Democracy at Work

I've been reading (mostly on-line) and thinking quite a bit lately about workplace governance models, economic structure, and why the current organization of the US workplace bothers me so intensely, partly triggered by reading John Kenneth Galbraith's The Affluent Society. The economic monoculture has made that process particularly frustrating. It's rare to find a discussion, even in the context of organizational strategies that are considered radical, that avoids the standard frame of productivity and business value. Most discussion is long on tactics and short on strategy and examination of goals. Wolff's appearance on Moyers & Company was a rare breath of fresh air, enough so that I grabbed his book shortly afterwards.

Wolff is a Marxian economist (meaning that he makes use of Marxist analysis of economics and capitalism while separating them from Marxist politics and Marx's advocacy of revolutionary socialism), which for me was part of the interest. Marxist thought of any branch is not common in the United States; we're regularly deprived of several sides in the international conversation on economic models. I was taught Marxist theory in elementary and high school (in retrospect, surprisingly even-handedly and well, despite the biases of my schooling), but none of the later developments of Marxist thought. I think that's a typical experience here; in the United States, Marxism culminated in Mao and Stalin, and no further development of the underlying theories is ever mentioned.

Democracy at Work is subtitled A Cure for Capitalism and does indeed advocate a concrete alternative to capitalist business structures. But this is only the last third of the book (and in some ways the least useful, as I'll discuss in a moment). The first two-thirds of the book is basically a remedial education in modern, as opposed to historic, Marxian economics for US readers like myself who have never heard it before, cast in the context of the current financial crisis. This may well be old hat for Europeans, but if you've been wondering what (at least some) modern-day Marxists actually believe, or are saying to yourself "there are modern-day Marxists after the collapse of the Soviet Union?", I recommend this book to your attention. It's an excellent summary, which I read with the delightful feeling of an expanding viewpoint and the discovery of new directions from which to look at a problem.

There's quite a bit in this section that's worth thinking about, including another take on the nature of the recent economic collapse and how that fits into a Marxian analysis of capitalist crises. But there was one point in Wolff's explanation that I found particularly helpful. He completely restructured my understanding of the Marxian analysis of worker exploitation and profit allocation.

There are two angles of Marxist economic thought and socialist economics that get a great deal of attention, at least in the United States, in history and economics classes: the role (or lack thereof) of markets in price setting, and the ownership of the means of production. Defenders of capitalism like to focus on the former, since it's quite easy to identify the advantages of theoretical free markets in finding ideal prices and balancing supply and demand, whereas central planning of prices and production has resulted in some catastrophic and deadly failures. (Although I will note, with passing interest, that those failures predate large-scale computing, and there are now large corporations that manage budgets larger than some countries via centralized command-and-control economic practices.) Defenders of socialism are more likely to focus on the ownership of the means of production, since it's easy to show prima facie unfairness in owners of capital extracting vast profits without having to do any work themselves, only be lucky enough to start with large quantities of money.

Wolff, however, argues that both of these focuses misses a core critique by Marx of the workplace structure in capitalism, and that, by ignoring that critique, supposedly Marxist countries did not create anything that was actually Marxist in implementation. The Soviet Union was just as much a capitalist country as the United States is. It was state capitalism rather than private capitalism, but the core capitalist structure was intact.

Wolff arrives at this conclusion, which may be well-trodden ground in parts of the world that include active Marxist thought but which was quite startling to this American, by treating the ownership of capital as a partial distraction. He focuses on a more direct question and practical question: who determines what a worker does on a day-to-day basis and how that product is used? Who determines what profits are collected and how they are spent? In private capitalism, this is done by the owners of the capital: large shareholders, major investors, and the managerial class that they hire. In Soviet state capitalism, this is done by national politicians, bureaucrats, and the managerial class that they hire. In neither model is it done by the workers themselves. The Soviet model gives theoretical ownership of the capital to the workers, but that ownership is diffused, centralized, and politicized, redirected through the mechanisms of the state, and therefore is effectively ignored. Ownership and control is entirely captured by the political class.

Both of these systems are capitalist in Wolff's view of Marx: there is a class of owners and managers, who control the terms and nature of work and who allocate the profits, and a class of workers, who have to do what they're told, are not paid full value for their labor, and don't have a say in how the profits their work generates are spent. At the most important level of day-to-day autonomy and empowerment, they are functionally identical. They are both equally hierarchical and exploitative; the only difference is in whether the system is controlled by rich individuals or by well-connected politicians. (And, as any study of modern politics quickly reveals, the distinction between those two groups in most countries is murky at best.)

Wolff convincingly recasts modern economic history as a constant pendulum swing between private capitalism and state capitalism. Crises in one system push countries towards the other system; subsequent crises push the country back towards the first system. Regulation grows and shrinks, companies are nationalized and then privatized, but both systems are united in excluding the worker from any meaningful control over their work life.

The first two-thirds of the book was full of insights like this for me. I didn't agree with all of it, but all of it was worthwhile and thought-provoking. But I was a bit leery of Wolff's proposed solution. My past experience with critics of capitalism is that the critique is often quite compelling, but the proposed solution is much less believable. And, sadly, that concern was warranted here as well.

The core of Wolff's proposal is predictable but possibly sound: a restructuring of the workplace to be radically democratic. The business would be owned entirely and exclusively by the people who work for it, equally regardless of the job of the worker, and the workers would decide democratically or via elected repesentatives from among the workers how to allocate the profits of the business, what standards and business practices should be followed, and how the work is to be done. I was particularly interested to hear that this model (workers' self-directed enterprises) has apparently been successful in Spain in the form of the Mondragon Cooperative. Given all the tricky, small details that have to be resolved in an actual workplace, an existence proof is worth more than pounds of theory.

Unfortunately, like a lot of proposed alternatives, Wolff's description of WSDEs is quite fuzzy and involves a lot of hand-waving. I was never able to build, from this book, a coherent and complete mental model of how such a workplace would function. Wolff tends to surround every specific in a halo of contingencies, possibilities, and alternative models, and is maddeningly nonspecific on such practical matters as how line management would work, how such a business would do financial planning or project approval, how competing interests in different parts of the organization would be balanced, and other practical governance matters that fill my work life. Maybe the answer to all of that is just "democracy," but I'm dubious.

Democracy has a number of well-known flaws that I thought weren't adequately addressed. For example, democracies are often quite happy to further and reinforce existing prejudice (such as sexism or racism), and are prone to yielding control to the most charismatic. Democracies also have an informed voter problem, which seems like it would be particularly acute if democracy is going to make detailed business decisions. And, for larger organizations, control by pre-existing money could re-enter the equation via propaganda and campaigning around votes. Some of this gap in the book could be addressed via a more in-depth look at how Mondragon and any other real-life examples work, but that is sadly missing here. (I am interested enough now, though, that I'd read a good popular treatment of the history and methodology of Mondragon, although I don't think I'm up to working through an academic study.)

The hierarchical, dictatorial management structure imposed by capitalism is so awful that WSDEs don't have a particularly high bar to meet to be fairer and more empowering than what we have today. The question, rather, is would they function sufficiently well that the business would be able to make effective decisions, and that's unclear to me from this book. This is, as Wolff spends some time discussing, particularly difficult when in direct competition with capitalist enterprises. This sort of endeavor will probably trade some degree of economic efficiency and raw marketplace power for improvements to fairness and empowerment, but that means it's going to require support from the surrounding society, which is a huge obstacle. I doubt there's a free lunch here: true fairness and equity also leading to improved economic efficiency in a capitalist context is a nice dream, but not horribly practical.

Wolff also seems to suffer from something else I associate with Marxist thought: a preferential focus on a very narrowly-defined type of productive worker, apparently left over from Marx's original critique in the context of industrialization. Wolff inserts a very odd and quite awkward distinction in his WSDE model between workers who directly produce the product that's sold, and who in his model therefore produce the profits of the business, and all other workers in the business. He then gives special privileges to the former group to decide how much profit to return in worker compensation and how much to use for other purposes, thus making the supporting workers second-class citizens within this supposedly equal workplace.

Speaking as someone who works in IT, and hence would be classified by Wolff into the supporting rather than directly productive category, I do not find this division at all convincing, and Wolff never provides a coherent explanation for why he introduced it. He only says that it's necessary for the governance of the business to not be exploitative, which seems to assume that there is a special economic role played by the workers who work directly on a saleable product. Maybe there is some analysis that could convince me of this, but, if so, it's not present in this book. It struck me as a recipe for continuing the exploitation of the most invisible and powerless workers in capitalism: janitors, groundskeepers, and other low-paid service jobs.

I wish the whole book were as insightful and pointed as the first two-thirds, but alas I found the WSDE discussion to be somewhat muddled and utopian. "How do we get there from here" is always the hardest part of this type of discussion, and Wolff has no special skill in that department. But, despite that, I got a lot of fascinating ideas and new conceptual frameworks out of this book, and I'm tempted to read it again. I suspect some of this, similar to my discovery of promises and infinite streams in programming, is filling in of odd gaps in my personal education rather than a discovery of unusual, new ideas. But if you too have gotten your political education within the US capitalism über alles bubble, this book may fill in similar gaps in your knowledge. If so, it's a very rewarding experience.

If you're curious about a preview of Wolff's perspective without paying for the book, I recommend watching the first episode of Moyers & Company in which he appeared. Wolff is a clear and engaging speaker, and his interview provides a good feel for his discussion style and his general perspective.

Rating: 8 out of 10

Reviewed: 2013-05-03