Economic Democracy
Howard, Robert
Books: DEMOCRACY IS THE CURE WHEN it comes to American economic policy, the marketplace of ideas is anything but free. This explains in part why the great economic debate promised for this...
...This goal of restraining corporate power through a new kind of government activism does not necessarily mean that economic democracy would extend the power of the state for its own sake...
...In an election year that has done so much to undermine both their effort is welcome...
...Carnoy and Shearer are not advocates of a centralized state socialism...
...They oppose widespread nationalization, for example, on the grounds that too much government ownership could become an obstacle to democratic decision-making...
...Crosland, "a society in which ownership is thoroughly mixed up" with the federal government, unions, cities and states, groups of workers and consumers, pension funds, foundations, and, of course, owners of private capital all taking part...
...Taking democracy seriously in the new economic era requires extending it to the workplace, the union hall, the boardroom...
...Whether the topic is the budget, tax cuts, industrial policy, or the "reindustrialization of America," the major candidates have displayed a predictable reliance on the same old set of unquestioned economic assumptions...
...The challenge of a government committed to economic democracy is to fashion qualitatively new mechanisms of public intervention, ones that "restrict corporate power instead of aiding and abetting it " For example, such a government might still decide to help out Chrysler, but it would use federal aid as a tool to push the corporation toward greater democratization—perhaps by demanding an equity position in the firm, by appointing public representatives to the board of directors, or even by coordinating corporate planning so that Chrysler's production meets urgent national priorities such as energy efficiency or mass transit...
...Likewise, democratic discussion and debate is the only stable foundation for the new social and political consensus about economic goals...
...Even the social welfare programs specifically designed to help the poor are carried out within well defined limits...
...But to assume that the market rationally allocates resources is to ignore the considerable evidence of how the massive concentration of corporate wealth distorts the investment process...
...However, while Carnoy and Shearer accept the necessity of an activist government, they are equally critical of what passes for "intervention" in the liberal welfare state...
...But it works, largely due to the authors' informed pragmatism, their refreshing openness to the ideas and policy experiments of other societies (particularly Sweden), and their sensitivity to the opportunities for social change as well as the obstacles against it embodied in America's unique political history...
...Instead, the authors envision a policy of "strategic intervention" in which a public holding company would acquire controlling interest in certain major firms in key sectors of the economy...
...economy," the authors write, "is faced with a set of economic problems that appear to be unsolvable by corporate capitalist development...
...The ultimate goal would be, in the words of the late British socialist C. A.R...
...They analyze mechanisms for limiting corporate power, explore a variety of alternative economic policies and institutions, and set out a scenario for a new social movement of the eighties which they claim can mobilize a majority ECONOMIC DEMOCRACY THE CHALLENGE OF THE '80'S Martin Carnoy and Derek Shearer M. E. Sharpe, $15, 436 pp...
...By "economic democracy," Carnoy and Shearer mean something very different from the reigning conservative and liberal models of how our economy works...
...Without this any long-range revitalization of the American economy will be impossible...
...Commonweal: 666...
...The essence of such transformation is economic democracy—the transfer of economic decision-making from the few to the many...
...The Republican party's tax cut plan, for example, would not only have regressive distributional effects...
...Reagan wants to "unleash" the private sector by radically limiting government...
...Two absolutely crucial priorities would be a public energy corporation and a public bank...
...Economic Democracy by Martin Carnoy and Derek Shearer speaks to this double failure of economic ideas and political leadership...
...Economic Democracy is an attempt to imagine an alternative political reality...
...They also warn against the dangers of "lemon socialism"—endless government subsidy of chronically ailing firms or industries...
...The authors' faith in the continuing relevance of our democratic and egalitarian traditions is a testament to the tenacious promise of politics and social change...
...If changes are to be made, then the way the economy is governed and the, way things are produced will have to be changed as well...
...The latter would direct badly needed capital to al21 November 1980: 665 tentative institutions like worker cooperatives, appropriate technology firms, or state and municipal low-cost housing agencies...
...Its thesis is that the multiple problems confronting our economy—inflation, unemployment, poverty, the energy crisis, work and its discontents—are built into the very structure of an economy shaped by the decisions of, at most, a few hundred giant private banks and corporations...
...Most government policies from fiscal and monetary policy to the recent bail-out of the Chrysler Corporation end up serving the very corporate interests that dominate the private sector...
...With intelligence and ambition, Carnoy and Shearer have sketched a detailed portrait of what a more democratic and egalitarian society would look like, how it would function, who would benefit from it...
...A program of economic democracy, by contrast, would subordinate tax policy to a comprehensive plan of public investment that would benefit taxpayers directly rather than trickling scarce resources through a wasteful "corporate filter...
...It is an immense—one is tempted to say "impossible"—project...
...The new conservative economics embraced by Mr...
...Public enterprises at the "commanding heights" of the economy would serve as indicators for the economy as a whole and testing grounds for new forms of democratic participation and production for social need...
...Their pronouncements and their programs are strikingly consistent in their systematic evasion of the basic realities of economic power in the United States today...
...In such a pluralist society, conflict over the ends and means of economic activity certainly wouldn't disappear...
...Carnoy and Shearer's central accomplishment is to pose what may be the most difficult political question of the decades to come: how to reconcile the democratic values of American society with the necessity of more comprehensive economic planning imposed by changing economic circumstances...
...The U.S...
...Robert Howard of American citizens behind their proposals for economic reform...
...The former would serve as a yardstick for evaluating the production costs, pricing policies, and investment decisions of the major oil companies and at long last would provide the federal government with an effective vehicle for implementing a national energy policy...
...But the structure of the economy would prevent the narrow interests of any single social group from predominating...
...it would increase corporate profits without guaranteeing that they be channeled into socially useful investment...
...This explains in part why the great economic debate promised for this election year has been such a dismal failure...
Vol. 107 • November 1980 • No. 21
