Workplace Participation and the Crisis of Capitalist Democracy

Recent events have definitively proven that the prevailing political-economic system is bankrupt: the vast majority of working people have experienced neither material gains nor meaningful democracy, with devastating political and economic consequences. I wish to argue that these two failures are intrinsically related, and in particular that they both stem from a lack of workplace participation.

Let me begin by clarifying that the deep-seated lack of democracy currently afflicting Western societies pertains not only to formal politics, which at least maintains the charade of elections, but also to the workplace, which is so unmistakably authoritarian that even free-market libertarians have called for its reform. Indeed, the primary failure of Western democracy is that it does not extend to the areas of life that most affect the demos. On the contrary, in the institution that provides them with their livelihood and occupies the majority of their waking hours, citizens remain subservient to a class of masters, who, through the influence thus acquired, end up dominating the pageant of political democracy as well.

The absence of workplace democracy is also a primary cause of our economic woes. The despotic structure of power within the firm is what allows a fortunate few to cream off the proceeds of growth, which, in turn, is thereby short-circuited through mechanisms that have now been irrefutably exposed in recent years. I mean, just think about it - if capitalism and democracy really are such natural bedfellows, as the high priests of neoliberalism are so fond of declaring, why does democracy not prevail in the very heart of capitalism, viz. the firm? The answer is that we live in a capitalist democracy, not in a democratic capitalism.

The idea that workplace participation would kill both the political bird (a lack of democracy) and the economic bird (stagnation and inequality) with one stone may sound like a pipe dream, not least because it contradicts the conventional (but receding) wisdom that 'soft', social reforms are inimical to economic progress. To be sure, it is no silver bullet, especially considering that the causation also runs in the opposite direction - as demonstrated by Theresa May's recent about-face on her promise to install workers on company boards, the lack of workplace democracy is a symptom as well as a cause of the political and economic maladies currently plaguing society. Indeed, from a Marxian perspective, the notion that capitalism can be reformed by democratising the workplace is self-contradictory; democratic capitalism is an oxymoron. In one way or another, however, the twin crises of economics and politics can only be solved in tandem, for they are two sides of the same coin.

Central Planning, Social Ownership, and the Cooperative Solution

Since the fall of the Soviet Union, a fundamental axiom of modern society has been that a socially-owned economic system coordinated by central planning is unfeasible, and that a privately-owned system coordinated by the market has proven itself to be the only realistic alternative. On the contrary, I wish to argue that actually-existing capitalism is neither privately owned nor coordinated by the market, but is rather based on large, centrally-planned, socially-owned corporations. From this perspective, at least, capitalism and communism are really two versions of the same system.


It is standard practice in this age of neoliberal hegemony to compare real-world communism with an idealised form of capitalism, with the virtues of market exchange and private property juxtaposed with the vices of central planning and social ownership. The problem with this sort of analysis is that real-world capitalism is based on large corporations, which are in fact centrally planned and socially owned.


The notion that corporations are centrally planned is hardly controversial. Indeed, we should not forget that Marx initially got the idea of central planning from observing capitalist enterprises. Most people, however, seem to think that these 'islands of central planning' are suspended in a 'sea of market relations'. On the contrary, as Herbert Simon and others have noted, most economic activity occurs within firms rather than between them. Putting two and two together, it seems indisputable that contemporary capitalism is, on the whole, centrally planned.


The notion that corporations are socially owned is less well recognised, since shareholders are usually assumed to be the corporation's owners. Even if that were the case, it would still represent a significant deviation from the ideal of private property as individual ownership, since ownership of one thing (the firm) by multiple people (the shareholder) would involve an irreducible degree of collectiveness (socialisation). Indeed, for this very reason, Marx hailed corporations as harbingers of socialism, demonstrating that private property would eventually become obsolete. When we add that shareholders do not own the corporation, which instead comprises an intricate web of rights and responsibilities between a diversity of stakeholders, the socially-owned aspect of capitalist corporations becomes even more clear.


Capitalism and communism, then, appear to be more similar than they are different - and we have not even touched on the critical role of the state in contemporary capitalism. Indeed, I would argue that central planning and social ownership are inherent to any form of large-scale economic system. The problem is that these two aspects do not always mix well, since the central planners and the social owners are not usually identical. Just like the communist state, the capitalist corporation is supposed to be run in the interests of society (and not, as the conventional wisdom would have it, solely in the interests of shareholders). However, as soon as this task is delegated to a limited group of people - which it must be in the case of large-scale organisation - the potential for corruption arises. This seems to be what happened to the Soviet Union; and it seems to be what is happening to corporate capitalism.


A promising answer to this dilemma is cooperative organisation. Like all viable economic systems, it is centrally planned and socially owned, and therefore susceptible to the same tendency for corruption. This corruption, however, is made salient - it is anticipated, identified, and discouraged. Indeed, it is perhaps no surprise that utopians on both sides of the political spectrum - libertarians and anarchists, free-marketeers and bleeding-heart socialists - have converged on the cooperative ideal as an alternative to both real-world communism and real-world capitalism; for it represents an expedient hybrid of the two, an auspicious alternative to both, or perhaps just a different version of what is essentially the same underlying system.