In this post, Paul Raekstad (University of Amsterdam) discusses their recent article in Journal of Applied philosophy on whether Property-Owning Democracy can resolve the unfreedom of capitalism.

Socialists rightly argue that capitalism cannot be free. This is because it’s built on the personal domination of workers by bosses, the structural domination of workers in labour markets, and the impersonal domination of everyone by market forces. The solution to domination is democratisation. But do we really need to replace capitalism with socialism to secure emancipation? Advocates of Property-Owning Democracy argue that we don’t. In a recent article I argue that they are wrong.

In response to the socialist challenge, there’s a long history of people arguing that we can keep capitalism without its inherent unfreedom. How? By the right combination of taxation, redistribution of land and other property, free training and education, and so on. Property-Owning Democracy (POD) is the latest of these. Its contemporary advocates focus on three main things. First, blocking the transfer of advantages down through generations, via especially high taxes on inheritances and gifts inter vivos. Second, dispersing ‘capital’ more widely than it is today, including both human capital (e.g. skills, education, and training) and non-human capital (e.g. land, machinery, and other means of production). The human capital side amounts to free, high-quality education and training available to all (an idea that any academic in their right mind should love). On the non-human capital side, most contemporary models are rather vague. There is, however, broad agreement that it need not involve people having meaningful ownership or control over their workplaces or the broader economic entities they are part of. Third and finally, contemporary advocates of POD often add means to safeguard against undue influence by wealthy individuals and corporations on state politics. This, it is argued, reduces inequality, removes oligarchical political power, and so secures workers against domination.

Once we broaden our perspective from the economy’s influence on state politics to the nature of its social relations, this argument falls apart. Why? Because POD fails to eliminate workers’ domination by bosses. The arguments I focus on here define domination in terms of arbitrary power, so that someone is dominated if and only if they are subjected to the arbitrary power of another. Non-domination matters because it’s important for freedom to advocates of both neo-Roman/republican concepts and positive concepts of freedom.  Whichever concept you prefer, showing that POD fails to secure non-domination shows that it fails to achieve economic emancipation. Those who seek a free society should be socialists instead.

To see why POD can’t eliminate economic domination, let’s start with one of the ways in which capitalism is dominating. Everyone basically knows that modern corporations are essentially dictatorships ruled by bosses – owners and managers. They make decisions about who gets hired and fired. They decide on employment conditions like which workers get which kinds of promotion and training opportunities and which don’t. And they decide on long-term business decisions, like whether to invest in green or dirty energy or whether to outsource to another country where they can oppress and exploit workers more and more easily. Note that since this is about bosses’ power over workers generally, this applies to the public sector and to non-profits as well, not just for-profit corporations.

Finally, these powers are backed up by sanctions like getting fired and ultimately by the power of the state and the law, built from root to branch on the threat of violence.  Bosses sometimes accept some rules and guidelines for their use of power and they may not always use their arbitrary power badly. But none of this changes the real problem here: which is that their position gives them a lot of arbitrary power over workers to begin with.

POD fails to remove the arbitrary power that bosses have over workers under capitalism. Why? Because it still retains a division between large-scale holders of capital in the form of individual capitalists, large corporations, and firms owned by governments, pension funds, and the like. POD imposes no requirement that workers own or have meaningful decision-making power where they work, nor does it require replacing the hierarchical division of labour between managers and workers seen under capitalism. As such, POD has the same division between bosses and workers, with the former dominating the latter. Bosses can therefore still control which tasks are performed and how, decide on employment conditions, and decide long-term business decisions without workers effectively being able to contest or control their decisions. POD fails to eliminate these powers or make them non-arbitrary, and so fails to secure economic emancipation – at least for the vast and diverse majority of the population, which is working-class.

Can this domination be removed simply by securing a non-dominating state? No, because not being dominated in the realm of state politics doesn’t entail non-domination in other aspects of one’s life. Can it be removed by introducing Dutch or German-style co-determination? No, because these haven’t removed the arbitrary power of bosses there and there’s no reason to think they will be enough to do so elsewhere. Can it be removed by introducing a UBI? No, because any UBI that has a realistic chance of implementation will be below what’s needed for getting fired to not sanction workers economically and because getting fired imposes a number of non-monetary sanctions that a UBI doesn’t compensate for. Can workplace domination be removed in a POD that shifts to a society of independent producers? Perhaps as a thought-experiment, but so long as the economic rules of the game remain the same, the tendency towards concentration and centralisation of capital will just cause it to re-emerge. Moreover, a transition from here to there is, at present, entirely unrealistic since there is, as of yet, no social agent both able to and interested in carrying out such a transition.

We can only achieve non-domination by democratisation, by subjecting all social powers to those who are subject to them. This is just as true for economic institutions as it is for others. Rather than attempt to have capitalist relations without their inherent unfreedom, we should replace these relations with genuinely non-dominating ones. The power to make economic decisions should be held by workers themselves, rather than by unaccountable ruling elites. In short, those who want economic emancipation should thus reject POD and look to socialism instead.

The Journal of Applied Philosophy is a unique forum for philosophical research that seeks to make a constructive contribution to problems of practical concern. Open to the expression of diverse viewpoints, it brings the identification, justification, and discussion of values to bear on a broad spectrum of issues in environment, medicine, science, policy, law, politics, economics and education. The journal publishes in all areas of applied philosophy, and posts accessible summaries of its recent articles on Justice Everywhere.