Tuesday 21. September 2021
#216 - June 2018

Economic democracy and plural economy 2.0

Does democracy have a place in today’s economy, and what specifically does that mean? A brief explanation of the idea and current status of economic democracy.

Where labour is considered a commodity it endangers the dignity of people, ultimately jeopardising human and personal self-fulfilment. A life lived with dignity includes decent work, fair pay and good working conditions. “Existential insecurity, work-related psychological and physical suffering and being controlled by others” are counter to this, yet they represent the reality of the lives of millions of Europeans and the majority of the populations of the developing world.


If workers are not to be dismissed as tools, the safeguarding of their dignity includes having a say in their working environment and the economy. This is what is covered by the term economic democracy. Fritz Vilmar has summed it up as follows: “Economic democracy is the embodiment of all economic structures and processes by means of which autocratic decision-making is superseded by a democratic system that is legitimised by the participation of those economically affected and/or the democratic state.”


In the models of economic democracy, workers are involved in the economic structures, through bodies of information and consultation of workers, through representations in the decision making bodies and through trade union representation. Workers are kept informed, consulted and allowed to participate. Economic democracy is not limited to corporate level, however, but includes the whole of the economy and working environment.  


Common Good is always at its heart. In addition to the private economy, a fundamental role is played by State - as a regulator but also as an operator and provider of goods and services - , cooperatives and other forms of production. This echoes the Encyclical Laudato sí, in which Pope Francis says: “In order to continue providing employment, it is imperative to promote an economy which favours productive diversity and business creativity.


A rich history



Proposals to extend democratic principles to the economy have a long, wide-ranging tradition in Europe.


For example, a resolution of the 1928 congress of the ADGB, the German association of trade unions, referred expressly to “Making economic democracy a reality”, developing the concept within German-speaking countries. A little later, the term was used in France, in 1944, in the “Programme of the National Council of the Resistance”, which called for the “implementation of [...] an economic democracy”, which “equates to the removal of the great economic and financial feudalism in the economy”.


During the post-war years, demands were made in western Europe for social participation through the establishment of welfare States, each implemented differently according to its country’s traditions. From co-determination in the coal and steel industry to social dialogue and social partnership, various forms of participation by workers and trade unions were institutionalised, many of which formed the foundations of the systems that exist to this day. Many forms of the public and social economy, whether state or cooperative initiatives, were also institutionalised at this stage.


However, rights to information, consultation and participation or, to put it more fundamentally, to general social participation, remained limited everywhere. Nowhere do they fully incorporate the “macro levels of the national and European economies”, sectoral, company and shop floor levels. . With regard to the latter levels, the European Trade Union Confederation (ETUC) and a public appeal by trade unionists and intellectuals have very recently advanced proposals on the subject.


The new economic democracy


Overall, economic democracy represents something as yet unfulfilled, a regulative idea, which in recent times has frequently re-entered the debate, referred to as “the new economic democracy”. Many of the more recent proposals relating to economic democracy make reference to Ota Šik, an protagonist in the Prague Spring.


Karl Polanyi has brilliantly shown how, considering them as commodities, the market society leads to the destruction of human beings and nature. He sets out four economic principles covering the production and distribution of goods and services: "1. The market 2. Distribution 3. Reciprocity and 4. Householding". This makes it possible to understand that the economy is plural, these four principles being able to participate each one, in his way, in

securing livelihoods of the individuals. The economy tends to totalitarianism when it is reduced to a single principle.


Polanyi’s approach, further developed today by thinkers such Jean-Louis Laville and others, once again gives visibility to broad areas of the production of goods and services that were left aside by orthodox economic theories, such as aspects of the social economy. The same applies to householding, referring in particular to all goods and services produced in the family home.


In the age of global financial markets and digital day labourers, it is the “total market” that dominates. For example, a few IT companies have developed in only a few years as far as the Dow Jones top ten. Most of them do not know any form of workers participation. At the same time, non-profit initiatives offering similar products, such as open source softwares, are often marginalized and eliminated.


Social regulation by the European Union and its member states to achieve a plural economy is needed. The position of trade unions and civil and social organisations must be strengthened. Otherwise, without social organisations, there is a risk of social cohesion collapsing. Above all, the EU, and who else, is in a position to win back the sovereignty it has lost over IT businesses and financial markets and set the frame for new forms of economic democracy.


Thomas Miessen

Responsible of European Trade Union Action at the Service of International and European Relations of the Confederation of Christian Trade Unions in Belgium (CSC)


Translated from the original text in German


The views expressed in europeinfos are those of the authors and do not necessarily represent the position of COMECE and the Jesuit European Social Centre.


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Note: The views expressed in europeinfos are those of the authors and do not necessarily represent the position of the Jesuit European Office and COMECE.