Economic ownership has re-entered the political mainstream. Senator Bernie Sanders is the latest politician to plant a flag in this debate with an ambitious plan, announced this week, to give workers a greater stake in their companies and the wealth they generate. Following the announcement of Labour’s Inclusive Ownership Fund policy in 2018, Sanders’ designs mark a decisive shift in policies to democratise ownership at scale. No longer content with regulating capitalism, progressives are instead directly confronting capital ownership.
Though the details of Sanders’ plans are yet to be hashed out, its direction of travel is clear. The plan would require businesses to contribute a percentage of stocks to a fund controlled by employees. In turn, the fund would pay a regular dividend to workers while making them a powerful voting shareholder. Analysis for Common Wealth, the think tank I co-founded that designs ownership models for a democratic and sustainable economy, suggests that granting 10 per cent of dividends would pay on average $2,725 per employee each year.
There are important design questions to get right. Sharp differences across sectors and firms will determine the policy’s effects. Though popular among progressives, worker ownership could actually deepen inequality. There is no guarantee workers would stand to receive the same amount. Google employees would likely benefit from a greater payout than Walmart workers. The Labour Party’s approach to worker ownership remedies this problem by capping the dividends that go to workers and sharing the excess across society. When properly thought through, the policy could be a lever for sharing the wealth that society creates in common.
That Sanders’ intervention would boost individuals’ income is a useful outcome of the policy that may prove a vote winner. But it’s not the sole purpose of the intervention. At its heart, it is about effecting a durable shift in economic power and wealth towards workers through democratising ownership and control within the company.
The plan would also upturn the distribution of power within the firm itself, in a move that could ultimately challenge the decision-making power of private capital and create a new architecture of corporate control rights. Sanders’ proposal, and Labour’s inclusive ownership fund, would dislodge the primacy of external shareholders and reshape the ownership of business, using micro-economic interventions to rewire the distribution of power within the economy.
For progressives in the Anglophone world, cross-Atlantic collaboration between the UK and US is a source of great hope, even if they are late to the party. Those involved in plans for democratising ownership, and the movement for a Green New Deal, are swapping policy ideas and campaigning tactics. There’s work to be done, and the entirety of capitalist realism to contend with. But just as an intellectual and political alliance between Ronald Reagan and Margaret Thatcher galvanised a turn towards neoliberal economics in the 1980s, so today, the cross-pollination of ideas could be a seedbed for transcending their legacy.
A more democratic architecture of ownership is essential for confronting challenges like climate change and spiralling inequality. Twice before in living memory British society has transformed itself; both times deep shifts in property relation underpinned change. The post-war consensus marked a shift in the extension of public ownership, a process that began during the Second World War and culminated in Labour’s landslide 1945 victory. Ownership and property rights were also fundamental to the counter-assault that Thatcher’s government launched on this consensus during the 1980s. By privatising land, housing and utilities, the Conservative Party constructed political constituencies in support of a new settlement that put private ownership at its centre.
Neoliberal capitalism has neutered democratic power and privileged finance over the real economy. As efforts to move beyond this model intensify, those involved should learn from past movements of economic change. Transforming the economy in the decades to come will depend on equally deep shifts in property relations and ownership. It will also require the creation of political coalitions capable of demanding change. By expanding the constituencies that have a stake and a say in the economy, this is something that new ownership models can help achieve. The entry of ownership into the political mainstream is a welcome step toward deepening economic democracy.