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Firms as Political Entities: Saving Democracy through Economic Bicameralism
When people go to work, they cease to be citizens. At their desks they are transformed into employees, subordinate to the hierarchy of the workplace. The degree of their sense of voicelessness may vary from employer to employer, but it is real and growing, inflamed by populist propaganda that ridicules democracy as weak and ineffective amid global capitalism. At the same time, corporations continue untouched and even unremarked as a major source of the problem. Relying on 'economic bicameralism' to consider firms as political entities, this book sheds new light on the institutions of industrial relations that have marked the twentieth century, and argues that it is time to recognize that firms are a peculiar institution that must be properly organized in order to unshackle workers' motivation and creativity, and begin nurturing democracy again. For more information, please visit the accompanying www.firmsaspoliticalentities.net.
223 pages, Kindle Edition
First published October 25, 2017
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Displaying 1 - 3 of 3 reviews
July 13, 2023
At a certain point, most commentary on Big Tech starts reaching for historical precedents. There's something odd about these comparisons, though: the more powerful the Apples, Googles, and Amazons of the world become, the further back in time we reach for reference points. Are Sundar Pichai and Tim Cook robber barons? Feudal lords? Emperors? A recent NYT article looked to Mesopotamia to contextualize AI, and since Silicon Valley's inception, books like Microserfs and The Coming of Neo-Feudalism: A Warning to the Global Middle Class, have argued that the labor conditions in the tech industry, and the kind of society it engenders globally, are essentially medieval.
Whether or not you think that's are a stretch, it's hard to argue that there isn't some historical deja vu at play when Musk and Zuckerberg are preparing to fistfight, joining a long heritage of duels and jousts, and when Uber is literally invading cities like Portland with its cars. Contract work resembles the plight of borderland serfs, ping-ponging between companies as margins grow thinner; tech giants, preaching AI salvation, claim their tithes in the form of tax breaks. It all does seem brutal and colorful and grim in a way that suggests there are patterns of human organization that repeat themselves.
It's easy to push these parallels too far. Is all this really the same? What do we gain by equating eras wholesale? These sorts of bird's-eye historical analogies can be hit or miss, but in Firms as Political Entities, Isabelle Ferreras marches purposely across the centuries to the Magna Carta, and comes back with a gem of an idea.
Her basic argument goes like this: it took thousands of years to make countries (and polities generally) more democratic, and the single biggest step in that process was the introduction of the bicameral legislature, which provided a check on the aristocracy.* In 2023, firms are nation-states unto themselves — they're global political entities, almost nomad nations — yet they're still structured like monarchies, with a unicameral court of shareholders calling the shots. If companies aren't purely economic actors, but are also social institutions, then the natural conclusion is that large firms should be democratized.
Here's how that would work. Companies would now have a built-in parliament, and any major decision would have to pass in both of its chambers. On one hand, you'd have the capital investors, or the shareholders. But now you'd also have a body for the labor investors, whom we currently call employees. There would be issues to troubleshoot, for sure, and it might seem like it's an insufficiently radical solution to the problems we're facing, yet it would be a significant change. Consider the lead-up to the 2008 financial crisis, when many low-rung hires at banks knew that the people they were giving loans wouldn't be able to pay them back. What would have happened if they had had a vote in the company, like shareholders do? Having a parliament would also even the playing field for negotiating labor contracts, make business practices more transparent, and force companies to respond to climate concerns.
It might even slow the corporate capture of government. Right now, we have two coexisting systems: our politics are ostensibly democratic, but our economics are feudal. Because of lobbying and the revolving door through which politicians cash out when their term ends, the lines blur and the latter regime overwhelms the former. Setting up democratic mechanisms in Big Tech, Pharma, and the rest could dent the impunity with which they tamper in mainstream politics.
This might be a long-shot idea, but I appreciated how Ferreras fashioned it into a tangible goal to work towards. While the book is pretty dry, it's worth reading for the examples in the footnotes (e.g. an American garment factory in the 1920s that declared itself a republic and had a parliament for a few years). The FAQ is also great, since it answers practical questions about how this could function. If nothing else, reading this made me question things I took for granted about what rights you should have as an employee — if democracy was a worthy ideal in government, why wouldn't it make sense for economic institutions, too?
Whether or not you think that's are a stretch, it's hard to argue that there isn't some historical deja vu at play when Musk and Zuckerberg are preparing to fistfight, joining a long heritage of duels and jousts, and when Uber is literally invading cities like Portland with its cars. Contract work resembles the plight of borderland serfs, ping-ponging between companies as margins grow thinner; tech giants, preaching AI salvation, claim their tithes in the form of tax breaks. It all does seem brutal and colorful and grim in a way that suggests there are patterns of human organization that repeat themselves.
It's easy to push these parallels too far. Is all this really the same? What do we gain by equating eras wholesale? These sorts of bird's-eye historical analogies can be hit or miss, but in Firms as Political Entities, Isabelle Ferreras marches purposely across the centuries to the Magna Carta, and comes back with a gem of an idea.
Her basic argument goes like this: it took thousands of years to make countries (and polities generally) more democratic, and the single biggest step in that process was the introduction of the bicameral legislature, which provided a check on the aristocracy.* In 2023, firms are nation-states unto themselves — they're global political entities, almost nomad nations — yet they're still structured like monarchies, with a unicameral court of shareholders calling the shots. If companies aren't purely economic actors, but are also social institutions, then the natural conclusion is that large firms should be democratized.
Here's how that would work. Companies would now have a built-in parliament, and any major decision would have to pass in both of its chambers. On one hand, you'd have the capital investors, or the shareholders. But now you'd also have a body for the labor investors, whom we currently call employees. There would be issues to troubleshoot, for sure, and it might seem like it's an insufficiently radical solution to the problems we're facing, yet it would be a significant change. Consider the lead-up to the 2008 financial crisis, when many low-rung hires at banks knew that the people they were giving loans wouldn't be able to pay them back. What would have happened if they had had a vote in the company, like shareholders do? Having a parliament would also even the playing field for negotiating labor contracts, make business practices more transparent, and force companies to respond to climate concerns.
It might even slow the corporate capture of government. Right now, we have two coexisting systems: our politics are ostensibly democratic, but our economics are feudal. Because of lobbying and the revolving door through which politicians cash out when their term ends, the lines blur and the latter regime overwhelms the former. Setting up democratic mechanisms in Big Tech, Pharma, and the rest could dent the impunity with which they tamper in mainstream politics.
This might be a long-shot idea, but I appreciated how Ferreras fashioned it into a tangible goal to work towards. While the book is pretty dry, it's worth reading for the examples in the footnotes (e.g. an American garment factory in the 1920s that declared itself a republic and had a parliament for a few years). The FAQ is also great, since it answers practical questions about how this could function. If nothing else, reading this made me question things I took for granted about what rights you should have as an employee — if democracy was a worthy ideal in government, why wouldn't it make sense for economic institutions, too?
March 20, 2020
Excellent development of a political theory of the firm. Great reading. Goes well with Tracy Coker's A Worker's Worth.
April 25, 2023
Interesting ideas but highly repetitive
Displaying 1 - 3 of 3 reviews