‘Democracy at Work: A Cure for Capitalism’ reviewed by Hans G Despain


Democracy at Work: A Cure for Capitalism

Haymarket, Chicago, 2012. 220pp., £13 / $15 pb
ISBN 9781608462476

Reviewed by Hans G Despain

About the reviewer

Hans G Despain is Professor of Economics and Department Chair at Nichols College, Massachusetts. He …

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Richard Wolff’s latest book Democracy at Work: A Cure for Capitalism addresses the transition from now to an alternative non-capitalistic society, with the primary focus on the now. Wolff has written the book for an American audience and specifically U.S. institutional change. However, its general principles are applicable to all capitalistic societies. Essentially, Wolff argues capitalistic workplaces should begin to be democratized by means of creating and instituting Worker Self-Directed Enterprises (WSDEs). The current moment is ripe for such an effort, first, because citizens are eager and receptive for alternatives to the worker unfriendly, low pay, benefit impoverished, and undemocratic workplaces most of us are currently enduring. Second, there are still millions of American workers cyclically unemployed from the financial collapse of 2007-8. Third, citizens remain angry about the lack of ‘main-street’ level ‘bailouts’ and there is a sense that the system is rigged against the workers and rigged in favor of a narrow elite (also see 169-79).

Wolff’s book is divided into three parts and eleven chapters, an introduction, and very brief conclusion. Part One explains the instability of capitalist societies, uneven development, and tendency for crisis and financial collapse, with the collapse of 2007-8 merely the most recent. Part Two explains that state-form capitalisms (e.g. Soviet, China, etc.) are partial alternatives at best. They successfully changed the macro-political management of economic production. However, Wolff argues in addition to changing macro-political management, the micro internal organization and management of individual productive enterprises need democratization. Part Three is the heart, and lengthiest section, of the book. Part Three presents in great detail the possibility for, and the how-to of, creating and instituting “Worker Self-Directed Enterprises” (WSDEs) within a capitalistic society and the impact and consequences they would have on the systemic dynamic of a capitalistic political economy, the change of behavior and incentives for workers and managers, and the transformation of cognition with respect to the conception of real-world alternatives to the undemocratic totalitarian capitalist workplaces and the political empowerment of citizens, community, and workers.

Wolff is under no illusion that WSDEs will end workers’ struggles. Analogous to the end of slavery, ex-slaves still had economic and political problems. Ex-slaves no longer struggled over being the property of a slave-master, but other forms of exploitation, oppression, and racism persisted (182). The nineteenth century emancipation proclamation shifted the grounds of the struggles; institutions transformed and power-relations shifted. Similarly, Wolff believes that WSDEs will transform the political and economic grounds of worker struggles. WSDEs will be an extension of democracy and a shift of the power-relations that govern society.

Similar to other Marxian economists, Wolff underscores the historical record of the instability of capitalism (25), its uneven development (27), and tendency to generate massive inequalities in income (135-7), wealth (92), opportunity (44-5), and political power (89-90). Welfare state capitalism and New Deal politics intended to mend these contradictions and maladies of capitalism (31-7). New Deal reforms were both partial and all too temporary.

The boom and bust history has a parallel policy occurrence. Namely, during the bust there is an increase in regulation and pro-labor policy, and during the boom there is a dismantling of regulations and an increase in anti-labor policy (151-4). In other words, typically crises have been followed by countercyclical, pro-labor, and “trickle-up” economic programs that have been rather effective to reverse the immediacy of the crisis (112-3), but ineffective to prevent the boom and bust sequence itself (35-7).

Historically unique and remarkable, of the U.S. policy response to the 2007-8 financial crisis, was the absence of any serious debate concerning “trickle-up” economic programs to protect American workers and households (68). Instead, the response was bailouts for financial corporations and key industries (56-60), and programs of “trickle-down” economics (96-7), whereby, large and direct government assistance for (typically big) business and the rich, which in turn “is supposed to ‘trickle down’ and provide a recovery for the mass of people, too” (7). The problem is that “the expected trickle [down] failed to materialize” (57).

The bailouts and trickle down programs generated massive federal budget deficits (56-60), and the debate quickly turned from socio-economic crisis to a critique of “deficit spending” (63). The big problem now became the “sickness” of government deficits and debts and the appropriate medicine was argued to be austerity or economic belt-tightening (66-7). There was little disagreement about the importance and effectiveness of austerity (9). The main political question was not, if austerity or not, but how much austerity (67).

The “too big to fail” banks got bigger after the 2007-8 collapse (76), but the banks which were unable to function without massive government support and bailouts were nonetheless argued to be “private enterprises” (71). Thus, not only was there no serious debate concerning New Deal “trickle-up” economics, “any systemic alternative to capitalism” was keep silent and off the national agenda (68). The Occupy Wall Street movement attempted to challenge the concentration of wealth and power (177) and the social taboo of any national discussion concerning “a systemic alternative to capitalism” (174-5).

A major problem confronting the discussion of “a systemic alternative to capitalism” is the legacy of Soviet and China style “socialism.” Wolff, drawing heavily from his previous writings (Wolff and Resnick 2002), carefully defines capitalism. The conventional wisdom accepts that a shift in (1) the ownership of the means of production, and (2) the distribution of the means of production and output, (respectively (1) from capitalists to national government, and (2) from economic markets to political planning) is to move from capitalism to “socialism” (99-100). Wolff argues this to be false. It does accomplish a macroeconomic shift to be sure, however, what is further required is microeconomic shift (140) in the internal organization of producing enterprises (93) and who controls the distribution of the surplus generated (104). In both western-style capitalism (“private capitalism”) and the so-called alternatives to capitalism (state capitalism) the surplus produced by workers is appropriated and distributed by others (109).

Wolff’s Marxian surplus analysis reveals the scandal of American capitalism and Soviet “socialism” alike: there is an absence of democracy concerning the distribution of the surplus generated by these systems. “In fact, we must question the very possibility of genuine democracy in a society in which capitalism is the basic economic system” (94), real democracy is absent in both. The scandal then is that in the U.S. which is argued to be the world’s foremost democracy, and the worker inspired Soviet “socialism,” both preclude democratically and worker controlled workplaces. A new economic system must critique both private and state capitalism and provide a concrete pathway forward (116).

Wolff’s primary agenda is to provide an argument and blueprint for the democratization of the workplace. After all, most Americans accept democracy as a foundational social value. “If democracy is a genuine foundational social value, it ought to govern the workplace first and foremost” (147). His overarching hope seems to be revolutionary, however, his argument and blueprint is surely reformist. According to Wolff, reform politics can be complimentary building blocks for social transformation. “Indeed, one goal” of Wolff’s book “is to lay out a program for revolutionary change that can achieve reforms that won’t easily be reversed” (113). For example the rollbacks we have witnessed of the New Deal and other reforms and regulations (36-7).

In private and state capitalism, a board or public body, different from the workers, collectively appropriates and distributes the surplus. “By contrast, in a WSDE, no separate group of persons – no individual who does not participate in the productive work of the enterprise – can be a member of the board of directors” (118). The salient point of the internal organization of WSDEs is that the “surplus production, appropriation and distribution in WSDEs is different from and can coexist with various forms of ownership of means of production” (141) and presence or absence of money and markets (143-4).

It is crucial for WSDEs to work out (micro)politically the “mutually acceptable relationship between” “two kinds of workers” (129). The first type of workers are the direct producers of the surplus and the second type of workers are those that “enable” indirectly the production of surplus, such as secretaries, clerks, security guards, cleaning staff, managers, lawyers, architects, counselors and so on who maintain the paperwork and physical spaces that provide the necessary conditions (128). Additionally there is a second realm of enablers (unaddressed by Wolff) who maintain households, provide caregiving to children, elderly, sick, etc., along with the community at large (145).

Wolff provides little guidance of how the micro-politics of WSDEs would be worked out. Nonetheless, it should be pointed out that these micro-political problems are currently worked out rather simply in a radically undemocratic way (151). Wolff’s point is to underscore the Occupy movement illustrates the desire for radical change from the 1% oligarchic undemocratic hegemony. How workers choose to work out and constantly adjust the relationships within the WSDE will profoundly shape its internal life as well as distinguish it from the internal (typically totalitarian) internal life of the capitalist enterprise (130).

At his website, www.democracyatwork.info, Wolff offers well over one hundred examples of current worker self-directed enterprises. In the book the primary example offered is Mondragón Corporation of Spain and its 85,000 worker-members, all based on the premise of one worker-member, one vote (157). Wolff further differentiates his WSDEs from Employee Stock Ownership Plans (ESOPs) and other worker-owned enterprises (119-20), worker-managed enterprises (120-1), and cooperatives (122). The key difference is that it is only in WSDEs that distribution of surplus is determined democratically. This empowers workers both economically and politically (146) and most important is a radical nonexploitative micro-political shift in the daily lives of the working-class (124).

Wolff argues that WSDEs can exist within, and coexist with, capitalism and its enterprises (159). He argues it erroneous to believe that noncapitalistic enterprises cannot successfully compete with capitalistic enterprises (156). The Mondragón Corporation of Spain has been impressively successful for more than five decades (128). Hundreds of WSDEs are demonstrating there is an alternative to capitalistic enterprises (see www.democarcyatwork.info).

Not only are there reasons to believe that workers and citizens will prefer, politically fight for, and economically support WSDEs (e.g. consuming only WSDEs produced goods), there will also be positive impacts on several other dimensions of society. There will be a shift in participatory politics, because people will be encouraged that their political beliefs and actions can make a difference (146). Likewise, the impact on technical change and patents will be revolutionary because workers and communities decide whether to implement new technology (131-2). There will be a radical shift in local environmental policy (172), distribution of income (135), and education (128, 161).

Although Wolff distinguishes and prefers WSDEs from and over ESOPs, worker-managed enterprises, and co-ops, he emphasizes that strategically there is a close connection between these institutions (along with trade-unions) and the creation and institutionalization of WSDEs (169-79).

Moreover, Wolff suggests that we support a federal program that allows unemployed workers to take their unemployment compensation as a lump-sum to pool with others to create WSDEs (170-1) and infrastructure projects supportive of WSDEs (161). For example, “WSDEs need public schools to teach all students how to design and direct large group activities,” “the benefits and modalities of collective behavior,” “and how to give and receive orders within a community of equals” (162). Certainly these ideas have far more potential to improve the lives of workers than anything else being debated in Congress today.

Wolff’s WSDEs afford a New Deal, not so much concerning the relationship between the government and the citizen, but a New Deal concerning the relationship between a productive enterprise and its worker-members. It would be a New Deal that radically extended the democracy that is so valued by Americans and its political history. WSDEs would be new institutions capable of the following four things: (1) providing jobs to the unemployed, (2) offering an alternative for all workers to the totalitarian capitalist enterprises, (3) able to compete with and outperform capitalist enterprises, and (4) resist political rollback.

Wolff’s book and ideas deserve wide support and wide debate to repoliticize the American population and rejuvenate the American workforce and citizens.

4 October 2013

References

  • Wolff, R. D. and Resnick, S. 2002 Class Theory and History: Capitalism and Communism in the USSR New York: Routledge.

9 comments

  1. WSDE certainly is a concept that is conducive with traditional labor union movements and progressive politics. It is also an extension of democracy which should appeal to those that support the founding ideals of the U.S. constitution. In the U.S. democracy has been extended to first the wealthy/land owner white males, than to non-wealthy/non-land owning white males, then to African American males, then to women. WSDE simply continues this historical tradition into the workplace.

  2. Democratic rights are won through political movements and mass mobilisations. However, it is important to lay out in which democratic direction a society is to move. Without a clear theoretical model, agenda, or vision, a social movement cannot obviously take off or succeed. Wolff steps in to work out such a model for America and perhaps the world. To the extent, the WSDE model is supposed to work within the capitalist framework, at least to begin with, it remains reformist, but it is right to move towards an alternative non-capitalist regime with a more modest aim. In mankind’s journey to a better socio-economic system – towards self-governance in productive labour and freedom – it will be a useful ‘experiment with truth’.

    Sarban

  3. Sarban, WSDE is radically reformist. However, what is potentially revolutionary here is the very questioning of Surplus Value — who controls its and its distribution. To couch this in a less esoteric language of democracy is very important as a political entry point. Democratic capitalism is certainly an oxymoron; it is very difficult to maximize profits under a democratic regime.

  4. That’s somewhat of a worry though Hans, as Wolff’s reformism – which I’m not against – still play by capitalistic rules. For instance he still refers to a surplus being produces, and allocation roughly seems to follow the law of value. I think a truly socialist society would not function in such a way that these terms could make sense. But I do see WSDEs as a good stepping stone.

  5. CB:

    The purpose of WSDEs is limited by definition, but tell me where in the world you see revolutionary potential right now? Wolff’s model is a compromise between theory and history, truth and reality. At the same time, there is need to restore and legitimise revolutionary agenda (move towards truly socialist society) at least in theory. This is something philosophers like Badiou, Zizek and others are trying to do, although I am not sure with what success.

  6. CB,

    Wolff’s definition of Surplus Value is the product that is produced beyond the reproduction requirements of a firm or society. The argument is couched on Surplus Value.

    As to the law of value, it depends what is meant by value. Marx does seem to use this term at least in three senses, as a philosophical category, as a cultural phenomena, and as an economic law-like force. It seems to me value is at work in all societies in the first two senses (which I take as Marx’s point), while the latter is unique to capitalism. But even in capitalism the so-called “law of value” depends on institutions, e.g. competitive firms or oligopolies, powerful or impotent public sector (which would have been the entire point of volume two of Capital had Marx been able to finish it).

    In short, your comment “WSDEs [are] a good stepping stone” is the key. Wolff too sees this as a bridge to an alternative society and a reaction to CINA (capitalism is no alternative). He understands WSDEs as real policy to dysfunctional economic and political systems, and a political strategy to empower the masses.

  7. I wonder whether the comment by CB is even more destructive of Wolff’s notions that is appreciated. If these worker owned firms exist in a capitalist environment, then the inherent rules of capitalist development will ensure, perhaps, that they gradually become more like conventional capitalist firms [ an example is the co-operative movement in Britain] or they would gradually succumb to capitalist competition. They would survive if they were self-sufficient, which is a bit implausible in contemporary society. On the other hand, if they had to compete with capitalist firms in the market to gain some cash for necessary purchases, it seems to me that they would inevitably lose. They could not produce products at the low prices that contemporary capitalists manage, by driving down wage rates.

  8. Sydney,

    WSDEs are out of phase with the logic capital, i.e. minimizing costs and allowing for capital mobility to maximize profits. The point is to begin to challenge the logic of capital toward a “logic of humanism.” You assume in your comment that the contradictions of capitalism with humanism will force WSDEs to automatically succumb to the logic of capital. I don’t think so. Simply on the grounds these enterprises are being created suggests resistance against the logic of capital within capitalistic social relations.

    Capitalism is no alternative (CINA).

    Capitalism is not working for the majority of people, within and outside the so-called developed countries.

    WSDEs are certainly reformist, will face the contradictions of a quasi-humanistic institution within the anti-humanistic social relations of capitalism. However, it is not immediately obvious how these contradictions get worked out. In my estimation the contradictions are not boding well for the successful reproduction of capitalism.

    Of course these are not at all easy to predict, causes and consequences within social being are radically overdetermined. But as capitalism destroys the environment, itself (socioeconomic and financial crises) and human lives (in the U.S. underemployment is nearly 20 percent, 53 percent of the workforce makes less than $25,000, young people are unemployed at rates of 15 percent, working for free [internships] or low pay even when they have a college degree, no benefits no healthcare) how much longer can it survive?

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