Why This Pandemic Makes the Case for Economic Democracy
The global pandemic has completely altered life as we know it in the short-term. In the long-term, a hopeful result would be openness to new political economic possibilities. Policies like modern monetary theory, single-payer healthcare, and universal basic income, seemingly beyond the pale of mainstream recognition before the pandemic, may now be given a fair shake. I want to make the case that another political-economic shift ought to be considered in light of the pandemic—economic democracy.
By economic democracy I mean the formally recognized right for workers to take part in the strategic decision-making process of their workplace. This right is already extended to capital investors, as shareholders, who elect directors to the corporation’s board. This right for workers could take the form of co-determination, most famously displayed in German corporations, where workers are guaranteed substantial (though minority) representation on their company’s governing board alongside investors’ representatives or, even more equitably, economic bicameralism, a model advanced by Dr. Isabelle Ferreras in which workers and investors each elect representative governing bodies with veto power over the decisions of the other.
The coronavirus has made the need for economic democracy glaringly apparent. Political democracy alone has proven to be inadequate to meet citizens’ reasonable expectations of democratic agency in modern society. And there is no justifiable reason shareholders can enjoy economic democracy (i.e. electing corporate directors) while workers are excluded. Shareholders argue that (1) the relative importance of their investments as the means of raising capital and (2) the risk they incur by fronting this capital for a business, justify privileged treatment in the enterprise. Yet these justifications fail to meaningfully explain the disparate treatment of shareholders and workers. You see workers, as labor-investors, should be given rights in corporate democracy equal to capital investors.
The Shortcomings of Political Democracy
On April 7, Wisconsin held in-person voting for its primary elections in the middle of the pandemic. When the Governor’s initial proposal to delay elections due to COVID-19 was blocked by the right-wing state legislature, the Governor issued an 11th hour executive order to postpone the elections, but the conservative state supreme court rejected the Governor’s move as unconstitutional.
Going through with the election was not only a serious health risk for voters and poll workers, it was an immediate bar from participation for many working class voters. To vote in urban areas like Milwaukee, a voter merely needed a few spare hours on their hands to wait in line (distressingly six-feet apart from the next voter)—a tall order for those working full-time.
While Wisconsin’s pandemic-primary was rightfully appalling, it merely dramatized a long-standing reality of political inequality in the United States. The U.S. suffers from relatively dismal voter turnout, and worse yet, that turnout is correlated with a person’s income. The result being that lower-income citizens are less likely to vote, and less likely to have a voice in the strategic decisions of their workplace—double disenfranchisement. Meanwhile, the wealthier a citizen, the more likely they are not only to vote in political elections, but also to own stocks granting them an avenue to exercise economic democracy—doubly enfranchised.
Historically in the United States, electoral participation has been at least 12% higher among the top 50% of income earners. (Source: Thomas Piketty, Capital and Ideology)
If workers are going to be barred from, disillusioned with, or disinterested in voting in political elections, then we should open up democracy in the places workers are sure to have access and a vested stake in the results—the workplace. This economic democracy can be achieved by extending to workers governing privileges already possessed by shareholders.
The Importance of Labor Investment Relative to Capital Investment
While the financing of a business enterprise through the corporate structure is important for the business, is it more important than the human labor which facilitates, operates, and generates the real value of the enterprise? The coronavirus outbreak seems to shed light on the answer to this question. Governors have issued orders that most people stay home, but that “essential workers” continue to go to work. Grocery staff, delivery people, warehouse workers, and restaurant employees are all being recognized as “essential” during this crisis. But these workers have always been essential. Though too often disparaged as “low-skill” employees, wage-workers literally make the world run. This realization has proven to be a powerful tool for leveraging change, as organized workers withholding their labor from the business can bring operations to a screeching halt. What good is capital financed by shareholders if there is no labor to generate value from it? Thus, capital investors’ claim to favored status over labor investors based on their relative importance in the enterprise fails to hold water.
The Risk of Labor Investment Relative to Capital Investment
Finally, capital investors’ risk-based justification for privileged treatment over workers fails to ring true in ordinary times and proves to be an absurdity during a pandemic. Essential workers who have to continue to work in person are heroically putting their lives on the line. How could capital investors, who are among the most well-off in the country and whose “risk” is often diversified across the economy, compare their potential for losing money to these essential workers’ potential to lose their life or pass the virus onto vulnerable loved ones?
Yet even in ordinary times workers face health risks from their labor, and they risk being laid off at any point, losing their means of subsistence. By planning much of their lives, and the lives of their family, around their job, workers risk being uprooted by a corporation’s decision to outsource jobs. The risk workers bear ought to be valued the way capital investors’ risk is—with a voice in the enterprise’s strategic decision-making.
Conclusion
Political democracy has proven unresponsive to the demands of working people, and, like capital investors, workers own a key input in the business enterprise—their labor. Made clear by the coronavirus crisis, workers’ labor is essential, not only to the corporation but to society at large, and they incur a risk equal to, if not greater than, that of capital investors. These reasons have allowed shareholders to have a say in the direction of the corporation by electing the board of directors. But by the same logic, workers should have a formalized voice in the enterprise. The coronavirus has laid bare the irrationality of this disparate treatment of capital and labor investors. Hopefully enough of us recognize it to demand a change.