State Transformation, Corporate Organization, and Economic Democracy

• In Event: Rethinking Power, Populism, and the Crisis of Democracy

Abstract

The economic crisis of 2008 has today evolved into a severe, and growing, political crisis of the American state. This crisis is characterized by an intense contradiction between the forms of governance, strategy, and administration that have characterized the period of US-led globalization, on the one hand, and the mechanisms of legitimation, especially the two major parties, on the other. Both the Democratic and Republican party establishments are seeking to contain “populist” challenges to capitalism and globalization, from left and right, respectively. This concentration of state power in agencies that are isolated from democratic pressures has been a crucial institutional support for the power of finance, which has also contributed to the exploding economic inequality and precarity that is at the root of the populist upsurge. And yet, since the 2008 crisis, the state has pursued a restructuring that has left finance more powerful and concentrated than it was going into the crisis. This has been accompanied by new structures of corporate ownership and governance, the dimensions of which are still unfolding, including continued financialized reorganization of non-financial corporations, the return to prominence of Boards of Directors, the rise of the “privatized” corporation with restrictions on investor voting rights, the huge growth of private equity, and historically unprecedented shift of investment toward passively managed funds.

How are we to understand the political consequences of the emerging structures of corporate ownership and control? As the Trump Presidency continues to intensify the dysfunction in the American political and economic system, what are the opportunities for progressive change in light of the left wing insurgency within the Democratic Party waged by Bernie Sanders and his followers? Is a strategy to “break up the banks” economically or politically viable—or effective? What are the possibilities and limits of granting workers seats on Boards of Directors, as has been proposed by Elizabeth Warren, or of expanding Employee Stock Ownership Plans, as advanced by Bernie Sanders and Kristen Gillibrand? Can pension funds constitute “labor’s capital” or “labour’s last best weapon” in democratizing corporate control, as argued by David Webber and Theresa Ghilarducci, among others in the labour movement? Do workers’ cooperatives, as described by Richard Wolff and Gar Alperovitz, offer a way forward? As I will argue, these proposals are in fact more likely to bind workers to their firms, processes of financialization, and pressures for competitiveness than to break with them, reinforcing problems of class re-formation and solidarity. Instead, I will argue that progressives should develop a strategy based on democratizing the financial system, along the lines proposed by Robert Pollin and Gerald Epstein.

Author

• Stephen Maher, York University