A long line of reformers has sought to extend democracy to the workplace, but the decline in the labour share of power and income, stagnating or falling real wages, rising inequality, employers' market power and profit shares in advanced economies show that this goal is increasingly distant. Also, in contrast to political democracy and its attempts to control power in the public sector, the concept of economic democracy, which focuses on the concentration of economic power, has received much less attention. Economic democracy is often defined as "a system of checks and balances on economic power and support for the right of citizens to participate actively in the economy regardless of social status, race, gender, etc." Economic democracy is usually identified with "labour management" or workers' control and (co-)ownership of enterprises and the appropriation of profits or surpluses, which traditionally belong exclusively to the "owners" of capital. Various forms of worker participation, co-ownership and profit-sharing are widespread and successful in many dimensions, but they are far from universal. 

It can be argued that the concepts of economic democracy and social justice are interlinked. The latter focuses primarily on just relations between groups in society, and not so much on justice for individual behaviour or for individuals. Historically and in theory, the idea of social justice is that all people should have equal access to wealth, health, well-being, justice, privilege and opportunity, regardless of their legal, political, economic or other circumstances. In economic terms, social justice most often means efforts to redistribute wealth, income or economic opportunities from privileged groups to the disadvantaged. 

On the other hand, modern economies often deprive workers of their "natural" democratic rights and their share of the surplus generated, and most of the benefits of growth are appropriated by the "owners" of the business. Well-being and job satisfaction are often ignored unless they directly contribute to profitability (although there are of course many employers who show varying degrees of benevolence or altruism towards their workers), while precarious work and underemployment, with stagnating or falling real wages, have persisted for decades, despite recent low official unemployment. Moreover, profit-maximising companies, in which workers do not participate in decision-making or profits, enjoy increasing monopsony power. 

The "owners' rights" seem to arise naturally because they can hire workers and give them a fixed wage before the sales revenue is generated, and continue to do so despite temporary fluctuations. Such exclusive claims by 'owners' to appropriate increasing shares of profits in incomes and to control the economy in order to increase their own wealth seem unjust, undemocratic and inefficient in the light of a long history of productivity and welfare gains from profit sharing and employee participation. These developments have further contributed to rising inequality, discontent and authoritarian populism in response to globalised capitalism, which has concentrated most of the benefits of growth and sales to a small minority of the rich, at the expense of lower-paid precarious workers and looming climate and environmental catastrophe. And the crisis of the COVID-19 coronavirus pandemic has exacerbated this situation. 

However, the output and income of the enterprise, and hence the residual surplus or profit, are generated by the employees using available capital and other "passive" inputs. Without their accumulated and often specific skills this could not be the case, so there is a strong equity argument for a general sharing of the surplus. Furthermore, worker motivation, participation, productivity and well-being are additional benefits of surplus sharing, which in turn would also improve the survival and viability prospects of new start-ups and mature firms. Productivity can also be raised at the expense of worker well-being in many other aspects of work organisation, such as worker autonomy and control over work or co-determination. Protection against exploitation requires not only a fair distribution of profits, but also real participation in democracy at work. 

So it can be argued that economic democracy contributes to social justice at work. Authors FitzRoy and Nolan in "Towards economic democracy and social justice: profit sharing, co-determination and employee ownership". Towards Economic Democracy and Social Justice: Profit Sharing, Co-Determination, and Employee Ownership) for Economic Democracy and Social Justice proposes an extension of co-determination, complemented by a radical, redistributive tax reform that would curb the exploitative power of capital-managed enterprises and employee buyouts. The Slovenian Institute for Economic Democracy has also recently drafted a bill that would facilitate the conversion of companies into employee stock ownership plans, similar to the US ESOP programme. 

If you are interested in learning more about the possibilities of setting up employee ownership schemes in Slovenia, we will be happy to answer any of your questions. Contact us at info@ekonomska-demokracija.si!