What Socialists Fail to Understand about Workplace Democracy

The number of young people claiming to want socialism has increased in recent years largely under the idea of increasing “workplace democracy.”

The phrase, “workplace democracy,” may sound attractive at first if one thinks it is nothing more than having a greater say in what goes on at one’s workplace.

However, the reality of what socialists want is not as glamorous as the mantra and has several significant problems that make it fatal for productivity and prosperity.

At the onset, one must define what workplace democracy is and looks like.

Many socialists and communists who want socialism as a transition model suggest this means that the current employees get to vote on business decisions.

They say that this is important because, under capitalism, capital is concentrated in the hands of a few through cronyism and nepotism that leaves employees poor and disenfranchised while the proclaimed “one percent” get rich and stay in power.

But getting to a vote requires several difficult hurdles which, as you’ll see, ultimately end up causing more conflict and bring about many of the same complaints socialists have about capitalism.

Socialists will say that those employed at current businesses must be given a right to vote about business activity.
However, this right to vote will not go uncontested.

There are owners, managers, and even employees who will not agree with this change in business structure.

Inherently, to implement this change, force will be required to oust those who resist the change in structure.

Which then leads to the questions of who is going to be ousted, by what means, and why?

If the socialist complains that there are crony benefactors in various positions within a company, how will those in the company distinguish who is undeserving of their position due to capitalist favoritism, and who is deserving?

The typical socialist will answer that votes will take place at the company level, but this leads to a few other problems.

First, who gets to vote?

Are all current members allowed to vote?

If not, who gets to choose who is ineligible?

As the allegations of cronyism and favoritism are not just limited to CEOs and middle managers, distinguishing who gets to vote, and why, would have to be factored.

Further, how the votes are counted and the visibility of who votes must be determined.

If voting is public and those voting get to see who voted for what, then there is likely to be major conflict and backlash when votes against certain people are viewed by others.

If the voting is in secret, then how is the integrity secured?

This often will lead socialists to suggest that those in the state will have to supervise company votes, which ends up turning business endeavors over to central planning in the state as those in the state determine the methods and operations for a vote.

Of course, how the company’s direction is taken is still not resolved.

With decision rights left to majoritarianism, what products are made become a matter of vote, which means that every possible element of production now must be submitted to a vote of all members.

If a socialist then suggests that managers would make those judgments, then the socialist has just put the decision rights back into the hands of a few instead of having “workplace democracy.”

There is no in-between: either those working at the business have a say on company direction, or they do not.

This often becomes difficult for socialists to wade through as they struggle to determine what decisions count as regular operations versus directional decisions.

Whether the company should buy or sell, make, or not make, now becomes an institutional bottleneck on every single business decision if “workplace democracy” is to be truly had.

Should a pizzeria also sell calzones? Should a car repair shop offer certain warranties? Should a lawn service focus on residential, or offer commercial services?

All these questions are readily submitted to majoritarian votes.

But when and where do these votes take place?

Who decides at what point a vote will, or will not happen?

Who decides what the forum and mechanism will be before there is a forum and mechanism grounded?

Again, the socialist puts the cart before the horse and will often have to concede that there must be state intervention or that, in reality, a vote cannot be meaningfully had before the mechanisms and scope of voting are settled.

The decisions about what direction to take will also come with a loss of information as, if removed, most businesses will no longer have key managers and CEOs who had business-wide insights.

But the internal struggle is not the only element.

Externally, there are millions of unemployed persons who want a job with established companies, but who may have been denied in the past.

The socialist claims that workplace democracy would rule entry as well, but this inherently means that those who may have been kept out of a job at particular companies due to the claimed capitalist oppression will now be left out of a company still if the democratic vote does not accept the newcomer.

In this manner, employment is still not guaranteed, as the socialist wants discrimination based on vote, which inherently means that others can be kept from a dream job at a particular company even under “workplace democracy.”
So, what does “workplace democracy” ultimately create?

It creates a situation where business decisions are throttled due to bottlenecks of group voting.

Popularity contests become more important than efficient output of wanted goods and services.

The new tyranny is the tyranny of the 51% or other majority number, which the socialist will downplay by saying, “Well don’t you prefer to be ruled by the majority rather than the 1%?”

The socialist hopes that people will miss the fact that if one is in the minority, they are still being forced to a collective vote and, even under socialism, many may be forced into a work direction they do not agree with.

The reality of this workplace democracy, when mandated, is just as bad if not worse than the cronyism the socialist complains of in capitalism, as favoritism becomes a matter of how well-connected one is to those in political power and how much personal popularity one can gain in a company.

The incentive structure shifts from productivity to persona, and, thus, like politics today, those who get into power are those who are most successful at manipulating votes in their favor.

Socialists will try to counter with examples of horizontal business structures like with the videogame company Valve to suggest that there can be successful democratic companies.

But the obfuscation they make is hiding that these companies had founders who set the business direction and the mechanisms for voting and entry into the company.

In other words, the company direction and limitations were not up for a general vote.

Rather, it was the direction of individuals with their own resources and capital who set up the rules for the “Boss-less” company.

So if someone claims that they want more workplace democracy because they want more decisions in the company, then the only ethical means to this end is to establish a company where those working within it agree to a set of democratic rules.

This necessitates that there be a founder who sets the rules for entry.

So, even in democratic co-operatives, the “boss” still lingers in the founding documents for all newcomers.

In this way the socialist will always, by nature of the democratic system, institute coercive rules that force minorities to the whims of those who curry greater political and social power.

The 1% will still exist: it will just be those who are best at manipulating others for power.

#libertarian #ancap #voluntaryism #voluntaryism #economics #austrianecon #austrianeconomics #misesu #mises #rothbard #hayek #sowell #friedman