom cannot be an endless meeting, but must be the opposite, such as collapsing in front of the TV. Life is hard as it is, so freedom must be light and relaxing. Easy, like a tremendous exhale. This is the intuition that many have which runs precisely counter to the ideal of self-determination. Although it is true that life is hard, I think that freedom is hard too. Which is not to say that it is terrible—in fact it can be one of the best things in life—even if it is hard. I do not know how to counter the common intuition that freedom must be easy except by juxtaposing it with another equally powerful intuition: that abandoning self-determination requires relinquishing something very deep about the desire of human beings to not be controlled. A character in Ursula Le Guin’s novel Dispossessed puts it this way: “It’s always easier not to think for oneself. Find a nice safe hierarchy and settle in. Don’t make changes, don’t risk disapproval, don’t upset [others]....It’s always easiest to let yourself be governed” (1974, p. 149). It goes without saying that easier is not always better. (p.48)

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What is the empirical evidence concerning workers’ desire for increased democracy at work? The answer depends a lot on how you phrase the question. On the one hand, it is clear that most countries in the West have very limited amounts of workplace democracy right now (Dow, 2003). We have seen that some on the Right argue that this shows that workers do not actually want it, for if they did they would be willing to take lower wages for increased democratic voice (Maitland, 1989). However, the empirical fact about the rarity of workplace democracy may simply reflect businesses’ intransigence and hostility toward the idea of forfeiting control over the firm,19 combined with the fact that even if workers really do value workplace democracy they may perfectly reasonably not wish to sacrifice substantial amounts of income for it. That does not mean that workers do not value increased say at work, only that it may not be their primary concern.

On the other hand, when workers are directly asked whether they would like more say at work, they clearly answer yes. In a comprehensive study of social attitudes, Zipp et al. (1984, pp. 406–7) report that although most Americans report job satisfaction, there is also “widespread favorable feelings toward increased democracy in the workplace”—with 79% of respondents stating they would rather work for an employee-owned firm than an investor- or government- owned one. A Federal Commission sponsored by the US Department of Labor found that 84% of workers would like to participate more in workplace decisions (Commission on the Future of Worker–Management Relations, 1995, p. 39). Probably the most comprehensive analysis of American workers’ attitudes toward workplace relationships is Freeman and Rogers (1999). Their data show “as conclusively as any survey can that the vast majority of employees want more involvement and greater say in company decisions affecting their workplace, ” with 63% of workers indicating their desire for more influence over workplace decisions (1999, pp. 40–41).20 Even this degree of enthusiasm for increased worker influence is somewhat surprising given the dominant cultural norms that take for granted the need for experts and superiors, the naturalness of hierarchy, the idea of work as a drag, and freedom as independence understood as relaxing in front of the TV.

Related evidence for people’s desire to control their own lives is the widespread desire to be self-employed. Indeed, the fact that so many people—10% of the labor force in most countries—are willing to face the daunting odds (the high risks, the long hours, the low pay, and the fact that roughly 40% will fail in their first year (Taylor, 1999)), speaks volumes about the widespread desire to escape hierarchical work. Not only is self-employment a dream of many people, but whenever people are asked why they want it, their answers invariably refer to the absence of a boss, the capacity to make decisions (p.49) oneself, to be in control of one’s own working schedule; in short, the ability to self-determine.21

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The bulk of the evidence thus indicates that while a minority may indeed choose subservience at work the majority has subservience thrust upon them.

One of the most interesting aspects of the evidence on participation is that once workers begin to participate, they tend to want to more and more; in other words, participation breeds participation (Mason, 1982; Sobel, 1993). This trend has been noted in co-ops all over the world, from England to Venezuela (Cornforth et al., 1988; Piñeiro, 2007). Such a trend suggests that, in general, the more people are exposed to workplace democracy, the more they will desire it (other things being equal). I suspect this is generally the case, since freedom is like a muscle of the human spirit; it tends to atrophy and diminish with neglect, but grows and becomes stronger from regular use. It is instructive to recall that throughout the 1950s millions of middle-class women started to work outside the home, even though the work conditions were often unpleasant and the material requirement to do so was often quite limited. Sixty years later, the desire to work outside the home, and the recognition of the kind of freedoms that can come with this, have grown immensely and become normalized. Indeed, today, the denial of the freedom to work outside of the home would strike us as atrocious. The radicalism of the second-wave feminists in demanding opportunities to participate in the workforce has become our common sense. Similarly, I suspect that were the real material opportunities for workplace democracy to increase, we could expect a drastic increase in the number of cooperatives as well as in the number of people who desire increased workplace participation and feel distinctly unfree without it.

Property Rights versus Democratic Rights

Consider the case of an entrepreneur; call her Rana. Most would agree that there is nothing wrong with her renting capital and/or machines in order to start a business. Such a process is often an important source of innovation, and should she produce something that others wish to buy (and assuming they can afford it), her self-interested behavior can serve the public good. Should the business prosper, Rana will likely wish to hire employees in order to expand. But this is where difficulties arise. It is not a problem for Rana to rent the capital or machines and use them however she wishes, but it is a categorically different issue to rent human labor and use it however she wishes.22 Some have argued that it is never acceptable to rent human beings (Ellerman, 1992)—but I want to sidestep that debate here. The important point is that when a business is a one- person business, then the entrepreneur legitimately (p.50) has total control over it. However, when Rana starts hiring others, the business becomes less and less a simple extension of her particular vision and more and more an association of work. Time is the crucial factor here. On the day that Rana hires Hanan, it seems clear that we would still want to call the business Rana’s. Yet if Hanan were to work there for several years, then so much of the business would be the product of joint labor, joint effort, joint intelligence, joint creativity, and so on that it seems increasingly false to see the business as solely Rana’s, and

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increasingly unfair for Rana to retain supreme control over it, to be able to direct Hanan as she sees fit, order her around, and so on. After a certain time a group of people working together start to constitute a work association, and Hanan should acquire a right to choose whether she wishes to become an equal in the association.

Consider the injustice we would feel at the following (common) situation: Rana decides to give the company to her daughter Ranette. All of a sudden Ranette is in charge. She may have never set foot in the business before and know nothing about it, but she comes in on Monday morning, twenty years younger than all the workers, with the power to hire and fire, to give raises, slash pensions, and much more. She orders Hanan and the others to change the business direction, ordering them to scrap one project that they had been working on for years to take up an entirely different one. She insists on a more formal workplace than her mother did—requiring the workers to dress differently and refer to her as “Ma’am.” We feel the injustice of such a situation because it is clear that what is being inherited here is not simply wealth but power.

After a certain time the employer should not lose her right to her property, but she should lose the right to use her control over property as a means for controlling other people. So we see that conventional private enterprises are really a bundle of two distinct things: (i) a set of property and capital (offices, machines, etc.) and (ii) an association of work involving power relations between people. Usually, (i) implies (ii); that is, unequal ownership of property compels those without property—Hanan in our example—to accept the work relations within the association dictated by the owner. Usually, unequal ownership of property is translated through the employment contract into power over people.

It is important to remember that firms are always both of these things (a set of property and an association of workers) because ownership of things should not translate into power over people. This should be a basic principle of a democratic post-feudal society. Since work is a particularly important type of association—one that is deeply socially consequential—Hanan and the other workers should have the legal right to choose to democratize the workplace. (p. 51) But this is difficult as long as Ranette is the sole owner of the property of the firm (because if one person owns the property there cannot be equal decision-making about how to use it). So in most cases what is required is a right for the workers to hold a referendum to decide if they would like to buy out Ranette (so that the workers come to collectively own the firm, and therefore are in a practical position to democratically govern it). The right to do this is conditioned in part by time. Having worked for one week does not seem to be enough time to give an employee a right to equal say, whereas 10 years is more than enough. Deciding the time limit at which point a worker is considered no longer temporary but part of the association is, of course, slightly arbitrary, but the underlying principle should be clear: after sufficient time the right of

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property owners to direct labor is eclipsed by the right of the associated laborers to choose whether they would like to self-determine. One year seems to me about right. Note that no workers are forced to work in a democratic firm: this remains purely a private choice. What is at stake here is simply the provision of a real opportunity for workers to access workplace democracy should they desire it. The purpose is to foster egalitarian opportunities not dictate democratic outcomes.

Connected to this issue is the worry that giving a voice to employees might seem to require unfair redistribution of property. For instance, if Rana initially invests $10, 000 into her business then works hard on it by herself for 10 years, it seems unfair for Hanan, a new employee, to immediately acquire say over the business property now worth $100, 000. Indeed, for Hanan to have equal say over this capital is tantamount to expropriation. This kind of expropriation would strike many as unjust.23 Hanan should not instantly acquire a right to voice, but only after a certain time. And even then, her right should be to buy out Rana (or become co-owners with her) so there is no issue of expropriation of property, only redistribution of voice.

Democracy and Experts

While the legal basis of the authority of management rests on contracts and ownership, the ideological basis for their authority usually involves some claim of expertise. CEOs typically justify their exorbitant salaries with the claim that such is the market value of their managerial expertise.24 Does expertise justify a lack of democracy in the workplace? The first thing to say about this is to point out that in fact managers (and this is even truer for external shareholders) may have very limited knowledge of much of the complex inner workings of a firm— and often substantially less than the workers who engage in such operations on a daily basis. The mass of workers are likely to have (p.52) hundreds of ideas for improving the firm’s operations; however, they usually have no incentive (or power) to implement them, since whatever benefits result will flow to the employers alone. In Colin Ward’s words, “the fantastic inefficiency of any hierarchical organization is the outcome of...[the fact that] the knowledge and wisdom of the people at the bottom of the pyramid finds no place in the decision- making leadership hierarchy of the institution” (1982, p. 41). One of the fundamental arguments in favor of democratization is that it unleashes the creativity and contributions of all those who had been disempowered but now feel a sense of ownership.

This said, it is clear that complex organizations do require specialization and expertise—so the question remains as to whether experts should have authority over rank-and-file workers on the basis of their expertise.

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This is a difficult question. On the one hand, we should reject the idea that ordinary people, nonexperts, should be disenfranchised from decision-making. Just as the state should not be controlled by the political science professors or philosopher-kings on the basis that they know the most politics, neither should business be run by “economist-kings.” Democrats throughout history have rejected this Platonic justification for elite rule and rightly insisted on the capacities of ordinary citizens to decide for themselves what is best for themselves. Experts need to remain accountable to the workers. On the other hand, there may well be situations where experts require substantial autonomy to do their job well—constant surveillance and monitoring would only serve to undercut their effectiveness.

There is a real tension here—it is an instance where democratic practice is more art than science. Overall I would stress two things: first, the importance of balance. Both accountability and autonomy are important for experts, but since these cut in opposing ways they need to be kept in balance. Ultimately, I think a wise co-op would treat experts as indispensable and respectable tools to be used for the co-ops’ purposes. Just as members of parliament will often assemble a group of experts to inform and advise them, so should various departments or work-teams in co-ops use experts to advise them and guide their own decision- making. The important point is that the experts see themselves as equals to the workers, and view their role as that of “advisors” not “bosses.” Experts are necessary, but they should serve, not lead—they should be “kept on tap, not on top” (Dahl, 2000, p. 71).

Conclusion The central argument of this chapter is that the current system of hierarchical work is deeply unjust because the majority of average workers are largely (p. 53) compelled to join workplaces within which they are fundamentally unequal —essentially servants. In both neoliberal and social democratic contexts, it is very difficult for the average person to choose an alternative to hierarchical work in the form of workplace democracy. I have argued that no one should be compelled to be subservient at work, which means that everyone should have the opportunity to choose workplace democracy should they so desire. For such a choice to be real, the state cannot be hands off, but must foster and facilitate the expansion of worker cooperatives.

Although my focus has been on issues of equality and freedom, these are not the only reasons for caring about workplace democracy. There are good reasons to think that a cooperative-based economy would have substantially more income equality and job security. Co-ops are less likely to abandon their town or city to engage in a race-to-the-bottom, and they are less likely to sacrifice employment for profit maximization. And yet they operate with a degree of economic

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efficiency that is largely comparable to standard firms. It is to these kinds of arguments about the real-world performance of co-ops that we now turn.

Notes:

(1) . These figures come from Wright (1997). However, his terminology is slightly different; what he refers to as the “extended managerial class” I am simply calling “professionals, ” and what he calls the “extended working class” I am calling “average workers.” Of course, this tripartite division of the working population can be made much more fine-grained. For instance, Wright sometimes divides the class structure into three owning groups and nine working groups. But for our purposes such detail risks obscuring more than it would reveal.

(2) . For a calculation of a living wage, see James Lin and Jared Bernstein, “What We Need to Get By, ” Economic Policy Institute (2008). Welfare rates differ in each state—for some general information, see “Welfare Information, ” http:// www.welfareinfo.org/payments/.

(3) . This management clause between the UAW and GM in 1990 is typical: “The right to hire; promote; discharge or discipline for cause; and to maintain discipline and efficiency of employees, is the sole responsibility of the Corporation except that Union members shall not be discriminated against as such. In addition, the products to be manufactured, the location of the plants, the schedules of the production, the methods, processes and means of understanding and solely and exclusively the responsibility of the Corporation” (Melman, 2001, p. 21).

(4) . What makes the average worker a “servant” is not simply that she follows orders, but that she is largely compelled to do so. To see this distinction, imagine a rich idiosyncratic person accepting a low-skill, low-autonomy job that she doesn’t actually need, but wants to do for a lark. In such a case it would not be accurate to call this person a servant. This person retains her autonomy because she can leave at any time, and so we can be confident that she is performing the job’s roles out of her own authentic desire.

(5) . The average American baby boomer had 11.3 jobs between the ages of 18– 45 (5.5 of these between the ages of 18–24) (BLS, 2012). Nevertheless, with the exception of self-employment, it is likely that all of these jobs were for hierarchical firms.

(6) . Religious organizations might be a partial exception.

(7) . Kant defines “sapere aude” as the exhortation to “have the courage to use your own understanding” (Reiss, 1970). Mill expresses a similar hostility to subservience in On Liberty (1998).

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(8) . Of course, different people will have different evaluations about what kind of work they enjoy or dislike, so balancing cannot be done with mathematical precision, but nevertheless there are often jobs that most people agree are unpleasant—washing the dishes, scrubbing the floors, taking out the trash, etc. An important advantage of democratic workplaces over conventional firms is that they allow for increased deliberation to identify the agreements that do exist in this regard, and then if the majority wishes, to implement some mechanism to share the benefits and burdens more equitably.

(9) . Co-ops with 50–75% members are in a grey area. It seems to me that these can be considered genuine co-ops only if the nonmembers can become members after a reasonable period. Of course, this numerical breakdown is only a rule-of- thumb. It is possible to imagine a co-op where 60% of the workers are nonmembers, but who nevertheless share in all the day-to-day decision-making in a one-person one-vote manner, and are only excluded from long-term strategic investment decision-making—this could still be a highly democratic workplace.

(10) . See, e.g., Van Parijs (1995). It is interesting to note here that basic income proposals, which are usually intended to increase individual freedom, complement proposals to increase workplace democracy; so this is an interesting instance where real utopian visions—of economic freedom and economic democracy—may well support each other.

(11) . In practice workplace democracy has rarely been successful without collective ownership due to the difficulties of establishing regular, secure financing in a capitalistic environment, as well as the difficulties in maintaining sufficient incentives without a material stake in the firm’s ownership (Dow, 2003). For example, in the first 30 years of Mondragon’s existence only three co- ops failed (out of more than a hundred). At least one of the failures was attributed to the fact that workers did not put up a large enough material stake in the firm, so it became an established requirement for workers to put up roughly 20% of the starting capital (Campbell et al., 1977; Morrison, 1997).

(12) . This is an important category as it made up (in 2000) about 15% of the American workforce, 21% of the Canadian, and 31% of the Swedish (Gomes, 2010, p. 3).

(13) . This was proposed by Tony Benn, Secretary of State for Industry, in Britain in the 1970s (Benn & Mullin, 1979). In chapter 4 we further discuss the issue of the degree to which consumers should have a say in economic decision-making.

(14) . Although there is a common prejudice against the idea that publicly owned firms can be efficient, there is much evidence to the contrary, from Renault in France to Singapore Airlines. Indeed, in today’s fastest growing economy, China,

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state-owned enterprises account for 40% of national output (Chang, 2007; Cohen, 2010).

(15) . Just as in the United States, Western European countries have experimented with “worker participation” in various forms—some even have a system of co-determination for large firms. To the extent that these programs have actually increased workers’ influence in firm decision-making they are praiseworthy, but none of them are meant to actually democratize work in the genuine sense of providing actual equal status or influence for workers. As we will see in the next chapter, co-determination has allowed workers increased access to information, but no ability to veto management plans, much less to actually elect or remove managers.

(16) . The first figure is derived from the number of worker co-ops existing in Sweden in the early 1990s (about 100) compared with the total number of private enterprises (about 55, 000) (Johansson, 1997; Stryjan, 1990). For the second figure, 1.95%, of the 6.4% of the general adult population on assistance in 1987, received social assistance for 10 consecutive years (Andren & Gustafsson, 2004).

(17) . Likewise, regulations are blunt but often useful tools for the defense of workers’ freedoms. But just like unions, their strength lies in their ability to defend and protect; they are largely inadequate in terms of fostering self- determination.

(18) . For workers to buy out their firms, even with state support, would require a financial commitment. It would likely require a significant degree of savings over a number of years, and since a worker’s savings would have to be plowed back into the firm to gradually acquire ownership shares, she is potentially at risk by putting all her eggs (her job and her savings) in one basket. The lack of diversification means increased risk. So the normal risk-adverse worker may well prefer to continue working in an undemocratic firm. This is, of course, a choice she should be free to make. That said, successful co-op networks engage in substantial cross-investment precisely in order to reduce such risks.

(19) . Consider, for example, the massive campaign waged by the Swedish business class against the proposed plan for increasing economic democracy through wage-earner funds (Pontusson & Kuruvilla, 1992).

(20) . However, while the average American worker does want more influence at work, she does not currently share my perspective that workplace democracy is the answer. Indeed, the authors find that the vast majority (85%) of workers would prefer a firm “run jointly” by employees and management than one run “by employees alone” (10%) (Freeman & Rogers, 1999, p. 56). I suspect this has

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less to do with any actual antipathy toward co-ops than simply reflecting a lack of familiarity with them.

(21) . For empirical evidence that self-employment increases independence and work satisfaction, see Hundley (2001) and Benz and Frey (2008).

(22) . Although the language of “renting humans” sounds strange to our ears, this is precisely what is involved in the employment contract. Even Paul Samuelson, the neoclassical economist par excellence, recognizes this: “Wages are the rentals paid for the use of a man’s personal services for a day or a week or a year” (quoted in Ellerman, 1992, p. 95).

(23) . Whether expropriation is always unjust is a question that is beyond the scope of this chapter. At present it seems clear that large-scale expropriation of business property would be unacceptable to the vast majority of the population— thus making it undemocratic. Slow, incremental changes seem to me to have much more potential for actually improving the conditions of working people.

(24) . However, there is good reason to be skeptical of this. For example, Nobel prize winner Daniel Kahneman researched the performance of 25 well-paid wealth advisers over eight years and found that the consistency of their performance was nonexistent: “The results resembled what you would expect from a dice-rolling contest, not a game of skill” (Kahneman, 2011). Moreover, if remuneration was really due to expertise, it would be difficult to explain the explosion of high pay for CEOs in the United States (but not other countries) over the last several decades, since it is hard to believe that they have suddenly become more expert than all other American workers (or CEOs in other countries). A much more plausible explanation for their income is not their expertise but the use of stock options and other devices that have essentially allowed American CEOs to write their own paychecks (Baker, 2006; Chang, 2010).