Can Sanders’ policies on worker ownership shift power in the American economy?

Bernie Sanders is currently storming the Democratic primaries and looks set to claim the nomination. Therefore, conversations are beginning to shift from Sanders’ electability to what America’s first socialist president might do in office. One of the least discussed areas of Sanders’ policy platform is his stance on worker ownership yet this may prove to be one of the most important.

The Sanders’ plan for employee ownership and corporate democracy is bold and has the potential to redefine the progressive project in America. As opposed to more commonplace welfarism, these policies are the most fundamentally socialist aspect of Sanders’ radical agenda. It would involve a shift in ownership of the means of production to the worker from the capitalist, without a gulag in sight. This would make for one of the biggest underlying changes in how American capitalism works since the election of Ronald Reagan.

Before digging deeper into Sanders’ policy commitments, it’s worth quickly spelling out the basic of worker ownership. It is the process of giving workers control of a company and a share of its profits. This is usually done by giving workers a proportion of shares, that can be managed collectively, giving them representation on company boards and a share of profits. Cooperatives are companies owned and managed exclusively by members, these can be workers or consumers or a mix of the two. The socialist argument for this is that employees produce the wealth, and should therefore control what happens to that wealth.

There are a number of hugely important benefits to supporting worker ownership. Firstly, and this is crucial to the success of the Sanders project, ideas of worker ownership provide a material alternative to the current economic settlement in modern capitalist societies. Rather than merely offering people what could be perceived as handouts, this shift in ownership makes workers fundamentally in charge of that which they produce and the benefits of that production.

Secondly, there are economic benefits to pursuing an economic model with greater worker ownership. A great deal of economic evidence suggests that having a substantial stake in a company makes workers more productive, reduces absenteeism and makes companies less vulnerable to economic downturns. Also, worker-owned cooperatives have far higher rates of satisfaction than traditional companies and result in greater economic stability for employees.

Given the extent of wealth inequality in the US, as well as the complete disempowerment of the trade union movement, it is no surprise Sanders has crafted a well-detailed plan focussed on ownership. He has historically been a big proponent of cooperatives – there are videos in circulation of him endorsing these sorts of businesses whilst a small-town mayor in the 1980s.

This could become a core part of his electoral offer and a crucial way of offering the American people a way to take control of their economy. Sanders is very hot on calling out arguments about economic democracy in a deregulated free market but worker ownership policies are a chance for Sanders to demonstrate the meaning of real economic democracy.

The headline policy is that corporations with at least $100 million in annual revenue must become, over the course of 10 years, 20% worker-owned. This would involve paying out a regular dividend to workers and giving them stakeholder voting rights. The stock would be managed collectively by a Board of Trustees directly elected by the workforce.

This policy would have serious economic consequences for the corporate class in America and represent a massive shift in wealth towards the people actually generating it. These plans go even further than the plans laid out by John McDonnell in the 2019 Labour Manifesto and would present a clear power shift in large companies.

As well as this, 45% of seats on corporate boards would be made to represent workers. This would actually make “corporate democracy” more of a reality than an oxymoron. This sort of representation is common in Germany, and other EU nations, which, as Sanders points out, is hardly Venezuela but a functional and wealthy social democratic nation.

The two policies outlined would irrevocably reshape who controls big business in the United States. Having substantial representation on boards, as well as a stake in the company, gives workers a better position in which to challenge their executives about conditions, pay and general management of the company. It’s important to remember that this is valuable for the owners as well; workers have the best understanding of what goes wrong in a company, and often have the best solutions too. These reforms could bring about shifts to pay ratios and help reduce job losses due to outsourcing.

The other section of Sanders’ plan is Employee Ownership Banks. These banks would be set up offering low-interest loans and technical assistance to start-up cooperatives and worker-owned initiatives. Worker Ownership Centres would be opened to educate workers and business owners about the merits and logistics of this system.

Furthermore, business owners that replace their workers with cheap foreign labour or automation would be obliged to provide shares to redundant workers. If Sanders was elected president, it would usher in the biggest opportunity for the global left in decades, and a chance to show that socialism needn’t involve intrusive big government.

The radicalism of these proposals makes for an obvious departure from much of the Democratic field. Warren’s policy set, for instance, has very little substance on worker ownership. Her Accountable Capitalism Act only makes provision for worker representation on boards, and even that doesn’t provide as much as Sanders’ commitments. It goes without saying that nobody else comes close to offering anything on the scale that Bernie has on, well, practically anything.

There are weak spots in Sanders’ plans. Unlike the Labour Party’s Inclusive Ownership Fund, for instance, there is no universal cap on dividends going to workers across different companies. This means that firms with a higher stock price (mostly tech companies) would pay out far more to their employees than other companies, which could create sectoral income imbalances. There is also arguably little synthesis with other elements of the campaign agenda. It would have been interesting to see how ideas of ownership would have fed into large-scale employment projects like the Green New Deal.

As a start however, Sanders’ plans represent a huge opportunity to highlight the strengths of a real democratic socialist project and represent the most comprehensive programme of worker ownership a candidate has put forward in American history.