The Boss-Employee Two-Step

When workers help run the company, things often turn out well

For several years now I have been pressing a book into the hands of friends and strangers who show even the slightest interest in how businesses can and maybe should work.

And while I order my copies by the dozen, it is, at first glance, an embarrassing book. A 1980s trade paperback published by Time Warner, it is bound in the sort of garish, grinning cover that books written by CEOs invariably have. The boosterish title, Maverick: The Success Story Behind the World’s Most Unusual Workplace, does not help.

Maverick is the story of Semco, an industrial conglomerate based in Brazil. While largely unknown to the North American MBA set, Maverick has long been one of Latin America’s best-selling business books. In it, former Semco CEO and heir Ricardo Semler explains the crisis, gamble and resurgence of his father’s ailing enterprise. Redemption comes only when Semler reaches an impasse and, facing bankruptcy, decides to turn his back on much of what he learned at the Harvard Business School. In a few short years, he devolves virtually all business decisions to Semco’s several thousand workers. Today Semco employees famously set their own schedules, production targets and, perhaps most provocatively, their own salaries. And lo and behold: it all turns out rather well. Sound principles, self-determination and a hefty kind of mutual accountability trump stifling management and hierarchical decision making.

It is the sort of book that would surely give hope to Tom Malleson, an activist and newly minted academic who is the author of After Occupy: Economic Democracy for the 21st Century. That Malleson named his book After Occupy is fitting. In fact, it is a title that might best describe an entire genre of books dedicated to returning serve to Occupy’s critics, many of whom were quick to feign disappointment that the movement lacked substantive policy ideas or a more compelling call for change.

This was to mistake how protest movements gain traction: not by issuing prescriptions, but by creating symbols and fixing them firmly in the public mind. Forget masks and sit-ins and inchoate calls to end capitalism as we know it. Occupy—and its culture-jamming accomplices at Vancouver-based magazine Adbusters—are the principal authors of our current fascination with the rise of the one percent.

And kudos to them.

If those same critics are now beginning to feel a bit cramped, too bad. Since Occupy there has been an uninterrupted run of unlikely bestsellers providing all the policy ideas necessary to fill a generation’s worth of party manifestos. From the late Tony Judt’s Ill Fares the Land—a masterful, all-purpose account of a society unhinged by materialism and decay—to Kate Pickett and Richard Wilkinson’s explosive 2010 hit, The Spirit Level—which linked health status to income disparities across members of the Organisation for Economic Co-operation and Development—a definitive case is forming, drawing to it many of the top minds in political theory, social science and economics.

Of course, all this still comes before the frenzied arrival this spring of the English translation of Thomas Piketty’s Capital in the Twenty-First Century, a book that now looks to be the reference text not only for a movement, but also for a generation of economic and political thought. What Occupy alleged, Piketty backs up with 200 pages of footnotes, making it crystal clear that we have re-entered dangerously gilded territory. And keep in mind that when a book published by Harvard University Press and written by a French economist explaining historic ratios of wealth in western countries becomes a publishing sensation, this is, in the parlance, a tell. Something is shifting.

Malleson’s contribution to all this picks up an essential but neglected aspect of the story, not only alerting us to the dangers of inequality but pointing to the source of its manufacture. His target is the workplace and he enjoins us to resurrect the reforming tradition that brought us responsible government in the 19th century, and to seek to have it applied to business in the 21st. As he states, “There is no good reason for a democratic society to go out of its way to foster undemocratic businesses.”

And yet this is what we have. In fact, outside of formal politics, democratic societies practise very little of what might properly be called democracy. Economic systems are rarely empathetic or participatory and as the debacles of the past decade have once again shown, markets are far from -responsible.

But steady. Malleson is not calling for the overthrow of capitalism. Rather, his goal is to promote what has already been done and has succeeded very well where businesses and governments have embraced a more cooperative ethic. And here he is on firm ground. Whether it is Britain’s famed employee-owned department store John Lewis, which failed to lay off a single worker during the 2008 recession, or Spain’s 80,000-strong Mondragon cooperative, which operates 289 companies and workers’ organizations, precedents that point to the viability of genuinely “better businesses” are not hard to find.

Regrettably, Malleson ignores Canada’s own better businesses, including British Columbia’s ubiquitous Vancity credit union, Alberta’s “Owners Care” WestJet, Ontario’s beloved Lee Valley Tools or Quebec’s mighty Desjardins. These case studies deserve to be written and a Canadian school of responsible business cultivated.

But never mind. Malleson is trying to make a larger point: that the Anglo-American market system encourages too much of the wrong kind of business, and does too little to favour competitive, innovative businesses that also recognize that their interests and the interests of their workers are not so very far apart.

South of the border, state legislatures are beginning to take up the case. In California, a bill has been introduced to set a preferential state tax rate for businesses that constrain the pay gap between top executives and front line employees. In Rhode Island, the state senate intends to favour public tenders from businesses that act similarly.

Slowly the idea of narrowing income inequality and regarding it as a form of “social pollutant” is becoming accepted as a matter of good public policy—especially by governments newly alert to the carrying costs of the status quo. Businesses that generate massive inequality while enlisting tens of thousands of workers to their oppressive workplaces—Walmart, Foxconn, this means you—may some day be recognized to be every bit as damaging to the social ecology as PCBs were to the Love Canal.

But fair pay is only half the picture. Economic democracy requires more. Fully realized, it is is also a vision of greater collective agency through which workers do more to influence and shape their productive activities. This does not mean the kibbutz, but it does mean enfranchising labour. Here Malleson speculates that workplace democracy requires “solid parliamentary structures, [including] a democratic constitution, regular General Assemblies, decision-making transparency and availability of information.”

In the first instance, this seems heavy-handed, if not impractical, requiring the grafting of explicitly parliamentary mechanisms to another, very different sphere. Better to stick with principles and let the mechanisms evolve to suit the situation. After all, we are dealing today with a public not exactly enamoured of the democratic promise delivered daily by Question Period.

Rather than a singular vision, which Malleson to his credit refuses to propose, the cause of economic democracy needs the biggest possible tent, spanning the distance from German-style labour management committees to employee stock sharing to Toyota-inspired assembly line autonomy to open book management.

It also needs to make room for the entrepreneur—a figure notably absent from Malleson’s account. To be sure, the entrepreneurial archetype is popularly celebrated and also deservedly suspect. But if modern business and economic democracy are to share the twin goals of greater creative expression and heightened personal agency, then a positive vision of entrepreneurship and personal initiative needs to be articulated. This is turf we cannot afford to cede to the Ayn Rand wannabes.

In some ways, several of these themes are better covered by Will Davies’s Reinventing the Firm, a 2009 pamphlet from the United Kingdom think tank Demos that provides a more explicit account of how business can be transformed and -strengthened.

Had After Occupy been leavened by the author’s own direct observations of economic democracy in action, his recommendations might carry somewhat more force and greater texture. Instead, Malleson delivers something closer to a speculative work that nevertheless provides a vital service by directing the attention of the “occupistes” toward a neglected, highly relevant economic alternative.

Now it is a question of what it will take for any of it to catch hold. Democratic theorists as varied as Britain’s Paul Hirst and Brazil’s Roberto Unger have long urged the redemptive power of association, reinvention and agency—qualities that are central to any concept of democracy as well as to free enterprise. Malleson carries forward this tradition, imagining the economy as an extension of the democratic sphere.

If it is here at the nexus of personal initiative and collective accountability that the conceptual gears start to grind, do not blame the democrats; blame popular culture. Too many paeans casting individual freedom against the indifferent weight of government have made it very difficult to think more openly. It is a caricature that deserves to be upended. After all, as rigid and bureaucratic as government may be, it is well matched and often exceeded by the inanity of life inside cumbersome corporations and despotic small businesses. This is not a point best made by theorists and radicals—it is made handily by Dilbert.

Imagining an alternative, where business is a collective enterprise and an enlivening and creative experience that yields both spontaneity and shared satisfaction—as well as a strong measure of economic security—is a profoundly humane and necessary vision. This is why, as much as theory, we need examples and vigorous experimentation. Movements like U.S.-generated B Corporation, which assists companies to convert toward a more cooperative and responsible footing are essential, as are publicly backed revolving funds that help aging business owners sell their shares to workers. New private equity that backs start-ups founded on democratic principles would complement the recent growth of specialized ecofunds.

Without irony, commerce has long used revolutionary language, promising liberation and transformation in the form of whatever products or services it happens to sell. But today we need more than mere hucksterism or the showmanship of Madison Avenue. In fact, what we need is for business to simply keep its promise, and direct this same emancipatory energy and inventiveness within.

Malleson’s After Occupy is an important contribution to a first draft of a political and economic agenda that is gaining momentum. If achieving responsible government was the democratic project of the 19th and 20th centuries, achieving responsible economics and a universal economic franchise is a fitting objective for the 21st. This means a reinvigorated commitment to making real a more modern, democratic form of capitalism while heaping praise and borrowing liberally from unlikely precedents like Mondragon and surprising business pioneers like Semler. Here Malleson wisely suggests that the best arena for democratic innovation in this new century may not be the chambers of legislatures and parliaments, but in the boardroom, warehouse, assembly line and store.