Research conducted by BerkeleyHaas and Rutgers University provides insights into how such ownership structures can impact job quality, wealth distribution, and business sustainability. The main question of the study was “How might worker ownership improve job quality and firm performance in historically low-wage sectors?” Let’s look!

What Does the Act Establish?

The POWER Act “establishes a panel to study the creation of an Association of Cooperative Labor Contractors, among other potential activities, to facilitate the growth of democratically-run high-road cooperative labor contractors.” It additionally provides financial support through loan guarantees and tax incentives to businesses that are transitioning to employee-owned models (like ESOPs and worker cooperatives). This is offered to reduce the financial barriers as businesses go through structural change. The act additionally supports employee-owned businesses by granting preferential treatment in federal contracting and providing advisory services for their employee ownership journey.

The Study

The BerkeleyHaas and Rutgers’ research highlights the broader economic benefits of employee ownership, particularly in “job quality and firm performance.” Its main findings include:

• Benefits of Employee-Owned Models: The study found that employee ownership improved job quality through higher wages, better training, and democratic workplaces. They additionally found increased job security, lower turnover, and better productivity levels

• Barriers: Although employee-owned companies are valuable (for the reasons listed above), market estimations often lead to undervaluing. They also explore how different regulatory barriers, like financing restrictions, hinder growth for these businesses. The POWER Act addresses these barriers by promoting Cooperative Labor Contractors (CLCs) to address weakened labor conditions in contract labor

• Umbrella Groups: The study revealed that secondary cooperatives and nonprofit coalitions help overcome these barriers. The Power Act encourages similar usage of cooperative support (through Umbrella Groups) to enhance “economic viability”

Additionally, this study lays out approaches to promote worker ownership because of how economically prosperous businesses that adapt these models can be. These approaches include:

• Improving Information: The study proposes the idea of a certification program to recognize these high-road worker-owned (HRWOs) companies (including worker-owned workplaces). This would help with the identification of workplaces to inform workers of the opportunities that are available to them

• Programs for Operations: The study recommends a training curriculum for HRWOs to lower costs of maintaining a democratically run workplace. This can additionally be seen through training grants, or loan templates for cooperatives. The Umbrella Groups (listed above) cannot fully support worker-owned workplaces, so establishing programs (especially as HRWOs grow) is essential for continuing workplace operations

• Creating Regulations: They suggest the clear definitions of HRWOs and removed requirements during the application process for loans. They want regulatory deference for HRWOs, to safeguard them from their practices (with the idea that these companies act differently than others because they are not inherently focused on producing profits for shareholders). An example of this includes a waiver for joint employer liability.

The POWER Act represents a strategic effort to explore and potentially implement worker ownership models in California. Research from BerkeleyHaas and Rutgers University provides evidence that employee-owned models can lead to improved job quality, enhanced performance, and broader wealth distribution in the long-run. Exciting stuff from California that we can look forward to seeing across the United States.

And to be fair, why should Gen Z trust the grownups? They delivered the financial crisis, the Iraq War, climate change, a polarized pandemic response, and historic inequality. Among my students, one way that distrust manifests itself is in curiosity about the anti-vaccine presidential candidacy of Robert Kennedy, Jr.

Another way that distrust is expressed, according to business owners I speak with, is that Gen Z workers demand be in the know about decision-making in the companies they work for, and to influence those decisions. Unlike previous generations, they tell me, these new hires are disinclined to defer to previous generations whose own deference got us into our current set of messes.

To the degree the message is just “move aside, it’s our turn,” it will not prove any more restorative than any other shift in power. It will just be a new group that gathers power over other groups.

But if this generation’s participatory impulse opens up space for a less hierarchical, more democratic way of working together—what organizational scholar Mary Parker Follett called power with—it might well transform our companies, churches, schools, neighborhoods, and forests.

One organization helping Boomers and Zoomers learn a version of power with is Campus Compact, through its work on international collaboration. I was turned on to Compact’s work by my aunt NJ Pierce, who co-authored the piece linked above. Her white paper focuses on higher education, but its lessons for the workplace are clear, too: as business owners and executives get farther along in their career, they would do well to consider how to “co-generate” their organizations with their younger colleagues. I can tell you from my experience in the classroom and as a manager that it’s worth the work!

A Wall Street Journal podcast from this week highlights a big experiment at Bayer, the giant pharmaceutical company and maker of aspirin.

The new CEO is implementing what he calls “dynamic shared ownership,” cutting ~40% of bosses and middle managers, and facilitating the creation of ad hoc teams built around the best ideas, proposed by anyone at the company and then voted on by their colleagues.

Bayer won’t call this democratic—perhaps that’s a scary word?—but it sure sounds like that to my ears.

For one point of comparison, here is an edited version of the five pillars of democracy, according to one of the giants of democratic theory, Robert Dahl:

1. Effective participation

2. Full access to information

3. Equal treatment

4. Control of the agenda

5. Full inclusion of adults

Listening to Bayer employees’ complaints and to the CEO’s proposed solutions sure sounds a lot like he might have read Dahl along the way. Dynamic Shared Ownership promises to offer more transparent and effective participation and control over the decision-making agenda to a wider swath of Bayer employees, equalizing the importance of employees’ input.

Watch this space—we’ll see how it goes! The original podcast:

The organizational democracy scale: The most recent and comprehensive paper I could find came out in 2022. In it, two management scholars build and test an organizational democracy scale (a closely related idea). Their scale includes ten concepts:

1. Freedom

2. Fairness

3. Integrity

4. Tolerance

5. Shared responsibility

6. Structure

7. Transparency

8. Knowledge sharing

9. Accountability

10. [A] learning environment

Open questions: The paper doesn’t offer a definition of each of these terms, but it does suggest 2-5 questions organizations can ask their employees to get a sense of how employees view their organization and rate themselves on this scale.

• That gets at how employees feel about their employers, but it doesn’t get at the structural and institutional questions political scientists are be interested in (see Part I).

• It isn’t immediately clear to me from Ahmed and Ahmed’s list of questions how these criteria for organizational democracy differ from general criteria for good workplaces.

Still, it’s not a bad place to start! How would your organizations rate on the organizational democracy scale?

In a recent paper, Colin Birkhead and I recall a story now a popular image in political science research: 

Rumi, the 13^th century Sufi poet, was one of many to share a version of the parable about a group of people in a dark room attempting to describe an elephant based on the part of the elephant they were touching. Holding aside the question of why and how these amateur biologists found themselves in such a predicament, the moral of the story is that they were giving different descriptions of the same thing.

Workplace democracy is one such elephant. For the last few months, as part of a potential project with Simon Pek, we have been looking at the litany of terms scholars use to describe similar democratic processes at an organizational level—different parts of the same elephant of workplace democracy. Here is what we have found, with a focus on academic literature reviews for each of each term. 

Workplace Democracy

The most common, popular usage of the phrase workplace democracy seems to be in reference to labor unions, which has a rich tradition of study. But academics consider workplace democracy much more broadly and across multiple disciplines. The most interesting recently published works are a pair of theoretical pieces in defense of workplace democracy by Helene Landemore and Isabelle Ferreras, and a 2023 survey of Americans’ desire for more workplace democracy. 

One previous wave of focused research on workplace democracy was in the 1990s and 2000s, and focused on workplace democracy spillovers, or whether democratic workplaces make for more effective political citizens. Scholars have begun to revisit this question, too. 

The most recent review of workplace democracy we’ve been able to find is an unpublished piece from 2007 by leadership scholar Tim Hatcher. An edited version of his list of expressions of workplace democracy: 

• Open communication and enhanced flow of information 

• Open governance and worker control over functions that impact them, including job design, work requirements and quality 

• Individual freedom of expression and choice

• Gender and ethnic equity 

• Flatter, team-based organizational structures and non-hierarchical controls 

Organizational Democracy

Organizational democracy expands the application of democracy beyond the enterprise to other organizations. In this 2019 review of psychological research, Weber and colleagues define organizational democracy as ongoing, broad based, and institutionalized employee participation. Written rules, regulations, and board membership are ways employers can enable employees to exert substantial influence on tactical and strategical decisions.

Industrial Democracy

According to a 2020 paper, industrial democracy is a set of “collective agreements and social dialogue” that enable employee participation and representation. There is a Journal of Economic and Industrial Democracy, but if this chart is any indication, the phrase fell out of favor after the 1980s; the last well-cited literature review we found was from 1983. It breaks industrial democracy into six categories of varying clarity: 

• Collective bargaining (union representation) 

• Workers' representation on boards (codetermination)

• Joint consultation and information (works councils)

• Humanization of work (probably closest to today’s good jobs conversation) 

• Self-management (the worker control part of worker ownership) 

• Economic democracy (a society-wide consideration) 

Employee Participation, Involvement, and Voice 

Employee participation examines the connection between employees and employers during decision making. According to this 2005 review, by Summers and Hyman, employee participation improves company performance by changing employee attitudes, resulting in increased job satisfaction by enabling employees to share input and ideas. 

Employee participation is sometimes articulated as employee involvement. According to this 1992 review, employee involvement is used to indicate that these initiatives were largely those designed and introduced by management and intended to improve communications with employees, to generate greater commitment, and enhance employee contributions to the organization.  

A weaker form of employee participation, according to this 2014 review by Mowbray and colleagues, is worker voice. Participation, according to another review, is an institutional feature where managers grant their employees participation through practices that they implement; In contrast, employee voice involves employees going to their employer to make their concerns known. 

Psychological Ownership

Psychological ownership is the fulfillment of three basic human desires: efficacy, a sense of belonging and self-identity. There are two types of psychological ownership: promotive, dealing with accomplishments and aspirations; and preventative, dealing with a sense of duty and obligation. 

In their 2017 review, Sarah Dawkins and colleagues frame psychological ownership as either job-based or organization-based PO. In organization-based PO, workers are shown to associate with the company using possessive vocabulary as in “this is ‘my’ organization”. Job-based PO looks at employees’ connections/allegiance to their job. 

When democratic institutions are in place at the organizational level, research shows that self-reported feelings of psychological ownership increase. As such, psychological ownership can best be described as an effect, or product, of workplace democracy. 

Even More 😅

That is far from an exhaustive list, but it’s a place to begin. In a future post, we might also consider collaborative governance, consensus decision-making, non-hierarchical workplaces, economic bicameralism, workplace republicanism, cooperative economics and economic democracy. And I’m sure we’re still missing a few!* Drop us a note in the comments about what we should include and/or cover next. 

*A Feb 2024 update: Ahmed and Ahmed 2022 have an even longer list. They “began with thirty-two search terms enormously [sic] used as a synonym for organizational democracy, including industrial democracy, workplace democracy, participative management, participation in decision making, worker ownership, postbureaucratic, empowerment, union-based organizations, worker-owned firm, alternative to hierarchical models of organizations, corporate democracy, flat organizations, network organizations, worker participation, self-directed organizations, participative firms, economic democracy, democratic decision making, decentralized authority, less hierarchical firms, worker ownership, employees stock ownership, employee ownership, self-management, democratic worker organizations, union democracy, labor-managed firms, human economy, democracy in firms, market democracy, and voice at work.”

*A Jan 2025 update: At the 2025 Kelso Workshop, Bill Nobles introduced us to another pair of potentially overlapping phrases: liberated companies (cf. Isaac Getz and Gilles Ardaud) and freedom-based organizations (Judy Lundy).

Background: In a recently published paper, employee ownership scholar Chris Mackin explores the different meaning of the word ownership. He sat down with workplace democracy scholar Michael Palmieri to discuss the paper, and in particular the founders’ idea of an industrial republic. A key quote from that podcast:

Our parents and grandparents fought for a political republic, which is here to stay. we should have an industrial republic, built along the same lines as our political republic, where the people in the building are the ones that own and govern themselves, and are not owned and governed by people on the outside, because they just happened to have the privilege of coming into their money through feudalism.

And a little more from Mackin’s paper, footnote references removed:

The 19th century context for this activity, before and after the civil war, was not at a far remove from the American Revolution. The largest and most successful industrial firms were capitalized by European interests who sought to employ traditionally independent farmers and tradespeople. Many Americans spurned their invitations to work for a wage as well as the terminology of employer and employee that they deployed. They found that language demeaning and beneath the standards of citizens of a newly free republic. If factories and industrialization represented the future, they reasoned, then new forms of economic organization should reflect republican values and therefore be structured as cooperatives. George McNeil, a 19th century labor campaigner summarized this point of view when he called for “a republicanization of labor as well as a republicanization of government” At the time of these debates, the highly charged ideological categories and language of modern times pitting the terms capitalism against socialism had not significantly taken hold in the United States. Gourevitch (2014) describes the ideology of resistance evident in this era as “labor republicanism.”

Go Deeper: Check out the podcast below. For more on the founders’ views on industry, see the introduction and first chapter of the book The Citizen’s Share, and this recent article by Nick Romeo.

Background: The online Stanford Encyclopedia of Philosophy has been around, as long as there has been an “online.” I remember using in college in the early 21st century, and I returned to it again in preparing to teach a course on democracy.

• As I was reading the SEP entry on Democracy, it occurred to me that some of the justifications of political democracy might also serve as justifications for workplace democracy.

Justifying Democracy

The authors break down the justifications for democracy into two categories:

• Instrumental justifications look at the outcomes of democracy relative to other systems of government. They include:

  • Greater responsiveness. Democracies are more responsive to the needs of their citizens.

  • Better policies. Democracies produce better policies, by taking advantage of the (cognitive) diversity of its citizens, and by surfacing more information from them.

  • Better people. Democracies make their citizens more autonomous, rational, motivated, and moral.

• Intrinsic justifications point to the principles that democracy upholds better than other forms of government, including:

  • Liberty. Democracies do a better job of protecting liberties (life, liberty, property)

  • Public justification. As my grandfather would say, I will need to study this more, but the thrust of this seems to be that it is inherently good that people have access to the reasoning behind the rules that govern their lives.

  • Equality. Democracies offer the best path to making sure that citizens are treated equally, and of giving individuals the sense of being treated equally. It also involves less coercion and violence than other systems.

Each of these justifications, of course, are subject to debate. Whether democracies always lead to better policies, for example, is very much a live question.

Justifying More Democratic Workplaces

Each of these justifications has merit, however, and each is worth considering as a potential justification for workplace democracy. Let’s take a look:

• Instrumental justifications (reasons democratic workplaces might lead to better business outcomes)

  • Greater responsiveness. Democratic workplaces might be more responsive to the needs and concerns of their employees. Managers might have more incentive to listen and be accountable.

  • Better policies. Democratic workplaces might make better decisions by tapping into the diverse perspectives and local knowledge of employees. They may also elicit more engagement and initiative from staff.

  • Better people. Democratic workplaces could foster more autonomous, empowered, and fulfilled employees by giving them voice and agency.

• Intrinsic justifications (reasons democratic workplaces might just be better places to work)

  • Liberty. Democratic workplaces might give employees say over the rules governing their work, where they spend half of their working days.

  • Public justification. Workplaces that require leaders to publicly explain their decisions rather than handing down orders might reorient the relationship employees have with their employers.

  • Equality. More democratic workplaces might foster a sense of dignity in employees, even if they still report up through hierarchies.

I find it difficult, even in parsing this out, not to instrumentalist those intrinsic justifications. Maybe that’s OK: even those intrinsic justifications, which are better just for their own sake, could also make a company more successful by making them better places to work, leading to less turnover and better performance.

Some of these points have already been argued by other scholars, of course—perhaps in a future post I'll put together the kind of annotated bibliography that I expect from my students!

In a recent Harvard Business Review article, venture capitalist Nitin Nohria argues that CEOs are, ideally, not the ultimate decision-maker. Rather, the CEO’s job is to create the context in which other people in the company are empowered to make decisions.

The article made me recall a question I’ve kicked around for a while: Do companies really need CEOs?

• On a practical level, having a CEO is one answer to a lot of questions. Where does the buck stop? Who, ultimately, has to stand in front of the board and explain what went wrong? When a team can’t get consensus, who decides? These are practical questions, one answer to which is “The CEO.”

• On a reputational level, the absence of the absence of a CEO might just be seem confusing or risky to people outside a company, including to venture capital investors like Nohira.

The Case Against CEOs

But having a CEO is just one way to answer those and other questions. Making decisions in self-consciously democratic and egalitarian ways is as old as humans themselves (I’m halfway through Graeber and Wengrow’s majestic book The Dawn of Everything, where they make this point in 800 pages). Even when setting up the constitution, America’s founders considered one proposal with multiple executives.

In the absence of a CEO, then, it is incumbent on an organization to develop the answers to those important questions. One way to do that might be through explicit power-sharing agreements, in the form of a company constitution. As with a governmental constitution, the point of the exercise is to anticipate the things that could go wrong, so that we can proactively design against them. Otherwise an organization is likely to arrive at a moment in which decisions are made by whomever in the organization is willing to pick up the power lying in the streets.

To that point, the American constitution, building from principles the founders gathered as it was from both European and Native American thought, might offer some pointers here. Organizations could separate sovereignty, for example, as the constitution does between the federal government and the states. They could separate powers, as the constitution does among three branches, putting each person in charge of a different set of decisions in the company.

If this sounds unorthodox, that’s probably because it is! At least in corporate America. For examples of how to establish more democratic organizations, we will have to look elsewhere—social movements, religious groups, nonprofits, governments, German-style codetermination. But as one former CEO put it in a recent blog,

“since we became employee owned, I have come to appreciate that dispersed power and consultation lead to better, safer, less impulsive decisions, and they don’t have to come at the price of bravery and responsiveness.” - Guy Singh-Watson

In the end, the only two limits on experimenting with organizational democracy are human nature (which I believe less brutish than many would argue) and our own organizational imaginations.

In brief: The processes that worker cooperatives use to make decisions determines whether they promote or stifle gender equality, according to one California research. Those that build participatory bureaucracy do best.

The background: In a post earlier this year on the University of Minnesota’s The Gender Policy Report, Cal Poly professor Joan Meyers lays out her recent research on the decision-making structures in worker cooperatives. Here’s what she found:

The co-op pandemic advantage: The pandemic disproportionately impacted women— particularly women of color—in the labor market. Women, over-represented in the roles of essential workers, had a higher exposure to COVID and more long-term consequences. However, worker co-ops—companies owned and managed by their workers—were able to avoid negative financial and physical outcomes for their women workers.

The co-op difference: Typically, women earn less and have less power in work settings compared to their male counterparts. In co-ops, employees have an equal say in the organization’s goals, the allocation of resources, and even some of the operations. Currently, the roughly 1000 worker co-ops in the U.S. are more diverse and have more gender parity. 

What makes some cooperatives more egalitarian? Prof. Meyers coined the term participatory bureaucracy to describe when decisions concerning employment, scheduling, wages, and policies are subject to a collective decision through a membership-wide vote. This approach to allowing more accountability has steered worker co-ops towards more egalitarian balances without hierarchy. Participatory bureaucracy is most likely to succeed when the co-op’s worker identity is embraced, especially employees’ varied interests and conflicts. For instance, one co-op understood its employees as having a role at the company and as members of families and communities; therefore, providing childcare options was important.

What’s next: The WORK (Worker Ownership, Readiness and Knowledge Act) Act of 2023 aims to improve employee ownership and help drive change in worker co-ops. In order for companies to tap into their gender egalitarian prospects, many have to restructure their culture and organizations.  

Image credit: An AI image from the prompt “gender equality in a worker cooperative”

• That got me thinking: What might we learn about workplace democracy from measures of political democracy?

• Are there already workplace democracy indexes out there? If so, do they make use of all this work political scientists have done to understand political democracy?

Come along, fellow nerds.

How do political scientists rate and rank democracies?

In a 2021 article, Andrea Vaccaro (now at Oxford) compares four different indexes of democracy: Polity IV, the Vanhanen Index, the Freedom Rating, and V-Dem. Details on each of these are below the jump.

Have these indexes been applied to the workplace?

I think the answer is no, there is not much going on.

• Segrillo and friends (2021) propose a joint political + economic democracy index at the country level; Sanz and friends put forward a country-level industrial democracy index

• Gagnon and Fleuss (2020) and Hatcher (2004) both argue that we ought to do this, too

• Jeff Kerr (2004) disagrees

Are there other indexes of workplace democracy?

• Ridley-Duff and Ponton proposed one in 2011, but it doesn’t seem to have been picked up yet

• Unterrainer and friends (2022) offer a pretty interesting analysis of democratic degeneration in Spanish cooperatives

• But wait! Ahmed and Ahmed built an organizational democracy index in 2022 from ten dimensions: freedom, fairness, integrity, tolerance, shared responsibility, structure, transparency, knowledge sharing, accountability, and learning environment

What’s Next?

I’ll print out Ahmed and Ahmed 2022, then report back. Happy weekend!

P.S.: More on those four democracy indexes

The Vanhanen Index is the simplest (or what political scientists might call minimalist). It is a measure of:

1. How much electoral competition is there, measured by the losing party’s percent of the vote?

2. How much participation is there, based on how much of the population votes?

Polity IV and its successor, Polity V, has some impressively inscrutable documentation. From what I can gather it is an index made up primarily of six components, which I’ll translate for you into six questions:

1. Is there a process for choosing who is in power (the executive) other than violence?

2. If there is a process, is it competitive (as opposed to hereditary)?

3. If it’s competitive, can anyone compete?

4. Are there some institutional constraints on executive power, or can they do whatever they want?

5. Are there established, stable avenues for people to participate in decision-making?

6. How widespread and stable is the ability to participate in decision-making, in practice?

The Freedom Rating is more complex. It’s made up of two groups of twenty-five total indicators:

1. Political Rights:

   1. Electoral Process (3 questions about the executive, the legislature, and elections management),

   2. Political Pluralism and Participation (4 questions about the right to organize into parties, whether opposition parties have a real shot, the presence of external pressure, and whether all people have the right to participate), and

   3. Functioning of Government (3 questions about whether the executive and legislature are really in charge, corruption, and transparency).

2. Civil Liberties:

   1. Freedom of Expression and Belief (4 questions about independent media, religious expression, academic freedom, and freedom of expression),

   2. Associational and Organizational Rights (3 questions about freedom to assemble, to organize into nongovernmental groups, and organized labor),

   3. Rule of Law (4 questions about the independence of the courts, due process in the courts, protection from violence, and equal treatment of all groups), and

   4. Personal Autonomy and Individual Rights (4 questions about freedom of movement, the right to own property and start businesses, social and sexual freedom, and freedom from economic exploitation).

V-Dem has five sub-indexes. Longer descriptions start on p44 of their codebook, but here’s the short version:

1. The Electoral Democracy Index covers freedom of elections and the media

2. The Liberal Democracy Index adds the rule of law, checks and balances, and civil liberties

3. The Participatory Democracy Index adds measures of “the degree to which citizens participate in their own government through local democratic institutions, civil society organizations, direct democracy,” says Wikipedia

4. The Deliberative Democracy Index measures whether elites are in charge, or if the broad population has a say in outcomes

5. The Egalitarian Democracy Index looks at whether all groups have equal access to all the good stuff above, or if benefits are limited to specific groups

In brief: In an article published this month in the American Political Science Review, two political scientists find that Americans do, on balance, want workplace democracy, even after being told of its potential downsides.

The background: Frankly, political scientists haven’t written much workplace democracy since the 1980s and 1990s. To see an article in APSR, the most prestigious journal in political science, is an exciting development.

More detail: The authors ran surveys of Americans, in which they defined workplace democracy in three ways: having “workers on their corporate board, employee ownership programs, and direct election of management by 7, 10, and 5 percentage points.” A majority of respondents (though only by 5-10 percentage points) said they would prefer to work at more democratic workplaces.

• Having controlled for things like salary, the authors conclude that what workers want is more decision-making power.

• This seems to be true across party lines, though the idea of codetermination (having workers on boards) is less favored by Republicans.

There are not any high-profile democratically run companies in the United States. However, that is not the cause for the UK. John Lewis has been run by its employees for nearly a century and is the model for the government’s recent EOT push. So how does this democratic workplace work, and how effective is it?

John Lewis is a high-end British department store with locations throughout the UK. It employs around 80,000 employees (or partners), who are collectively given a say over how the business IS run. This is done through the partnership council and partnership board. The Partnership Council is made up of 58 democratically elected councilors. It is able to make recommendations and dismiss the chairman. However, it seems to lack strong decision-making power. The Partnership Board is made up of both appointed and democratically elected leaders. The board is where major policy is primarily addressed and is headed by the chairman. The Chairman is the face of the company and carries a responsibility to ensure its mission. The Trust is another important element, as it ensures the constitution and democratic practices are maintained. Beyond democratic institutions, John Lewis also has rigorous profit-sharing schemes, ensuring equal employee bonuses each year. Through these levels of administration, employees are given considerably more control than most companies.

However, John Lewis is not without its critics. Dr. Abby Cathcart, who has extensively researched John Lewis, found that it was not always living up to its democratic constitution. For instance, partners do not own a stake in the company; the trust does. Therefore partners do not democratically control the capital of the company. Moreover, that capital is not distributed equally, giving rise to a corporate hierarchy. Initially, the constitution stated that no one was to be paid more than 25 times that of the average worker in London. However, the constitution was amended in 2012 to make that 75, a movement away from the equitable mission of John Lewis’s constitution. Dr. Cathcart also points out that managers and partners have different conceptions of what partnership even means. Managers highly value loyalty and have resigned partners to a more submissive role in the company decision-making process, according to Cathcart.

While Dr. Cathcart’s criticisms are important to keep in mind, John Lewis’s model works better than most. In practically all conversations surrounding workplace democracy, John Lewis is centered. It has been consistently endorsed by both Labor and Conservatives in the UK. John Lewis shows how successful democratic businesses can be while also showing some of the pitfalls other businesses ought to be wary of.

In this week’s episode of Plain English, Derek Thompson breaks down the Writers Guild of America strike. It’s worth a full listen:

At risk of applying the same hammer to every nail, three EO+WD related thoughts occurred to me as I listened:

• First, one way to look at the strike is as an argument about how to split revenues from TV shows between the owners of studios and their writers. What if there weren’t a distinction there? What if the writers (and directors and show runners) were owners of the studios? It’s not impossible—one UK studio has already converted to an employee ownership trust.

• On a related note, the strike highlights for me something we’ve written about before, which is that labor actions are just one way to alter the power structure between owners and workers; they are just one expression of workplace democracy. Employee ownership is another that could apply, but so are works councils and codetermination, or putting employee representatives on boards.

• Third, as Thompson points out, the history of writers’ strikes in the US doubles as a history of changing media technology. The lesson from one of my favorite public policy theories, though, is that if you zoom out from particular technological shifts, the one big story is the shift from information scarcity to attention scarcity. It used to be hard to get information; now it’s hard to get people’s attention. I think this macro-level trend hurts writers, who are used to getting paid to create. Now anyone with a TikTok account can be a “creator.” Following this upsetting logic through, in the future writing on a TV show might primarily serve as a means to some other end for writers, the same way releasing albums is primarily a way for musicians to promote the in-person concerts where they make the real money.

Overview: Eliminating waste in a sustainable, fruitful way is a primary goal of those working tirelessly to protect our environment. At Rust Belt Riders, a Cleveland, Ohio based organization, the mission is to direct food waste away from landfills and use it to create their own soil blend that will “[nourish] the very food” grown across their area. They collect food waste from both commercial organizations and residential areas, all in an effort to create a food production system that protects the environment.

Just as vital as the work they are doing is the means by which they are doing it. Not only are they a worker cooperative, but workplace democracy is at the heart of every decision they make.

Why it Matters: In operation since 2014, Rust Belt Riders is an organization that is clearly thriving and seeking to effect real change in the way we grow our food. Their story, and other organizations like theirs, is a testament to the fact that workplace democracy works. Innovative organizations such as these can serve as a model for firms looking to implement democracy in the workplace.

Dig Deeper: To learn more about Rust Belt Riders commitment to workplace democracy and protecting the environment, check out this article.

The founder of Patagonia recently did the unthinkable: he chose to commit profits towards helping the planet. But in an article for Bloomberg (which may also be restructured into a purpose trust), Devon Pendleton and Ben Steverman point out that while the planet may benefit from the deal, Chouinard will, too: in structuring Patagonia this way, he avoided 700 million dollars in taxes. Is the deal about tax avoidance or doing something good? And if it is both, is that ok, if it incentivizes others to do the same?

To me, these questions reflect a larger issue, which is a system that allows a few people to accumulate massive amounts of wealth. There are ways to level the playing field, including employee ownership and democratizing the workplace. As business owners plan to retire in record numbers in the next decade, now is the time to incentivize them to restructure their business into something more equitable.

In a recent interview, Chouinard used a slogan now associated with Alexandria Ocasio-Cortez: “every billionaire is a policy failure.” If a few more tax breaks are the policy solution to that failure, perhaps I can get on board.

When talking about workplace democracy, SMU professor of business ethics, Josh Crabill makes an unusual reference—to a speech by Adolph Hitler.

In that 1932 speech, to a group of industrialists, Hitler pitched his nihilistic vision of authoritarian politics. In capitalist markets we allow the strong to dominate the weak. Why shouldn’t it be the same in politics? If concentration of power in a small number of hands (authoritarianism) is good for business, why isn’t it good for government, too? When Hitler gave his speech, he believed that democratic governments were too slow and ineffective to function, much less win a war against leaner, meaner, authoritarian models.

Crabill uses this unorthodox example to make what is called the contrapositive argument to Hitler’s claim: Democracy (as anti-authoritarianism) is the least bad form of politics. Might it not also be the least bad way to organize a business? As U.S. Senator John Sherman put it way back in 1890:

• “If we will not endure a king as a political power, we should not endure a king over the production, transportation, and sale of any of the necessaries of life. If we would not submit to an emperor, we should not submit to an autocrat of trade.” - John Sherman

I asked Dr. Crabill to share the syllabus for his business ethics course, which covers a range of topics including social enterprise and B Corps. Here are pieces he assigns on specifically on workplace democracy:

• How Bosses are (Literally) like Dictators, a 2017 Vox article by University of Michigan philosopher Elizabeth Anderson, based on her book Private Government: How Employers Rule Our Lives (and Why We Don't Talk about It

• First, Let’s Fire All the Managers, an HBR article by London School of Business professor Gary Hamel, co-author of Humanocracy: Creating Organizations as Amazing as the People Inside Them

• We the Owners: Employees Expanding the American Dream, a documentary funded by the Beyster Foundation for Enterprise Development—which also funds the Rutgers Center for Employee Ownership and Profit-Sharing, which in turn gave me a fellowship in 2022-2023 that helped kick-start EO+WD

• What Do We Really Know About Worker Co-operatives?, a 2018 report by Leeds University Professor of Economics Virginie Pérotin

For extra and non-democracy-focused fun, also check out Crabill’s article on the ethics of Westworld, HBO’s artificial intelligence dystopian period piece.

Unionizing is an incredibly important avenue to ensure workers’ interests are met. But they should not be the end. Unions exist to ensure that corporations do not take advantage of their workers. Yet despite unions still existing, workers’ demands are not getting heard. Moreover, the recent UAW debacle demonstrates that even unions are susceptible to corruption. As long as a corporate hierarchy exists, workers will always be at the bottom. Dismantling this hierarchy is the only way to ensure that workers are treated fairly

This is why workplace democracy and employee ownership are so important. Companies do not work for their workers, but they should. Decisions should be made collectively amongst those who know the inner workings of their company the best. the recent East Palestine disaster shows why this is important. For years union workers were crying out about how unsafe their practices were, yet they were ignored for the sake of the shareholders. It was only a matter of time before a train derailed. Had the decision-making been in the hands of the workers this would have been different. They are the ones on the train every day, they are the ones who know the system, and they are the ones who know the inventory. How safe their workplace is should be up to them, not shareholders half a country removed from the railways. But despite being unionized, they had no say.

This is not to say unions are unnecessary, they certainly are not. Unions do serve a vital function in protecting workers’ rights. In fact, unions can serve a very important role in democratizing the workplace as seen at Harvard. They simply do not go far enough.

Last week philanthropists, nonprofit leaders, investors, and Niala Boodhoo from Axios gathered in Oxford, England for the annual Skoll World Forum. I attended thanks to the Skoll Centre for Social Entrepreneurship, and I took advantage of the trip by asking delegates how they had experimented with workplace democracy,. Here are a few of the examples I gathered:

• One east African nonprofit runs a quarterly “happiness survey,” asking employees how happy they are with their job, how happy they are with the company, and what are the obstacles to their happiness. They then make the responses public to the whole company, where employees are invited to take on solving some of the issues that come up.

• The CEO of an American company tried multiple ways to encourage participation and feedback. They tried and gave up on anonymous feedback, because it immediately devolved into misogynist trolling. A “listening tour” flopped, too, because they didn’t do a good enough job communicating the resultant changes to employees. A representative council of employees crumbled, too, because the folks elected to it were the same ones who were promoted quickly and had to give up their specific seats on the council.

• Another delegate had worked for many years at the Self-Employed Women’s Association (SEWA), a large collective of trade unions in India that has been in operation since 1972. Hear about their organization from their current secretary general here.

• One leader of a for-profit company in Africa made an attempt at direct democracy among staff. In keeping with the expectations of James Madison, a cofounder of America, the employees quickly developed “factions” (see Federalist 10). That leader drew a distinction between promise of participation (which they wanted) and the dangers of direct democracy (which they were skeptical of). They also saw lots of examples of Potemkin democracy, where leaders would only put issues to a vote when the outcome was going to go their way.

A couple of takeaways:

• Some of these experiments “failed,” in the sense that they didn’t play out like employers had hoped. But they were successful as experiments if we learn from them what works and what doesn’t. Switching to democratic decision-making, for example, requires thinking clearly about how people might take advantage of a new distribution of power.

• It was notable that a lot of this experimentation was woman-led, which made me think of the excellent book Women & Power by Mary Beard.

TL;DR: Political scientists have been writing about workplace democracy for decades, but it hasn’t taken off—until now, maybe? 🤞

Catch up quick: In her 1970 book Participation and Democratic Theory, Carole Pateman took aim at “classical” democratic theorists (Schumpeter, Berelson, Dahl, Sartori, and Eckstein). Building from the work of Rousseau, Mill, and Cole, Pateman put forward participatory democracy as an alternative theory with participation in decision-making—rather than representative voting—at its core. Her book paved the way for deliberative democratic theory, now a major field of study in political science and theory.

What’s missing: Often forgotten is Pateman builds her 1970 thesis from case studies of democratic participation in workplaces, where workers can train themselves to participate effectively as citizens of a democracy. Her examples include:

• The collective decision-making of British miners (the composite longwall method)

• Standard car plant workers’ nearly bossless gang system

• Glacier Metal Company’s constitution and network of legislative Works Councils

• The John Lewis Partnership’s employee ownership structure (which has lasted until at least 2023)

• Scott Bader Commonwealth’s charitable trust-based structure, including its system of check and balances

• State-mandated Workers Councils in communist Yugoslavia

What happened to workplace democracy? In 1970, Pateman believed an age of worker participation might be on the way:

• “It seems probable,” she wrote, “that an element of participation will be introduced into the work life of many individuals in the future under the influence of the new theories of management that have been developed in the last decade or so.”

An idea whose time has (finally) come? Depending on what Pateman meant by “many,” that hasn’t happened—yet. Employee ownership grew in the United States mostly through employee stock ownership plans (ESOPs), which only sometimes include employees in decision-making. And there are fewer than a thousand worker cooperatives in the United States with fewer than 10,000 workers in them.

And yet:

• The number of worker cooperatives in the United States has nearly doubled in the last four years

• Congress passed new legislation supportive of ESOPS in 2022, and research suggests that the incorporating workers in decision-making is the key to higher performance in those firms

• Governors of multiple states signed 2022 bills supporting employee ownership in 2022

• Some American companies are experimenting with a new form of employee ownership, the employee ownership trust

Watch this space. We’ll find out together whether these developments will lead to the growth of workplace democracy, and whether that will have the transformative effect on democracy that Pateman predicted.

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Go Deeper: Read more on “The Political Theory of Carole Pateman” and Paul Blumberg’s influential Industrial Democracy: The Sociology of Participation (1968).

Image credit: From the cover of the 1970 edition of ‘Participation and Democratic Theory;’ artist, title, and date unknown.

With the national conversation shifting towards workers’ rights, Bernie Sanders has come up with an ambitious plan. The fact is the Democrats have failed, they have neglected to seriously address workers’ rights. Joe Biden pretended to be the “most pro-labor president” but then shut down rail workers’ demand for seven paid days of sick leave. Moreover, little in way of regulation has occurred after the East Palestine disaster, despite workers demanding something be done beforehand. Joe Biden and the democratic party are just as captive to capitalist interests as Republicans are. The only difference is that they posture as pro-labor, despite getting little done.

            This could change. Bernie Sander’s recent Workplace Democracy Plan could totally shift the Democratic party. It lays out the goals of worker protection in a Bernie Sanders Administration. These include protections for unions and union employment, banning right-to-work laws, expanding the right to strike, banning scabs, and much more. It primarily emphasizes workers’ right to unionize and their right to bargain with their corporate overlords. However, despite being called the “Workplace Democracy Plan” it does not discuss workplace democracy, only trade unions and stronger worker protections. This would set the foundation for a transition toward workplace democracy. However, with such a large figure using the term, it could create a newfound interest in the concept, leading to a broader adoption of democratic structure in the workplace.

            This plan may never come to fruition, as a Sanders presidency is unlikely. But the working class recognizes how little the current administration cares about them. if Democrats know what they are doing, they will move towards a more labor-focused platform. Inequality is at an all-time high and is only getting worse. If Democrats want a chance in the upcoming elections, they will fight to reduce this inequality.