Toward an Economic Democracy

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tags: capitalism, labor relations

The idea of restructuring our economy so that capital is a resource that works for labor and not just for itself is not a new one. Workers didn’t always work solely for wages. They used to work in small shops and on farms. In the middle of the nineteenth century, as industrialization was taking hold, some labor leaders warned that an employer-employee relationship where the first group owned and the second group was expected to survive on wages was a trap that would result in dependence and servility. They argued for employee ownership of the newly emerging industrial economy as an alternative where labor should work for both wages and capital ownership. 

Strangely enough, so did a smattering of legendary industrialists, including Robert Brookings, Leland Stanford, and, early in the twentieth century, the chairman of the General Electric Corporation, Owen D. Young. On July 4, 1927, Young took the podium on the newly installed granite steps of the Baker Library at the Harvard Business School. He was the guest speaker for the opening of that grand building, and he had a surprise vision to share with the audience. He asked his audience to consider whether American capitalism, then barely a century old in its industrial form, had been launched on the right foot. 

Into these [larger-scale businesses] we have brought together larger amounts of capital and larger numbers of workers than existed in cities once thought great. We have been put to it, however, to discover the true principles which should govern their relations. From one point of view, they were partners in a common enterprise.  From another they were enemies fighting for the spoils of their common achievement.

He spoke hopefully that the Harvard Business School might be a place where his alternative vision could be fleshed out and made to work.

Perhaps someday we may be able to organize human beings engaged in a particular undertaking so that they truly will be the employer buying capital as a commodity in the market at the lowest price.… I hope the day may come when these great business organizations will truly belong to the men who are giving their lives and their efforts to them, I care not in what capacity.… Then we shall dispose once and for all, of the charge that in industry organizations are autocratic and not democratic.… Then, in a word, men will be as free in cooperative undertakings and subject only to the same limitations and chances as men in individual businesses. Then we shall have no hired men. That objective may be a long way off, but it is worthy to engage the research and efforts of the Harvard School of Business.


Read entire article at The New Republic

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