Thursday, 02 October 2014 / TRUTH-OUT.ORG

Richard Wolff: Enterprise Structure Is Key to the Shape of a Post-Capitalist Future

Wednesday, 26 February 2014 09:33 By Leslie Thatcher, Truthout | Interview

Do you support reporting and analysis that’s free from corporate influence? Help Truthout continue our mission by making a donation today!

Richard D. Wolff.(Photo: rdwolff.com)

Richard Wolff talks about "The Shape of a Post-Capitalist Future," his entry in the new anthology Imagine: Living in a Socialist USA, and his conviction that making the transition from capitalism to socialism requires a deliberate critique of capitalist workplace organization.

Make a contribution to Truthout and receive Imagine: Living in a Socialist USA. Click here.

Leslie Thatcher for Truthout: What motivated you to choose (of all things!) "corporate structure" in your search for a "powerful, attractive and credible vision of socialism?"

Richard Wolff: Chiefly because the internal organization of our workplaces has been so badly undervalued and thus so little transformed in and by socialist practices. This was true not only in the efforts to establish actual socialism but likewise in the theoretical and political projects for transition from capitalism to socialism. 

Human beings spend most of their adult lives - the central parts of most days of most weeks - at work. How their work structures their interactions with other people (their interdependencies, interactions, freedoms and responsibilities) are crucial to everything from daily personal life to politics, culture ... everything. Socialists have focused on changing ownership of means of production - from private to social - and on changing the mechanism of distributing resources and products - from market to planning. Those foci meant that the internal organization of workplaces was neglected and/or treated as a secondary matter of what technology and efficiency require, something largely independent of the transition from capitalism to socialism.

I am convinced that to make the transition from capitalism to socialism requires a deliberate critique of how capitalism organizes its workplaces. It likewise requires a deliberate specification of how and why socialism organizes its workplaces very differently.

"Marx stressed there that a central dimension of capitalism that he wished to see transformed was 'exploitation.' "

To drive the point home, let me add two further and closely interrelated considerations. First, most of the "actually existing" socialist experiments to date unraveled in part because they never transformed the organization of their workplaces. They more or less replaced private shareholders and boards of directors with state officials and they more or less substituted planned distributions of inputs and outputs for market exchanges. What they did not do was to radically alter the internal organization of workplaces in a specifically socialist way. Second, by a "specifically socialist way" I mean pretty much what Marx specified in Capital. Marx stressed there that a central dimension of capitalism that he wished to see transformed was "exploitation." By that he meant the capitalist organization of the workplace. In that organization workers add more value by their labor than the value paid to them (wages, salaries) for that labor. Capitalists appropriate that "more," or what Marx called "surplus." To squeeze as much surplus from the workers as possible, capitalists control and make all the key decisions: what, how and where to produce and what to do with the surpluses they appropriate from the workers. 

A transition to socialism would thus require the transformation of capitalism's exploitative internal organization of enterprises. In other words, the transition to socialism requires that workers not only produce surpluses, but also themselves appropriate and distribute them. Workplaces stop being conflict-ridden confrontations of two different groups of people - employers and employees - and become instead cooperatives in which the same people who produce the surpluses also - collectively and democratically - appropriate those surpluses. Workplaces are reorganized into workers self-directed enterprises (WSDEs). In WSDEs, workers (rather than capitalists) decide what, how and where to produce and what to do with the surpluses their labor generates.

Imagine a socialism for the 21st century that included among its central goals the democratic transformation of the workplace, a dramatic advance beyond the major 19th and 20th century versions of socialism.

In other writings and presentations you've indicated you are altogether aware that all dominant CEOs after their initial selections, pick their own board for loyalty and for their identification with the CEO's interests, yet you present a very idealized picture of actually-existing corporate structure in "The Shape of a Post-capitalist Future." Why?

Because I wanted to ground a basic critique of the corporate organization of production - the dominant form of capitalist enterprise in the world today - by focusing on its paradigm form, its textbook formulation without the many deformations and biases that shape its particular incarnations. I wanted to show the profound problems, weaknesses and flaws in its best form before examining the additional defects it often displays, such as the one you chose as illustration. Indeed, it is often the basic corporate organization of the enterprise that positions and enables a CEO, for example, to produce such additional defects. In my view, what you call the idealized capitalist enterprise organization is already fundamentally anti-democratic in how it determines (1) who produces the net-revenues versus who disposes of those net revenues and (2) who does the work versus who decides what products will be produced with what technology and where. The actual specifics of many capitalist corporations are only that much more vulnerable to the basic critique.

Your essay proposes that production decisions be relocated from the supposedly neutral market of capitalism and the purportedly incompetent and heavy-handed state of Soviet socialism, but how do you counter arguments like Richard Smith's that government planning is necessary to arrest climate change as equitably as possible?

First of all, I try to make clear that democratizing the enterprise is a necessary component of socialism that must be added to correct its traditional overemphases on socialized (versus private) ownership of means of production and planning (versus market exchange) as mechanisms for distributing resources and products. It is not a matter of enterprise democratization as a substitute for socialized property and planned distribution. And this applies for many objectives of a socialist system, including arresting climate change.

Second, production decisions, the priority responsibility of all the workers in a democratized enterprise, would have to be made interdependently with residence-based democratic political decisions. Because enterprise decisions affect residential communities and vice versa, a commitment to democracy requires that each site participate in the decisions of the other.

Third, the issue is thus not whether the government at one or another level (local, regional, national and international) plays a role in the economy (planning is one such role). Among economic theories, only the neoclassical affirms laissez-faire fantasies of economies functioning without government interference despite the overwhelming empirical evidence that every actually existing capitalist economy has been intimately entwined with government. Keynesian economic theory celebrates the appropriate government interventions in the capitalist economy. Most versions of socialist economic theories articulate very powerful roles for governments in contemporary and likely near future economic realities. The issue is rather how interdependent enterprise and residential democracies work out those decisions, co-determine what government is and does.

Our critique of the Soviet model (see S. Resnick and R. Wolff, Class Theory and History: Capitalism and Communism in the USSR. New York and London: Routledge Publishers, 2002) focused on the rarity there of democratized workplaces (in the sense of WSDEs). We carefully specified them as enterprises where productive laborers themselves appropriated the surpluses they produced. Thus the behavior of successive Soviet governments reflected the prevalent absence of democratized enterprise organization. The socialization of property and planning established by the 1917 Soviet revolution eventually were undermined in significant ways by that enduring absence. The same logic suggests that the prospects for governments to arrest climate change equitably would be greatly enhanced by the transition from capitalistically organized enterprises (e.g. typical private corporations and state enterprises with their employer-employee dichotomies) to WSDEs.

How can you create a structure whereby corporate decision making will involve the workers and the residential communities whose lives are interdependent with the enterprise in a globalized world?

Remarkable achievements at special moments in the history of capitalism can provide foretastes of and pointers toward a viable post-capitalism. In the socialist enthusiasms of the new Weimar government in post-World War I Germany, a parliamentary arrangement emerged that helps us to answer this question. In that bicameral system, one legislative body was based on residence in the by-now conventional manner of voting by geographic district. The other legislative body was based on the economy. It was representational too, but the voting was by enterprise and industry. 

Thus, we might proceed comparably now as part of a transition from capitalist to WSDE-type economic organization. Enterprise decisions would be made first and democratically by the workers engaged there (rather than the tiny minority of major shareholders and the boards of directors they select, as is typical in capitalist corporations). However, such decisions would have to be consistent with the larger industrywide and economywide rules and regulations that would be the purview of the economy-based legislative body. And in turn, that body's activities would have to be consistent with the framework co-determined with the other legislative body's parallel deliberations and their results.

”We cannot expect a newly emerging economic system to automatically or by itself guarantee the culture, politics, or other aspects of society needed for that new system to survive or prosper.”

In such a structure, local, regional and national enterprise decisions would always and necessarily incorporate (and be subject ultimately to veto by) the democratically generated desires of the communities they interact with. Likewise, political decisions in residential communities would incorporate the democratically generated desires of enterprise workers they interact with.

Bill Ayers' essay in Imagine! describes how very few Americans are educated for responsibility - for democratic citizenship and decision making of any kind - today. What prevents bad actors from taking over workers' councils? Do you feel a change in enterprise structure will bring along a change in culture, enterprise councils will educate for responsibility or do we need to make other cultural changes for this to work?

We cannot expect a newly emerging economic system to automatically or by itself guarantee the culture, politics or other aspects of society needed for that new system to survive or prosper. 

Economic systems (feudal, capitalist, communist, and so on) try to shape their social and natural environments to secure their reproduction. That is because every economic system depends on its surrounding physical nature, culture and politics to persist. From their birth through their subsequent evolutions and to their deaths, economic systems interact with their natural, cultural and political conditions. Conditions and system are thus always in a process of continuous mutual transformation. Historically, every economic system eventually reached a point where its interactions with its surrounding conditions provoked and enabled transition to a new and different system.

Capitalism may well again be nearing such a point now. Its crises, its evolution into global mega-corporations, and its increasingly unequal social impacts are shaping the surrounding natural, political and cultural conditions in ways generating fast-growing criticism and opposition. If a social transition from capitalistically organized enterprises to WSDEs occurs, that would likely mean transformations in the surrounding natural, cultural and political conditions. 

Economic democracy at the enterprise level would drive to alter, for example, education. The goal would be to create and support the capacities, attitudes and motivations in people needed to enable WSDEs to function well and persist. Of course, many other social processes will simultaneously impact education. All these factors will together determine whether the resulting educational system does or does not support a WSDE-based economic system. 

No economic system has been able to finally control its conditions. That's why history displays the rise, development, and eventual demise of every past system. There is little reason to presume that capitalism will not follow that path. Likewise, there seems little reason to presume that for a WSDE-based economic system either. 

So yes, indeed, for economic democracy to be established in a WSDE-based economy that displaces and supersedes capitalism, it will take major changes in culture, politics and much else. Everyone in society will play a role – in how they think and interact with others, wherever they live and work. Everyone, consciously, intentionally, or not, will help determine whether the system reaches tipping-point soon and whether a democratic enterprise system is part of the changed world that emerges. 

Copyright, Truthout. May not be reprinted without permission.

Leslie Thatcher

Leslie Thatcher is Truthout's content relations editor.

Related Stories

Political Corruption and Capitalism
By Richard D Wolff, Truthout | Op-Ed
A Lesson From Chattanooga
By Richard D Wolff, Moyers & Company | Op-Ed
Economic Update: This System Does Not Work
By Richard D Wolff, Economic Update / Truthout | Radio Segment

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Richard Wolff: Enterprise Structure Is Key to the Shape of a Post-Capitalist Future

Wednesday, 26 February 2014 09:33 By Leslie Thatcher, Truthout | Interview

Do you support reporting and analysis that’s free from corporate influence? Help Truthout continue our mission by making a donation today!

Richard D. Wolff.(Photo: rdwolff.com)

Richard Wolff talks about "The Shape of a Post-Capitalist Future," his entry in the new anthology Imagine: Living in a Socialist USA, and his conviction that making the transition from capitalism to socialism requires a deliberate critique of capitalist workplace organization.

Make a contribution to Truthout and receive Imagine: Living in a Socialist USA. Click here.

Leslie Thatcher for Truthout: What motivated you to choose (of all things!) "corporate structure" in your search for a "powerful, attractive and credible vision of socialism?"

Richard Wolff: Chiefly because the internal organization of our workplaces has been so badly undervalued and thus so little transformed in and by socialist practices. This was true not only in the efforts to establish actual socialism but likewise in the theoretical and political projects for transition from capitalism to socialism. 

Human beings spend most of their adult lives - the central parts of most days of most weeks - at work. How their work structures their interactions with other people (their interdependencies, interactions, freedoms and responsibilities) are crucial to everything from daily personal life to politics, culture ... everything. Socialists have focused on changing ownership of means of production - from private to social - and on changing the mechanism of distributing resources and products - from market to planning. Those foci meant that the internal organization of workplaces was neglected and/or treated as a secondary matter of what technology and efficiency require, something largely independent of the transition from capitalism to socialism.

I am convinced that to make the transition from capitalism to socialism requires a deliberate critique of how capitalism organizes its workplaces. It likewise requires a deliberate specification of how and why socialism organizes its workplaces very differently.

"Marx stressed there that a central dimension of capitalism that he wished to see transformed was 'exploitation.' "

To drive the point home, let me add two further and closely interrelated considerations. First, most of the "actually existing" socialist experiments to date unraveled in part because they never transformed the organization of their workplaces. They more or less replaced private shareholders and boards of directors with state officials and they more or less substituted planned distributions of inputs and outputs for market exchanges. What they did not do was to radically alter the internal organization of workplaces in a specifically socialist way. Second, by a "specifically socialist way" I mean pretty much what Marx specified in Capital. Marx stressed there that a central dimension of capitalism that he wished to see transformed was "exploitation." By that he meant the capitalist organization of the workplace. In that organization workers add more value by their labor than the value paid to them (wages, salaries) for that labor. Capitalists appropriate that "more," or what Marx called "surplus." To squeeze as much surplus from the workers as possible, capitalists control and make all the key decisions: what, how and where to produce and what to do with the surpluses they appropriate from the workers. 

A transition to socialism would thus require the transformation of capitalism's exploitative internal organization of enterprises. In other words, the transition to socialism requires that workers not only produce surpluses, but also themselves appropriate and distribute them. Workplaces stop being conflict-ridden confrontations of two different groups of people - employers and employees - and become instead cooperatives in which the same people who produce the surpluses also - collectively and democratically - appropriate those surpluses. Workplaces are reorganized into workers self-directed enterprises (WSDEs). In WSDEs, workers (rather than capitalists) decide what, how and where to produce and what to do with the surpluses their labor generates.

Imagine a socialism for the 21st century that included among its central goals the democratic transformation of the workplace, a dramatic advance beyond the major 19th and 20th century versions of socialism.

In other writings and presentations you've indicated you are altogether aware that all dominant CEOs after their initial selections, pick their own board for loyalty and for their identification with the CEO's interests, yet you present a very idealized picture of actually-existing corporate structure in "The Shape of a Post-capitalist Future." Why?

Because I wanted to ground a basic critique of the corporate organization of production - the dominant form of capitalist enterprise in the world today - by focusing on its paradigm form, its textbook formulation without the many deformations and biases that shape its particular incarnations. I wanted to show the profound problems, weaknesses and flaws in its best form before examining the additional defects it often displays, such as the one you chose as illustration. Indeed, it is often the basic corporate organization of the enterprise that positions and enables a CEO, for example, to produce such additional defects. In my view, what you call the idealized capitalist enterprise organization is already fundamentally anti-democratic in how it determines (1) who produces the net-revenues versus who disposes of those net revenues and (2) who does the work versus who decides what products will be produced with what technology and where. The actual specifics of many capitalist corporations are only that much more vulnerable to the basic critique.

Your essay proposes that production decisions be relocated from the supposedly neutral market of capitalism and the purportedly incompetent and heavy-handed state of Soviet socialism, but how do you counter arguments like Richard Smith's that government planning is necessary to arrest climate change as equitably as possible?

First of all, I try to make clear that democratizing the enterprise is a necessary component of socialism that must be added to correct its traditional overemphases on socialized (versus private) ownership of means of production and planning (versus market exchange) as mechanisms for distributing resources and products. It is not a matter of enterprise democratization as a substitute for socialized property and planned distribution. And this applies for many objectives of a socialist system, including arresting climate change.

Second, production decisions, the priority responsibility of all the workers in a democratized enterprise, would have to be made interdependently with residence-based democratic political decisions. Because enterprise decisions affect residential communities and vice versa, a commitment to democracy requires that each site participate in the decisions of the other.

Third, the issue is thus not whether the government at one or another level (local, regional, national and international) plays a role in the economy (planning is one such role). Among economic theories, only the neoclassical affirms laissez-faire fantasies of economies functioning without government interference despite the overwhelming empirical evidence that every actually existing capitalist economy has been intimately entwined with government. Keynesian economic theory celebrates the appropriate government interventions in the capitalist economy. Most versions of socialist economic theories articulate very powerful roles for governments in contemporary and likely near future economic realities. The issue is rather how interdependent enterprise and residential democracies work out those decisions, co-determine what government is and does.

Our critique of the Soviet model (see S. Resnick and R. Wolff, Class Theory and History: Capitalism and Communism in the USSR. New York and London: Routledge Publishers, 2002) focused on the rarity there of democratized workplaces (in the sense of WSDEs). We carefully specified them as enterprises where productive laborers themselves appropriated the surpluses they produced. Thus the behavior of successive Soviet governments reflected the prevalent absence of democratized enterprise organization. The socialization of property and planning established by the 1917 Soviet revolution eventually were undermined in significant ways by that enduring absence. The same logic suggests that the prospects for governments to arrest climate change equitably would be greatly enhanced by the transition from capitalistically organized enterprises (e.g. typical private corporations and state enterprises with their employer-employee dichotomies) to WSDEs.

How can you create a structure whereby corporate decision making will involve the workers and the residential communities whose lives are interdependent with the enterprise in a globalized world?

Remarkable achievements at special moments in the history of capitalism can provide foretastes of and pointers toward a viable post-capitalism. In the socialist enthusiasms of the new Weimar government in post-World War I Germany, a parliamentary arrangement emerged that helps us to answer this question. In that bicameral system, one legislative body was based on residence in the by-now conventional manner of voting by geographic district. The other legislative body was based on the economy. It was representational too, but the voting was by enterprise and industry. 

Thus, we might proceed comparably now as part of a transition from capitalist to WSDE-type economic organization. Enterprise decisions would be made first and democratically by the workers engaged there (rather than the tiny minority of major shareholders and the boards of directors they select, as is typical in capitalist corporations). However, such decisions would have to be consistent with the larger industrywide and economywide rules and regulations that would be the purview of the economy-based legislative body. And in turn, that body's activities would have to be consistent with the framework co-determined with the other legislative body's parallel deliberations and their results.

”We cannot expect a newly emerging economic system to automatically or by itself guarantee the culture, politics, or other aspects of society needed for that new system to survive or prosper.”

In such a structure, local, regional and national enterprise decisions would always and necessarily incorporate (and be subject ultimately to veto by) the democratically generated desires of the communities they interact with. Likewise, political decisions in residential communities would incorporate the democratically generated desires of enterprise workers they interact with.

Bill Ayers' essay in Imagine! describes how very few Americans are educated for responsibility - for democratic citizenship and decision making of any kind - today. What prevents bad actors from taking over workers' councils? Do you feel a change in enterprise structure will bring along a change in culture, enterprise councils will educate for responsibility or do we need to make other cultural changes for this to work?

We cannot expect a newly emerging economic system to automatically or by itself guarantee the culture, politics or other aspects of society needed for that new system to survive or prosper. 

Economic systems (feudal, capitalist, communist, and so on) try to shape their social and natural environments to secure their reproduction. That is because every economic system depends on its surrounding physical nature, culture and politics to persist. From their birth through their subsequent evolutions and to their deaths, economic systems interact with their natural, cultural and political conditions. Conditions and system are thus always in a process of continuous mutual transformation. Historically, every economic system eventually reached a point where its interactions with its surrounding conditions provoked and enabled transition to a new and different system.

Capitalism may well again be nearing such a point now. Its crises, its evolution into global mega-corporations, and its increasingly unequal social impacts are shaping the surrounding natural, political and cultural conditions in ways generating fast-growing criticism and opposition. If a social transition from capitalistically organized enterprises to WSDEs occurs, that would likely mean transformations in the surrounding natural, cultural and political conditions. 

Economic democracy at the enterprise level would drive to alter, for example, education. The goal would be to create and support the capacities, attitudes and motivations in people needed to enable WSDEs to function well and persist. Of course, many other social processes will simultaneously impact education. All these factors will together determine whether the resulting educational system does or does not support a WSDE-based economic system. 

No economic system has been able to finally control its conditions. That's why history displays the rise, development, and eventual demise of every past system. There is little reason to presume that capitalism will not follow that path. Likewise, there seems little reason to presume that for a WSDE-based economic system either. 

So yes, indeed, for economic democracy to be established in a WSDE-based economy that displaces and supersedes capitalism, it will take major changes in culture, politics and much else. Everyone in society will play a role – in how they think and interact with others, wherever they live and work. Everyone, consciously, intentionally, or not, will help determine whether the system reaches tipping-point soon and whether a democratic enterprise system is part of the changed world that emerges. 

Copyright, Truthout. May not be reprinted without permission.

Leslie Thatcher

Leslie Thatcher is Truthout's content relations editor.

Related Stories

Political Corruption and Capitalism
By Richard D Wolff, Truthout | Op-Ed
A Lesson From Chattanooga
By Richard D Wolff, Moyers & Company | Op-Ed
Economic Update: This System Does Not Work
By Richard D Wolff, Economic Update / Truthout | Radio Segment

Hide Comments

blog comments powered by Disqus