To some economic democracy is self-evidently a good thing if this means spreading economic opportunities more widely, giving workers a greater say in the workplace and allowing communities to participate in the investment decisions that shape their future. Indeed a classic argument has it that political democracy - universal suffrage, civic freedoms and all that is needed to make them practical and effective - will itself work better if accompanied by 'social' or 'economic' democracy. Absent the latter, real civic participation will be low and big money will corrupt the political process, especially in complex societies where commercial networks can shape political agendas and where the cost of campaigning is high.
While few deny the need for reform in the way elections are run and financed - a source of recurrent scandal in nearly every rich country - another line of thought would challenge the conclusion that it makes sense to aim for economic democracy. The very term is thought to be a contradiction in terms or a category mistake. The Biblical notion that man is condemned to live by the sweat of his brow already contained the idea that we work because we have to. To use Marx's language, work belongs to the realm of necessity, not freedom. While social abuse and exclusion can be done away with it is in the nature of work to be demanding and unwelcome. Technology may lighten the load but there usually remains a resistant core of simple chores, tasks which most will look forward to getting through so that they enjoy its fruits in free time or 'quality time'.
The category mistake also consists in failing to register that economic processes are too complex to be governed by votes and electioneering. Governments can and must lay down some basic ground rules but, as Friedrich Hayek showed, they lack the locally-specific information required effectively to run complex enterprises still less to plan the entire economy. On the one hand, consumer needs are too intricate and changeable; on the other, the myriad of local and specific investment opportunities can never be known at the planning center. While Hayek's critique of central planning was in many way compelling, it failed to acknowledge the extent to which markets rely on the wider social context in which they are embedded. It also did not demolish the argument that public initiative and collective resources will be needed to meet large scale and manifest threats, dangers and risks.
So votes can be effective if directed at a few, simple large scale choices - alternative policy packages - on a national or even global scale. Moreover the vote is a precious badge of political citizenship. Ideally this 'political democracy' would extend to such basic choices as how best to address climate change, or how to improve public health. In principle voters can decide the scope of taxation and of social programs. But there is a widespread sense that prevailing power structures and interest groups narrowly constrain actual outcomes. 'Economic democracy' might be a way of allowing for greater and more effective citizen input.
Political democracy is based on the principle of one person one vote. In national politics this is easy enough to apply and one might imagine the principle playing some role in a more democratic global order. But how would the idea of one person, one vote translate to the everyday economic world?
When I did the equivalent of Economics 101 we still used Paul Samuelson's classic text book which opened with the observation that markets could be thought of as a sort of electoral process in which dollars worked like votes. When the consumer made a purchase, or a businessman an investment, their dollars functioned like votes in favour of what they had chosen. Aggregated across the economy they would steer output in one direction or another. The problem was that dollars were not, like votes, equally distributed amongst the citizenry. In the postwar period, heyday of that textbook, such an objection seemed weaker since both wealth and earnings had undergone what economists term a 'great compression'. CEOs did not like to be seen taking too much out themselves and instead showered their employees with benefits.
We all know that things stand very differently today, with research showing that the main gains since 1980 have been garnered by the rich and the super-rich - not just the top 1 per cent of households but by the top 0.1 per cent and the top 0.01 per cent. If we take residential property out of the equation the concentration of wealth is even greater and the top 1 per cent own a half of all corporate securities and money market bonds while half of US households own no productive property at all.
Such plutocracy is especially difficult to justify when it derives, as it now so often does, from chief executives being extravagantly rewarded for indifferent or even negative results, or from back-dated options, or from monopolistic forms of financial intermediation such as are expertly practiced by the great investment banks and fund managers. Eliot Spitzer, the New York attorney general, revealed systematic abuse of this sort in banking, fund management and insurance in the years 2002-6 but had no power to correct it with systematic reform. These investigations led a Republican Senator, Peter Fitzgerald of Illinois, to describe the US financial services industry as 'the world's largest skimming organization'.
In today's financialized capitalism the shots are called by two partially overlapping groups - the super-rich and an elite of financial intermediaries and agents who aim to join the former. The corporate securities and money-market instruments not owned by the very rich are held by institutions supposedly in the interests of millions of middle class holders of 401(k)s, or members of employer-sponsored pension and health plans. I have elsewhere suggested that we call this institutional and pension wealth 'grey capital' since the property rights and privileges it confers are very unclear. Institutional capital gives leverage not to the beneficiaries but to financial and corporate executives who they have no way of controlling.
I could expand on all this and ply you with tales of greed and duplicity unmasked. It is satisfying to hear of highly-placed miscreants brought to book. But more important are the structural forces shaping modern economies and the scope for checking or changing them. The classic function of capital markets and financial institutions was to direct capital to where it could most profitably be invested but in the era of financialization they have discovered another vocation which is to sustain the momentum of sales by reorganizing and extending credit networks. Elected governments have 'de-regulated' financial institutions to allow the party to continue.
The Debt Trap
Large companies like General Electric and Ford have profitable finance
arms which lend money to their customers or devise leasehold arrangements
that facilitate product sales. For their part the swanky investment banks
display great interest in mortgages and consumer debt, especially the
risky 'sub-prime' variety because this attracts the best rates. They purchase
huge amounts of this debt, repackage it in credit derivatives, slice up
the debt into ten tranches graded according to their degree of risk, hedge
each tranche according to a different formula, and sell on the resulting
collateralized debt obligation (CDO) to the pension and mutual funds.
This has been very profitable but in a changed business climate the magic
could evaporate. Instead of helping to sustain demand it could squeeze
it remorselessly, as interest rates rise and bad debts inflict losses
on the holders of the CDOs.
The financial inflation of demand is a way of putting purchasing power into the hands of consumers without re-distributing wealth towards them - similar processes are at work in the global economy, where huge imbalances are created by the weakness of domestic demand in China and India. If a better way could be found to put purchasing power in the hands of consumers this would be both economically beneficial and a step towards global justice, and in that sense economic democracy too.
However demand is not only regulated by finance but also shaped by corporate marketing and promotion. Naomi Klein's No Logo and Joel Bakan's The Corporation furnish vivid accounts of the corporate ability to condition our culture and our desires. While consumer dollars might seem to command the corporations competing for them, the consumers actually have no say over how demand is met. This is a phenomenon which can be traced back to the origins of capitalism in the sixteenth and seventeenth centuries. At that time commercialised agriculture put money in the hands of farmers, landlords, merchants, professionals, and even day-labourers, and enabled them to buy exotic luxuries like sugar, tobacco, spices, dyestuffs, cotton and coffee. But it was enterprising merchants ('grocers') who decided to meet that demand by organizing plantations staffed by indentured servants and slaves. As Thomas Holt has observed the English housewife buying a packet of sugar by means of her penny-votes was helping to set in motion a gigantic new social order based on the antithesis of individual choice and freedom. If you like, a certain type of economic democracy was breeding another type of economic bondage and tyranny.
The global order so acutely delineated by Naomi Klein showed that we continue to live in a world where the apparently innocent acts of the Western consumer are linked to sweat shops and the depletion of scarce vital resources. The difficulty with dollar power is not only that it is very unequally distributed but also that it only confers a second-order say, leaving the corporations and capital markets to make most of the crucial decisions about how demand will be met. Governments can regulate but they are often too remote, too ignorant, too clumsy, to make any difference. Social movements can agitate but their boycotts tend to have only a momentary impact. Corporations are flexible and have staying power. Public concern is fickle. It can tire of activist stridency and succumb to the determined wooing of any apparently contrite corporation.
'Consumer Sovereignty':
a Dimension of Economic Democracy?
Moreover the astute modern corporation will claim to be simply the servant
of the consumer. Consumers views of what they want and need are, as Klein
and others have shown, profoundly shaped by the insidious barrage of advertising
and marketing. Young children are already targets of commercial strategies.
Their 'peer group rivalries' shape taste and and their 'pester power'
mobilises adult spending. Even those with miniscule incomes on the global
periphery of capitalist exchanges are entangled in a consumer logic -
if they want to buy a bottle of Coke or Fanta, if they wish to look at
TV, if they want to buy a metal implement, then they will have to find
some money, by selling something they have found or made, or by taking
any employment available. This can easily feel more like a tread-mill
than 'consumer sovereignty'.
Yet over the system as a whole consumers with cash or credit behind them do have power and corporations will try to woo them. While the consumer's needs are stimulated and shaped they are not unreal. They may be 'artificial' but then even such basic necessities as the need for food, clothing and shelter can be met in a myriad of different ways each of which will reflect cultural assumptions, including taboos or socially-instilled ideals of what is satisfying and appropriate. The capitalist mode of production is yoked to a capitalist mode of consumption which does foster a type of 'consumer sovereignty', with rivalrous corporations falling over one anther in a bid to ingratiate themselves more successfully with consumers. In a different way democratic politicians also strive to present themselves as champions of the consuming public, reluctant to tax and keenly aware that 'it's the economy, stupid'.
To represent this consumer-oriented commercial complex as 'economic democracy' would be very much a step too far because of the previously-mentioned polarisation of wealth and the superior resources and information of corporations and finance houses. The business scandals reminded us that prevailing commercial and financial practices are riddled with insider systems of privileged information and power. If these could be identified and stripped out, we could still be left with an ecologically unsustainable notion of the sovereign consumer. For example energy should not be priced simply to suit the consumer but should reflect its full cost. The super-markets are full of goods brought from thousands of miles away at far below the real cost of their transportation if their contribution to climate change is taken into account. And if such costs are to be reined in higher prices for fuel may prove quite inadequate and need to be supplemented by carbon rationing geared to steady reduction of overall levels of absolute consumption. Persuading majorities of the need for such restraint will not be easy but once such majorities have been assembled in a jurisdiction then minorities may have to be coerced, a proceeding that would be a sort of economic democracy that tames consumer sovereignty.
Dilemmas of Workers
Self-Management
How can a responsible economic democracy be constructed? How could more
participate in the making of economic decisions? How could economic resources
be more fairly and thriftily distributed? We will never be able to construct
institutions that guarantee ethical ways of producing and consuming but
some arrangements may facilitate and encourage responsible behaviour and
social justice just as too many of today's institutions do the opposite.
We have some negative and a few positive examples.
The non-statist socialist Left of the twentieth century - especially of its latter half, was drawn to the ideal of 'workers self-management'. When Tito's Yugoslavia broke with Stalin it turned to workers self-management as an alternative to a command economy. For a while it worked rather well and by the late sixties the country was beginning to bring a measure of prosperity to most regions. But Yugoslavia remained a one-party regime, and, even though it exercised a comparatively mild dictatorship, this still hobbled democracy in the enterprises as much as anywhere else.
A further problem is that even where enterprise managements were genuinely responsive to the workforce what of those who were not employed by them, or were employed by other enterprises? The problem became acute when significant unemployment appeared, as it did in the 1970s and 1980s. Enterprise managements were quite solicitous of the interests of 'core workers' but not of those who were casual or unemployed. And if two enterprises had different ideas about regional priorities would the company with the most employees have to prevail? Obviously the absence of real democracy in the wider society meant that there was no legitimate arbitrator. But moves towards a little more democracy did not help, indeed it was accompanied by aggravated nationalism in the Federation's constituent republics.
It would be absurd to hold the 'self-management' structures in former Yugoslavia responsible for the tragedy that unfolded in the 1990s and, because they had such limited power, I don't believe anyone has ever suggested this. But what transpired certainly showed that fairly positive micro-governance arrangements do not necessarily add up to a good macro-solution of economic problems. Another case in point would be the German system of mitbestimmung, or co-management, whereby workers are represented on the second of a two-tier management board. German corporations have been, and remain, world champions. This allowed Germany to overtake the United States and become the world's largest exporter in 2005. But other indicators of macro-economic well-being told a different story, with a stubbornly high unemployment rate stuck at around ten per cent for the last two decades.
Another version of enterprise-level economic democracy is employee share ownership plans (ESOPS). There is a case for employees holding some stock in their employer but it is a limited one. Such ownership might give them some channels of information and the prospect of a share of the profits. But there are also big risks. When Enron collapsed in 2001 its employees held, on average, about half their 401(k) savings in the form of Enron shares. The collapse therefore meant that they lost not only their job, but also half their savings. Although the unhealthy nature of such concentrated risk has led to greater caution, many US employees still hold too much of their 401(k) savings - over a quarter on average - in the form of their employer's stock. This is largely explained by the fact that employers find it easier to issue stock than to stump up cash when contributing to employee savings plans.
Employee stock ownership has been high at a number of troubled corporations - such as United Airlines - as employees were offered stock in exchange for wage or benefit economies and cut-backs. Possession of such corporate securities has not given such employees added leverage and sometimes seems to have further increased their exposure to employers' blackmail - 'abandon your benefits or see your job and savings destroyed'.
The modern corporation is so vulnerable to the capital markets that small-scale individual share-holding confers only what are known on Wall Street as 'subordinated' rights of ownership. Otherwise put, they have little clout, and are at the end of the line of those with a claim over the company's assets.
The Mondragon
Cooperative
The world's most successful example of employee-self-ownership and self-management
is the Mondragon Cooperative Corporation based in the Basque country,
Spain. Mondragon grew from 8 cooperatives in 1960, employing 395 worker
members, to 92 cooperatives in 1980 employing over 18,000 worker members.
By 2004 the group was Spain's seventh largest corporate entity, with combined
assets of 18.6 billion euros and 70,000 worker members. The group produces
electrical goods, auto components, machine tools, and furniture. It has
a construction division and a retail chain and maintains important research
and training programs.
Crucial to the post-1980 growth and diversification of the Group has been a bank, the Caja Laboral Popular, which supplies overall financial coordination and planning, and an Enterprise Board, which guides each new start-up. The Caja Laboral Popular and the system of self-ownership acts as a buffer against the storm and stress of the wider economic context. By 1995 the Caja had 1,380 employees and was a major force in the Basque region. In the early days the still small size of the group, and the shared Basque and Catholic background of most members, eased the tasks of governance. Once the group had grown larger and more diversified, however, finance made a crucial contribution to its expansion and coherence, exerting a certain discipline on each of its constituent enterprises. In the late 1980s overall leadership of the entire group was vested in a 'Cooperative Congress', representing every constituent cooperative, and an elected Standing Congress Committee.
Mondragon is still only an island of community collectivism within a still capitalist context, but at least it is one which serves as a more plausible stepping stone towards 'economic democracy than other variants of self-ownership or self-management. The Mondragon employee-members still have some concentration of risk but the now quite diversified nature of the Group's assets and activities has served to reduce this. The ability of Mondragon to sustain growth, to defend an egalitarian pay structure, and to make provision for the educational and cultural needs of its members, notwithstanding the pressures of globalization is certainly an achievement and belies the determinism of 'flat world' prophets like Thomas Friedman.
But Mondragon, framed by the wider Spanish and global context, is at best an incomplete recipe for a whole society. The corporate organization of the modern capitalist economy, and the greatly unequal distribution of productive wealth, would have to be reckoned with in any strategy for a more democratic economic order.
Regional Mobilisation
and 'Popular Budgeting'
Another path towards greater collective participation has stressed the
potential role of regional or municipal government. Dynamic local economies
often display the benefits of cooperation between local authorities, universities
and local business. On the one hand enterprises can count on social inputs
which would have been too costly for any given concern to have paid for
by themselves, while, on the other, such enterprises know they must ensure
that the whole community shares in their success. China's 'Township and
Village Enterprises' (TVEs) draw on such a logic and have made a large
contribution to overall advance. But often much depends of a local notable
and his connections, with little scope for genuinely democratic feed-back.
A quite different model of local mobilisation is supplied by the Brazilian city of Porto Alegre and its attempt to develop 'popular budgets'. The Brazilian PT (Workers Party) won election to run this city in the 1990s and decided for a model of extended civic participation that would begin rather than end with their assumption of office. While the PT had its own ideas concerning how the municipal budget should be raised and spent it decided to hand over detailed deliberation and implementation to assemblies in every district in which citizens could voice their own priorities and concerns. Even after the novelty had worn off tens of thousands of citizens attended district meetings where budget priorities were decided. The new system was sufficiently entrenched to survive elections in 2005 in which the PT lost its majority on the municipal council. However the level of participation has fluctuated, with often about 50,000 people in a city of a million and a half playing an active role in the budget process. While this may be less than a tenth of the adult population it still reflects a massive rise in participation compared with most states where only a third or a half of the population even vote, let alone play a direct role in shaping collective decisions. It is also notable that participation is greater in small, manageable neighbourhoods than in the city's large, anonymous central district. A real limitation, however, stems from the limited powers of municipal government and the constraints on its ability to raise revenues. Even though local authorities often aim to stimulate local production, they are revenue-consuming rather than revenue-producing entities. If it is to have real substance economic democracy should be about organizing wealth-production and the disposal of the wider economic surplus.
The Swedish Wage-Earner
Funds
One of the most innovative attempts to construct a 'social and economic
democracy' in and against a developed capitalist context was, and to some
extent still is, the Swedish welfare state. It employed progressive taxation,
a national wage-bargaining round, social funds and ambitious public welfare,
health, education and child care programmes, to construct what was known
as the 'Swedish Home'. The architects of this system were Gosta Rehn and
Rudolf Meidner, economists who worked for the LO, Sweden's main trade
union federation.
Influenced Keynes and James Meade, the two men understood that welfare and corporate finance needed to be thought through together if high employment levels were to be maintained and inflation avoided. Remarkably enough, their model did for long succeed in delivering on both fronts - something which, sadly, cannot be said about other European welfare states, where monetary stability was achieved at the expense of a long and debilitating toleration of high levels of unemployment, with younger workers, older workers and ethnic minorities the worst-affected.
From the time of the introduction of a second state pension system, the ATP, in 1959, the 'Swedish home' could accumulate a trust fund so that in future asset income as well as current taxes could be drawn on to pay ATP entitlements. Such pre-funding makes it easier to share between generations the costs of variable cohort size or an ageing population. Continental European pension systems were more purely reliant on pay-as-you-go and were going to have difficulty coping with such demographic challenges. The famous wage-bargaining round was another device which Rehn and Meidner integrated into their model, helping it to avoid the twin perils of hyperinflation and persistent, high joblessness. Meidner's position as the chief economist of the trade union federation must have been important in promoting a species of solidaristic wage-bargaining in which the fruits of productivity advances were widely shared. (In recent years the Netherlands has had good results with a similar approach ).
A crucial mechanism for maintaining macro-economic balance in the Rehn/Meidner model was the investment reserve. Whereas Anglo-Saxon companies are encouraged to take 'contribution holidays' - and put nothing into their pension and health-care funds during upswings of the business cycle - Swedish corporations were encouraged to stow operating profits in special tax-exempt reserves. More generally the Swedish welfare state guaranteed secondary pensions and health care to all citizens, instead of offering private corporations tax incentives to take on the task of supplying social insurance to their own workers. The latter formula - Anglo-Saxon style corporate welfare - has proved to be a trap for employees, depriving them of their promised benefits and threatening their jobs as once-famous companies plunge into bankruptcy and entire industries - steel, airlines, auto and telecoms - are staggering under the burden of pension and health entitlements. The corporate pensions crunch destroys good jobs and their replacement by low-wage, insecure service employment - MacJobs - is scant compensation.
However the cornerstone of the Swedish model was the annual national wage-bargaining round, which allowed for a debate on social priorities as well as safeguarding high levels of employment. While the maintenance of full-employment was highly positive it also boosted the bargaining power of key workers and large corporations. The wage round itself ensured a degree of wage restraint on the part of the best-placed workers in return for new social guarantees. But this still left the problem of well-placed corporations garnering super-profits because their employees had moderated their claims. It was Meidner's response to this problem which set the scene for an ambitious attempt to bring about what might be thought of as a new dimension of economic democracy, namely one which did not seek to suppress the market but rather to democratize and socialize the investment process.
Meidner came to believe in the need to establish strategic social funds - 'wage-earner funds' - to be financed by a share levy on the large corporations whose profits were being swelled by the wage-bargaining round. These corporations also gained from publicly-provided coordination and services, and a healthy and well-educated workforce. To prevent the large corporations reaping 'excess profits' for the sole benefit of their shareholders they were to be required to donate shares equivalent to a fifth of their annual profits to a regional network of 'Wage-Earner Funds'. A portion of these funds would go to an enterprise-level body run by the employees, who would thereby acquire a growing stake in their employer. But the bulk of the funds would be channelled to the regional network, representing local communities and trade unions. The shares acquired by the funds would not be sold but would be held to generate future revenue. The funds would also be able to influence the large corporations by voting their stock at AGMs.
The 'Meidner plan' was a response to a specific challenge but it was not difficult to see that, over time, it might give a novel twist to the classic leftwing dream of an equal and self-governing society, in which workers by hand and by brain would assume the leadership of society. The market would cease to be an automaton and consumers would be rejoined to the world of production. Meidner also saw that an ageing and learning society would require social expenditure on a scale unprecedented in peacetime. The '20 families' who dominated Sweden's large corporations sector had no difficulty in seeing the threat to their position represented by the share levy and 'wage-earner funds'.
According to the original plan every company with more than fifty employees was obliged to issue new shares every year equivalent to 20 per cent of its profits. The newly issued shares - which could not be sold - were to be given to the network of 'wage earner funds', representing workplaces and local authorities. The latter would hold the shares, and reinvest the income they yielded from dividends, in order to finance future social expenditure. And as noted above the funds would, as they grew, be able to play an increasing part in directing policy in the corporations which they owned. They could scrutinize corporate conduct to make sure that employees were being fairly treated and to ensure that consumer demands were being met in sustainable and socially responsible ways.
The Meidner plan was endorsed by the LO in 1976; indeed the federation's normally stolid ranks greeted its passage at that year's conference with cheers and sang the Internationale. The membership of the Social Democratic party was also enthusiastic. However, the party leadership did not share Meidner's vision, however, did a poor job of presenting it to the Swedish people. Meidner's plan was very radical and they were not. With hindsight there were aspects of the plan that were ill-advised. The management committee of the funds should, perhaps, have been solely responsible to all the citizens of a locality, with no special position for trade unions. As it was the proposed structure aroused fears, even among trade unionists, of excessive concentration of power in the hands of trade union leaders. The privately-owned media ran quite a successful campaign focussing of this issue. But the modifications made by the Social Democratic leaders went in the wrong direction and handed control of the funds to financial technocrats. Opponents also played up the fact that private sector workers would gain ahead of public sector employees. When the social funds were eventually set up in 1982 the corporate contributions were quite modest and they no longer furnished a means whereby citizens could channel future revenues to social objectives or to regional growth.
Sweden's welfare state and social market economy faced a severe financial crisis in the early 1990s and the Rehn/Meidner model did not emerge unscathed. Rehn and Meidner had stepped down long before, and their advice had anyway not been heeded. The social funds by this time controlled 7 per cent of the shares quoted on the Swedish stock exchange. They were wound up and the proceeds were used to establish a string of scientific research institutes. Meidner's plan has yet to be properly tried, though even in its diluted form the social funds helped to propel Sweden to the forefront of the knowledge-based economy.
While Meidner sought to raise the corporate contribution this has actually been in decline, whether in the shape of taxes or of employer-sponsored health and pension plans. Increasingly, it seems, we live in a society like the French Ancièn Regime before 1789 - then the wealth of the feudal aristocracy was largely exempt from tax, now it is the holdings of the corporate millionaires and billionaires. Other signs reminiscent of the age of Louis XVI include the spirit of 'après nous le déluge', the reliance on lotteries, and the emergence of modern variants of 'tax farming' - for example, laws which oblige citizens to pay their taxes (pension contributions) to commercial fund managers rather than to an accountable public body. But the taboo on effective taxation of corporate wealth is the most crucial sign of a reign of privilege.
Rudolf Meidner's share levy, unlike so many modern taxes, was extraordinarily difficult to evade. Those who stowed their shares in a tax haven would not escape the measure. On the other hand it was not at all punitive. Unlike traditional corporate taxation, it did not subtract from the cash-flow or resources which the enterprise needed for investment. It modestly diluted shareholder wealth without weakening the corporation as a productive concern.
The 'wage earner fund' proposal was an attempt to safeguard the world's most successful example of a welfare state but it also reflected the thinking of an earlier generation. Meidner was not born in Sweden but arrived there as a refugee from Nazi Germany in 1934 (he died in December 2005). The idea that workers and citizens should together tame the corporations by acquiring a steadily growing and across-the-board collective ownership was an echo of ideas - notably that of sachwertfassung or 'realisation of value' - that Meidner imbibed in his youth as a 'juso' (Young Socialist) from the debates of German and Austrian Social Democrat economists like Rudolf Hilferding and Karl Polanyi. With his strong sense of the practical workings of the market economy Meidner devised an economic democracy defined by the redistribution of capital rather than, as with most Social Democrats, simply the redistribution of income. On the other hand his approach did not concentrate power or ownership in the central state but rather diffused it in a regional network of social funds, responsible to their local communities. The scheme was designed in such a way as to maintain employment levels and assure macro-economic balances. According to a recent assessment even the truncated version of the scheme had this effect.
Looking back over three or four decades, there remains something very distinctive about the Swedish achievement, something which owes much to the original model. Swedish welfare remains comparatively generous and Swedish unemployment only a little over a half of the core EU rate. Swedish parents have access to better child-care, and Swedish women have better-paying and more flexible jobs, than are to be found in other advanced countries. But Sweden no longer has a reserve fund for meeting the rising costs of the ageing society. Following the stand-off of the early 1980s the leaders of Swedish Social Democracy began to see Meidner as an embarrassment, or as a relic of a bye-gone age. He was consigned to the shadows and no part of his thinking was more disdained than the 'wage-earner funds'.
Social Funds,
Share Levies and Carbon Rationing
Meidner was dedicated to the 'de-commodification' not only of welfare,
education and research but of the means of production. But the overall
logic was to re-embed the market and not to attempt to suppress either
the market or commodity production. Meidner's proposal for a network of
regional funds broke with the traditional socialist practice of concentrating
more power in the central state. Instead it furnished the social fund
network with the wherewithal to boost some social expenditures and the
leverage to influence corporate activity.
But the share levy and regional social funds could well complement the introduction of such measures as rigorous carbon taxes and personal carbon rationing. Faced with the catastrophes of climate change, and the need to temper their ravages, it will be necessary to rein in consumption, sometimes in quite imperious ways. This will only be acceptable a wide public if the rich are also obliged to tighten their belts. The sharp polarization of recent times has led to a resurgence of arguments for progressive taxation. While there is certainly scope for raising tax rates on those with high incomes, the rich have found many ways of avoiding conventional incomes taxes. Meidner's share levy is a direct and simple tool for promoting economic equality and for promoting a degree of social control over corporate power (without, of course, removing the case for better regulation too).
The share levy and regional social funds sought to promote a responsible model of accumulation but were not framed with specifically ecological objectives in mind. However they could well complement the introduction of such needed measures as rigorous carbon taxes and personal carbon rationing. Faced with the catastrophes of climate change, and the need to temper their ravages, it will be necessary to rein in consumption, sometimes in quite imperious ways. This will only be acceptable to a wide public if the rich are also obliged to tighten their belts. A system of national carbon rationing would give every individual an equal carbon ration but allow those who didn't fully use their allowance to sell it to richer citizens who wished to exceed their ration. Such a scheme is itself at least semi-egalitarian and deserves a niche of its own in any scheme for economic democracy. But the end result is that the rich get to produce pursue a life style which produces more carbon and hence exerts pressure of the sustainable environment. There is also the problem that while individuals can each be allotted an equal share - with, perhaps modest variations relating to age and condition - there is no rational basis for allotting rations to corporations and in consequence the best approach for the corporate sector would be carbon taxes.
While it is essential sharply to curb carbon emissions some level of carbon emission is essential to life so an absolute ban would not be appropriate. There are other emissions, like CFCs, which should be completely banned. Likewise in protecting marine life a combination of bans and quotas will be needed. New Zealand has designated large areas of ocean as off-limits to the fishing industry and a global authority should be empowered greatly to extend such zones. Areas not subject to complete bans should be subject to rigorous quotas, with extensive reserved rights for line fishing, small vessels and poorer countries.
The sharp wealth polarization of recent times has led to a new interest in progressive taxation. While there is certainly scope for raising tax rates on those with high incomes, the rich have found many ways of avoiding conventional incomes taxes. Meidner's share levy is a direct and simple tool for promoting economic equality and for promoting a degree of social control over corporate power (without, of course, removing the case for better regulation too).
It is now a long time since governments of the Left have dared to tackle the corporations and ask whether their owners might be obliged to contribute more to the wider society, without which their own profits would be impossible. Yet without such an attempt how can escalating inequality be checked or pressing public expenditure be financed? Meidner's attempt to safeguard the 'Swedish home' has been the most far-sighted attempt to think through the 'financial democracy' needed to underpin 'economic democracy', understood as encompassing a more egalitarian distribution of property, contributing to more generous social outlays and restoring a degree of social control to an accumulation process now gripped by a heedless and destructive consumerism which is incapable of surmounting the stress, debt and inequality which it has itself created.
Robin Blackburn teaches at the New School for Social Research and is the author of Banking on Death or Investing in Life: the History and Future of Pensions (2002) and of Age Shock: How Finance is Failing Us (2006), both published by Verso.
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