How do we make work better for everyone, even within the constraints of a capitalist system?
In a previous newsletter, we looked at the notion of private government, the idea that when you work for a company, you are essentially the citizen of a private government and that, thus, you are subject to an authoritarian regime.
At a time when the US seems to be moving toward running the country more like a corporation (which could severely undermine democracy), I want to share a proposal to move in the opposite direction. What if we treated a corporation more like a democratic state?
I want to share one proposed solution: a bicameral organization, which comes from Isabelle Ferreras’s book Democratizing the Corporation: The Bicameral Firm and Beyond.
Where are we Today?
First, let’s restate the problem,
Outside the workplace, they are expected to behave as responsible citizens, as voters capable of taking a stance on major political and social issues. Both in and outside of the workplace, they are expected to behave with courtesy toward others—to treat them with respect, as equals in dignity and rights. Then, at their jobs—in places, circumstances, and settings they know best, in which they are arguably the most qualified to assess situations and make decisions—workers become subordinates. They cease to be equals. Instead they become “subordinates” thanks to the labor contract—tools, resources, “human capital”—a phrase that acquires an eerie ring when one realizes that firm government is run unilaterally by those whose rights depend entirely on capital ownership. 1
When I shared the idea of democracy in the workplace on LinkedIn, commenters told me that workers could not be trusted to make decisions for an organization because they would vote based on their self-interest. This was a humorous comment, as the responder may have forgotten that individuals acting in self-interest are considered capitalism’s driving power.
At work, we give up our rights and our due process. In most knowledge work, what is expected of you can change and dramatically increase, yet you have no real recourse to renegotiate your contract at that point. You can ask for a raise or a promotion, but often, those benefits will come sometime after you have taken on the additional work (if they come at all). You are at the mercy of the company you work for. A company that could get rid of you at a moment’s notice.
To grasp the specific logic through which workers experience their labor, I use the notion of the critical intuition of democratic justice. I use this term in the tradition of the critical social sciences, the Frankfurt school in particular. From complaints about unfair compensation to burnout or full-fledged participation in a demonstration, I use this term to describe the notion that working people want to be treated according to the simple standard of the first article of the Universal Declaration of Human Rights: as “equals in dignity and rights.” As “equals in dignity,” they are equal “in rights,” too: I argue that this critical intuition extends to the inclusion of voice, that they ought to be heard and represented, as well. 2
When we are at work, we are outside of a democracy and at the mercy of our company. Given that work dominates a large part of our waking lives and is critical for survival, we should find ways to ensure our rights are equally protected at work.
The other risk is that democracy and capitalism are often at odds, which is part of our work challenges. In the United States, for example, we see how capitalism can hinder democracy in real-time, as the current administration ignores democratic constraints to run the country like a business.
This tension between democracy and capitalism has great destructive power—not to destroy capitalism in the short turn but to destroy democracy instead. Democracies promise their citizens equality. But, even in political democracies, that promise has been shut out of the workplace. 3
If we want to save democracy, one way to do it may be to expand democracy into the place it has not yet reached: the workplace.
Investments in business
If we think about the organization in these terms, we see that:
There is no question that a firm has economic dimensions. However, these should not obstruct the sociological reality of what a firm is: a form of political entity, which is owned by no one.34 It is an entity whose existence depends on ongoing decisions about the goals of the coordinated actions pursued within it, which are bound up in issues of efficiency and justice and depends on two major forms of investment, capital and labor. Their investments are mutually dependent: without one or the other, the capitalist firm would cease to function. It is an entity that affects the lives of many, including consumers and community members whose physical proximity means they are touched by its activities. Capital investors are stakeholders, too. Labor investors, however, are the only constituency formally governed by the rules and decisions of the firm. 4
Those who invest capital in the corporation (Ferreras uses the term firm for reasons that I won’t go into here) are then given the ability to make decisions about how to govern that corporation, while those who commit their labor to the firm gain no such decision rights; in fact, they are subjects to the decisions of others.
One proposal would be to go in the opposite direction, and firms like this exist. Rather than having the firm run by those who contribute capital, it should be run by those who invest labor:
Hence, it should be pointed out that the reverse of the despotic corporate firm—that is, a monocameral firm governed by labor investors—does actually exist in the world as we know it, in the form of worker-owned and -governed firms 5
A Proposal
Looking at history, there is a precedent for achieving democracy:
This history, and in particular the history of democratic revolutions, reveals that shifts from despotism to democracy have been managed through what I call a bicameral moment. By this I mean the moment when those in power realize that they must share that power equally or risk losing it altogether. The continued prosperity of Western societies has been made possible through these moments of emancipation, in which a dominated—and often more numerous—group in a given society secured the same rights as the despotic minority and began to participate in government. 6
And so, what should this look like at work? Ferreras proposes that we start from the perspective of creating a two-chamber approach to managing a corporation.
[This proposal] views the capitalist firm as comprising two constituencies, made up of incommensurable classes of investor—capital investors and labor investors—and assigns a chamber of representatives to each one. 7
It starts by questioning the underlying assumptions of today’s setup. Why do those who invest capital have a more significant say in how a firm is organized and operated? The theory is that they are more invested (since they invested money), are therefore more loyal, and have more at risk. Ferreras challenges those assumptions.
Although exceptions may exist, under the current conditions of global financial capitalism, there are no grounds for considering that capital investors have—by nature or culture—any greater loyalty to a firm than its employees, or desire its continued existence or prosperity more strongly.59 In fact, capital investors are far more mobile and less committed than the people working in the firm. Not only are labor investors generally more dependent on and attached to their firms; they are also vital to its proper functioning. In the context of publicly traded companies, because a labor investment is far less “liquid” than that of shareholders, the risk borne by labor investors is greater than that of capital investors. After all, when a firm is in trouble, a capital investor might choose to sell her shares. All that will be lost to her—the maximum risk she has taken, in other words, thanks to the clause of limited liability—is the value of the share, which, at worst, drops to zero. The same is not true of labor investors, for whom the risk is far greater: a labor investor cannot change jobs nearly so easily, and in cases where they are required to move homes or retrain to obtain new work, they may end up in debt—with less than zero, in other words. 8
When we see these two constituent groups as more equal, having both groups have representation in governance makes sense. Here is how Ferreras lays it out:
It consists of two chambers, a “capital investors’ chamber of representatives” (what is currently known as the board of directors) and a “labor investors’ chamber of representatives.” These two chambers would form an elected representative government that would work together to govern the firm. The government’s executive branch—its top management—would be appointed by the two chambers together. To set the rules governing the existence of the firm, executive management would have to receive a majority vote in both houses. This is why I refer to a two-chamber parliament, in which a majority (50 percent plus one) of representatives in each chamber would be required for the firm’s parliament to pass any legislation. 9
To anyone living in a two-chamber democracy, this will sound very familiar. Each chamber would have its own way of choosing representatives and the number of representatives. It would give employees a real voice in a company’s operations and key decisions. This also goes a bit further than proposed legislation in the US where, at one point:
Elizabeth Warren’s Accountable Capitalism Act proposed that workers elect 40 percent of the board, while Bernie Sanders’s Corporate Accountability and Democracy Act proposed that workers elect 45 percent. 10
Employees have a much stronger voice than in previous proposals by having two chambers that are required to agree to move any “legislation” forward.
Legislative representation through bicameral politics provides legitimate government in that it channels the voices of the constituencies of the political entity. It is reasonable in that each branch of government is limited by being balanced by the others. Finally, it is intelligent in that it provides rational representation for both sets of interests. 11
What this means for managers:
When I read this proposal, it seemed like a great compromise that could work within the constraints of our corporate systems today while also giving employees more power. The challenge, of course, is how it can be implemented.
Middle management is not in a position to enact this sort of change. However, voicing an idea like this can give it momentum. Like past initiatives by Sanders and Warren, the government may force organizations in this direction, but that will take a significant political change.
In the near term, there are ways to consider these changes and try to give teams more actual power and control.
I would ask, “What team-level management decisions can we give the team a democratic voice to decide?”
Many organizations don’t ensure that the direct reports of any manager they hire are on the interview panel and can approve or veto any hiring decision. This allows some flexibility in choosing a manager.
Employees can set their own goals and priorities.
What legislation and ideas can you democratize on your team?
- Isabelle Ferreras, Democratizing the Corporation:
The Bicameral Firm and Beyond ↩ - Ibid ↩
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