We Need Change*

Semi-direct Democracy and Enterprise Ownership by Employees.

Milan Valach

Paper from: The First  World Conference on Direct Democracy, CZ, Příbram 1998, it is not published yet.


     It is in this century that we have obtained the stunning power which enables us to solve many problems faced by mankind on one hand, but which, on the other hand, increases the danger of misuse for short-term, selfish objectives of small power elites in an unprecedented way. The force of these means is so great that, for the first time in history, the survival of mankind could be in danger, either as a result of a devastating war or a global ecological catastrophe. It is for this reason that the requirement of placing these means under democratic control assumes a radically new meaning. At the same time, we witness an increase in the importance of large citizen strata's moral qualities without which such democratic control is virtually impossible. Based on these facts, any uncontrolled governance by power elites is the most serious threat we are facing today.

     At present, the main issue is a transformation of the social system in such a way that the decisive factor in society will no longer be the egoistic interests of privileged  groups, but the interests of large population strata to live in conditions worthy of Man.

     It is not only imperative to reduce the destruction of nature but also to change the structure of both, our internal and external world.  "This process will affect every field of life. It will require the effort of all sorts of human talent. It will require not only technical and entrepreneurial innovations, but also innovations in the sphere of neighbourhood relations, in the sphere of society, politics, art and spiritual life." (Meadows)

     Our efforts to create and assert a vision of a world we strive for on the threshold of "the first global revolution" (King, Schneider), are impeded by the demoralizing consequences of bondage, resulting in a sense of inferiority, diminishing the confidence in our own strength and intellect, as well as the confidence in other people and in the meaningfulness of common actions. (See Fromm 1993)

     Even contemporary capitalism, as a political and economic system, is essentially hostile to human solidarity, it tends to shatter human community into a mass of isolated individuals. Competition, on which it is based, is basically nothing else than a conflict, a mutual struggle for individual success tending to escalate into a conflict of a general and destructive character (Etzioni). Isolated humans are inevitably plagued by a feeling of loneliness and impotence, especially vis-à-vis accumulating global problems. To such individuals, these problems appear to be the effect of "invisible cosmic forces of evil" (Marcuse)  which dominate the world. In many people, such an impression gives birth to a feeling of anxiety from which they try to escape by adhering to force, by identifying themselves with a superior power supposed to protect them. In the twentieth century, this "mechanism" of overcoming one's own unsatisfactory existence was set in motion on a large scale several times, to demonstrate its practical function. The idea of the individual being of no value, of being unable to depend on him/herself and being in need of submission was the main theme of Hitler's ideology (Fromm 1993). At the same time he offered a psychological solution in the form of identification with a higher entity - the race. A similar psychological "mechanism" can also be found in the communist movement.

     However, can't the problem be solved by a government consisting of sage politicians? Plato affirmed that those who know more should govern those who know less. Such a government is even considered useful by the ignorant ones themselves. In his Constitution (342A - E), Plato tries to prove this principle by comparing governance to medical consultation. Since the physician knows more than we do about what is good for our health, he becomes the ruler of our body. It seems obvious that the right to govern is based on expertise. Generally speaking: He who knows better than ourselves about what is good for us should govern over us. However, as it is often the case with Plato, something important is left untold. As a matter of fact, the whole argument is clever demagogy. The main origin of everything is not the physician's knowledge and will, but our own will. The very essence is our own decision to be healthy because our own health is valuable to us. It is evident that one can make up his/her mind to neglect his/her own health, or even to choose death. If we ask the physician to come and help, it is a matter of real choice. We thereby express the wish that we want him, an expert, to take care of what is dear to us, i.e. our own health. Thus the physician is no longer a ruler over the patient, but his/her chosen assistant. Instead of the ruler- and-subject model, we get a cooperation-between-partners model. This is a general principle expressing the idea that, in practice, expert leadership always serves values and interests of the user. Therefore the aim should be to serve the interests of the majority of citizens, not only in the political sphere, but also in the sphere of employment.

     In this context, Robert Dahl draws our attention to the fact that democratic society cannot be indifferent towards internal steering of enterprises, a system which is still "a system of guardianship and, at worst, despotism" (Dahl). According to him, the employees are definitely at least   as capable at steering their enterprises as the share-holders, or even better (ibid.). Even if the enterprises steered in this democratic way would only be as good profit-makers as others, they would, in fact, be better because of their democratic contribution (ibid.). Interestingly, objections against democratic steering of enterprises are similar to known objections against democracy in general (ibid.).

     In the contemporary economic system, the predominant type of enterprise consists of owners and employees, these being different people. Since the number of enterprises must always be smaller than the number of people involved in economic activity, in such a system, ownership and the power attached to it is the privilege of a small minority. If we would abolish this privilege by transforming private ownership into state ownership, we would only achieve a transfer into the hands of the power elite that is steering the state. Thereby, social inequality is not diminished, it increases because the result is the expropriation of many private owners in favour of a single ownership group. This is a phenomenon well known in totalitarian systems. Also its consequences are well known. To really abolish ownership as a privilege means to transform all people into owners-guardians of their own lives. Therefore, the optimum ownership form will evidently be individual ownership in cases where a person works alone and a cooperation of individual owners in cases where the nature of work requires a collective effort.

     This leads us to the notion that we must negate the prevailing system of a majority dominated by a minority and replace it by another system, which, however, in the sphere of economics, should preserve competition as a stimulating factor, while combining it with cooperation in the field of activities of individual economic subjects. The present supreme evil's main cause is not the market and competition aiming far maximization of profit. The cause of today's crisis runs deeper, it is the nature of the subjects that compete in this market. The predominance of one kind of private interest (the interest of the elitist proprietor, member of a minority) over the interest of all others determines the nature of the entrepreneurial subject as a whole, it reduces its final function to one single dimension, i.e. profit, and in the same way it models even the entrepreneurs as individuals. However, this is not a matter of share-holder's morality, but the necessary form of functioning of such type of property. Its basic principle - the dominance over the employees and their exploitation for the benefit of the owner influences the nature of the market and the behaviour of the whole economic system.

     The effort to rationally humanize and democratize contemporary systems leads us to the idea of employee ownership of enterprises. This means a transfer of enterprises into the hands of their employees so that these would acquire a decisive influence over the behaviour of the respective firm. If responsibility is acquired by the people who know their own work best, even productivity will increases (Drucker). Such a change of enterprise ownership removes alienation of all types and therefore, it has multiple effects. In such a system, in spite of position differences in the global division of labour, nobody has the privilege of power over others. In spite of the fact that specific decisions are necessarily made by responsible individuals, these decisions are accepted not on the basis of subordination and ownership, but on the basis of consensus over the interests of those who are to implement them. Therefore, in such a system, human life, both in the individual and the collective sphere, becomes Man's own work, a work performed   in common and on equal terms with others. Solidarity becomes a reality of everyday life, an empirical fact of mutual dependence both in success and difficult times, a fact resulting from activities of the respective collective of employees. Voluntary cooperation and common pursuit of success create a synergic effect - a qualitative multiplication of the ability of   human community as a whole to solve emerging problems. Profit, which remains preserved, loses its short-term character and, above all, its predominant role. In the process of reaching consensus on common objectives and the way to attain them (which is a continuous process), common interests of those who build up such consensus are, necessarily projected into these objectives. The one-sided attitude of the capitalist private owner (the share-holder) expecting to only get profit, and to get it as soon as possible, is replaced by a complex relation between the employee and the firm from which he/she expects to get not only a salary, but also conditions favourable for his/she self-realization, both in his/her work place and in co-worker relations. On the other hand, it is understood, that on the part of the firm, he/she expects a behaviour which does not destroy the environment in which he/she lives (Zelený 1990). Practical experience shows that democratic enterprises are highly ecological in the fact that they show circumspection and economy in consuming energy, capital and materials (Vanek).

     From the viewpoint of the democratisation of everyday life of employees, it is, of course, desirable e.g. that the management of the enterprise be organized according to the principle "one man- one vote". Should individual employees invest unequal amounts in buying shares, this difference can only make a claim to a higher or lower share in the profit. Property of a large share does not by any means give the owner the right to govern others.

     The Yugoslav experience shows that democratic steering of enterprises is not possible if it is not a component of a pluralistic democratic society (Sekelj, in: Sekelj, Tomek). Enterprise democracy and political democracy, i.e. democratic management of society as a whole, are interrelated.

     This relation works both ways: a successful enforcement of employee ownership depends on the acquisition of the political influence necessary for the enforcement of the respective laws and the overcoming of the resistance of certain ownership-based power elites. Therefore, even in pursuing a change of the political system, we face the same task as in the field of economics. This means that we must seek ways which, on one hand, will enable the citizens to bring their interests to bear in all their complexity and, on the other hand, will ensure, to a maximum extent, that political power will not be abused.

     Therefore, in addition to a transformation of the economic system, an effective expression of the democratic principle also requires the abolition of political power as a privilege. For this purpose, it is necessary to understand that politicians "are not the rulers of people, but their officials", therefore, people also have the right "both to install and depose them whenever they like" (Rousseau), i.e. not only during elections. Moreover, as a matter of fact, voters vote for parties they prefer based on the spur of the moment. This, however, does not mean that they consent to the whole of their program or to everything these parties profess and do, especially after getting into power. Nowadays, the voters typically consent to some issues of the party program they have chosen but not to others (Polák). This is also a consequence of the fact that the parties no longer express the interests of one specific group, they are no longer representatives of a world simplified in such a way. Thus, the voters of the same party can agree on one issue but disagree with the rest on another one (see Welsch). But this being so, the very idea of democracy gets into an essential contradiction with the current system of rule by parties who can often realize projects contrary to the will of the voters, but in agreement with the preferences of the respective leadership and the groups of lobbyists attached to them.

     It is necessary to realize that politicians are trustees of our common lives. If we disagree with what they are doing, we must have a legal possibility to express our opinion. Since it is we who are at stake, clearly, our opinions must have a binding form. We could say that for this purpose, we have periodical elections. But the period of time in question is so long that it makes it possible to adopt and realize decisions that cannot be reversed later on, or if they can, the damage is considerable. Moreover, a situation that enables politicians to make decisions on behalf of citizens without feeling that they are controlled by the citizens, alienates them dangerously far away from the citizens. This being so, they also have the opportunity to use their power for the assertion of personal or specific group interests. However, in addition to the radical measure of dismissing the politicians, we should have another, less radical opportunity of participating in decision-making that concerns us. We should have such opportunity both in asserting our own interest, if we believe it to be disregarded, and in reversing any political decision we disagree with. The paramount democratic expression of the will of the citizens is the vote. By voting, we strive for the assertion of our interests.  If it is legitimate to vote once every four years, it must be legitimate to vote every time we desire to do so. If voting on this or that issue is to be a form of control over politicians as well as a form of asserting interests overlooked or suppressed by them, it cannot be they who should decide how often and when to vote. Voting should be organized on the basis of citizen decision, i.e. decisions made by at least a minimum number of voters stipulated by law on a specific level (local or national). In other words, it is necessary to pass a bill on referendums decided by citizens both on the communal or district and the national level. With regard to politicians, the results of referendum must be binding.

     The practice, observable in such procedures "shows that among ordinary people, there is a fantastic source of hidden creative energy. It is true that they are less informed than the experts, but on the other hand, they have a broader outlook, they are able to see things and phenomena in their context...and they are personally interested in solving the problem in question" (Jung, similarly Dahl).

     If we accept the idea of decentralized power, of decision-making by the local community where local issues are concerned, then individual responsibility of all community members and their mutual solidarity become important values. Participatory politics are thus based on values including activity, creativity, responsibility and self-confidence in the sphere of the individual human being and on the values including liberty, solidarity and mutual confidence in the sphere of inter-personal relations.

     However, these values are the same we were able to identify as both a pre-condition and a result of the functioning of a participatory, i.e. employee-owned enterprise. Therefore, generally speaking, we can say that extensive stimulation and assertion of these values depends on, and, by its consequences, is conductive to, a radical humanization of society. Only in this way is it possible to set off on the road leading to the establishment of a global participatory system, including the solution of contemporary problems through a humanization of the entire civilization.

     The notion of liberty, which is so important to us, can now be defined more precisely. It is evident that it cannot be conceived as individual independence, or as a possibility to do whatever I like. Everybody being inevitably dependent on cooperation with others, his/her life is only possible within the framework of human community. Therefore, any notion of liberty assumes a meaning only in this context of human co-existence. Consequently, thinking of liberty, we seek a form of human co-existence in which all members participate in decision-making freely and on equal terms. From the point of view of management and steering of human society, to be free means to be equal. But under such conditions, other people are no longer competitors, but partners who enrich one another.

     This concept is consistent with the model of a new system presented in this paper, a model based on employee ownership and semi-direct democracy (Toffler 1996) including as many directly elements as possible into the existing representative democracy. This model can thus become another step in the direction of increasing human liberty. Hopefully, this is also the direction leading to moral, ecological and political healing of the wounds of the contemporary world.


* These ideas are covered in more detail in my book (only in Czech): Valach, M.: "The World at a Turning Point", Czech Republic, publishing house Doplněk, Brno 2000, 324 pages.



Dahl, R. A.:  Democracy and Its Critics. Yale  University Press, USA 1989.

Drucker, P.F.: The Frontiers of Management: Where Tomorrow's Decisions are Being         Shaped today. London 1987.

Etzioni, A.: The Moral Dimension. Toward a New Economics. New York 1988.

Fromm, E.: Escape from Freedom. New York 1941.

Jung, R.: Návraty k demokracii. In: čas. Ekonom, č. 27, Praha 1993, s. 13.

King, A., Schneider, B.: The First Global Revolution. SR, Bratislava, Bradlo 1991.

Marcuse, H.: One-Dimensional Man. Studies in the Ideology of Advanced Industrial Society. Boston 1964.

Meadows, D., Meadows, D., Randers, J.: Beyond the Limits. Chelsea Green Publishing Company 1992.

Plato: Republic. Praha, Svoboda 1993.

Polák, J.: Democracy- Direct  or Indirect? Praha, DD Publishing House 1993.

Rich, A.: Wirtschaftsethik II. Gütersloher Verlagshaus Gerd Mohn. Gütersloh 1992.

Rousseau, J.J.: O společenské smlouvě. Rovněž viz: Rozprava o původu a příčínách nerovnosti mezi  lidmi. In: Rousseau, J.J.: Rozpravy. Svoboda 1989.

Sekelj, L., Tomek, V.: eds.: Anarchism. Community  and Utopia. Praha, Filosofický ústav AV ČR 1993.

Toffler, A., Toffler, H.: Creating a new Civilization. The Politics of the Third Wave. Atlanta 1995.

Vanek, J.: Problém přechodu od centrálně plánovaných  k demokratickým decentralizovaným socialistickým ekonomikám. In: čas. Politicka ekonomie, r. 38, Praha 1990, s. 1025-1044.

Welsch, W.: Postmoderne- Pluralität als ethischer und politischer Wert. Koln 1988.

Zelený, M.: ČSFR očima exilového ekonoma. Praha, Alternativy a Polarita 1990.



Pokud se Vám tento článek líbí, doporučte jej!

google facebook Digg delicious reddit furl mrwong topclanky Jagg bookmarky Linkuj si ! pridej Vybralisme stumble upon myspace twitter

© 2009 - www.valach.info, kontaktní formulář