Transforming capitalism: worker-owned business, or expanding the non-profit sector?

• Author: Lewis, Hunter
• Position: Essay

Editor's Note: In the September/October issue of World Watch, philosopher David Schweickart wrote about the dynamics and environmental advantages of economic democracy, a noncapitalist system in which most firms and corporations would be owned and run by their workers. In this essay, author and investment banker Hunter Lewis critiques economic democracy and argues for expanding the nonprofit sector instead.

Who would not agree that today's capitalism needs reform? But reform in what direction? That is the critical question.

In the September/October 2009 issue of World Watch, David Schweickart, philosophy professor at Loyola University Chicago, offered an intriguing proposal: a move to worker-owned businesses. He cited the Mondragon Corpo-racion Cooperativa (MCC), an alliance of worker-owned and shareholder-owned businesses based in Spain, as an imperfect but serviceable model to follow.

Worker-owned businesses are not just an idea. They are also an ideal, an ideal which cannot help but appeal to all of us on some level. But we live in a world of competing ideals. For example, if we want economic democracy, as Schweickart says he does, are worker-owned cooperatives or buyer-owned cooperatives the right model to follow? In making this choice, we must remember that all workers are also buyers (consumers), but not all consumers are workers. Might it not be more democratic for consumers to own the economy rather than workers?

Schweickart also accepts the idea that workers in worker-owned businesses may be paid at different levels, just as they are in MCC's worker-owned businesses. The fundamental concept of democracy is one vote per person. If workers receive different numbers of dollars or Euros for their labor, can this really be described as democratic? Or is it enough that workers will be able to vote in or out management teams and review management compensation on a one-person, one-vote basis?

Another issue: If all workers ultimately have an equal say about compensation, will they agree to keep the labor share of expenses under control? Will there be enough money left over to save, to build up needed financial reserves, and to make the investments necessary to compete and produce better and better, and cheaper and cheaper, products? All of us as consumers ultimately benefit from being able to choose better and cheaper products brought to us by competition, and it takes a great deal of investment to produce them. Does this perhaps explain...