A Cross-Atlantic Plan to Break Capital's Control
/By PETER GOWAN and MATHEW LAWRENCE
Bernie Sanders’s plan for worker-owned funds isn’t just notable because it could lead us toward a democratized, sustainable, socialist economy. It’s also the product of a growing collaboration between the Left in the United States and the United Kingdom.
Capital has been put on notice.
On both sides of the Atlantic, the Left is no longer content to regulate capitalism. Instead, leaders of socialist movements contending for state power are now seeking to transform the landscape of ownership, redistributing wealth and power in the economy by democratizing company ownership.
Bernie Sanders’s support for worker ownership funds, announced last week, is the latest ambitious commitment to the new politics of democratic ownership. If implemented, this would be a vital institutional turn towards, in Sanders’s words, “an economy where workers feel that they’re not just a cog in the machine — one where they have power over their jobs and can make decisions.”
Though the details of Sanders’s plans are still under discussion, the implications are clear. The plan would require businesses to contribute a percentage of stocks to a fund controlled by employees. In turn, the fund would pay a regular dividend to workers while making them a powerful voting bloc in corporate decision-making.
By rewiring income and control rights at the company level, gradually dislodging ownership by capitalists (typically with control exercised through extractive financial intermediaries that act as their agents) and empowering labor, the funds would help reshape how the economy operates and for whom.
There are important details to debate, particularly how the dividends would be distributed. To coincide with the Sanders’s announcement, Common Wealth, a UK-based think tank designing ownership models for the democratic economy, published research by Lenore Palladino, a senior economist at the Roosevelt Institute, on the distributional effects of worker funds. Critically, it shows that for the 1,345 corporations that reported sufficient information who would likely be required to establish a fund under the proposal, granting 10 percent of dividends per employee would have meant an average payout of $2,725 per worker. If a higher percentage of companies were owned by workers, this payout could be even higher.
The average does mask sharp differences in payout, reflecting differing rates of profitability between firms and sectors. It would be possible to reduce this by only permitting individual firm-level dividends to be a certain size, and placing any amount above this in a central social wealth fund (a proposal recently adopted by Momentum, the pro-Corbyn campaigning group). Alternatively, dividends (both IOF and non-IOF) could be treated as regular personal income in the tax code and made subject to steeply progressive taxation.
These are important questions of design to debate. Yet critically the Sanders plan challenges inequalities in both resources and decision-making power at the firm level. By ensuring there is a social claim on the dividends, potentially capitalizing an overarching social wealth fund, the policy could extend democratic control of the economy as a whole and transform corporate wealth into social wealth.
By ensuring everyone has an equal stake and a powerful additional channel for labor’s voice in companies through worker-controlled funds, we could build increasingly cooperative, democratic companies. By reestablishing the link between firm productivity and worker compensation, they can ensure workers — and society through a social wealth fund — share in returns they generate.
And critically, strategically, they can begin to break the controlling power of private capital in decision-making, both at the firm level and across the wider economy. In short, ownership funds could be a powerful policy tool for moving towards democratic socialism: it is about giving workers democratic control over their daily lives and sharing the fruits of what they produce together.
The Sanders plan has clear echoes of the UK Labour Party’s Inclusive Ownership Funds (IOF) policy, which was taken up by Shadow Chancellor John McDonnell as policy last fall. The policy would transfer 1 percent of firm equity in companies with over 250 workers into a worker-controlled fund each year, until the funds reach 10 percent of the firm’s total equity.
To deal with distributional inequalities between different firms and sectors, Labour’s plan caps individual dividend payments above £500, with all the surplus socialized above that. While we are sympathetic to the egalitarian motive, we are inclined to believe that this cap is too low and that it should be increased. But the policy would still have immense transformative potential if fully implemented.
Bernie Sanders’s announcement is also the latest example of the growing cross-fertilization of ideas and energy between the US and UK left, from the adoption by British leftists of the Green New Deal to the cross-pollination of organizers in movements like the Democratic Socialists of America, Justice Democrats, and Momentum. Given the scale of crises confronting the two countries — from climate crisis to pervasive inequalities to an extractive and broken economic model — this newfound ambition comes not a moment too soon.
There is a long history of transatlantic cooperation by political movements. Advisers and intellectuals behind the neoliberal agendas of Ronald Reagan and Margaret Thatcher planned out methods for breaking the power of organized labor, rolling back the welfare state, and using mass unemployment to return the whip-hand of capital to full control over their countries’ economies. While these discussions often happened in secret, the new transatlantic left are openly working on an agenda to restore the power of labor, decarbonize the global economy, and fight back against the dominance of extractive, financialized capital.
For new UK policy organizations like Autonomy, worker decision-making in the future of work and the campaign for a four-day week are central. The New Economics Foundation (NEF) has pushed for worker control, as well as new ways of thinking about the ownership of personal data. We Own It, another young think tank, have been central in pushing for democratic public ownership of strategic sectors of the economy.
The Centre for Local Economic Strategies (CLES) have long championed community ownership and wealth-building initiatives, and along with the Democracy Collaborative assisted the pioneering Labour council in Preston in building the UK’s most improved local economy in what was once a declining post-industrial town, through public support for cooperatives and other municipally and community-owned economic institutions. IPPR’s Commission on Economic Justice, hailed by John McDonnell as the Beveridge Report of its time, has set out an institutional roadmap for a post-neoliberal economy.
In the US, Alexandra Ocasio-Cortez’s leadership on the Green New Deal has centered large-scale public infrastructure projects. In the face of historic racial inequality Cooperation Jackson has developed alternative economic institutions, including those based on collective ownership of land. Municipal efforts like those from Seattle city councilor Kshama Sawant push for local ownership of common goods — including calls for workers to take over the Boeing airplane factory. Socialist legislators from the new socialist caucus on Chicago’s city council to Julia Salazar in New York are leading the fight for universal rent control and tenant protections.
On the research front, the socialist People’s Policy Project has published papers advocating for a massive public investment in social housing and the establishment of a publicly owned social wealth fund that would pay a universal basic dividend to all Americans, while the Democracy Collaborative and the Roosevelt Institute have been promoting firm-based worker ownership funds in the United States.
What makes worker ownership so important as a component of this agenda is how it works through both immediate redistribution of the surplus to workers, as well as building durable democratic institutions for workers to exercise collective power. The policy is radical not only in its redistributive force, but in the way it opens a discussion about how to build a fully democratized, sustainable, and socialist economy. If we are to address large-scale climate crisis and a dangerously oversized financial system that gambles using the public’s money, we need to embrace radically different configurations of ownership on both sides of the Atlantic — and to build even more international bridges between movements, across language barriers as well as between movements in the Global North and Global South.
This international movement may be in its nascent stages, but it is important to recognize and build upon the increasingly concrete and valuable ties between the Left in the US and the UK as a model for how movements and activists can work productively together in a way that strengthens the Left in each country.
