Economist Daniel Chandler: ‘Shareholders have all the power. It doesn’t have to be that way.’
Who runs companies? After trying in vain to get employees back to the office since the pandemic eased, many executives feel the answer is: not them. Today’s bosses grumble they have to bend to staff demands to embrace flexible working, to stand up for liberal values, to make allowances for mental health and personal circumstances. Millennials and Gen Z expect nothing less.
But for Daniel Chandler, these stories — usually from well-paid, white-collar settings — are misleading. The power in most British workplaces lies almost wholly 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 outlandish. Workers do not have seats on boards, they do not have “works councils” to influence day-to-day conditions, they don’t even realise 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 the workplace, for many, “is a sphere of subservience and powerlessness quite unlike any other domain of life in modern democratic society”. Most British companies are “benevolent dictatorships”, but quite a few forgo the benevolent part — workers fear wrongful dismissal and victimisation and feel chronically anxious.
Chandler wants to kick-start a debate about power within businesses. In Free and Equal, he seeks to reinvent liberalism — recently tarred by left and right as outdated and naive — as a relevant, radical doctrine. The book comes with endorsements from economists Thomas Piketty, Amartya Sen and Sir Angus Deaton. It comes alive with its proposals for workplace democracy.
“Our political debate has become very focused on the distribution of money as the key to fairness and justice. [There’s a] neglect of other questions like the connection of work to dignity, meaning, self-respect . . . For a lot of people, there’s the absence of opportunities for meaning and fulfilment that could come from work. Then there’s the presence of genuinely bad working conditions.”
Sharing power in the workplace would benefit not just workers, but companies and democracy itself. “Part of the success of rightwing populist movements is that they speak to a desire for respect and dignity.” If liberals can empower low-skilled workers in their daily lives, perhaps they can woo them away from the populists.
The son of a theatre agent and an actor, Chandler was studying history at Cambridge university when he first read the political philosopher John Rawls’s 1971 classic A Theory of Justice. Rawls posits that, if people didn’t know where in society they stood, they would agree to two principles. One, that individual freedoms should be respected. Two, that social and economic inequalities should be managed in a way to give most benefit to those at the bottom.
Rawls gripped academia, but not politics. His principles were seen as too abstract or as defences of the capitalist status quo. As Chandler worked in policy jobs, including at the UK’s Institute for Fiscal Studies, he felt too much discussion was simply tinkering. He began a PhD, revisited Rawls and became convinced the American philosopher’s radicalism 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 disentangle modern-day political debates. This includes tilting the balance towards free speech (not hate speech laws), limiting big-money donations to political parties (and filling the gap with state funding), and backing a universal basic income (even though Rawls himself was sceptical). He also applies Rawls’s second principle — that power inequalities should be managed to benefit those at the bottom — to workplace hierarchies.
“The way we distribute power in companies needs to be justified,” says Chandler. “Shareholders have all the power. It doesn’t have to be that way.” It would be one thing if minimising workers’ power had real economic benefits. But having workers on boards, for example, does not appear to have hit German companies’ profits or longevity. It has actually increased their productivity and investment. “The costs for companies are likely to be small, and as likely to be positive as they are negative.”
What’s the prize? Putting workers on boards should ease the flow of information within a company, and give workers a greater feeling of ownership. Chandler cites studies suggesting that Germany’s “co-management” approach meant businesses were less likely to fire workers during the 2008-2009 recession, finding alternative paths to cut costs. Counter-intuitively, co-management does not have large effects on wages.
But Chandler argues empowered workers could negotiate flexible working arrangements and changes to how their jobs are organised. He cites the example of Suma, a whole foods co-operative, as an outlier where employees rotate positions “from truck driving or cooking to accounts”. (Co-operatives have a key place in his desire to shake up capitalism: he wants employees to have the right to initiate buyouts, perhaps with subsidised loans.)
How far could UK companies change? Chandler’s proposal is that all UK businesses should ultimately have to allocate half of the seats on their board to worker 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 co-operative relationship between workers and employers.”
This would be “a maximal version of the German model”. It would be introduced gradually. German workplace democracy operates in the context of wage bargaining: because pay matters are decided partly at a sector-wide level, company-level discussions can focus on less contentious matters. The UK should “probably” introduce sector-wide bargaining before workplace democracy, says Chandler. “I don’t think it would be sensible to jump from where we are now to giving workers half of the seats on every board.”
The UK has toyed with empowering workers. David Cameron’s government talked up worker-owned businesses, such as the John Lewis Partnership. Theresa May promised to put workers on boards, until then chancellor Philip Hammond stymied her. In 2018, the Corporate Governance Code was modestly updated to say companies should appoint an employee director, establish a workforce advisory panel, designate a non-executive director, or explain why they hadn’t done any of these.
Only a few companies, such as Capita, have appointed even one employee director. “I don’t think we should be leaving it to the goodwill of enlightened employers to bestow this upon their workers,” says Chandler, who adds that May failed to “make these ideas exciting to people”.
But if workplace democracy is the answer, why are so few employees interested in mechanisms that they have, such as trade unions? Chandler blames the perception that unions have little power. “A majority of workers would like more influence at work,” he says.
There are other doubts. How do companies with global workforces implement staff representation? How does it fit with regulators’ demands that boards in certain industries have more expertise? And, if workers have more influence, shareholders have less flexibility. The London Stock Exchange is already losing out to the US: would limiting shareholder power not accentuate the problem?
One of the world’s largest co-operatives, Spain’s Mondragon, has excluded overseas employees from workplace representation. To address that, Chandler favours laws that cap the hiring of workers without ownership stakes. He supports laws that limit the temptation to share the spoils unsustainably among workers and encourage co-operatives to invest more for the long term.
Free and Equal adds to the Brexit-fuelled bandwagon of those who argue that the UK should look to continental social democracy. But France and Germany are not immune to populism or labour unrest. Germany’s co-management model, for example, came under scrutiny with the Volkswagen diesel scandal. When pressed, Chandler recognises he isn’t an expert on either country. He suggests their models are “incomplete”, but they have nonetheless avoided US levels of inequality.
The potential attraction of Chandler’s ideas is that they come at a time when the left arguably lacks a vision. Like centre-left writers such as Anthony Giddens and Will Hutton in the 1990s, he mixes boldness and pragmatism.
His ideas are an alternative to nationalisation, the route favoured by the former Labour party leader Jeremy Corbyn. “The traditional socialist model of public ownership is not a solution, because it just transfers power from one small group of owners to a small group of bureaucrats. The state can’t go in and redesign jobs, because it just doesn’t know enough about how individual companies work or what workers want.”
Chandler — talkative but not hectoring — recognises concern about immigration, and unlike much of the left, does not want to scrap university tuition fees.
His bolder proposals include addressing the climate and nature crises, even if this requires a “reduction in our material standard of living”, and abolishing private schools. Embracing his various spending commitments would, he guesstimates, take taxes up to 45-50 per cent of gross domestic product (from 37 per cent now).
How far is Sir Keir Starmer’s Labour party from Chandler’s blueprint? “Intellectually, not hugely far. But in terms of policy they’re quite far away at the moment.” Chandler insists his book, with its calls for a UBI and workplace democracy, is not “a blueprint for the next election” but a long-term project.
It’s easy to be seduced by Chandler’s talk of dignity at work; it’s harder to imagine how such a thing would be measured. At the time we meet, many workers have more concrete worries. Some are striking for higher pay, many are anxious generative artificial intelligence will take their jobs. Chandler insists the effects of AI could be better handled if, in addition to regulation, companies were co-managed. As for the strikes, they “reflect how far we’ve fallen away from that ideal of shared prosperity”.
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