The People’s Corporation

Yesterday during one of my Twitter rants, I reintroduced an idea I had floated several years ago: namely, that the creation of a corporation that could actively reorganize production while expanding could be a possible vehicle for leftist goals. After all, if the corporation is the most powerful form of organization in the world today, why shouldn’t we have one?

When I first brought up the idea, some people objected that any corporation would be essentially forced to make ever-greater profits and therefore give up on the goals a leftist corporation would presumably have. While it’s true that every business has to “make money,” it is not the case that every business must always make more and more profit. In the long run, a business simply has to remain solvent, to break even — making a profit is a prudent way to build up a reserve for lean times, but the demand for ever-greater returns is generated by the stock market-driven model of contemporary capitalism. The reason that companies participating in this regime “have to” keep making ever greater profits (or do things like laying off employees or cutting wages that market participants, for ideological reasons, believe will lead to greater profits) is that if they don’t, shareholders can replace management and force them to make those changes. These pressures do not hold in the same way for a privately-held company. If the owners and board of directors are content with modest profits, a company can continue more or less indefinitely at that level. Bain Capital might come along and offer to buy out the company in order to apply the more dominant model, but they have no way of forcing a company to sell if it doesn’t want to. While there’s no way to absolutely defend against eventually having people in charge who will be willing to sell out, it should be possible to organize the People’s Corporation in such a way that it would be extremely unlikely. In short, the people making this objection were treating the self-justification of contemporary finance-driven capital as an immutable economic law.

Yet the People’s Corporation would face competition in whatever line of business it operated in (and I think it more or less wouldn’t matter which line that was to start). Surely the more exploitative corporations would have an edge! I think the case of Apple is instructive here, though. Their profit margins are huge, and in fact they are stockpiling more money than they know what to do with. There is ample “room” to pay workers much more while still charging a similar price. There are good reasons that trying to compete on price in Apple’s space would not be a smart strategy, but the point of the example is that cutting labor costs is not the only way to compete on price — that is an ideological illusion. Indeed, the People’s Corporation would have room to compete on price from the other direction: while its labor costs would be higher, it would not need to pay obscene executive salaries or dividends or buy back its shares or do any of the other things that amount to throwing the company’s money away. I’d imagine that using local labor forces would result in lower administrative overhead that would help to make up for the difference in labor costs as well.

On purely economic grounds, then, I think it’s doable. The notion that corporations “have to” behave as they do behave is partly an ideological illusion and partly a result of the way corporations relate to the stock market — and there’s no need for the People’s Corporation to be publicly traded. The more serious concern, I think, is whether this would really change things. After all, one could say that the 20th Century saw the rise of a People’s Corporation already, and it was called the Soviet Union. That experience does not seem to provide an attractive model, nor did it prove sustainable — indeed, the equivalent of the People’s Corporation selling out and going public basically did occur in the end.

This is where I’d draw on Postone’s critique of traditional Marxism. The problem in the Soviet Union was that their solutions focused on the realm of distribution without really problematizing the mode of production — in fact, their goal was to replicate the capitalist mode of production as quickly and aggressively as possible, believing that removing the distortions introduced by market distribution would actually lead to better results and that then they could instrumentalize the machinery for other ends. The result was mass exploitation of labor and the environment for the purpose of building up as much fixed capital (as opposed to money capital) as possible.

The way I envision the People’s Corporation is that it would change the mode of production, at least to some degree. Environmental sustainability (and ultimately, environmental rehabilitation) would have to be “baked in” from the beginning — I suggested building everything from the ground up for recycling, but even if that turns out to be the wrong emphasis (as a commenter suggested), the environmental concern would have to be central. The People’s Corporation wouldn’t expand for its own sake, but in order to displace and ultimately replace the current mode of production entirely. It wouldn’t be a matter of giving people an ethical option — the goal would be to ultimately deprive them of the unethical option by putting exploitative, polluting companies out of business (or buying them out and restructuring their operations in line with the People’s Corporation’s goals).

Obviously this doesn’t entirely get rid of the problem of alienated labor and the commodity-form, which would be the ultimate communist horizon — but it could be a step in that direction, more so than my distribution-focused advocacy of a universal basic income. (If Emily’s around, I hope she appreciates that her comments were not entirely in vain in that thread.)

I think what’s important about this proposal in the short-term, though, is that it envisions a concrete way that the left could get access to actual material resources — stemming from ongoing, sustainable production rather than from begging for donations. That’s what the left had when it was at its strongest (whether funding from trade unions or from the early Soviet Union), and I think that’s what the left needs more now than an abstract sense of “organization” or “discipline.” No amount of “discipline” is going to change the fact that the left cannot afford to support many full-time militants or to fund its own presses or researchers, for example. Yes, organization can be very powerful, but not if it doesn’t have material resources behind it — and by the same token, having access to greater material resources would allow more room for experimentation in terms of strategy, etc., which is to say that we could afford to try and fail once in a while.

What made the Communist Party in Russia powerful wasn’t simply that they were a disciplined Party, but that they gained control over the economic apparatus of a vast, resource-rich country through a series of events that probably could never have been planned. The notion that organization and discipline as such will directly produce the desired results strikes me as more akin to a Stalinist voluntarism than to a Marxist materialism.

But it’s not as though I actually know how to bring this about, etc., so I’m open to suggestions.

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28 Responses to “The People’s Corporation”

  1. Jared Says:

    “[T]he goal would be to ultimately deprive them of the unethical option by putting exploitative, polluting companies out of business (or buying them out and restructuring their operations in line with the People’s Corporation’s goals).”

    Presumably ordinary companies pollute and exploit labor because it’s profitable to do so. How does People’s Corp. gain a competitive advantage over such companies without doing the polluting and exploiting? One thing I thought of was: through aspirational/affinity branding, along the lines of Whole Foods vs. scuzzy regional supermarkets. But that wouldn’t take you very far – presumably you need profits to come from ‘normals,’ too?

    So far it kind of sounds like:
    1. Form a company with an explicit leftist charter.
    2. …
    3. Profit!
    4. Replace the dominant capitalist mode of production, etc.!
    Obviously step #2 is already really hard for a lot of ordinary companies without the burden of extra political and ethical constraints.

    What if “People’s Corp.” was an organizational model that companies could join or copy, with “best practices” and guidelines for revenue sharing and so on? Kind of like how fisheries work to get approved as organic. Companies that met the necessary criteria could support one another and benefit from cross-promotional synergies or what have you, with the goal that, over time, the “red economy” would grow alongside and become competitive with the rest of corporate America.

  2. Adam Kotsko Says:

    Perhaps you could use affinity branding as a starting point. I literally don’t think it matters where you start with this.

    Are you dismissing out of hand my notion that this company’s different relationship to the need for profits, executive compensation, etc., could make a difference? Isn’t the whole point of a “public option” that its lack of a need for profits would help it compete against companies who need to syphon off a portion of their production? As I recall, people were saying that a non-profit public option could perform that function whether or not it was government-run — and could do so, albeit to a lesser extent, even without government subsidies to lower prices below cost.

  3. voyou Says:

    Your point about resources being more important than “organisation” in the abstract is great; I’m a bit sceptical about the possibility of using a “people’s corporation” for anything more transformative than accumulating these resources, though.

    The UK does have something not entirely unlike your proposal, The Cooperative Group, although it doesn’t now have a particularly explicit political agenda. It is affiliated to the Cooperative Party, which is in turn connected in some fashion to the Labour Party, but I don’t know that it exerts much political influence. Also, their shops usually carry the Morning Star, the Communist Party of Britain’s newspaper, which is nice. But the Cooperative Group was originally set up with a political agenda, tied to the broader movement of workers’ and producers’ cooperative, and I wonder if the waning of that politics suggests that the space for a privately-held corporation to reorganise production isn’t actually more limited than you suggest.

    One thing you don’t address, I think, is the competitive advantage of scale; if a larger business is more competitive than a small one, then businesses will have to expand or be out-competed by those businesses which do; but to expand, a business needs to accumulate capital, so act like a capitalist no matter what its ownership structure is. I think this is where the compulsion to seek profit comes from in Marx’s model, not just the desire of shareholders for returns.

    The question, I guess, is whether a coop or a people’s corporation could resist this tendency long enough to support people in bringing about radical social transformation through measures other than economic ones.

  4. Adam Kotsko Says:

    Right, but there are degrees of acting like a capitalist. The hyper-exploitation of contemporary companies is not a law of nature — companies “made money” back in the good old Fordist days when a much higher percentage of revenue went toward wages. And a lot of the extra profits reaped through hyperexploitation are essentially wasted through executive compensation, share buybacks, etc., when the company isn’t simply sitting on huge stacks of money (like Apple). The hegemonic balance of profits and wages today is driven by the demands of the stock market, which are themselves driven by ideological conformism and idiotic short-sightedness rather than “profitability” as such (as though it’s simply “known” what’s going to turn out to be profitable or not).

  5. Adam Kotsko Says:

    The very fact that speculative activity is so dominant shows that the current model is not generating productive investments as it stands. Companies aren’t reinvesting all those hyper-exploited profits back into the business — they’re constantly gutting their businesses for the sake of short-term profit targets.

  6. Asteele Says:

    Maybe a nation wide low fee-bank.

  7. Adam Kotsko Says:

    That would fit with Goodchild’s idea for a “value bank” at the end of Theology of Money.

  8. nydwracu Says:

    What products/services/etc. is the capitalist mode of production worst at?

  9. Jared Says:

    I think this is a really fascinating topic. So a nonprofit employee-owned (?*) company:
    a) makes widgets at a higher cost than their conventional competitors because it pays higher wages and doesn’t dump chemicals or whatever, but
    b) can sell widgets at the same or lower prices than conventional competitors because it doesn’t have to worry about profits.

    Instead of it not mattering at all what industry you attempt this in, I think the particulars of the business are important. A desktop computer maker or airline or pencil sharpening company isn’t going to be viable just because its shareholders aren’t the public. Assuming we’re not limiting this idea to piddly service sector companies, anything capital-intensive means you still have creditors; and we can expect the cost of capital for Red Star Whiskey to be higher than it is for Diageo, which reduces the advantage of being a nonprofit. I guess the reaction would be to pay down debt as soon as possible? But then your company’s not going to grow much, which leaves less money for missionary work.

    When the employees are also the shareholders, paying any profits back to workers in the form of higher wages isn’t any different from share buybacks or dividends, right? It’s just a sign that management can’t find opportunities with expected returns greater than the cost of capital. But sending any profits back to the people who generated them is obviously the whole awesome idea here.

    Higher wages would attract good people to skilled roles, and as long as you paid some people *something* more, you could still give incentives for people to be creative and to work hard if they wanted to.

    I had a mental image of “It’s like The Home Depot, except lefty”. But successful companies don’t just happen. I guess the least clear part has to do with founding such a company? Where does the capital come from, and don’t these founders have essentially to be enlightened benefactors? Why else would a group of people pool their time and resources under a charter according to which they’ll be giving up most or all of the eventual upside from the huge risks they’re taking? (I realize that’s a setup for a high-minded quip, but seriously.)

    * Do employees own shares of the company, or do they just receive a split of revenue as wages, or what? And if the widgets sell surprisingly well and there are profits, what happens to those? Does an employee agree in advance to sell her shares back to the company if she quits or is fired?

  10. Adam Kotsko Says:

    I figure we’ll just do a Kickstarter.

  11. ambzone Says:

    Interesting idea. We should learn from neoliberal practices and integrate those that aren’t inherently abhorrent. Neoliberals themselves got quite a few trick from the post-war consensus in order to build their own ideological hegemony. That’s what’s “neo” about them really. They didn’t wait for the revolution.

  12. deontologistics Says:

    I think the basis of this idea is very good, and it’s similar to some things that myself and Reid Kotlas have been talking about under the heading of ‘anti-capital’. However, voyou is right that there is a long history of co-operative enterprises, and that these are by no means models of leftist virtue simply in virtue of co-operative ownership. The co-operative group is the perfect example of the problem here, insofar as it has progressively adopted the practices and organisational structures of the capitalist organisations it competes against to the point at which it is increasingly indistinguishable from them (especially the co-operative bank: http://www.neweconomics.org/blog/entry/what-can-we-actually-learn-from-the-co-ops-recent-troubles). This is very much paralleled by the degradation and appropriation of unions as collective ways of managing and channelling labour power.

    What we need are new forms of economic organisation that don’t merely borrow from corporate models but are systemically designed to resist the collapse back into the profit-motive, or something resembling it. Against voyou then, it’s crucial to maintain the possibility that anti-capitalist enterprises could accumulate, distribute, and invest resources in ways orthogonal to profit-making, which is what I mean by ‘anti-capital’. The tricky thing is to design these mechanisms, so as to allow anti-capital to flourish within capitalism (by competing with capital), as a potential platform for a transition to post-capitalism. As ever, the devil is in the structural details.

    There’s a number of ideas I’ve been throwing around on this front, but it’s all still heavily underdeveloped. On thing I will say though is that Kickstarter is a fascinating model from which to draw inspiration here. This is because it is a product-oriented investment model, rather than a profit-oriented investment model. It enables supply and demand interactions that don’t proceed through finance capital. That’s pretty fucking impressive from a structural perspective, even if it’s by no means approaching the potential of the model.

  13. Jared Says:

    deontologistics: it seems like the “orthogonal to profit-making” condition would be satisfied by a section in the corporate charter outlining how profits are to be invested in anti-capitalist education etc., right?

    Ordinary nonprofits do this all the time, and without accidentally becoming avaricious profit-maximizers down the road. I don’t see what’s so tricky about it.

  14. Adam Kotsko Says:

    I think the issue here is that most of us are closely associated with a form of non-profit organization that did turn around and become avaricious profit-maximizers, i.e., universities.

  15. Jared Says:

    The definition of what activities profits can be spent on would need to be pretty detailed, I guess, and include provisions making it difficult to revise the charter. It seems like some reputable charitable organizations keep pretty tight control, over time, of where their money goes. And if the job of the Revolutionary Committee of the Board of Directors has the primary purpose of directing funds in the mandated way, and reports to the board and employee/shareholders regularly…. doesn’t seem so implausible to me. It’s not like the things universities do these days are always

    I bet this company would have some pretty serious PR problems at the start unless it was really careful to rebrand all of the educational content. “Don’t buy your auto insurance from Red Star, they use profits to fund commie teach-ins!” vs. “Anodyne, Inc. uses profits from its businesses to support adult literacy and business education throughout North America.”

  16. Jared Says:

    Oh, the end of that sentence: It’s not like the things universities do these days are always directly in opposition to education, or in violation of some clear mandate. I agree that universities are a good example of how profit motives take over if you don’t explicitly try to exclude them.

  17. nonmanifestation Says:

    “I think the issue here is that most of us are closely associated with a form of non-profit organization that did turn around and become avaricious profit-maximizers, i.e., universities.” This brings up something I’ve wondered for a long time while reading university professor’s complaints about universities: why not make a co-op university?

  18. suppg02 Says:

    I love the idea, it’s something I thought about a few months ago. A pet hate of mine is overpriced coffee shops , I also like zizeks ideological critique of their bullshit environmentalism. So it would be great if unions (who here in the uk have quite a lot of money and are growing ever distant from a Labour Party which they financially support) could support a new venture of coffee shops, friendly for business and activist meetings etc with Internet access. Of course they could be fair trade and it’s a relatively simple commodity to sell. Who knows. Red coffee Shops!!

  19. ben Says:

    Would I be completely wrong in thinking that the suggestion is for something similar to Patagonia (a privately held environment-focused benefit corporation, though I don’t know anything about how it compensates its workers)?

    (Regarding the temptations associated with success, according to wikipedia, REI, which is a cooperative, pays its CEO $750,000 a year. OTOH it does appear to treat its workers a lot better than most retailers.)

  20. Adam Kotsko Says:

    That parallel was drawn in the previous discussion of this topic.

  21. ben Says:

    I must have missed same.

  22. ben Says:

    (Ah, the first link, duh.)

  23. ben Says:

    But even there it’s just someone mentioning, hey, Patagonia. The previous discussion doesn’t answer the question of whether that’s along the lines of what you’re talking about or just something evoked, perhaps incorrectly, by your post.

  24. Adam Kotsko Says:

    I’m not familiar in detail, but it seemed like a suitable point of comparison.

  25. Hill Says:

    http://en.wikipedia.org/wiki/Mondragon_Corporation

    How about the Mondragon Corporation? They make, among many other things, Orbea bikes. They are one of the few things in the corporate world that doesn’t immediately depress me. They employ over 80,000 people and are one of the largest corporations in Spain. The highest to lowest wage ratio is capped (average 5:1) and decided upon democratically by the worker-owners.

    From the Wiki article: “This framework of business culture has been structured based on a common culture derived from the 10 Basic Co-operative Principles, in which Mondragon is rooted: Open Admission, Democratic Organisation, the Sovereignty of Labour, Instrumental and Subordinate Nature of Capital, Participatory Management, Payment Solidarity, Inter-cooperation, Social Transformation, Universality and Education.”

  26. Adam Kotsko Says:

    That could work, too, in principle. What I’d need to know, though, is whether they view themselves as having established a kind of “bubble” of just worker relations or whether they actively seek to expand their model, both “forcibly” (through market mechanisms or buy-outs) and propagandistically.

  27. eric Says:

    this is in line with the coop movement as well as the logical end to syndicalism.


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