Anything that stood in their way was swiftly dealt with.
The comfortable shareholder’s chair is quickly becoming a hot seat as demands for more democracy at work are resonating on both sides of the Atlantic. Trade unions, politicians and intellectuals are developing plans to infuse companies and the economy at large with more democracy, more participation, a louder voice for workers and, as a result, more collective control and ownership.
Concrete plans and proposals are rich in their diversity, but they all have one thing in common: they challenge the fundamental idea that companies should be owned by shareholders, and that ownership means having the right to control. And that is a powerful shift in thinking.
Let’s start with the United States where Elizabeth Warren and Bernie Sanders hope to change the face of capitalism. Both are campaigning to become the Democratic Party’s presidential candidate and are brimming with ideas. Warren wishes to install a kind of ‘accountable capitalism’ where companies aren’t only run by and for the shareholders, but all stakeholders. For this, she wants workers to elect 40 per cent of company board members and to give workers a direct say in strategic company decisions. Co-determination, American style.
Sanders plans to both strengthen workers’ power through unions and install more economic democracy in the overall economy. The list of proposed measures would make it easier for unions to organise on company level and to stage industrial action. As such, he wants to ban the replacement of striking workers and to stop companies from forcing workers to attend anti-union meetings.
Interestingly, he also envisages a form of sectoral collective bargaining which would set industry-wide minima. His second plan focuses on corporate democracy and envisages having at least 45 per cent of board of directors in large companies elected by workers, establishing an employee ownership bank, and forcing companies to allocate up to 20 per of total stocks to employees. All these measures would indeed install more democratic control over company management, but also over the investment and strategic decisions of companies.
Mobilising support for Europe’s workers
In the United Kingdom, meanwhile, the debate (not the Brexit one) is currently being stimulated by plans and ideas from Jeremy Corbyn’s Labour Party. Their plans focus on democratising the economy through alternative forms of ownership. Cooperatives are to be promoted, along with locally owned shops and markets. Sectors with ‘natural monopolies’ (think rail, energy and the postal service) need to be in public control (read: nationalised). Additionally, one of the ideas is to introduce a kind of ‘right to own’ scheme where employees would collectively have a first right to buy out companies or plants that are being sold. As such, workers could take over struggling companies (with some assistance) and transform them into real co-ops.
On the European level, the European Trade Union Confederation (ETUC) is mobilising support to amplify the voice of workers in European multinationals. It is demanding stronger rights for workers to be involved and consulted about what’s going on in the companies in which they work, and they want to increase the participation of workers on company boards.
While there are many other examples, overall the picture is quite clear: the concept of democratising companies and the economy is being given serious attention and reflection. Despite their variety, what all these plans have in common is that they question one of the basic premises of modern-day capitalism: that companies should be owned and controlled by shareholders. It is an idea that has been relatively unchallenged for several decades.
Who should own and control companies?
Arguments for why shareholders should have so much power are usually based on the fact that they are financially invested and risk losing their investment. Yet, as Isabelle Ferreras a professor at the Université Catholique de Louvain in Belgium pointed out, workers invest their labour on a daily basis in the companies they work in. This is an equally important investment which should therefore come with ownership rights. As for the risk, capital investors can spread theirs by owning shares in different companies. For workers, however, there’s a limit to what extent they can invest their labour in different companies by working several jobs. From this point of view, it only makes sense to share or even transfer ownership from the shareholders to the workers.
Even if we accept that shareholders should, at least in part, own companies, that still doesn’t mean they should have full control. Our daily lives are full of examples where ownership and control are not the same thing.
Let’s look at two. First, renting out real estate means giving away control of the property to the tenant, who receives quite a lot of rights in exchange for their monthly rent. As an owner you cannot access your property without the renter’s agreement, you cannot change your property at will, nor can you easily decide to cancel the lease. In this case, then ownership doesn’t mean complete control; instead there is a balance between the two parties involved.
A second example is from inheritance law. When you pass away (which will happen at some stage, I’m sorry), your partner will remain in control of, for example, the house you lived in together – even if your children inherit the house and it’s officially their property. Your partner can use the house, change it, manage it and benefit from it, but she/he doesn’t own it. Control doesn’t mean ownership if it would risk putting the partner on the streets.
What these two examples have in common is that the tenant and the mourning partner both have a huge stake in a property owned by somebody else (the owner, the heirs), to the extent that their livelihoods and human rights are in the balance. In democratic societies, this state is considered too precarious and ownership is therefore separated from unlimited control rights. When the stakes are high for an involved party, you give them a degree of control over somebody else’s property. Seems like common sense to me.
People over profits
A similar reasoning could and should apply to companies. Employees undeniably have a stake in how companies are run. Their livelihoods and human rights depend on it. Whether workers have, for example, freedom of expression, freedom of association and reasonable income is intrinsically linked with company policy. It therefore only makes sense to give them a degree of control over what’s happening in the companies in which they work.
In fact, there are already examples where company ownership is split from control. Unfortunately, they are applied mostly to employees, to make sure that they don’t get control over the company. So, while employees are sometimes given company shares as part of their remuneration, they are ‘non-voting shares’, meaning they own part of the company but are denied a say in its management. It’s time to reverse this logic, so that it is no longer used to inhibit workplace democracy, but to stimulate it.
And finally, after decades of unchallenged shareholder power, the tide seems to be turning. We need to use the current creative momentum to replace the old conventional wisdom with a new powerful and emancipatory common sense: just like a government, in a democracy, companies should be of the people, for the people and by the people.