L7 Worker Ownership of Production

Tools For A New Political Economy

Worker Ownership of Production

(Excerpted from The Goldilocks Zone of Integral Liberty)

See also:
Common Property Shares

Worker-Owned Cooperatives

Simply stated, this is a successfully demonstrated approach to solving many of the problems in shareholder-centric capitalist enterprise, including the tyranny of private property, the tensions inherent to establishing owner-management and workers as separate classes, and ensuring the safety, well-being and job security of workers, and adequate diffusion of knowledge and training – all of this while still providing opportunities for competition in both non-profit and for-profit environments. Production on nearly every scale can be delivered by networks of worker-owned cooperatives who routinely vote on working conditions, compensation, strategic and tactical directions of the business, internal management structure, customer relationships, integration with local communities and so on. This is basically a “direct democracy for organizations” structure that can be (and has been) implemented in nearly every business sector, from banking to manufacturing to shipping to farming to garbage collection to healthcare. To fully appreciate the nuts and bolts of implementation, the breadth of some real-world experiments, advantages over bureaucratic organizations, and the rationale behind worker-owned cooperatives, I recommend consulting The Cooperative Workplace (1989) by Joyce Rothschild and J. Allen Whitt. Here are excerpts from that work that touch on some of the central themes we inevitably revisit when individual and collective wills intersect – in business or anywhere else:

“An organization, of course, cannot be made up of a collection of autonomous wills, each pursuing its own personal ends. Some decisions must be binding on the group. Decisions become authoritative and binding in collectivist organizations to the extent they arise from a process in which all members have the right to full and equal participation.” (p. 51)

“Collectivist organizations generally refuse to legitimate the use of centralized authority or standardized rules to achieve social control. Instead, they rely upon personalistic and moralistic appeals to provide the primary means of control. In addition, the search for a common purpose, a continuing part of the consensus process, is a basis for collective coordination and control.” (p. 54)

“Impersonality is a key feature of the bureaucratic model. Personal emotions are to be prevented from distorting rational judgments. Relationships between people are to be role based, segmental, and instrumental. Collectivist organizations, on the other hand, strive toward the ideal of community. Relationships are to be wholistic, affective, and of value in themselves.” (p. 55)

“In sum, where the process of criticism is collectively sanctioned, it may serve a constructive function for the organization. By making the leaders or core members publicly and legitimately subject to members’ criticisms, such forums tend to reduce the inequalities of influence and to check personal abuses of power.” (p. 87)

“Demystification was defined earlier as the process whereby formerly exclusive, obscure, or esoteric bodies of knowledge are simplified, explicated, and made available to the membership at large. In its essence, demystification is the opposite of specialization and professionalization. Where experts and professionals seek licenses to hoard or at least get paid for their knowledge, collectivists would give it away. Central to their purpose is the breakdown of the division of labor and the pretense of expertise.” (p. 114)

“Worker solidarity, like commitment, is of significance beyond the gains in worker satisfaction and morale that it may bring. One research team has found in its study of cooperatives in developing countries that high solidarity goes with various measures of economic success, just as low solidarity goes with economic failure (Abell and Mahoney, 1981, p.14). This team posits that cooperatives rely on their solidarity and commitment advantages to achieve their economic performance; if these are lacking, the result is more diseconomies than in a conventional enterprise. As is apparent from the organizational features outlined in Chapter 3, a collective orientation depends on mutual trust. Internal conflict is especially disruptive precisely because of the consensual basis and personal relations that characterize these groups. Thus, compared with conventional firms, higher levels of worker commitment and solidarity are often observed in cooperative enterprises – but by the same token, they are also more necessary.” (p. 165)

“In light of the available evidence, we are led to provisionally conclude that worker ownership and democratic management often can be turned into a labor productivity and profitability advantage. But this economic advantage is precarious in cases where mechanisms are not established to give workers more voice in company affairs.” (p. 167)

Over the following decades, additional research has confirmed many of Rothschild and Whitt’s observations as being highly predictive of enduring worker-owned cooperatives around the world. That research indicates that employee-owned cooperatives often outperform non-employee-owned competitors, tend to demonstrate more resilience over time, and provide greater worker satisfaction and sense of purpose – as long as there is ongoing democratic engagement, sufficient internal education and training, and a culture of self-awareness and constructive mutual evaluation. Competition with other enterprises can of course be stimulative as well. In many ways, the successful characteristics of these cooperatives parallel the design principles of Elinor Ostrom’s common pool resource management – and indeed what seems to work in most collectivist approaches.

Migrating from Shareholder Ownership to Worker Ownership

In order to initially migrate shareholder ownership to worker ownership, it will be necessary to create a path that encourages or incentivizes transition rather than engineering involuntary expropriation. Remembering that monopolies would first need to be broken down into smaller, networked enterprises, and that some of these enterprises will become non-profit, transfer of ownership can become less of a herculean task. For example, such transfers can be initiated through worker-buyouts backed by the common property shares in the workers’ community, or elite change agents could be recruited who can gift businesses to their workers. Lastly, all of this would occur in conjunction with a radical downsizing of the stock exchange, focusing it to encourage pilot-scale innovation and outlier approaches that require collective backing, rather than act as a rent-seeking activity. From the perspective of shareholders, there will be a change in asset valuation and value conversion, as fiat currency is first diffused and then replaced, as social credits and the Universal Social Backbone schema intersect with growing portions of economic activity, and a system of holistic valuation begins to gain momentum. So there will be attenuation of individual wealth concentrations, but again this would hopefully and in largest part be voluntary, inspired by widespread acknowledgement of the unitive principle and expressed through direct democracy.

As a final note, I recently came across David Ellerman’s
The Democratic Worker-Owned Firm, which provides a detailed model for configuration and management of worker ownership, as well as compelling ways to define components of traditional capitalist enterprise that help support a smooth transition.

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