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“The Soap Box” – For a Democratic Economy

There are number of facts about the economy of the world today that are inescapable. What constitutes an economy, what we produce to meet the needs of society and how resources are allocated for it, is owned by a small handful of mega wealthy people1. Secondly, the most common form of business, especially medium to large, is in the form of a modern corporation-or for short, a capitalists’ corporation2. Finally, major environmental concerns such as climate change and environmental degradation are directly connected to the world’s current economic activity3.

In a corporation, decisions are made by an executive board that is elected annually by its shareholders. Sounds democratic, right? However, if we look a little deeper, the process appears to be anything but democratic. Don’t take my word for it, former Prime minister and – amazingly still relevant commentator in the public sphere, John Howard, has famously said, “The economy is not a democracy”. And he’s right -it is not.

It is common knowledge that voting for executive boards of traditional capitalists’ corporations is done via shares. If you’re a “mum and/or dad” investor who holds a few shares in a company, you would get a few votes corresponding to how many shares you own. If you’re a wealthy individual who owns 27 million shares- you get 27 million votes. So in reality people who are elected to make decisions and manage a business are placed there by a few, very wealthy investors who own the majority of the shares of a company.

And there lies the bottom line of all our economic and environmental problems in my view. Business decisions and management have a direct and significant impact beyond business performance and bottom line profit. Businesses for better or worse have a tremendous impact on the lives of workers, their communities and the environment.

Is it then reasonable to assume that this way of organisation is not only undemocratic but also dangerously unfair? Why would a major shareholder whom in all likelihood has many shares in businesses in their portfolio be concerned of the lives of the workers that make these businesses profitable, or their communities, or their environment? Chances are, most investors never meet the workers that create their return on investment let alone know what products or commodities are produced by them. Subsequently why is it reasonable that workers, their families, their communities and the environment have little say over their livelihoods?

A solution to these issues is creating worker owned and managed cooperatives. Despite significant challenges in setting these up in the current legislative and economic climate, it is not only possible but it is also desirable. It is beyond the scope of this article to explain in great detail why that is – but ask yourself the following: Are workers likely to agree to outsource their own jobs? Are workers likely to agree to shut down local businesses? Are workers going to agree to the massive degradation of their land, air and sea? Are workers and their families, given power over the matter, going to ignore the existential threat of climate change? Are they likely to agree to the slow and agonising death of their towns, their culture and arts?

In my view, unlikely.

If you are concerned about how the economy is being run (such as the never ending privatisation of publicly owned resources), climate change, loss of local jobs and economy, degradation of the environment, and ever more hostile working conditions-including prospects for future generations, then it is time to seriously consider supporting worker owned and managed enterprises.

W.D Forté

Bibliography:

1: https://www.newscientist.com/article/mg21228354-500-revealed-the-capitalist-network-that-runs-the-world/

http://theconversation.com/who-owns-the-world-tracing-half-the-corporate-giants-shares-to-30-owners-59963

2: https://www.ft.com/content/1fda5794-169f-11e5-b07f-00144feabdc0

3: https://www.nap.edu/read/1792/chapter/5#46

https://ec.europa.eu/clima/change/causes_en

http://www.ase.tufts.edu/gdae/education_materials/modules/Corporate_Power_in_a_Global_Economy.pdf

Further reading:

https://www.nytimes.com/2014/04/05/business/economy/corporate-profits-grow-ever-larger-as-slice-of-economy-as-wages-slide.html

http://www.globalissues.org/article/55/corporations-and-the-environment

http://www.globalissues.org/issue/50/corporations

https://sites.hks.harvard.edu/m-rcbg/CSRI/publications/report_12_CGI%20Role%20of%20Business%20in%20Society%20Report%20FINAL%2010-03-06.pdf

Causes of global warming: https://ipcc.ch/report/ar5/

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