Begin with social owner ship. Systems for sharing voting rights within firms have existed in Germanic and Nordic Eu rope since the late 1940s and early 1950s.
Workers’ representatives hold half the seats on boards of directors in German companies and a third of the seats in Sweden (including small business in the Swedish case), regardless of whether they own any capital.5 These so called 5. See Chap. 11 for a more detailed analy sis.
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—+1 co management (or codetermination) arrangements were the result of hard
fought battles waged by unions and their po liti cal allies. The strug gle began in the late nineteenth century. The balance of power began to shift after World War I and changed decisively after World War II. Substantial changes in the law went hand in hand with major constitutional innovations. Specifically, the German constitutions of 1919 and 1949 adopted a social definition of the rights of owner ship, which took into account the general interest and the good of the community. Property rights ceased to be held sacred. Though shareholders initially fought these changes tooth and nail, the new rules have now been in force for more than half a century and enjoy widespread public approval.
All available evidence shows that co management has been a great success.
It has encouraged greater worker involvement in shaping the long term strate
gies of employers and counterbalanced the often harmful short term focus of shareholders and financial interests. It has helped the Germanic and Nordic countries to develop an economic and social model that is more productive and less inegalitarian than other models. It should therefore be adopted without delay in other countries in its maximal version, with half the board seats in all private firms, large or small, given to workers.6
As promising as Germano Nordic co management is, it suffers from nu
merous limitations, starting with the fact that shareholders have the decisive vote in case of a tie. Two pos si ble improvements are worth considering. First, if wealth in equality is reduced by way of progressive taxation, capital endow
ments, and circulation of property, which I will discuss in due course, workers may be able to acquire shares in their firm and thus shift the balance of power by adding shareholder votes to the half they already hold as members of the board. Second, the rules apportioning votes on the basis of capital invested should also be rethought. As noted earlier, it would not be in the general in
terest to entirely eliminate the link between capital invested and economic power in the firm, at least in the smallest companies. If a person invests all her savings in a proj ect of passionate interest, there is nothing wrong with her being able to cast more votes than a worker hired the day before, who may be setting aside his earnings to develop a proj ect of his own.7
6. Depending on the country, the legal system, and the size of a firm, the body re
sponsible for setting the overall direction of the com pany may by a simple over
sight committee or management council rather than a board of directors in the usual sense.
7. See Chaps. 11 and 12.
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Might it not be justifiable, however, to place a ceiling on the votes of large shareholders in major corporations? One recent proposal along these lines concerns “nonprofit media organ izations”: investments beyond 10 percent of a firm’s capital would obtain voting rights corresponding to one third of the amount invested, with the voting rights of smaller investors (including jour
nalists, readers, crowd funders, and so on) augmented accordingly.8 Initially conceived for nonprofit media organ izations, this proposal could be extended to other sectors, including profit making ones. A good formula might be to apply a similar vote ceiling to investments above 10 percent of capital in firms above a certain size.9 The justification for this is that there is no reason why a large firm should leave power concentrated in the hands of a single individual and deprive itself of the benefits of collective deliberation.
Note in passing that many organ izations in both the private and public sector function perfectly well without shareholders. For instance, most private universities are or ga nized as foundations. The generous donors who contribute to their capital may derive some benefit from their contributions (such as pref
erential admission for their children or even a seat on the board), which inci
dentally should be regulated more strictly. There are other prob lems with this model, which ought to be corrected.10 Nevertheless, donors are in a much weaker position than shareholders. Their contributions become part of the uni
versity’s capital, and compensation such as seats on the board can be with
drawn at any time; with shareholders and their heirs this is not pos si ble. Yet contributors continue to give, and private universities continue to function. To be sure, attempts have been made to or ga nize universities as profit making cor
porations (think of Trump University), but the results have been so disastrous
8. See J. Cagé, Saving the Media, trans. Arthur Goldhammer (Harvard University Press, 2016). Profit taking would not be allowed (nor could shares beyond a certain threshold be sold). In exchange, investors in the media could be granted tax deduc
tions similar to those granted to contributors to nonprofit organ ization in educa
tion and the arts. I will say more later about taxing contributions.
9. For example, the investment threshold above which vote reductions apply could be set at 90 percent for small firms (fewer than ten employees), decreasingly gradually to 10 percent for larger firms (more than one hundred employees). Obviously, these thresholds are open to debate and experimentation, and the numbers given here should not be taken as definitive.
10. This educational model has given rise to growing inequalities in the university system, which should be corrected. I will come back to this.
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—+1 that the practice has virtually dis appeared.11 This clearly shows that it is not
only pos si ble to drastically limit the influence of investors but also that organ
izations often work better when investor power is limited. Similar observations could be made about the health, culture, transportation, and environmental sectors, which will likely play a central role in the future. In general, the idea that the “one share, one vote” model of corporate organ ization is indisputably the best cannot withstand close scrutiny.
Reducing wealth in equality and capping large shareholder voting rights are the two most natu ral ways of extending the Germano Nordic co management model. There are others, such as a recent British proposal to have some board members elected by a mixed assembly of shareholders and workers.12 This could allow novel deliberations to unfold and new co ali tions to emerge, breaking out of the ste reo typical roles that co management sometimes forces on participants. But the debate does not end there: concrete experimentation is the only way to develop new orga nizational forms and social relations. What is certain is that there are many ways to improve on co management as it cur
rently exists so that social owner ship and corporate power sharing can con
tribute to the goal of transcending capitalism.