At this year’s World Economic Forum, income inequality was identified as the second gravest trend facing the world. In today’s society the richest 1% own almost half the world’s wealth ($110tn), with the most affluent 85 people possessing the same combined wealth as the poorest half of the world. Given the correlation between the rising pre-tax income of the “1%” since 1980 (as measured in 24 out of 26 countries on the World Top Incomes Database) and the falling burden of tax on the moneyed elite since 1970, it is easy to blame this calamity solely on the failure of the redistribution system. However, the systematic undermining of labour by capital is the other major underpinning of this travesty. The way to correct this power imbalance is to inject democracy into the workplace.
The pernicious consequences of financial inequality are not limited to falling social mobility but also to the compromising of political equality. The Citizens United legislation in the United States is a clear illustration of the tremendously disproportionate political influence of corporate capital. Indeed, it would not be far-fetched to claim that the US political and economic system manifests elements of a corporatocracy, given that in crucial circumstances the interests of corporations have trumped those of the public. In Britain, labour rights may be facing another shafting with Boris Johnson last week suggesting that a future Tory manifesto may include clauses proposing to render strikes illegal unless they receive a minimum 50% backing from an entire union.
The ratio of power between capital and labour can only be corrected by establishing a new political economy based on the democratisation of enterprise. A central tenet of democracy, that those who are subject to decisions should be empowered to make those decisions, is missing from the economic sphere. The current model of share-holders and corporate directors “calling all the shots” in the economy will never allow for greater equality because there is no representation of labour in this decision process. Workers need to be enfranchised and involved in the process of firm management as well as net revenue distribution and appropriation. In fact, believing in the merits of political democracy may be wishful thinking if the economy is managed by a bunch of plutocrats in the CBI and the City.
Worker self-managed enterprises are the ideal solution to the anti-democratic status quo. However, considering the vast majority of firms do not operate on this basis, there needs to be a way of democratising corporations from within. The creation of “remuneration committees” or “worker consultation bodies” within existing corporations to supplement the managerial strata of firms with worker representation represents an alternative firm arrangement. By empowering workers in firm management, greater financial equality would be achieved because share-holder and managerial decisions would have to receive worker backing. The extent to which capital would need the backing of labour is a contention; however, any form of worker empowerment in the modus operandi would be an improvement. The trade unions and the Labour Party should make it their priority concern to fight for this democratic right.