Could distributism and co-owned businesses help shape a more inclusive economic system for all?
“There is no alternative” was a phrase often used by former prime minister in the UK, Margaret Thatcher to describe her staunch, free-market sentiments that came to define the shaping of western society and economy throughout the 1980s and till today. Thatcher along with contemporaries such as then US president Ronald Reagan saw their take on free market economics as the ultimate expression of freedom, hard-work and individualism. Inspired by writers and thinkers such as Ayn Rand and Milton Friedman, they waxed lyrical about a system, the only system that would safely bring us collectively into the future fueled by innovation and prosperity.
Forty years have nearly passed since then and the rate of technological development have proved astonishing. Yet, for some reason we are still basing our economic models and assumptions on the type of societies we had before and during the Thatcher-era. Somewhere along the way the disconnect between the people with economic control and power and ordinary workers got far too great.
2019 is by no means the worst starting point in order to move away from the slowly crumbling grips of late stage capitalism. As a species we have never been wealthier, healthier, waged fewer wars and been better off in general than today. Something the late public intellectual Hans Rosling highlighted through his colorful presentations on “factfulness” at many a TED-conference.
But given how far we have come in other disciplines such as in physics, medicine or in engineering, it begs the question, could we not do better or more to distribute resources more evenly? Secondly, should we not strive for an economic system that would be more inclusive, community-based-and less pre-occupied with the on-going focus on accumulation material wealth? A system that caters to the needs of the many and not the few?
My take on an inclusive economic system refers to the idea that workers should play a more active role in the ownership of the company, that profits is distributed in a fairer way. Not to mention a labor market that is willing to move away from the traditional 9–5 model of working and that also does more in order to help people that are left outside the labor market or is facing disabilities.
“Three acres and a cow”
This became somewhat of a catchphrase to summarize the core message of distributism — a form of philosophical and economic ideology that emerged in England during late 1880s encouraging less concentration of capital and labor in the hands of a few landowners. Popularized by prominent writers of that era such as G.K. Chesterton and Hillaire Belloc, distributism sought to establish an alternative to capitalism or socialism at a time of immense social change.
In short, the aims were to ensure that economic resources were allocated more evenly among the populace and to divide labor into smaller, often family-based units and to promote co-operatives and guilds. The latter was especially intended to ensure that workers felt involved and emotionally invested in the work they carried out.
And here lies the real strength of distributism as an economic model — it offers personal involvement beyond the purely financial and transactional, it encourages a system of decentralized co-operatives with shared power and where wealth is more evenly distributed among the workers — plus it is not extracted to external shareholders. The funds remain within the co-operative, benefiting the wider community.
The Spanish, Mondragon Corporation is a notable example of this. Operating as a corporation and a worker co-operative jointly, originating out of the Basque region in Spain. With its more than 70,000 workers divided into thousands of branches, it ranks among the top ten biggest Spanish companies. Mondragon is organized through a strict enforcement of a co-operative charter, stipulating in detail the salary ratios between managers and workers (much lower than companies of comparable size) and how long a worker needs to have been with the company to access any form of capital gains etc.
Co-operatives when done successfully could re-invigorate local communities, it could enable small-scale investment of time and money and prevent the growing disconnect we are seeing between producers of goods and end consumers. What is more is that co-owned businesses arguably have greater flexibility to implement the values they deem important without external pressures, such as investors or shareholders that often bring along expectations or demands when injecting capital into a business.
In order to create a gentler and more inclusive economy and workplace, the contemporary structure of economic power needs to be shifted from the high concentration model to a local-based, low concentration model over time. A higher level of power and autonomy should be retained with the actual workers performing the work.
Secondly, a more long-term focus on creating value and building businesses could also boost the position of co-owned companies. Under the current economic system far too many promising businesses falter because they are not profitable enough from the get-go, but a gradual shift away from that thinking could leave room for a more diverse set of businesses that are owned by the workers themselves.
This as opposed to the current global trend of larger and larger multinationals formed through mergers and acquisitions, detached from the people it is set out to serve. Societies could benefit from smaller entities to form the backbone of the economy. This will in turn encourage people to have more of a direct interest in their own work and it will also bring greater care and attention to our shared resources.
Today, flows of capital tend to bypass small communities and end up in the hands of a few powerful corporate actors, such as Amazon or Starbucks that does not have any interest in giving back to those communities.
Globalization and the rise of multinationals have created many winners and numerous losers, offering alternatives to create a more inclusive and fair global economy will only become more important as the world grows more international and inter-connected.
