It’s a certainty that we’ll be entering both the new year and a new Democratic administration with the American economy on its knees. We’ll return to something resembling normalcy with time, but communities across the country and the lives of millions have already been irrevocably altered. The lesson of the last financial crisis—that precarity endures for working Americans long after the markets and headline figures rebound—will have to be learned again. And the central truth of our economic system will have to be confronted afresh: Ours is an economy where profits and power accrue almost wholly to a class of owners who, as we’ve seen this year, are willing and able to work their employees quite literally to death. The fact that the Biden administration is unlikely to produce solutions that get to the heart of our national iniquities hasn’t absolved us from the responsibility of devising, discussing, and promoting solutions to them. Many of the most promising ideas in circulation now proceed from a simple principle: Our economy will continue to fail the American people until they are given more control over it.
Some of the proposals that should be given consideration concern the reallocation of power at the firm level: that is to say, “reshaping company ownership so that it is democratic, inclusive, and purposeful by design,” as the policy analyst Peter Gowan wrote last year. In an interview this week, Gowan told me, “We should be encouraging the development of a lot of alternative economic models. And we should be encouraging people and workers on the ground to think about how the private ownership of capital is negatively impacting their lives.”
Gowan points, for instance, to the 100,000 establishments that have already permanently shuttered over the course of the pandemic, many of which might have been rescued with some assistance from the government or their own workers. “The bars that are closing down didn’t become unusable under Covid,” Gowan said. “It would have been entirely possible for them to sort of be put on ice and opened back up. But what happened is that a source of money got cut off and capital intervened to find a more profitable use of resources. And that does a huge amount of damage to the economy—the consequences of that are measured not in dollar terms but in whole communities that get hollowed out.”
“In principle,” Gowan continued, “there is a strong possibility—especially in a lot of companies that might have owners that want to exit the marketplace or that might want to sell off their assets—that the government can be stepping in and saying even though there’s no private owner at this place, the workers might still know about what’s going on in their business. They have the expertise, they have the knowledge, they know how to run whatever is being made or whatever services are being provided, and they run it themselves. And that could save a lot of jobs, it could save a lot of livelihoods, and it could create a lot of economic security on a common need for people.”
This isn’t a new idea. In Italy, for instance, a body of legislation called the Marcora Framework offers workers financial support for turning shuttering businesses into worker cooperatives. According to the European Research Institute on Cooperative and Social Enterprises, the framework facilitated at least 257 worker buyouts between 1979 and 2014 and saved at least 9,500 jobs. It also found that even distressed businesses that wound up closing eventually survived for over a decade, on average, after their worker takeovers. In 2018, the platform of the U.K.’s Labour Party included an even bolder idea—granting workers the right to a first chance to buy their companies not only when they’re at risk of dissolving but whenever they’re put up for sale.
Full worker cooperatives comprise a small portion of the American economy today. An annual survey by the Democracy at Work Institute and the U.S. Federation of Worker Cooperatives, in 2018, estimated that there are around 800 of them, and those that were verified by researchers employed fewer than 7,000 workers. But around 14 million workers at over 6,500 businesses participate in Employee Stock Ownership Plans, or ESOPs—retirement packages in which companies hold shares of their own stock in trust for their employees. In a widely overlooked campaign proposal last year, Senator Bernie Sanders, inspired by another recent Labour proposal, took the concept of the employee stock fund to the next level: the Democratic Employee Ownership Fund. “Under this plan,” the campaign wrote, “corporations with at least $100 million in annual revenue, corporations with at least $100 million in balance sheet total, and all publicly traded companies will be required to provide at least 2 percent of stock to their workers every year until the company is at least 20 percent owned by employees.”
In a recent paper, Lenore Palladino, an assistant professor at the University of Massachusetts at Amherst, sketched out the potential benefits of such a plan, which, as constructed by Sanders, might have granted as many as 56 million workers stock dividend payments and the same corporate voting rights held by investors on Wall Street. “They’re one way to rebalance power within the corporation so that employees as a stakeholder group have two things,” she said. “One is they share in the economic benefits or the economic potential of a corporation so that when it does well, they gain some of those profits directly, and two, and really equally importantly, it’s one mechanism or one way to create an employee voice in corporate governance, in the big decisions which corporations make.”
In a poll conducted by YouGov last year, the Democracy Collaborative found that a remarkable 55 percent of voters would strongly or somewhat support a proposal requiring companies with over 250 employees to gradually put half of their shares into a workers’ fund—far more than Sanders proposed. Gowan sees this as evidence of the idea’s intuitive appeal. “It’s like: Well, I work there,” Gowan said. “I do know a lot about this place. I do contribute a lot to it. And why wouldn’t it make sense for me to have some more control over where I work? And why shouldn’t I get some share of what the place makes? If the debate got more polarized, I have absolutely no doubt that a lot of the people who would have responded to that poll would end up deciding that this is actually bad because the media influences people. There’s no doubt about that.
“But I think that it does speak to the fact that there is potential to also reinforce those ideas,” Gowan continued. “To give them a more coherent expression of their desire for more control over their lives. People, I think, on a very basic level, have a desire for the world around them to not just be something that acts upon them.”
If implemented, ownership funds would grant workers a greater say on matters ranging from pay and labor conditions to corporate ethics and the environmental costs of business activity—all while giving them hundreds or thousands of dollars in dividend payments a year. Matt Bruenig of the People’s Policy Project is among those pushing for an even more dramatic economic intervention. In a report last year, he made the case for the creation of a “sovereign” or “social” wealth fund—a fund of stocks and assets owned by the federal government—in which every American would have a dividend-paying share, and which would grant the government, as a major economy-wide shareholder, a significant amount of control over corporate governance. These funds, on an obviously much smaller scale, already exist in a few states, including Alaska, whose Permanent Fund paid out $1,606 to each of the state’s residents in 2019.
There were around 80 sovereign wealth funds worldwide at the beginning of 2016, with most having been established since 2000. And Bruenig notes that the public ownership of financial assets has grown more and more common as a policy instrument in recent years. “You only hear about this if you read Bloomberg or The Financial Times, but Japan is slowly but surely buying up all the companies in Japan, just as a desperate effort to do monetary stimulus,” Bruenig said. “Not intentionally, but it’s like, ‘We need to get money out the door.’ That’s just where they’re at now. They’re now the biggest stock owner in the country.”
The Democracy Collaborative’s polling last year found that 57 percent of voters would support creating a national dividend-paying fund like Alaska’s—a result again illustrating that the American people are open to proposals that would structurally shift power and wealth to the working class one way or another. “There’s clearly a lot of questions in the policy design,” Palladino said, “but I actually think there is some kind of even bipartisan growing consensus that the way that corporations operate both is not producing the kind of innovation we need and is not producing the kinds of broadly shared benefits for those who participate that we need.”
There is talk all the time now about a democratic crisis; many are justly concerned that our political system and bad political actors have conspired to deny a majority of Americans an equal say in matters that affect them and the polity as a whole. But the same has always been true of our economic system. If democratic values hold enough moral weight to warrant their defense at the ballot box, they’re surely worthy of defense at the places where we earn our livings and within an economy that routinely destroys livelihoods. “All Americans deserve a say and a share”—this is promising as political messaging and promising as policy. Getting there won’t be Joe Biden’s project, and it may never be the project of the Democratic Party. But it should be ours.