Economist Daniel Chandler: ‘Shareholders have all the power. It does not have to be this way.

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Who runs the companies? After trying in vain to get employees back to the office since the pandemic subsided, many executives feel the answer is: they don’t. Today’s bosses complain that they have to give in to demands from staff to embrace flexible working, uphold liberal values, take into account mental health and personal circumstances. Millennials and Gen Z expect no less.

But for Daniel Chandler, these stories, usually from high-paying white-collar backgrounds, are misleading. Power in most British workplaces is almost entirely at the top. In Germany, France and elsewhere, many employees have a formal say in how their employers operate. But in the UK, the idea is far-fetched. Workers don’t have board seats, they don’t have “work committees” to influence day-to-day conditions, they don’t even realize that such things are possible.

In his new book, Free and Equal, Chandler, a 37-year-old doctoral student at the London School of Economics, argues that the workplace, for many, “is a sphere of subservience and powerlessness quite unlike any other sphere of life in modern democratic society.” Most British companies are “benevolent dictatorships”, but quite a few miss out on the benevolent part: workers fear unfair dismissal and victimization and feel chronically anxious.

Chandler wants to start a debate about power within companies. In Free and Equal, seeks to reinvent liberalism, recently labeled by the left and right as outdated and naive, as a relevant radical doctrine. The book is endorsed by economists Thomas Piketty, Amartya Sen, and Sir Angus Deaton. It comes alive with his proposals for democracy in the workplace.

“Our political debate has focused a lot on the distribution of money as the key to equity and justice. [There’s a] neglect of other issues such as the connection of work with dignity, meaning, self-respect. . . For many people, there is an absence of opportunities for meaning and fulfillment that could come from work. Then there is the presence of genuinely bad working conditions.”

Sharing power in the workplace would benefit not only workers, but also companies and democracy itself. “Part of the success of right-wing populist movements is that they speak of a desire for respect and dignity.” If the liberals can empower low-skilled workers in their daily lives, perhaps they can steer them away from the populists.

The son of a theater agent and an actor, Chandler was studying history at Cambridge University when he first read the 1971 classic by political philosopher John Rawls. a theory of justice. Rawls posits that if people did not know where they were in society, they would agree to two principles. One, that individual liberties are respected. two, that social and economic inequalities it must be managed in a way that benefits those at the bottom the most.

Rawls took over academia, but not politics. His principles were seen as too abstract or as defenses of the capitalist status quo. As Chandler worked in political positions, including at the UK’s Institute for Fiscal Studies, he felt that too much discussion was just horseplay. He began a Ph.D., reviewed Rawls, and became convinced that the radicalism of the American philosopher had been underestimated. “The standard assumption is that he was just providing a justification for the welfare state. That really wasn’t what Rawls said in his later work.”

In Free and Equal, Chandler uses Rawlsian principles to unravel today’s political debates. This includes tipping the scales toward free speech (not hate speech laws), limiting large-money donations to political parties (and filling the gap with state funds), and supporting a universal basic income (although Rawls himself was skeptical). He also applies Rawls’s second principle, that power inequalities must be managed to benefit those below, to hierarchies in the workplace.

“The way we distribute power in companies has to be justified,” says Chandler. “Shareholders have all the power. It does not have to be this way”. It would be one thing if minimizing worker power had real economic benefits. But having workers on boards, for example, doesn’t seem to have hurt German companies’ profits or longevity. actually has increase your productivity and investment. “The costs to businesses are likely to be small and as positive as negative.”

I don’t think it’s sensible to jump from where we are now to giving workers half the seats on every board.

Which is the prize? Putting workers on boards should ease the flow of information within a company and give workers a greater sense of ownership. Chandler cites studies suggesting that Germany’s “co-management” approach meant that companies were less likely to lay off workers during the 2008-2009 recession, finding alternative paths to cut costs. Counterintuitively, co-management does not have large effects on wages.

But Chandler argues that empowered workers could negotiate flexible work arrangements and changes to the way their jobs are organized. He cites the example of Suma, a whole-food cooperative, as an outlier where employees rotate jobs “from driving trucks to cooking to bookkeeping.” (Co-ops have a key place in his desire to shake up capitalism: He wants employees to have the right to initiate purchases, perhaps with subsidized loans.)

To what extent could UK companies change? Chandler’s proposal is that ultimately all UK companies should allocate half their board seats to employee representatives. This would be subject to a size threshold, so as not to deter entrepreneurs. Employees would also have the right to establish a works council. “It would lead to a more cooperative relationship between workers and employers.”

This would be “a maximum version of the German model.” It would be introduced gradually. German workplace democracy operates in the context of wage bargaining: because wage issues are partly decided at the industry-wide level, company-level discussions can focus on less contentious issues. The UK should “probably” introduce industry-wide bargaining before workplace democracy, says Chandler. “I don’t think it’s sensible to jump from where we are now to giving workers half the seats on every board.”

The UK has played with the empowerment of workers. David Cameron’s government talked about worker-owned companies like the John Lewis Partnership. Theresa May promised to put workers on the boards, until Chancellor Philip Hammond blocked her. In 2018, the Corporate Governance Code was modestly updated to say companies must appoint an employee director, establish a workforce advisory panel, appoint a non-executive director, or explain why they haven’t done any of these.

Only a few companies, such as Capita, have even appointed an employee director. “I don’t think we should leave it up to the good will of enlightened businessmen to give this to their workers,” Chandler says, adding that May failed to “make these ideas exciting to people.”

But if workplace democracy is the answer, why are so few employees interested in the mechanisms they have, like unions? Chandler blames the perception that unions have little power. “Most workers would like to have more influence at work,” he says.

There are other doubts. How do companies with global workforces implement workforce representation? How does it fit in with regulators’ demands that boards in certain industries have more experience? And if workers have more influence, shareholders have less flexibility. The London Stock Exchange is already losing to the US: wouldn’t limiting shareholder power exacerbate the problem?

One of the world’s largest cooperatives, Spain’s Mondragón, has excluded foreign employees from workplace representation. To address that, Chandler is in favor of laws that limit the hiring of workers without ownership interests. He supports laws that limit the temptation to unsustainably share the loot among workers and encourages cooperatives to invest more for the long term.

Free and Equal joins the Brexit-driven bandwagon of those who argue the UK should look towards continental social democracy. But France and Germany are not immune to populism or labor unrest. Germany’s co-management model, for example, came under scrutiny with the Volkswagen diesel scandal. When pressed, Chandler admits that he is not an expert on either country. He suggests that his models are “incomplete” but have nonetheless avoided US levels of inequality.

The potential appeal of Chandler’s ideas is that they come at a time when the left may lack vision. As centre-left writers like Antonio Giddens and Will Hutton in the 1990s, mixing boldness and pragmatism.

His ideas are an alternative to nationalisation, the path favored by former Labor Party leader Jeremy Corbyn. “The traditional socialist model of public ownership is not a solution, because it simply transfers power from a small group of owners to a small group of bureaucrats. The state can’t go in and redesign jobs simply because it doesn’t know enough about how individual businesses work or what workers want.”

Chandler, talkative but not intimidating, acknowledges concerns about immigration and, unlike much on the left, doesn’t want to eliminate college fees.

His boldest proposals include tackling the climate and nature crises, even if this requires a “reduction in our material standard of living”, and the abolition of private schools. Accepting his various spending commitments, he estimates, would raise taxes to 45-50 percent of gross domestic product (from 37 percent today).

How far is Sir Keir Starmer’s Labor Party from the Chandler model? “Intellectually, not very far. But in terms of politics, they’re pretty far off right now.” Chandler insists that his book, with its calls for UBI and workplace democracy, is not “a blueprint for the next election” but a long-term project.

It’s easy to fall for Chandler’s talk about dignity at work; it’s harder to imagine how such a thing would be measured. At the time we meet, many workers have more specific concerns. Some are on strike for higher wages, many are eager for generative artificial intelligence to take their jobs. Chandler insists that the effects of AI could be better managed if, in addition to regulation, companies were co-managed. As for the strikes, “they reflect how far we have strayed from that ideal of shared prosperity.”