Economic Democracy through Collective Capital Formation: The Cases of Germany and Sweden, and Strategies for the Future

Notes

1. For the purposes of this article, we can define “collective capital formation” as the gradual accumulation of capital on a multi-enterprise basis on behalf of given groups of working people or given communities of citizens, at local, regional, national, or supranational level, for their collective benefit, with these groups gaining increasing ownership of the enterprises in question through funds which are the recipients of the capital.

2. Aconcept elaborated within Eurocommunism in the 1970s, for example, by Togliatti in the Italian Communist Party.

3. And the social democratic reformism that Gunnar Adler-Karlsson (1970) called “functional socialism,” a “socialism” that seeks to balance the power of capital with a variety of welfare reforms, without changing the ownership structure.

4. This potential was actually recognised by the most famous neo-classical theorist Milton Friedman:.I have often speculated that an ingenious way for a socialist to achieve his objective could be to … invest the accumulated reserves in the capital market by purchasing equity interests in domestic corporations … To return to my fantasy, full funding would have long since brought complete socialism. (quoted in Blackburn 2002)

5. This information was provided in a private e-mail from Patrick McQuilken, Senior Advisor for Media Relations and Communications at the Fonds de solidarité des travailleurs du Québec (FTQ), November 12, 2012, which included a reference to the Act to Establish FTQ, adopted unanimously in 1983 by the Quebec National Assembly, accessible through the web page: http://www.fondsftq.com/en/a-propos/centre-de-documentation.aspx

6. During the Swedish WEFs debate, suggestions for some form of “citizen funds” were also made, for example, in Korpi (1982). Much earlier, the Swedish Social Democratic Minister of the Treasury, Ernst Wigforss (1959), also had ideas about what he vaguely called “Societal companies without owners,” which called for collective fund building.

7. One of the critical points in the kind of market socialism that existed in former Yugoslavia.

8. An initial version of this idea was presented by Nyegosh Dube (2012).

9. A study by the Copenhagen Business School found that contrary to the expectations of conventional economics, firms owned by non-profit foundations pursuing philanthropic goals performed just as well as traditional corporations (Thomsen and Rose 2004, 343–64).

10. As Schumacher put it, “this conversion would be an explicit recognition of the undoubted fact that a major role in the creation of ‘private’ economic wealth is in any case played by the public hand” (Schumacher 1973, 285–86).

11. This ranges from 10% to 35% in the EU, with 27% being the average in Western Europe, 18% in Central and Eastern Europe (i.e., the new EU member states) (KPMG 2014). Another option is to set 27% as the rate across Western Europe and 18% across Central and Eastern Europe (CEE), based on those averages. In the case of the European Citizens Investment Fund (ECIF), its ownership share in a given multinational could be equal to a proportionally weighted average of corporate taxes applicable in the countries where that company has operations.

12. Let's take the example of France where the corporate income tax rate is 33.33%. This means that France's CIF would automatically get a one-third stake in the largest French corporations. So, for the joint societal-worker stake to reach 51%, the WEFs would only need to build up an 18% ownership share of a given company. For sure, ownership of France's largest companies needs to be democratised—a 2009 survey showed that only 98 people control 43% of the shares in the companies comprising the Cotation Assistée en Continu (CAC) 40 index (Crumley 2010).

13. In Germany, all companies with more than 500 employees are required to institute co-determination, with workers having one-third of the seats on supervisory boards or one-half in companies with more than 2,000 employees (Eurofound 2009).

14. We can envisage Citizens Economic Assemblies (CEAs) at three levels: (1) national, (2) provincial or regional, and (3) county or commune (or whatever unit comprises the next level). A county-level CEA could, for example, have 60 members chosen by lot from among citizens of that county who have registered for selection. All county CEA members would constitute the selection pool for province-level CEAs, whose members in turn would be the pool for the national CEA, which would then delegate members to the CIF. The CEAs would enable citizens to make their voices heard and take part in goal setting and policymaking from the county level on up. In a somewhat similar way, civil society organisations could be structured in multi-level Civil Society Economic Councils.

15. For a detailed discussion of selection by lot in ancient Athens, see Tridimas (2011, Abstract, 5–7, 26–28). According to Tridimas, selection by lot was “a process which yielded an accurate representation of individual preferences.”

16. The ECIF could replace a national CIF where a company has less than half its EU employees in any one EU country. It could be overseen by the European Parliament.

17. The CIF—WEF plan is therefore a form of market socialism, where the production is largely guided by the market mechanism, but in contrast to capitalism (even of the social democratic variety) the market would function within a framework where social priorities take precedence, with a considerable degree of socialised investment planning.

18. Similar to the screening carried out by the Solidarity Fund (International Labour Organization [ILO] 2004).

19. Luke Martell (1990, 22) proposes such a function for CIF-like bodies: “Socialised fund bodies holding capital accumulated under democratic social ownership can found democratic companies and enterprises, so expanding the role of democratically determined and socially-minded activity in the economy.”

20. To a large extent, the WEFs would pursue the same agenda as CIFs, but with a greater focus on the specific interests of the enterprises' workers. The earnings from WEFs can be allocated in various ways that collectively benefit the workers of the enterprises where they have a stake. For some examples of how WEF funds could be used, see Meidner (1978, 84–90).

21. In his book on the WEF plan, Rudolf Meidner raises the issue of multinationals that are structured in such a way that key decisions are made by the parent company, not the subsidiary (Meidner 1978, 63–65). A collective fund with an ownership stake in the subsidiary would therefore not have much influence. In this situation, if or when the fund reaches majority ownership, it could make the subsidiary an independent firm.

22. Within these scenarios, the EU presents a special situation. Where a multinational, whether based in the EU or not, operates in several member states with collective fund systems, there could be joint EU-level fund ownership across all the entities belonging to that multinational (e.g., through an institution like the ECIF in the case of citizen—worker hybrid ownership) or at least coordination at European level of national funds. Such a joint approach would strengthen the collective funds vis-à-vis multinational corporations.

23. For a comparison of the 1990s anti-globalisation movement and the recent Occupy movement, see “A Comparison of Global Protests: Occupy Wall Street and the 1990s Anti-Globalisation movement,” Occupy Wall Street Analysis website: http://owsanalysis.wordpress.com/2012/03/30/a-comparison-of-global-protests-occupy-wall-street-and-the-1990s-anti-globalisation-movement-part-1-similarities/, and also: http://owsanalysis.wordpress.com/2012/04/05/a-comparison-of-global-protests-occupy-wall-street-and-the-1990s-anti-globalisation-movement-part-2-differences/.