This is today's Economic Update. I am Richard Wolff from Democracy at Work.
I want to respond to a spate of articles about the Business Roundtable,
about modern American capitalism,
about various business groups like the Roundtable, which have decided that
capitalism needs to become more
self-conscious. That it needs to have more of a social consciousness;
be more open to its stakeholders;
be more democratic—
all these kinds of statements that have been made, usually by people
closely associated with the business community.
Let us call them friendly critics of some of the excesses of
capitalist business.
Part of me wants to say, "Good for you to recognize
that capitalism has not had much of a social consciousness, has been busily
dividing the United States and other countries
into a very badly split,
poor-versus-rich
kind of scenario. And that
democracy has been a low priority." I am being polite here.
Part of me
says that is a good sign. The other part of me, to be honest, is
disgusted by all of this, because it is so phony, and I mean phony in a very particular way.
If you are going to take seriously what democracy means,
which I am assuming
many people do - good people on all
sides of this issue
want to take democracy seriously. If you do,
then you have to go to the root meaning of the term. If you do that, as I am about to do with you,
then you see that making capitalism
democratic is a little bit like making the square round.
It does not work. It is either a square or it is round. But you are not going to make the round
squarish. And you are not going to make the square roundish, because that is not available.
And that is the problem with capitalism and democracy.
Let me explain:
the basic idea of democracy was, and is,
that if you are affected by a decision, then you have the right, the human right, to
participate in
making that decision.
Democracy also
carries at least the implication that we are to be equal in
participating in those decisions that affect our lives.
Look! That is the basic idea behind having elections!
We elect the mayor, the governor, the president of a country or a region,
because that person, in a position of power,
makes decisions that affect us. And because that person
has the power to make those decisions that affect us, we
must participate in that process by electing or
rejecting such persons. That gives us power over them. That is, at least in theory,
commensurate with their power over us, we participate in the decisions that affect our lives.
Okay, if that is what democracy means, then let us take a look at the institution of the capitalist
enterprise; the factory, the office, the store,
whatever it is,
how does it work? And this is not a question of saying we are all
stakeholders. That is very nice. Of course, we are. That is just another way of saying we are all
affected by the
decisions. And if we are affected by the decisions, and we believe in democracy,
then we should have real power
over those decisions. There should not be people making decisions that affect us,
over whom we have no real ongoing
institutionalized power. And yet, that is exactly
what a capitalist enterprise is. If it is a small enterprise, it has an individual
employer/
capitalist/
business owner, whatever you want to call them. If it is a corporate form of capitalism, well, then it is a board of directors,
usually a group of 10 to 20 people
who make all the decisions. And let us go over how an enterprise works. Whoever the capitalist is,
individual
entrepreneur,
business owner,
board of directors, it really does not matter for the purposes of democracy. That group:
capitalist,
employer, a board of directors, they have enormous power over our lives.
Let us start with the basic one:
they hire and fire us. They thereby control how we
spend our days, five out of seven every week.
They determine whether we have an income from the work we do.
They determine what work we do. How we do that work. With what equipment. On what raw
materials. In what kind of a space. With what kind of music, or absence of music. You get the picture? The
decisions the employer has to make over our lives, are
total and
are every day,
all the time. And when you add that they determine whether we have income, and how much income we have,
they literally determine our lives. Not just the five out of seven days, but all
seven of them. And
what exactly is the democratic power we have over them? Well, it is next to nothing.
They hire and fire us. We do not hire and fire them. The workers in a corporation
do not elect the board of directors in
99% of the cases.
That is not the way capitalism works.
Shareholders who may not be any of the workers, they have that power.
Only if the workers are themselves the
shareholders, would they have any power at all. And
even then, if they have the power to elect the board of directors, that is very different from having the daily
influence that a board of directors has in the decisions they make.
So here is the bottom line: if you want democracy,
you cannot have the capitalist enterprise.
It is the square that you cannot make round. If
you want democracy,
you have to set aside the capitalist enterprise. The enterprise owned and operated
by an individual, or a family, or a
board of directors with shareholders.
What you have to have is something else. You can call it a worker co-op.
You can call it a community enterprise. There is a variety of things to call it,
but the basic idea is
simple: it is making enterprises, and therefore an economy
democratic. That is: the people who do the work,
in the factory, the office, the store, are the ones who make the decisions.
That is right. One person, one vote.
Collectively, by majority rule,
decide what the enterprise produces. What
technology is used.
Where the production of the good or service takes place. And here comes the big one:
what to do with the revenues earned
from producing whatever it is the enterprise makes. If that is to be done
democratically, then a
cooperative, a worker co-op, is the way to go. And that is not
capitalism. It is not the rule of the capitalist. It is the rule of the vast majority.
It is not the rule of the employer. It is the rule of the employees.
That is the crucial difference.
Workers together can be their own
employers. That is what a worker co-op was, and is. If you're serious about
democratizing the economy, then
capitalism is what has to go.
We will reach that point in the history of capitalism,
where understanding that is on the people's
agenda, both in the United States and around the world.
