Chapter 7: Why the ‘Property-Owning Democracy’ May Nationalize Capital Rather than Regulate Labour
Chapter 6 brought to the centre of the analysis the accumulation capital. But so far the analysis has assumed that the workforce has accumulated no capital. This chapter relaxes that seemingly incongruent assumption, and asks: ‘Does the ownership of capital by the workforce dull, or even remove, the incentive for the electorate to “vote for unemployment” by favouring a legal minimum on wage rates?’ The chapter argues that the answer to this question will depend critically on how the workforce’s capital is managed. If the workforce’s capital is managed on standard profit-maximizing lines then the incentive to ‘vote for unemployment’ by means of an above-market wage rate is, indeed, reduced, and perhaps to extinction. However, if the workforce’s capital is managed, not on profit-maximizing lines, but in a way so as to maximize the total wage and profit incomes of the workforce, then the wage rate is not reduced relative to the wage bill maximizing rate, and may be higher. Further, under such ‘maximizing management’ of the workforce’s capital, employment will be actually increased relative to employment under wage bill maximization, and perhaps to the point of full employment. It appears, therefore, that the ‘property-owning democracy’ threatens the ruin of the ‘labour monopoly’ explanation of unemployment. For it appears that the management of the workforce’s capital in the way that maximizes the labour interest actually increases the wage rate relative to competition, and without necessarily any cost to unemployment. These implications obtain greater resonance if the management of worker-owned...
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