Jonathan Culbreath on February 14, 2022
Florida Sen. Marco Rubio has been on the front lines of the movement to form a “working-class conservatism,” after former President Donald Trump provided the needed stimulus with his two presidential campaigns.
The latest development from Rubio is the Teamwork for Employees and Managers (TEAM) Act, which he has proposed together with Rep. Jim Banks of Indiana. The act proposes to legalize the voluntary creation of “employee involvement organizations,” and the inclusion of non-voting worker representatives on corporate management boards.
From the standpoint of working-class interests, this is certainly a step in the right direction for conservatives. Any gesture towards giving workers a real voice in the governance of America’s businesses is to be welcomed and applauded. As Oren Cass has noted, this move indicates a real shift in the GOP coalition away from the old “neoliberal” ideology of shareholder primacy, which posited that shareholders make the primary contribution to business development — leaving out the crucial contribution made by workers.
Yet the TEAM Act suffers from a few significant drawbacks, which are worth taking into consideration for the future development of a complete and coherent working-class political program.
The first major drawback is that the worker representative who is to be elected by employees themselves to sit on the company board of governors is a non-voting member. While it is obviously a good idea to have workers represented on the board, it is difficult to understand the rationale for leaving these representatives without voting power. This stands in contrast to traditional “co-determination” arrangements, such as those in Germany, where workers are required by law to have voting power on supervisory boards.
One may reasonably ask, along with more Left-leaning commentators like Matt Bruenig of the People’s Policy Project, what exactly is the purpose of such an arrangement? What precisely is it meant to accomplish for working-class bargaining power?
Lacking the power of voting, the inclusion of workers on corporate boards bears the risk of appearing to be a mere symbolic gesture, a form of “lip service” to working-class power, without actually creating an institutional arrangement which gives workers such power in a concrete way. This would seem to be a rather obvious oversight, which a truly labor-friendly political program should seek to remedy as soon as possible.
In the German system, it has been empirically shown that co-determination, which means voting power for worker representatives, significantly increases bargaining power for labor. This has resulted in a more equitable distribution of resources within the firm, away from the old model of shareholder primacy and towards the recognition of the role of other stakeholders, especially workers.
Some studies have even shown a small but positive effect of co-determination on the productivity of German firms. At the very least, there is little risk of co-determination affecting productivity adversely, despite its negative effects on shareholder returns.
It is crucial to remember that these concrete effects are directly related to Germany’s refusal to give worker representatives a merely consultative role, rather than actual voting power. Through their voting power, German workers can concretely affect the structure and distribution of a firm’s resources. The TEAM Act recently published by Rubio and Banks, although it appears to make a gesture towards the German system of codetermination, risks falling short of its stated pro-labor goals if it does not actually give workers a concrete form of power within the firm.
A second drawback of the TEAM Act is that both the creation of “employee involvement organizations” (EIOs) and the election of worker representatives to a seat on the board are entirely voluntary, on the part of both employers and employees. Of course, this feature of the bill might initially appeal to the very American penchant for voluntary association: shouldn’t people be free to organize as they like? Indeed, isn’t this good for workers?
However, the problem with the TEAM Act is that the EIOs may be dissolved just as easily and voluntarily as they may be established, and furthermore, they may be dissolved not only by the employees themselves, but by employers.
To be sure, Rubio and Banks lay out certain conditions under which employers may choose to dissolve an EIO within their company, but it turns out that these conditions are rather thin. In section 4 of the bill, these conditions are laid out as they pertain to large companies in particular. To quote from Rubio and Banks’ own two-page summary of the bill, “large employers may only dissolve the EIO based on the independent business judgment of the board of directors or substantial equivalent.”
There are two problems with this. First of all, most obviously, the “independent business judgment of the board of directors” could, in theory, exclude the judgment of the worker representatives themselves, since they play merely a consultative role and exercise no voting power. This just seems like too easy an escape-route for shareholder-appointed managers to take around the interests of workers.
Secondly, it is interesting again to compare this law to the German system, where the formation of worker councils and the inclusion of worker representatives on supervisory boards is compulsory, and not voluntary. In other words, workers’ interests have the direct protection of law, rather than the simple provision of an option to form an EIO — which could be dissolved relatively easily by the “independent business judgment of the board of directors.”
The system of codetermination bears a significant resemblance to the traditional system of interest-representation known as corporatism. A commonly cited definition of corporatism, from the scholar Philip Schmitter, is as follows: “a system of interest representation in which the constituent units are organized into a limited number of singular, compulsory, noncompetitive, hierarchically ordered and functionally differentiated categories, recognized or licensed (if not created) by the state and granted a deliberate representational monopoly within their respective categories in exchange for observing certain controls on their selection of leaders and articulation of demands and supports.”
As Gladden Pappin has outlined in an article at American Affairs, the benefits of such a system stem precisely from its compulsory aspect, among other things. For one thing, to mandate by law that certain defined interests should directly participate in the governance of American companies has the obvious benefit of circumventing the power of lobbyists, who currently exercise a disproportionate power over the public sphere when compared to employee representation.
A similar observation could be made about the internal governance of American firms themselves. To reduce worker representation to a merely voluntary affair within existing institutions, no matter how guided by rules and procedures — not to mention leaving workers without voting power — still leaves open the possibility that corporate managers who do have voting power will be influenced by their ties with company shareholders.
Real worker power requires, by contrast, the mandate of law and the ability to vote — short of the other alternative, which (as the Canadian trucker convoy is currently showing the world) could turn out to be much more chaotic and disruptive.
A truly committed and coherent working-class conservatism will need to take these considerations into account. Perhaps a more corporatist arrangement would be just the thing America needs to reorient its institutions towards a more labor-friendly or populist political framework.
Jonathan Culbreath is an independent writer and researcher living in Southern California.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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