December 13th, 2011 by Darin Robbins

Economic democracy can be very useful as a starting point and toolbox for the world that the Occupy movement is fighting for.

1. The Occupy movement is unique in that it uses an internal democratic process through the General Assemblies alongside the nonviolent civil disobedience of the occupation sites themselves. This internal democracy is the method used to discover grievances, demands, and solutions which is very vital to the identity of the movement and its subsequent actions. It is a bottom-up process that is shaped by its participants. The internal democracy is also an example of prefiguration which means, in the words of the I.W.W., “creating the new world in the shell of the old”. Prefiguration is distinct from either revolution or reform and that is why it can be difficult for the status quo to pin down and stereotype this movement. Economic democracy can be a potential solution that can be developed through the General Assemblies, and can be quite helpful as a starting point in the overall discussion as to how to deal with the inherent problems of the existing economic order. But economic democracy is also prefiguration in that the participants shape and control the enterprises they are within. It can be very easy for the General Assemblies to transition to democratic forms in an alternative economy since the process is similar and follows parallel principles of organization.

2. Economic democracy has a rich history that the Occupy movement can use and can serve as a toolbox for the movement. There is a long tradition of economic democracy through cooperatives, employee stock ownership plans, and community land trusts. All of these are democratic structures outside of the state, demonstrating that democracy is the best method to organize collective action. In fact in the private sphere, most organizations such as charities, historical societies, and environmental groups use a democratic process to some degree. The exception to the rule is the corporation, which points to the hierarchy that is the corporate structure and how it disrupts freedom and equality in the private sphere. Democracy is a process rather than a goal, and it has been shown that it can be applied to economic as well as political practices.

3. When one examines the history of economic democracy, one will find that it is much more than merely a leftwing idea. Its universal traits can be seen in the various forms it takes within distributism, binary economics, and social credit. Distributism, found in Catholic social thought, believes that widespread ownership of businesses where individuals are self-employed is the best form of justice, where decisions can be made at the most basic and local level of social organization. Binary economics, developed by Louis Kelso who invented the employee stock ownership plan, proposes that labor and capital are both important inputs into production and when improvements in technology and other factors makes labor less vital then there must be expanded capital ownership. Social credit, a movement that began in Western Canada by C.H. Douglas, holds that since profit requires a price that is more than the cost of production including wages then there must be a guaranteed supplement to allow workers the chance to purchase what they create. Even though Marx famously advocated workers owning the means of production, the idea of worker ownership goes beyond socialist ideology. Some form of the idea has existed for many centuries in many locations. In fact, Thomas Jefferson foresaw an economy composed of small farmers and self-employed artisans for the United States. He believed that through this economic independence citizens could be truly politically independent. This fits with the early history of this country where the wage system was more the exception than the rule. And just as political democracy is a process, so is economic democracy. The goal of both is autonomy and self-determination.

4. Economic democracy serves its purpose first and foremost as a structural critique of corporate capitalism. It is not merely just a part of capitalism than can be easily contained and marginalized. What occurs in economic democracy is a convergence of labor and capital, bridging the arbitrary gap established by capitalism and the wage system. This gap is the basic form of hierarchy in capitalism that results in an inequality of power among economic participants. In a cooperative, in contrast, the workers are also the owners so there is no need for any type of hierarchy in order for the business to accomplish its goals. On the other hand, economic democracy is also a simultaneous supply side and demand side approach. The supply side approach alone only favors the owners of capital, maintaining their surplus of power. The demand side approach alone favors workers as consumers, recognizing that they are one and the same, but it only has short-term benefits in a larger capitalist economy. With worker ownership, the long-term hoped for effects of investment in the supply side approach is merged with the immediate effects of the demand side approach that stimulates consumption. Finally, economic democracy disproves the myth that only corporations and the owners of businesses are the sole job creators. This misconception and distortion of reality perpetuates the idea that only the owners of capital are the real owners in an overall economy, thus supporting their claims to inordinate amounts of power and the ability to control the lives of workers as subordinates. The structural critique of capitalism is a way to deconstruct its inherent inequality of power that spills over into the society.

5. Economic democracy is a method for autonomy and self-determination that can develop on the local and national level. If autonomy as self-determination is the most expansive and authentic form of freedom, then it is very important that a democratic process in the economy can be available as the proper set of tools for this freedom to be expressed. Whether the democratic process is a cooperative, employee stock ownership plan, community land trust, or other type of economic structure, the common goal is to offer a new model that allows real freedom and empowerment. Economic democracy is both revolutionary and practical, which means that it is very possible. It prevents hierarchies that act as the main engine of capitalism in order for it to structurally reproduce itself. The internal democratic process that one witnesses at the various occupation sites clearly demonstrates this possibility, where this direct form of democracy can expand into the economic sphere.

6. Ever since the economic collapse in 2008, there has been increasing attendance at job fairs by people who are in desperate need of employment. They come to these fairs in the hope of finding a job from an already established business. But it has never actually occurred to any of these people to turn to each other in order to create their own jobs and provide their own income security. People obviously need jobs, and have other economic needs that must be fulfilled. Economic democracy is the direct creation of jobs by workers, cutting out the middle man of a corporate hierarchy that would eventually control the economic destiny of a wide swath of the population. It becomes absolutely necessary that new forms must emerge to better reflect an economy that best serves all participants rather than just a small elite. This necessity for economic democracy is opposed by the Tea Party, even though the concept of economic democracy does not contradict what the Tea Party claims it stands for. The Tea Party claims to be based on limited government, free markets, and fiscal responsibility. Economic democracy is the democratic structure that can exist outside of the state, and is a system that does not need or require state ownership or nationalization. Free markets as the voluntary exchange between equals is supported by economic democracy in the workplace while at the same time limiting the growth of corporate hierarchies that distorts the information communicated in a market. Economic democracy makes fiscal responsibility possible through giving people the option to have a say over the economic decisions that affect them. The opposition to economic democracy shows that the Tea Party’s ideology is based on an artificial scarcity which in turn enables social inequality. However, the Occupy movement and its ability to formulate a new alternative based on economic democracy reveals that the real situation is one of abundance where freedom and equality can exist for all participants. As the movement progresses, the opportunity for economic democracy to flourish in this country becomes more viable.