Britain is in the midst of the biggest economic crisis since the 1930s depression - a crisis that has been dragging on for the last four years. Even now, politicians are offering no clear solutions; just tinkering here and there with minor adjustments to a failed system.
We've got to get out of the current mess and take steps to prevent a repeat economic disaster in the future. One way of doing this is by ensuring greater economic democracy - more participation, transparency, decentralisation and accountability in the way the economy is run.
We expect political democracy, why not economic democracy too?
There are still insufficient checks and balances on big business. We can't carry on as usual, with the system that caused the present meltdown.
Britain needs solutions that can secure economic stability and success, together with social justice and the public good.
There are three proposals for economic democracy that are worth considering: industrial democracy and co-determination in the boardroom, trade union administration of their member's pension funds and share bonuses to reward employees for greater productivity and profitability.
First, a system of industrial democracy, based on the German model but better. This would require the boards of all private and public enterprises with 50 or more employees to establish equal representation and joint control between management and elected staff representatives; creating a partnership between the two constituents of economic success: capital and labour.
Under an independent chairperson acceptable to both sides, these boards with employee representatives would have full access to all corporate information and the final say over all corporate decisions, including investment, technology, wages, prices and so on. This system of economic co-determination would apply to private companies and also to public bodies like the NHS and local councils.
The result? A form of workplace democracy. This would shift the balance of economic power; constraining the remit of capital and expanding the influence of employees; forging a more co-equal partnership. This would be fairer and would also be good for the economy because shop floor worker directors could offer independent oversight of corporate operations and bring to the boardroom practical, often cost-saving, insights from their direct day-to-day, hands-on experience.
Not motivated by the profit motive and private gain, they would be more likely to blow the whistle on reckless risk-taking and on decisions that damage the consumer and the environment. Having employee directors would also ensure that disputes got addressed and solved quicker; leading to more harmonious industrial relations and to improved productivity. This would be good for individual enterprises and for the whole economy.
Second, trade union control of their member's pension funds - the value of which totals around £900 billion. This is a way to decentralise, diversify, and democratise the economy.
It could be accomplished by legislatively re-assigning the administration of pension fund assets to financial experts appointed by, and accountable to, individual trade unions who would act as trustees of the funds on behalf of their members all across the country. Or, alternatively, the funds could be placed in the hands of a regional union pension fund, acting for all the trade unions and their members in a particular region. This would localise and decentralise investment decisions and allow the funds to be used to meet particular local and regional needs.
Either version of this pension fund scheme would give employees direct power over a massive wedge of public and private investment capital; amounting to a third of the entire stock market.
It could then direct these funds into specific investments corresponding to the interests of union members and to broader social and environmental needs, such as the development of renewable energy and the conversion of arms industries to socially-useful civilian manufacture.
With unions more likely to be mindful of ethical issues, their pension fund investments would be less likely to be directed to speculative, get-rich quick portfolios. These tend to be bad for the economy, so this might be a way to ensure wiser, more moral investments that are also better for the economy.
Third, the progressive transfer of share ownership into trade union-administered employee share funds. This idea is a variation on the 'wage-earner funds' proposed by Rudolf Meidner of the Swedish trade union federation, the LO, in the 1970s.
It would obligate all private share capital companies to assign to a union-controlled employee fund a proportion of their annual profits in the form of a new share issue. This scheme would gradually, over many decades, give employees, through their unions, a controlling interest in their firms - eventually transforming them into self-governing workers' co-operatives.
The great strength of this scheme is that it incentivises and rewards employees for economic success, which is good for the economy. The more productive and profitable a company, the more shares it has to issue to the employees' fund and the sooner employees gain a controlling stake. They have an incentive to work hard and contribute to their company's success.
In contrast to the traditional reformist economic doctrines of Keynesianism and Welfare Statism, which merely seek to redistribute wealth more fairly within the confines of the existing free market, private ownership system, these three ideas for economic democracy are mechanisms for the structural transformation of capitalism. If implemented, they would alter, fundamentally, the distribution of wealth and power, in favour of employees and the wider public. And they'd help rebalance, stabilise and reinvigorate the economy. It's plain commonsense.
We need both radical and practical solutions to the economic crisis - a crisis that has arisen, in large part, from concentrated and unaccountable economic power. This means challenging the system of economic dictatorship by the mega rich and setting out a new model of economic participation, accountability, decentralisation and transparency. The interests of employees, consumers and the wider public welfare demand it. The time for economic democracy is now.
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