The March Toward Worker Capitalism

Edward J. Dodson

[Reprinted from Equal Rights, Spring 1984]

I have made the argument for several years that employee ownership presents a positive improvement in the condition of labor and should be included as a part of the Georgist program. While such changes in ownership structure are unrealistic for many industries, the existence of supportive legislation (E.S.O.P.) and other tax incentives may help preserve employment for hundreds of thousands of workers. Concentrating on short-term profit maximization, many companies become uncompetitive - - using revenues for dividend payments instead of research and development and capital improvements. The adversary relationship between corporate management/owner ship and labor has also resulted in maximization of short-term rewards as labor negotiations are undertaken with management. As we have experienced during the past few years, both parties are losers. Investment spending is designed to reduce the number of employees; unions are losing their footholds in many industries and wages are falling unilaterally.

Employee - owned firms are generally more concerned with long-term growth and will spend the funds to achieve these goals. Short-term "voluntary" wage reductions are accepted when replaced with growing equity. Layoffs are replaced by across the board wage reductions which keep everyone working (a lesson from the Japanese). A recent Conference Board report indicated over 60 companies have gone the employee owned route (with only two faillures) during the past decade, involving 50,000 jobs. The alternative? During 1982 over 600 plants employing 215,000 people were closed either permanently or indefinitely.