Book Review - "The 99% Economy: How Democratic Socialism Can Overcome the Crisis of Capitalism"' by Paul Adler - Australian Fabians

Max Odgen Reviews "The 99% Economy"


23 February 2020
Economy and Tax
Book Review

My old colleague Paul Adler, from USC, recently sent me his latest book, “The 99% Economy: How Democratic Socialism Can Overcome the Crisis of Capitalism”.

It is a good attempt at trying to find ways of transforming the US capitalist economy into a democratic socialist economy & society. I am often critical of people who undertake a critique of our society, which can be valuable, but it often tells us things we already know, only in more detail. There is little attempt at the more difficult task of HOW do we change things. Paul’s book is mainly about the latter, so it is most welcome.

His main theme is examining the way modern capitalist management operates, especially the high road corporations, and draws lessons as to how these processes would work well in a democratic socialist society. It is the classic case of the new growing out of the old, by prefiguring the new, which Marx and others believed would happen. Paul has been a leading scholar of management for all his academic life, and highly regarded, so he knows management systems well.

He discusses the complex systems required to manage modern, large corporations, and the incredible sophistication, knowledge, and co-operation required. How the most successful of them usually involve employees and sometimes their unions, in consultation and decision making, to get optimum results. He examples several large companies including IBM, Toyota, NUUMI, and especially Kaiser Permanente, all of which he studied. He titles this “The Growing Interdependence of Production”, which challenges traditional capitalist top down decision making.

As an example of the complexity and sophistication he sites Walmart, while not a high road company, having to co-ordinate 11,700 stores, 4 million products, 100,000 suppliers and 2.3 million employees, requires an amazing level of organisation, and social interaction, which he argues can be just as well undertaken within a democratic socialist economy.

Kaiser Permanente is the largest health insurance company in the US, established in ’45, with the most hospitals, clinics, doctors, nurses, and employees of any company. It is without doubt the most successful and sustained management/union process in the US. While working for the AFL-CIO in ’96, I had the opportunity sit in on one of the early meetings of the unions to discuss their response to KP, which took some time to work out. It was agreed that KP and the unions would jointly appoint the key consultant, who turned out to be Tom Schneider, whom many of us know, because he had an office here for several years. My brief encounters with KP since suggest that SEIU have been outstanding in the leadership they provided to the other unions.

Paul explains how KP solved some difficult problems with creativity and innovation. For example, as we have experienced here when trying to improve management in the health system, doctors have often proved a stumbling block, as they refuse to be part of a collective, insisting on their independence to make decisions. However, patiently over time, they worked out a process whereby doctors could have their independence as well as working closely with all other groups, which has continued to be refined, is now standard and has improved performance.

He references research on how the morale and attitude of KP employees has improved enormously, quoting a number of employees on how their new empowered daily work regime has improved their lives both at work and at home. One saying how he now participates in home duties far more than previously, when he used to go home put his feet up, have several beers, and wait for dinner to be ready.

This experience reminds me of the bundle of letters from spouses and partners, shop steward, the late Tony Mealor at ICI Botany, received, thanking him and the union, for the major changes they made to work systems and almost eliminating overtime, which had improved many relationships. I have often thought that the women’s movement has not paid enough attention to the issue of empowering workers in their workplace, as an important element of their liberation and improving the behaviour of men.

Mondragon gets a mention as a more advanced stage where as co-op the workers own the business, and praises the US Steel Workers Union for it’s initiative in working closely with Mondragon, to constantly survey possible US companies which might be taken into co-operative ownership. Something our unions should be doing.

Paul examines the Roosevelt New Deal, and how the crises of the depression, and then the war, led to union involvement in important decisions and consultation both at the highest level of government, business, and the workplace, and particularly an enormous increase in employee training. Suggesting there is a precedent for the radical changes he is suggesting. However business organisations organised immediately after the war to ensure that such union and worker involvement did not become the norm.

He outlines how there will be three circles of varying forms of ownership starting with government needing to own important social services, with great involvement of unions and employees in their management, including large corporations within finance and other sectors at the commanding heights of the economy. The second circle will be co-operatives under democratic ownership and control. At the outer, third circle, small and local business will largely continue to operate as normal, but with new government guidelines which facilitate their importance and service to the local community, as long as they find markets for their products and services.

Inevitably the big question lurking over the many innovative ideas is, how do we wrest ownership from the largest corporations, as they will fight with everything they have to maintain their privileges and power. His last chapter dealing with these very difficult issues is titled , Getting There, where he sites the possibilities – An economic crisis where there is a preparedness by the community to fight for a new democratic socialist agenda, by insisting government takeover failing businesses, and intervene vastly more into the economy which would require a rather radical government. A climate change crisis so bad that only radical government intervention is capable of having an impact. A more gradualist, social democratic approach, which he thinks would more likely lead to a political crisis, than an economic crisis.

In any event he calls for organisation in politics, schools, workplaces, and local communities, as a prelude and requirement for whichever form of crisis develops, which is where we nearly always end up in looking for social change, - mass mobilisation. Noting polls and support for Bernie Sanders, far more people than ever, especially the young, are losing faith in capitalism and business, so there maybe better grounds for mass mobilisation than previously. In this case taking advantage of, and developing the changes already occurring within current capitalism.

Paul mentions the experience of the union’s Meidner Plan in Sweden, whereby it was proposed that companies over a certain size would be required to pay twenty percent of their profit each year into an industry wide fund to be managed by a worker/union board, which would eventually lead to them being able to own the companies. This plan was being widely debated, and supported by unionists during my first Swedish visit in ’78. It was eventually dropped by the Social Democratic Party, under enormous opposition from business, and because they saw it as too radical.

I think Paul should have included a chapter/analysis of the potential for the now massive worker funds within superannuation and pension funds. There needs to be far more thought given to the role of these funds around the world, as they are now the major source of investment for much of business. For about twenty years there have been regular conferences examining the potential role of these worker funds, in building a better world. Many of these with strong union influence, are refusing to invest in anything which will exacerbate climate damage, increasingly require proper worker/union rights, and anti-discrimination policies before providing investment funds. An example of a more pro-active approach would be to get a funds, to endorse a set of principles outlining human centred work and management systems, that they want to see in the companies in which they invest.

Far more attention needs to be paid to the role of these funds, in influencing them to use this vast wealth for the benefit of their members; not only economic, but their broader health and wellbeing, as exemplified in reversing climate change. In other words, that they become far more pro-active in preventing some things happening. In the kinds of crisis Paul suggests, the role of superannuation and pension funds could be critical partners for all the other organisations attempting fundamental change.

The 99% Economy provides some interesting and innovative ideas for changing our world, but it will be a very tough battle, and a long haul. A revolution in countries like the US and Australia is not only extremely unlikely, but the outcomes of many revolutions during the 20th. century, suggests they are unlikely to deliver the best outcomes.

Taking many of Paul’s suggestions, aligning them with a major influence in the direction of worker capital, along with mass mobilisation, which is at the core, then it may be possible to make significant inroads into capitalist hegemony and towards some form of democratic socialism.

It is well worth a read because it poses some new ideas, which is always a good experience.

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