Social Democracy isn’t enough anymore, we need Economic Democracy
As a delayed reaction to the fallout from the Great Recession, recent years have seen a renewal of left-wing politics globally. Figures like Bernie Sanders and Jeremy Corbyn and organisations like Podemos and Syriza captured a desire among many for a decisive break with neoliberalism and the ‘Third Way’ approach common to centre-left parties. Unfortunately, 2019 and 2020 have marked a decline in this movement’s electoral success. But its prevailing ideas remain as popular as ever and cannot be disregarded. One of these is Democratic Worker Control.
Many honest social democrats sought to label this movement as their own, one that wants to return to the Keynesian social democratic consensus that existed after World War II and before the Thatcher and Reagan revolution. There is an element of truth to this. The New Left does want a more interventionist state with higher taxes on wealth and more regulations on finance. But labelling this movement as simply a desire to reverse the clock ignores some of the more radical and altogether more interesting aspects of this new socialist awakening.
Social democracy collapsed in the 1970s for a reason. It arose in the 1930s and 40s because, in the wake of the Depression and World War II, private capital was historically weak which allowed governments to put checks and balances on it in an unprecedented way — higher taxes on wealth, more regulation of the private sector, and stronger trade union membership. But as a result of this economic recovery, by the 1970s the capitalist class had also recovered and the effort to reverse progressive achievements was started in earnest.
The circumstances of history allowed social democracy to succeed, but once those conditions were gone it could no longer survive. In the context of the globalised and financialised economy of 2021, there is no prospect of social democracy succeeding on its own. The Left has to be more realistic. But to be more realistic, it has to become more radical. It has to return to the core of the issue — who owns and who controls the economy? No longer can we afford to ignore the conflict between capital and labour as social democracy attempts to do. Socialists should be forthright in arguing that labour must control capital once and for all.
How do we do that? Both Corbyn’s Labour Party and Sanders’ presidential campaign included in their platforms policies for increasing economic and workplace democracy. Their manifestos also included standard progressive policies like universal healthcare, public ownership of utilities and raising taxes on the wealthy. But the most novel aspects of their platforms were their policies for incentivising and strengthening the worker cooperative sector and mandating a share of corporate boards to be elected by employees.
Under John McDonnell’s concept of ‘Economics for the Many’, democratic socialism in the Labour Party had an injection of fresh thinking and new ideas. Radical proposals like converting private enterprises into worker cooperatives, a new model of ‘democratic public ownership’ and the ‘Preston Model’ of Community Wealth Building finally gave teeth to the socialist desire for economic transformation. Notably, McDonnell denounced the old Labour approach to nationalisation under Clement Attlee and Herbert Morrison as being too managerial and alienated from ordinary citizens.
Conversations around these policies have been missing in Irish politics for some time. Political discourse here tends to fall on a social democratic/neoliberal axis — those in favour of higher taxes and more public spending and those in favour of tax cuts and market-led solutions. That conversation is necessary, but it misses the vital issue of democracy in the economy — who gets to make economic decisions? No longer should workers be denied a voice in the decisions that affect their lives. What parties of the Irish Left, including the Labour Party, must put forward is a realistic blueprint for expanding democracy in the economy.
The first core policy to look at is the Worker Cooperative model. Workers own and manage the company themselves in a democratic and collaborative manner. Every worker has the same share of the company and an equal vote. Not every worker necessarily earns the same amount, but the level of remuneration for each employee is decided collectively. Each worker receives a set level of income and the workforce decides together what management or talented individuals can earn on top of that. As equal shareholders, each worker receives a bonus at the end of the year. Workers decide which individuals were most suited to management tasks through democratic elections. All important decisions of the firm are made democratically.
Allowing this model to be strengthened in the context of globalised capitalism is a challenge. One solution often put forward is that the workforce of a private company could, by law, be made the ‘buyer of first refusal’ in the event of a company selloff. Aiding workers in this purchase is where other socialist policies like public banking and community wealth building become necessary. Worker coops need capital investment too. Allowing communities themselves, rather than private profiteers, to support and invest in community-centred enterprises like this would allow a whole ecosystem of cooperative democratic organisations to flourish.
Worker cooperatives must become the centrepiece model for democratic socialists. But that shouldn’t let privately-owned companies off the hook either. Privately enterprises in Ireland should face the same requirements they would face in other European member states. Not only should they be mandated to engage in collective bargaining and recognise trade unions, they should also be required to allocate a portion of their corporate boards to elected worker representatives — Worker Codetermination. In Germany, workers in a company of over 2,000 employees elect just under half of the company’s board and elect a third of the board in companies of less than 2,000.
Public ownership/nationalisation cannot be discounted either. But we must be mindful of John McDonnell’s observation on the experience of nationalisation during previous Labour governments. Once industries were taken into public ownership, they were often handed over to bureaucrats or even the same managers who ran them while they were privately owned. Although arguably still more democratic than private ownership, nationalised industries were often divorced from the needs of workers and the communities they served. Democratic Public Ownership — engaging with workers, local communities, and all stakeholders — can be a model to follow in the 21st century.
Our Labour Party has a responsibility to put forward the case for economic democracy and workers’ control. While Labour’s 2020 manifesto had many progressive policies, it neglected to include proposals for strengthening the worker cooperative sector. This should change in the next manifesto. Other parties from Sinn Féin to the Green Party included such proposals, why not Labour? As the party of workers, strengthening economic and workplace democracy should be front and centre to our platform.
Often Labour and its affiliated trade unions take the phrase ‘workplace democracy’ as a synonym for trade unionism. It goes without saying that strengthening the rights of trade unions and expanding union membership are vital components of democratising the workplace. But this cannot be the extend of what we mean when we say ‘workplace democracy’, the policies outlined above have to be considered too. The trade union movement will have a vital role to play in advocacy of economic democracy across the board.
All of these proposed alternative models are achievable and have real-world demonstrable success. They are not utopian ideas. What makes them radical is that they challenge the accepted wisdom of our age that democracy must be confined to occasional electoral politics. Rather than advocating a return to the old model of social democracy, we should push for full democratisation of the economy. As democratic socialists, we should not avoid the moral case for democracy — that more democracy is a good thing in itself. This belief is as old as our movement and its renewal is central to the renewal of the Left today.