Democracy at Work: A Cure for Capitalism
A new historical vista is opening before us in this time of change, Wolff writes in this compelling new manifesto for a democratic alternative based on workers directing their own workplaces.
Publisher: Haymarket Books
Publication Date May 2012
List Price $17.00
Available for pre-order through democracyatwork.info
Reviews of Democracy at Work: A Cure for Capitalism
-- Nomi Prins, Author of It Takes a Pillage and Black Tuesday
Reviewed by Hans G Despain on 10/2/2013
This article originally appeared at MarxandPhilosophy.org
Richard Wolff’s latest book Democracy at Work: A Cure for Capitalismaddresses 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 (seewww.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.
Reviewed by Kate Frey on September 14, 2014
Socialist Alternative Portland, ME
In 2010 Richard Wolff published Capitalism Hits The Fan! The Global Economic Meltdown and What to Do about It. He hosts a weekly radio show on WBAI in New York and has had wide exposure in alternative media outlets. In Democracy at Work, Wolff addresses what he feels is the most viable path to a post-capitalist society. His analysis is informed by Marxism but is relatively jargon-free. He briefly but ably discards the right-wing view that disasters such as the Great Depression of the 1930s were caused by too much government intervention – but he also takes issue with Keynesianism. He explains how, during the 1930s, under pressure from a US working class in which socialists and communists played a leading role, Franklin Roosevelt was forced to adopt social-democratic programs, financed by taxing the rich. He contrasts the response of Roosevelt in the 1930s, a response barely tolerated by large segments of the US ruling class, with that of Bush and Obama during a period in which the US working class was more quiescent.
Wolff gives an accessible overview of the financial crisis that hit in 2009 and of the current “Great Recession.” He provides a good antidote to much of the obfuscation, capitalist apologetics, and blaming of deregulation as the sole cause of the crisis that one hears in the mainstream media, and provides a deeper critique focusing on processes inherent within capitalism itself. Between 1945 and the early 1970s the standard of living of the US working class continually rose, as it benefited from a historic labor shortage. From the early 1970s on, what Wolff calls “a set of broad economic changes” transformed US capitalism. These included changes in technology, especially computerization, women surging into the labor market, and immigration, along with the feedback loops of financialization fueled by greater worker productivity combined with stagnating wages, which forced the working class to rely on credit to maintain its standard of living.
Wolff does not delve into current theoretical debates on Marxist crisis theory, such as the question of the “tendency of the rate of profit to decline.” Nevertheless, addressing the non-specialist, Wolff makes an important contribution to the public dialogue.
In the second half of his book, Wolff discusses his “cure for capitalism.” His definition of capitalism and socialism, reflecting the influence of thinkers such as Louis Althusser and Etienne Balibar, focuses not on who owns the means of production, but rather on how society organizes the production and distribution of the surplus. He contrasts the goal of working-class control with the practice of the former Stalinist states, which he terms “state capitalist” because the surplus was controlled not by the working class but rather, as under “private capitalism,” by a managerial elite. He calls for a system of “Workers’ Self-Directed Enterprises” or WSDEs as the core of a future post-capitalist society. A WSDE differs from a capitalist firm in that the employees would democratically decide on production, distribution, and other goals. The drive would be to fulfill human needs rather than to reproduce capital.
Wolff goes on to discuss relations within the WSDE and also external relations with governments, other WSDEs, and communities. He says WSDEs would usually be small-scale enterprises, often smaller than a few thousand workers, but he leaves open the possibility of much larger firms. Internally, Wolff sees a differentiation between employees directly producing a surplus (the “producers”) and workers who provide necessary but ancillary services (the “enablers”). While both types of employees would have democratic input and control over the firm’s direction, only the “producers” would vote on decisions as to allocation of the surplus. Other than this Wolff posits a myriad of ownership possibilities for the employees, including equal stock ownership and direct democracy. There would also be varying relations with governments, possibly including renting or leasing plant and equipment, as well as various tax schemes and planning methods. There may or may not be market relations with other firms.
Wolff implies that there could be a period of co-existence between WSDEs and capitalist firms in which the two sectors would compete, perhaps not unlike the period of the New Economic Policy in the Soviet Union of the 1920s. Wolff refutes the commonly held myth that capitalist firms would be inherently more “efficient” than firms organized on other bases. Indeed, he rejects the capitalist notion of “efficiency.” WSDEs would focus on what are democratically decided to be desirable human needs relating to quality of life such as workplace accessibility, health and childcare, and education for cooperation rather than competition.
One might wish for more attention to the political obstacles in the way of reaching this goal. It seems likely, from examples such as the Russian or the Spanish civil wars, that to achieve a transition to a post-capitalist society will require a titanic revolutionary struggle. Wolff alludes to such difficulties in discussing the trajectory of the Soviet Union, but the book overall seems to downplay the necessary political dimension.
In closing Richard Wolff makes an appeal to the “organic intellectuals” of the Occupy movement, those looking for a way out of the current crisis and beyond traditional “statist” versions of socialism – including also those offered by European social democracy.Democracy at Work offers a stimulating yet relatively painless read for those bewildered by most expositions of economics.