European Social Democracies
For many years, the social democracies of Europe have fared far better than the United States in protecting its citizens from the abuses of capitalism. They accomplished this with a far more embracing view of the Welfare State and the rights and freedoms of their citizens, or, in other words, the life blood of the society flowed more equitably through the body politic, and the money was spent to nourish each and every body cell. This nourishment of the body politic manifested itself in universal health care, affordable education, vocational training, strong independent unions and labor laws, and far more services and support for the unemployed, the impoverished, and the aged than in the United States.
Based upon the 17 sustainability goals for peace and prosperity for the people and the planet established by the UN in 2015 and using the data from the blueprint of the 2016 report by the Organization of Economic Cooperation and Development (OECD), the United States scored far below Europe in quality of life and barely looked like a developed country. (Merelli)
However, like the United States, Europe has made the same mistake that the US made during the New Deal era. Despite all the reforms, capitalism remained at the heart of the economic system. Like the Americans, they believed they could control something that has to grow, or it will die; and now, vampire capitalism is a full-blown cancer in Europe. The corporate and financial global Leviathans of Europe have taken control of the EU. They have implemented free market capitalism so that they can control the flow of blood in the form of money, and they have opened the borders to bare the necks of the host nations and weaken their sovereign power. Like the United States, Europe is seeing the rise of right-wing populist parties and organizations in response to the inability of their government to protect their rights and freedoms and defend them against capitalist abuses. Basically, they are making the same mistake that we made. We and they have focused too much on rights and freedoms and not enough on direct participation by the people in the political and economic decision-making process. However, there are several important examples in Europe of the participation of labor in economic decision making and employee ownership of the means of production that we need to study these examples for their strengths and weaknesses. One of them is German Codetermination, and we will focus on German Codetermination in this excerpt from our series of studies on An Economy By The People.
German Codetermination
In the German system of codetermination, it is nationally mandated that,
(1) In companies with 500 to 2000 employees, the workers will elect 1/3rd of the representative on the Board of Supervisors with the remainder of the board being elected by shareholders.
(2) In companies with 2000 or more employees, the Board of Supervisors must consist of an equal number of workers elected representatives and shareholder elected representatives with the head of the board being elected by the shareholders.
The Board of Supervisors members are jointly responsible for monitoring firm operations, the appointment and dismissal of CEOs, the management and crafting of strategic and tactical investment direction, holding management accountable to the board, and the ethical and legal structure established for the business. The other important feature of the codetermination model is the worker’s council, an employee/management bodies that meet regularly and determines policy on med-level management issues like scheduling and workplace changes.
Has codetermination been successful? Codetermination in one form or another has been in place since the 1950s, and if it wasn’t successful and efficient and added value to the company and the workplace, it would have been abandoned decades ago. Instead, it has spread from Germany to 2/3rd of the EU, and it has resulted in long term planning and investment, higher wages, the expansion of the high skill labor sector, a shorter work week, more expenditures on research, technology, and community responsibility. The Bertelsmann Foundation’s 2018 global assessment concluded that the five highest quality democracies were all countries that have all implemented codetermination as an intricate part of their economy. It’s panel of international political scientists judged the quality of American democracy, i.e., how well citizen voices and sentiments are reflected in public policy, and the US ranked only 18th. Separately, the Freedom House annual international update on the global state of liberty found that freedom and political rights were also stronger in each of the major adopters of codetermination than they were in the US. (Tyler)
However, the fact that (1) in companies with only 500 to 2000 the employees, labor only elects1/3rd of the representation on the board; and (2) in companies of 2000 or more employees, the head of the board is selected by the shareholders and possesses the deciding vote between labor and ownership, codetermination in Germany remains capitalistic at its core. This is ameliorated somewhat by the worker councils where workers have an equal voice with management on a wide range of matters including job evaluation, working hours and overtime, social and welfare provisions in case of mass layoffs, training, accident prevention, and worker conduct on the plant floor. However, in many instances, it is the union leadership that dominates the decision process, and it is the union leadership who get elected to the supervisory boards. The problem with this is that the union leadership tends on the highest levels to distance themselves from the workers on the floor and identify more with the people that they work with day to day - management. Consequently, the workers themselves, as opposed to their union representatives, have not gained a meaningful voice in determining the policies of the firm.
Though the codetermination model is superior to anything we have in the United States as a model for worker and corporate relations, the codetermination model has several flaws. As noted, the labor segment of the relationship is dominated by union organizations that are not democratic in their decision processes, and their leadership tend to identify with the corporate leadership that they work with day to day. As the workers on the floor would say, “They’re the suits.” Another flaw is that there is no public input to ensure that the corporation is serving the common good.
Finally, and most importantly, because labor only represent 1/3rd the board in companies of 500 to 2000 employees, and in companies of 2000 or more the head of the board is selected by the stockholders, the corporation remains at its core, capitalistic, and, therefore, vulnerable to the free market neo-liberal economic ideology that is virulent in the United States, Germany and the EU today.
Cites
1. Merilli, Annalisa, "The US Has A Lot of Money: But It Does Not Look Like A Developed Country," Quartz, March10, 2017 https://www.qz.com/879092/the-us-doesn't-look-like-a-developed-country
2. Tyler, George, The Codetermination Difference, American Prospect: Ideas, Politics, & Power, January 10, 2019 https://www.prospect.org/labor/codetermination-difference/
Illustration
Simonds, David, No More Euro, Observer.
Author's Note - This is part of a series of excerpts on The Prelude To An Economy By The People. The excerpts will focus on the flaws of previous attempts at reform of the economic system. On our way to a new paradigm we will focus on (1) The New Deal, (2) Nationalization of the French economy during the Mitterrand Era. (3) German Codetermination, and The Mondragon Cooperative Network.
Author's Note - I have made Learn or Die: The New American Revolution available to you through Smashwords in a Freedom for Free Edition where you can pay what you want for the book or nothing at all. It is free. I'm doing this because after 50 years of research and study I believe I have found the way for all of us.
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