Power to the Workers
The Rise of Employee Stockholders
, by Louis O. Kelso and Patricia
Hetter Kelso, Ballinger Publishing Company, 1986. Republished and
currently available from University Press of America, 4720 Boston Way,
Lanham, Maryland 20706, (800) 462-6420.
Marxism is not so much the vision that
failed as it is the quest that failed. The ideal of economic equality
continues to be an obsession that dominates both thinking and behavior
in politics and government. So the failure
of Marxism means only that other paths will be explored.
Increasingly, we are seeing the manifestation of this
in attempts to articulate a new version of capitalism - "neo-capitalism."
Most of the articulations thus far are in the nature of attempts both
to verify and to strengthen the links between capitalism and democracy.
Simply stated, the argument is that, while there can be capitalism without
democracy, there can be no democracy without capitalism. The problem
then becomes how to equate this with capitalism's original and continuing
- even growing - tendency to create, maintain, and exacerbate inequality.
It is one of the ironies of history that if a visionary
stakes out a position and stands by it long enough the world will eventually
come around to where he or she stands. One such visionary is Louis Kelso,
who for more than 30 years has advocated with uncommon vigor and persistence
a vision of democratic capitalism that, while not espoused by a critical
mass of theorists, is rapidly accumulating adherents. This vision is
detailed at length in Democracy and Economic Power: Extending the
ESOP Revolution, by Kelso and his wife-collaborator, Patricia Hetter
Kelso.
Kelso first began to articulate his vision in The Capitalist
Manifesto, co-written with philosopher Mortimer Adler, which was
published in 1958. In subsequent books, Louis and Patricia Kelso further
developed the thesis that the democratic exercise of economic power
requires not the redistribution of income but changing the pattern of
ownership of capital. Income is increasingly created by capital rather
than labor, say the Kelsos, but the vast majority of people own no productive
capital.
Being a practical man as well as a visionary, Kelso created
a way to make his vision concrete - the Employee Stock Ownership Plan
(ESOP). Kelso has had the satisfaction of seeing the ESOP grow from
one small, bold experiment to a full-fledged movement. There are now
several thousand ESOPs, encompassing more than 10 million workers.
It is only in visions, unfortunately, that dreams can
remain undefiled. Kelso has also had the bitter disappointment of seeing
his concept distorted into the non-ESOP leveraged buyout, so cleverly
used by corporate raiders and self-seeking managers.
The Kelsos' new book is an effort to reaffirm their dream.
The authors restate, as vigorously as they have in the past, both their
perception of the need for economic democracy and their belief in worker
ownership of capital as the appropriate response. They show again how
worker ownership of capital can be realized. And this time they make
specific appeals to unions, which in the past have not been particularly
receptive to either the concept or the practice of ESOPs.
Be warned: This is not an easy book to read. Even imbued
as it is with the Kelsos' missionary fervor, it is a dense and complex
combination of economic, financial, and philosophical reasoning. But
you will be rewarded for your labor. The Kelsos' argument is logical,
coherent, and even compelling.
Mainstream economists have persistently ignored the Kelsos.
This book makes it hard to understand why they have done so and even
harder to understand how they can continue to do so. Certainly the new
technological revolutions are raising new questions about inequality.
As more and more wealth is created by machines rather than people, how
is that wealth to be distributed? Will we follow old patterns and tax
robots to support idle workers? Or will we seek new roads to what promises
to be a new world in the future?
Democracy and Economic Power illuminates one new
road. Everyone concerned about how we get there from here should read
it.
-- Originally published in The Futurist,
July-August, 1987.
