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A Case for Economic Democracy

By Gary Dorrien  Posted by David Kendall (about the submitter)     Permalink       (Page 3 of 3 pages)
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But less ambitious forms of economic democracy have succeeded in many places, and the scale question rests on politics and culture more than economic viability. Public bank theory takes seriously the failures of state socialism, the limitations of worker ownership, and the necessity of building up highly capitalized forms of economic democracy. The distinct advantage of this approach is that it diversifies forms of risk sharing and promotes greater efficiency by forcing firms to be financially accountable to a broad range of investors. Essentially, it is a solution to the entrepreneurial deficiencies of worker ownership, addressing conflicts of interest between cooperative owners and profitability that cause cooperatives to miss market signals.

There Can Be No Socialist Blueprint or Magic Wand

This approach does not rest on idealistic notions about human nature and it should not be the next progressive blueprint. Economic democracy is a brake on human greed and domination; the whole point of it is to fight the universal propensity of dominant groups to hoard social goods and abuse disenfranchised people. Neither should progressives absolutize any particular model of economic democracy, for the blueprint mentality is inherently problematic. Socialists were wrong to equate socialization with nationalization. They were wrong to reject production for profit, wrong to think that state planners could replicate the complex pricing decisions of markets, and wrong in trying to organize an economy not linked by markets. Not all Socialist traditions made these mistakes, but the blueprint mentality was deeply ingrained in virtually all of them.

From a democratic perspective, the key problem with the mutual fund model is that it weakens workers' power at the firm level. To the extent that the holding companies are granted supervisory control over their client enterprises, worker control is diminished. To the extent that the holding companies are kept in a weak position, the advantages of the mutual fund model are traded off as the enterprises essentially become cooperatives.

I have a theory about how to deal with that problem-it's a circular scheme modeled on Mondragon's "second degree" cooperatives that upholds the authority of the holding companies-but more important than any particular theory or model is the willingness to expand the social market in different ways and find out which models work best in particular circumstances. The tradition of Christian social ethics and progressive theology to which I belong has an ample history on this subject. The father of the social gospel, Washington Gladden, believed that profit-sharing industrial partnerships would put an end to the class struggle, until he lived long enough to see otherwise. The founder of social ethics, Francis G. Peabody, shared the conviction of most social gospelers that cooperatives were obviously the progressive Christian solution. The greatest social gospeler, Walter Rauschenbusch, believed that a combination of state and cooperative ownership would create a good society. Archbishop of Canterbury William Temple developed a type of guild socialism featuring a Meidner-like plan for worker-controlled collective capital funds. Reinhold Niebuhr stood for radical state Socialism before opting for the welfare state. Many liberationists and social ethicists have promoted "socialism" without describing what it is.

Most of this tradition wrongly operated with unitary ideas of capitalism and socialism, as though each were only one thing, culminating in the liberationist tendency to condemn "capitalism" categorically while employing "socialism" as a magic wand. The latter approach is too vague, monolithic, and evasive, but neither should social justice movements embrace any particular model as the next sign of the divine commonwealth.

The Better Way: Organic, Pluralistic, Pragmatic, Voluntary

Economic democracy must be a project built from the ground up, piece by piece, opening new choices, creating more democracy, building an economic order that allows for social contracts, common goods, and ecological flourishing. Economic democracy nurtures and sustains social trust: social capital that no healthy society can do without. It is a project that breaks from the universalizing logic of state socialism and takes seriously that there are different kinds of capitalism. Social theorist Roberto M. Unger calls for "alternative pluralisms," step-by-step constructions of alternative political and economic institutions. Abstract concepts of a monolithic "capitalism" or "market" obscure the variety of possibilities within existing capitalism and markets. So-called "capitalism" is always the product of particular historical configurations, contingencies, and struggles.

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The tests of any experiment in economic democracy are pragmatic. To impose something like the Mondragon network on a capitalist society would require coercion over workers who don't want to belong to cooperatives. The U.S. Pacific Northwest has a network of longstanding, highly successful plywood cooperatives. Some plywood workers choose to work in conventional firms instead of the cooperatives. No political economy worth building would force them into a different choice.

The issue of choice, however, is the key to a better alternative. A politics that expanded the cooperative and social ownership sectors would give workers important new choices. The central conceit of neoclassical economics could be turned into a reality if meaningful choices were created. The neoclassical conceit is that capitalism doesn't exploit anyone, because labor employs capital as much as capital employs labor. But in the real world the owners of capital nearly always organize the factors of production. To expand the cooperative and other social market sectors would give choices to workers that neoclassical theory promises, but does not deliver. It would show that there is an alternative to a system that stokes and celebrates greed and consumption to the point of self-destruction.

The earth's ecosystem cannot sustain a U.S.-level lifestyle for more than one-sixth of the world's population. The economy is physical. There are limits to economic growth. Global warming is melting the Arctic ice cap at a shocking pace. It is melting large areas of permafrost in Alaska, Canada, and Siberia, and destroying wetlands and forests around the world. The manic logic of corporate capitalism pays little heed to communities and the environment, and none to equality. Corporate giants like ExxonMobil succeed as businesses and investments while treating the destructive aspects of their behavior as someone else's problem.

For thirty years one had to be a stubborn type to sail against the religion of the market. Now one only needs to be awake. If the stubborn types can seize this terrible moment as an opportunity to build a better social order, we may actually do it.

Union alumnus Gary Dorrien is the Reinhold Niebuhr Professor of Social Ethics at Union Theological Seminary and Professor of Religion at Columbia University. An Episcopal priest, he was previously the Parfet Distinguished Professor at Kalamazoo College, where he taught for 18 years and also served as Dean of Stetson Chapel. Prof. Dorrien is the author of 13 books and approximately 175 articles that range across the fields of ethics, social theory, theology, philosophy, politics, and history. Praised for their "intellectual creativity" and "stylish prose," these works include four books on social ethics and economic democracy, two acclaimed books on political neoconservatism, and a trilogy titled The Making of American Liberal Theology: (1) Imagining Progressive Religion; (II) Idealism, Realism, and Modernity; (III) Crisis, Irony, and Postmodernity.

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