Is Workplace Democracy Utopian in a Market Economy?
Université Catholique de Louvain, Belgium
November 10, 13, and 17, 2015
LUBS, IZA & FCEA-UdelaR
Several normative arguments have been advanced in favor of extending democratic rights to workers in economic enterprises. To inform this normative discussion, I introduce conceptual tools from economic theory, organizational analysis, and present recent empirical work on the behavior of worker cooperatives and other forms of workplace democracy (works councils, codetermination, employee ownership plans, Kibbutzim, etc). The aim of the course is to clarify the prospects and challenges faced by firm-level democratic arrangements in enhancing socially responsible practices in market economies.
LECTURE I. Workplace democracy: definitions, normative foundations and real-world examples.
This lecture provides an organizing conceptual framework for understanding existing workplace-level democratic arrangements in contemporary market economies and analyzes the differences between them. Then, it introduces different normative criteria of evaluation to discuss the desirability of workplace democracy: efficiency, equality, democracy, meaningful work and community. Finally, it explains why workplace democracy - even if possibly desirable from a social point of view - does not spontaneously emerge via voluntary market transactions.
LECTURE II. The political case for workplace democracy. Potential benefits and costs of democracy at the firm level
In this lecture, the political case for workplace democracy is derived from the incomplete nature of the employment contract in capitalism. I discuss how workplace democracy may limit managerial discretion and reduce both monitoring costs and income inequality in socially beneficial ways. I also review the literature on collective-choice problems in democratic firms and the measures usually adopted to minimize them. Finally, drawing on recent research in behavioral economics, I analyze the role played by other-regarding preferences in democratic workplaces and how a better alignment between workers' preferences and organizational design may enhance their viability.
LECTURE III. Does workplace democracy foster the development of local communities?
It has been argued that democratic firms may generate positive spillovers to the local community in which they are located. This lecture provides a theoretical and empirical basis for such claim in relation to employment decisions, environmental pollution, and civic involvement. It also discusses intertemporal and intergenerational dilemmas faced by democratic firms, in terms of investment and innovation decisions, depending on their particular structure of property rights. Finally, it analyzes the concept of Corporate Social Responsability (CSR) and its relationship (if any) with workplace democracy.