True Democracy: From “mitbestimmung” to workers in control

The progressive era in the 1970s saw a huge push in Germany, Austria, and Scandinavia for real workplace democratic reforms. In 1976, in Germany under the government of Helmut Schmidt of the SPD (German Social Democratic Party), the Mitbestimmungsgesetz or Co-determination act came into effect. These were hugely important laws enshrining worker participation in Companies with public liability, publicly traded companies, and above 2000 employees into law. It stipulated that employees and trade union members must have an equal allocation on the Aufsichtsrat (supervisory board) as shareholders, with the chairperson being a shareholder with a decisive vote. The effect of this law is unlike Major American firms where shareholders have complete control German companies must try to achieve consensus with employees and trade unions on issues like salary, layoffs restructuring, etc. This has contributed to the stability of both the German economy and society greatly as unlike say with Thatcherism in Britain and Reaganism in the U.S. With the weakening of trade union power and restrictions on companies led to mass outsourcing with the inherent instability and disruption in communities.

Germany’s landmark Mitbestimmung law was a massive step in the right direction. Its succes is shown as it still survies today However, it stopped short of actually democratising society in a truly revolutionary way, as they never followed it up with further legislation pushing for workers to have the casting vote. With the onset of the neoliberal era, such ambitions further reforms were largely forgotten about but the original law survived. As things stand a German company will have to achieve some consensus with workers. This is still hugely superior to the American model of absolute shareholder Hegemony where workers have no seat at the table. However, it doesn’t go far enough and in the future, Germany and Europe must push to extend Mitbestimmung to workplace democracy by bringing workers the casting vote. A prime example of a democratically run company is Der Spiegel which the workers have 50.5% of ownership. Going forward Germany needs a 50+1 style push for workplace Democracy. In the same way, Bundesliga football clubs are mandated to be majority fan-owned, Large companies with over 500 employees for example could be mandated to also be 50+1. Extending Mitbestimmung to give workers the deciding vote.

Workplace Democracy isn’t just a bonus within a democracy. It is essential to achieve anything resembling real democracy. If you believe democracy is a better way to organise society politically. Then it logically should follow those giant hegemonic corporations are anathema to Democracy. This is not a utopian fantasy. There was huge momentum until the late 1970s for this.

The Swedish trade union Congress (LO) formed what they dubbed the Meidner plan in the 1970s. Formalised in 1976, the plan was the most ambitious plan to democratise the workplace and society ever created in Europe. It was to involve excess profits of major companies being redistributed as shares to the workers. This over enough time would eventually lead to workers attaining majority control over companies and effectively ending capitalism as we know it is a major western nation. With the defeat of Socialist Olof Palme in the 1976 elections, they never implemented the plan in its original form. When Palme returned to power, they had already changed it to a much milder plan. Some reforms were implemented but following Palme’s assassination in 1986 Sweden changed course and has moved to the right ever since abandoning and further pushes for workplace Democracy.

The Mondragon Cooperative in Spain is an example of another type of worker democracy. The worker Co-op. One of the most successful cooperatives in the world is the Mondragon Cooperative in the Spanish Basque Country, which operates banks and insurance companies and industrial and commercial companies that make clothing and produce food. This cooperative has almost 80,000 members, and it has been one of the top 10 companies in Spain for years. It is a prime example of how a worker-owned company can be as successful even in a market that favours traditional hierarchical businesses.

Crucial differences

The fundamental problem with the shareholder form of running a company is it strives only for profit at any cost. Investors often have no Relation or interest in the Community in which the company operates in. They invest to gain profit through dividends and an increase in share value. They don’t have a genuine interest in creating a great place to work and creating a company that is an overall benefit to society both socially and socially. For a worker-controlled company, this is very different. Workers also have a vested interest in the company’s success and profitability. But they also have a vested interest in creating a fair and respectful place to work and for their company to be a positive addition to the local community in which workers live.

The results of companies being controlled solely by shareholders are clear to see. Outsourcing and a global race to the bottom has resulted in companies because the people who control the companies have no interest in the communities the company operates in. If it’s more profitable to move a factory from the US to Mexico because of lower wages, then it’s in the interest of shareholders to make that decision. The devastating effects on a local community of losing such a vital source of employment are of no concern to them. This simply wouldn’t happen in a worker-controlled company, as the workers themselves have such a vested interest in the company staying in their community. Germany and the U.S. provide a stark contrast in this respect. Germany simply hasn’t suffered the same level of deindustrialization and outsourcing because at least workers and trade unions have a seat at the table in major German companies. For sure, it is not enough. But the de-industrialised wastelands that emerged after Thatcherism in the UK and Reaganism in the US never happened in Germany to the same extent.

The threat of outsourcing puts incredible downward pressure on workers’ rights wages and conditions. It undermines the bargaining power of workers and unions more than anything else. Negotiations in the neoliberal era can simply be accept these reduced conditions or the company will move overseas. The damage this has caused was the foundation upon which phenomena like Trump and Brexit decades later were built upon. Globalised capital with the removal of capital controls combined with the Hegemony of shareholder business led to the neoliberal race to the bottom we are still living in.

Importance of meaningful work

Working is more than just a source of income. It gives meaning and purpose to our lives. People want to be part of projects they enjoy and believe in. In such environments, the desire to work hard and improve comes naturally. Sadly, in the top-down corporate model that exists, this isn’t the case. Workers often feel powerless, having no say in the company they work for to create profits for people who do no actual work, i.e. shareholders. It rewards those who create wealth in the modern world with very little while those who do nothing more than purchase shares reap the rewards. This system is unfair and deep down most workers know this. Wealth is created by labour, and the vast majority of it is pilfered off to people who play no meaningful role in its creation.

Work without meaning, respect, and a genuine sense of worth leads to a myriad of social problems. People simply need to feel valued and have a proper sense of positive purpose. A worker-owned company making furniture can provide this as the workers enjoy creating excellent quality furniture which can bring immense satisfaction. Workers who work in a call centre of a major corporation with no contract, no rights, timed toilet breaks listening to abuse from angry customers will not have the same sense of meaning and purpose. This is obvious, of course, but rarely discussed. We need to promote good meaningful employment where people have a say. Not soul-destroying jobs with the sole purpose of further enriching shareholders. It’s called soul-destroying for a good reason. Because it is.

Can it change?

Absolutely. The 1970s was a period when the goal line of workplace Democracy was in sight. With enough momentum and awareness, this can happen again and go even further. Germany with its strong mitbestimmung laws and still powerful trade unions are the key to this movement. It is the dominant force in European politics and it already has the strongest laws ensuring worker participation in Corporations. For Germany, it’s simply a case of pushing the existing laws that much further to give workers the decisive vote. A 50+1 law for companies is what’s needed. Success in Germany can then lead to other countries emulating them.

The other way is organically new cooperative companies emerge to compete with traditional companies. They can also promote this through tax incentives or like in Italy’s Emilia-Romagna region, where a third of GDP is generated through worked controlled cooperatives. One law to promote this is the Marcora law. This entitles recently unemployed workers to have the option to be paid their entire unemployment benefits in one lump sum as capital provided they use it with other people to create a new cooperative enterprise.

What prevents change from happening?

Democratising society in such a way has always and will always come up against fierce opposition. It not only undermines the future profits of many rich shareholders. But it will change the basic power structure of society. Right now giant Corporations, CEOs, and major shareholders have a historically high concentration of power. They have a massive influence on global politics and media. Big tech has incredible power to shape narratives, as they have such a monopoly on information. In this late stage neoliberal Capitalist era, the continued acceleration of wealth and power to fewer and fewer people has become a threat to our very existence as a species. A Global democratisation movement must reduce this power in the workplace.

Like any era of history, power never gives itself up without strong resistance. Any attempt to tip the balance of society towards workers over shareholders and corporations would essentially amount to a transition from Capitalism to Socialism. The people who currently hold the immense power in the current time will not relinquish it easily.

Perception

This is the biggest obstacle that must be overcome to begin the transition. Public consciousness in particular in the English-speaking world like the U.K. and The U.S. is unaware of any alternative ways of arranging society. Even in Germany, a country that knows full well the benefits of worker participation, there is no great push to expand workers’ control further. The difficulty in changing people’s perceptions or even showing them that there are viable alternatives is that the popular media to varying degrees is owned and controlled by private corporations and shareholders. It is simply completely not in their interest to promote or even foster a debate on the fundamentals of changing how companies are controlled. We simply cannot expect the turkey to vote for Christmas on this one. Yet in the internet era, there is renewed hope. Figures such as Economist Richard Wolfe and former Greek finance minister and founder of democracy in Europe movement Diem 25 Yannis Varoufakis are becoming more and more popular and widely known. They are spreading this message more effectively than anyone, but hopefully; they are just the start of the millions of people becoming on average a viable alternative to the destructive and failing system we currently operate under.

Right now most of society accepts the status quo because they don’t know about or can’t conceive of viable alternatives. People have become more apathetic to politics as it has gone further and further into the hands of private interest. We must believe once again that society can be truly democratised and power returned as much as possible to the people and away from corporations. Once enough people are aware and believe change is possible, then it will become inevitable.