A REPLY TO RICHARD KROUSE
Dahl, Robert A.
Everyone concerned with the relation of forms of ownership to political equality owes a substantial debt to Richard W. Krouse for his lucid analysis. It invites one to deal with the issues...
...3. What is "private" and what is "social" or "public" depends on the system of controls: on who may do what with what and how...
...Ignoring authoritarian socialists whose ideal has been a central command economy and a one-party dictatorship over the state, even socialists of democratic persuasion and intentions have, to say the least, been quite divided...
...The Loose Formulation asserts that private ownership "is not as compatible as public or social ownership with democratic control of the enterprise...
...3 5. The most creative proposals for dealing with the controls and ownership or economic enterprises seem to me to be coming now from democratic socialists and others who are capable of transcending the older (and in my view mainly anachronistic) controversies...
...Although the two schemes differ substantially, both reflect a radical rethinking of the old issues of socialism, capitalism, and democracy...
...I particularly have in mind the recent proposals of the Swedish labor movement (LO) and Social Democratic party for a system of Wage-Earner Funds, an idea first presented in 1975 by the economist Rudolf Meidner and his colleagues in the Research Division of the Swedish Confederation of Labor and subsequently elaborated into a rather complex design, and a somewhat analagous solution advanced by the Danish Social Democratic party...
...and (B) economic enterprises could not be internally democratic unless they were socially or publicly owned...
...I To be sure, one might object that these firms are exceptional and as a general solution employee ownership is not very likely...
...Both schemes are intended to bring about profound changes in the ownership and control of larger firms, increase the supply of funds available for investment, strengthen incentives and productivity, and overcome existing limits on redistributing wealth and income set by the strong resistance of voters to further taxation...
...I do not assert that the Loose Formulation is invalid...
...In addition, I appreciate his scrupulous restatement of my own argument, particularly since the various pieces of it have been scattered over a number of different publications, which, in an unusual demonstration of scholarly responsibility and no little patience, he has undertaken to read...
...No solution to controlling enterprises will be satisfactory unless it provides for a satisfactory system of both internal and external controls...
...ON THIS MATTER, Krouse's argument is open to two possible interpretations, which might be called the Loose Formulation and the Strict Formulation...
...At some point in the process, an artichoke is no longer an artichoke, but 456 can we say precisely when...
...Consider two possibilities: (a*) private ownership is understood to mean that investors have a legal right to share in the profits of the firm but not the right to choose or control the decisions of the managers...
...Now Krouse might object that neither (a*) nor (b*) is consistent with what he means by private ownership...
...457 answered at the level of general discussions about socialism and capitalism or private and public ownership...
...2 2. Whether today this commitment requires democratic socialism obviously depends in part on the meaning of terms and also in part on how one solves a number of tough theoretical, technical, and empirical questions that have not been at all well explored by socialists, liberals, or anyone else...
...Because it would require a messier and more inconclusive discussion to evaluate the Loose than the Strict Formulation, and because Krouse's considered judgment appears to favor the Strict Formulation, I want to direct my response to the more clear-cut proposition...
...But if either (a) or (b) were untrue, then his conclusion would not follow...
...In my view these questions cannot be adequately I From Gerald Stourzh, Alexander Hamilton and the Idea of Republican Government (1970), quoted in J. G. A. Pocock, The Machiavellian Moment (1975), p. 534...
...However, given the number of employee-owned firms existing in the United States, I do not see how one could argue that (b*) is impossible...
...1. It is surely true, as Krouse says, that "a commitment to full individual equality of civil and political citizenship, when properly unpacked, requires a commitment not merely to formal equality of abstract right before the law but also to effective material equality of economic and social power...
...I want therefore to concentrate on his argument about the relation of forms of ownership to internal democracy within firms...
...I fear that only Loose Formulations, not Strict Formulations, will prove to be satisfactory, and Loose Formulations are necessarily quite messy and dependent on a number of contestable theoretical and practical judgments...
...He refers to "private ownership in anything like its present form—that is, private ownership of productive resources by a restricted social class," and again, "private ownership in the conventional sense...
...It invites one to deal with the issues with the greatest clarity one can bring to this difficult task and for that we should all be grateful...
...Even if (B) were shown to be dubious, it would be possible to defend (C) on other grounds...
...then it would follow (C) that a country could not be fully democratic unless enterprises were socially or publicly owned...
...I have simply tried to explain why I believe that the Strict Formulation, which holds that social or public ownership is a necessary condition for internal democracy in an economic enterprise, is unwarranted...
...The Strict Formulation implies that democratic control of enterprises is flatly impossible with private control...
...Imagine that the workers in each firm had complete authority to make all decisions about the firm, and that the rest of society had no effective control over the decisions...
...Instead, let me offer the following brief conclusions...
...Most political theorists from Aristotle onward, including Harrington, Locke, Montesquieu, and Rousseau, have so asserted, as have a good many American advocates of democracy from Noah Webster and Jefferson onward...
...The way Krouse qualifies the meaning of private property is crucial to his argument...
...And even the Loose Formulation entitles one to wonder whether social or public ownership is more likely than employee ownership to come about in the United States as a general solution...
...Now if one were simply to define private ownership to mean (a) the right to manage the enterprise (b) held by stockholders who exclude all employees except top management, then Krouse would, of course, be categorically correct...
...If, as many Swedes believe, the Swedish Model no longer works, it may be a good time not only for Swedes and Danes but also for Americans to give some serious consideration to these new proposals for dealing with old, difficult, and persisting problems...
...As I understand his argument, his conclusion as to the possibility of political equality finally depends on his conclusion as to economic enterprises...
...The greater the control over decisions that is exercised by groups inside the firm, say by workers, the more that firm is "private" vis-A-vis the rest of society...
...External controls may be exercised by local, regional, or national, even international, governments, by other economic units such as rival firms, suppliers, and buyers, and by markets...
...See, for example, Daniel Zwerdling, "Employee Ownership—How Well Is It Working?," Working Papers, May/June, 1979...
...q 3 I described these debates and the outcome years ago in "Workers' Control of Industry and the British Labour Party," American Political Sriense Review, October 1947...
...The Strict Formulation asserts that private ownership "is fundamentally incompatible with such control...
...Whatever the nominal form of ownership, the firm would be essentially "private" in relation to everyone outside it...
...It would not matter much whether ownership were nominally in the hands of the workers, society, or the government...
...But if neither is private ownership, would he insist that both are instances of social or public ownership...
...But since Krouse has failed to establish (B), the conclusion does not follow...
...Or (C) might also be given a Loose Formulation, asserting, for example, that in the United States at present a greater area of social or public ownership would facilitate the democratic process...
...As Richard Krouse rightly points out, different forms of ownership bear on the question of political equality in at least two ways: within economic enterprises, and in the political society generally...
...Indeed, Webster asserted the view, which was far from eccentric in his time, that "an equality of property, with a necessity of alienation, constantly operating to destroy combinations of powerful families, is the very soul of a republic...
...I am rather inclined to believe that as Loose Formulations, (B) and (C) could be justified, though this is hardly the place to explore the issues...
...b*) private ownership is understood to mean, as now, that owners have a legal right to control the firm but the firm is owned exclusively by the people who work in it, each person having one vote (no matter what the distribution of shares may be...
...458...
...Krouse might also object that neither (a*) nor (b*) is possible...
...The Loose Formulation implies that democratic control might be possible with private ownership but would be more difficult or less likely than with public or social ownership...
...in some reformed but recognizably similar condition...
...For example, after a series of fascinating debates the British Labour party by 1935 had pretty decisively rejected the ideas of workers' control in favor or parliamentary and bureaucratic controls, which at the time looked to the leadership to be more "democratic...
...Lawyers are fond of pointing out that private property is not a single right but a bundle of rights that in principle could be peeled off one by one like the leaves of an artichoke...
...To sum up, if it were true that (A) a country could not be fully democratic in a political sense unless its economic enterprises were internally democratic...
...But this is to abandon the Strict Formulation in favor of the Loose Formulation...
...My argument does not imply that employee ownership, or any other modified form of private ownership, is more favorable to internal democracy within economic enterprises than social or public ownership...
...The extent to which Krouse and I differ, where we differ at all, turns partly on the meaning of the terms private, social, and public ownership...
...II IT WOULD STILL BE POSSIBLE to defend (B) as a Loose Formulation of likelihoods, though as I suggested earlier, a satisfactory defense would have to be lengthy, complex, and less conclusive than I believe Krouse intended...
...4. Because of fears that workers' control might lead to the triumph of the "private" interests of the workers in an enterprise over social or public interests, or "the interests of the working class as a whole," socialists have never been of one of mind about whether to aim for internal democracy in economic enterprises, let alone how...
Vol. 27 • September 1980 • No. 4
