"Economic democracy" - says Richard Wolff, professor of economics emeritus at the University of Massachusetts, is the solution. The workers themselves collectively operate their enterprises would immediately redirect enterprise profits in different ways, with very different social consequences. For example, according the bureau of labour statistics, during 2010, the pay for average workers rose 2% while the pay for CEOs rose 23%. Workers who collectively directed their own enterprises would distribute pay increases very differently and far less unequally. Likewise, to take another example, self-directing workers would allocate their enterprises' profits to the government (that is, pay taxes) but demand in return the sorts of mass-focused social programmes that the current CEOs and boards of directors want government to cut. Democratic enterprises would have to work out collaborations and agreements with democratically run residential units (cities, states, etc) where their decisions impact one another.
Wolff wants to create a different kind of capitalism. Workers,of course, can organise themselves and run production without bosses and employers telling them what to do and ordering them around but Wolff is advocating a democratic self-managed market economy, an unrealistic blueprint which would never work. He envisages that in a given factory, the workers would elect a council which would decide on the level of wages, the price of the product, the amount of profits to be re-invested, etc - a completely impractical idea of direct workers' control of a capitalist economy.
What would have happened if, for example, the General Motors car factories are taken over by the workers who worked in them and if we assume a situation where theoretically, the wage labour/capital relationship operating at General Motors would have altered and become a kind of workers’ cooperative, with all the affairs of this car production unit under the control of the workers.
The market would still be operating and these workers would be selling the cars which they put together in the factories and the sale of these cars would give them an income which would enable them to live, to support their families, to buy the food, to pay the rent and the mortgage and all the other costs involved in living in a market system. They would have a lot of other costs as well. GM cars are not simply made in GM car factories. In fact, in the main, these factories are only the places of final assembly. Of all the labour required for the production of a GM are only a small proportion is supplied in these factories where the final assembly takes place. General Motors would have hundreds of sub-contractors supplying components. (You only have to think of the materials in cars—various metals such as copper, aluminium and steel, glass, paints, plastics, rubber, to realise that the different kinds of labour required for the production of a car are dispersed throughout a world wide network of productive links. You’ve got copper mining in Zambia, the mining of iron ore in Australia, the plastics pre-suppose the world oil industry, the paints, the world chemical industry, rubber from Malaysia, allocations of energy and world transport.) Car production is social production and by that we mean production organised on a world scale.
What this means for these workers in America who have taken over factories where final assembly takes place is that they are the sellers of cars but they also constitute a massive market, a market for all the worked-up materials and components which they have to buy in. These workers will be in competition with other car manufacturers—Fiat in Italy — Volkswagen in Germany — Nissan in Japan — Volvo in Sweden — Renault in France — the British, the Korean, the Malaysian car industries... So in order to maintain their livelihoods they will be in intense competition with all these other companies, trying to sell as many cars as possible and trying to capture a bigger share of the market at the expense of the capitalists and workers in other sections of the world car industry. They would have to maintain rigorous efficiency in line with the efficiency of these other companies. In any situation where their costs were disproportionately high resulting in relatively higher prices they would lose sales and there would have to economise and perhaps some workers would have to go. Where there was overproduction in relation to market capacity again there would have to be cutbacks. They could not go on incurring the accumulating costs of producing cars which they could not sell. It would then be a matter of them democratically deciding which of them is going to be out of a job.
In the circumstances where these workers have been able to control a company like GM (or any other )— and succeeded in managing for their own gain as distinct from the previous owners — they would be responding to the same economic pressures faced by the previous capitalist board of directors. They would be acting as the functionaries of capital; different personalities maybe but exactly the same economic role. We have described the mechanisms by which the capitalist structure of production maintains itself as an exclusive capitalist structure. Goods are produced throughout a world wide division of labour organised in different production units. The process through which this structure maintains itself as an exclusively capitalist structure is a process of constant economic selection. Whether or not a particular production unit can continue to exist as part of the structure is constantly tested and is determined by the economic viability of the unit. In every day terms this is matter of income against expenditure. If income exceeds expenditure then the unit can continue to form a part of the whole structure. Conversely, if expenditure exceeds income then it must disappear from the scene. "Economic democracy" enterprises would remain subject to the same competitive pressures, to keep costs down and to to maximise the difference between sales revenue and costs. The particular ways in which a production unit is organised makes no difference whatsoever to this process of economic selection. It can be the usual capitalist company, it can be a so-called workers cooperative under workers’ control. The decision-making procedures can be authoritarian or "democratic" as Robert Wolff would prefer, but it makes no difference to the fact that whatever the production unit is, in order to exist it must be economically viable. This is the process of economic selection by which the present structure of production is maintained as an exclusively capitalist structure. Capitalism is a system of production, value accumulation can as easily be managed by workers as by private capitalists or state bureaucrats.
Socialism is not just concerned with emancipating workers as workers (i.e. wealth-producers) but as human beings (i.e. as men and women). Socialism aims not to establish "workers control" but the abolition of all classes including the working class. In socialist society there would simply be people, free and equal men and women forming a classless community based on the common ownership and democratic control of the means of production by and in the interest of the whole people. To make decisions and exercise democratic control members of society need to set in place procedures which allow every member of society the chance to have an equal say in the way things are run, not simply at the work-place but in neighbourhoods and regions. A society where the means of production belong to everybody and run by democratic councils, that's socialism.
Theoretical speculations such as Professor Wolff's which relate to wages, prices, profits and taxes are ghosts from the past, as absurdly outdated as the quibbles about how many angels could dance on the point of a needle. Workers self-management of a market economy in the real world means workers self-exploitation.