Why our workplaces are private governments, why we can’t see it, and what should be done. IPPR Progressive Review’s Mathew Lawrence interviews the leading moral and political philosopher Elizabeth Anderson on good work, relational equality, and a fair constitution of the firm.

Mathew Lawrence: You begin your book with an examination of the history of egalitarianism before the Industrial Revolution, in which the Left viewed the market as the surest route to dismantling hierarchies of socioeconomic subordination. Can you take us through the argument that the market was the friend of emancipation?

Elizabeth Anderson: Before the Industrial Revolution, egalitarian thinkers conceived of market relations as relations between independent people. People who were transacting on the market would not have to observe any hierarchical norms. The model here is Adam Smith’s ‘butcher and baker’. You walk into the store, you ask for some bread and you transact based on mutual interests. Each side appeals to the interest of the other and the transaction is a success. Each side walks away with something that they prefer to have and they’re independent of the other party after the transaction. There’s no subordination or domination in that relationship.

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They key concept is the contrast between market relations and the employment relation. In the employment relation, your boss orders you around. Pro-market pre-Industrial Revolution egalitarians saw the market as a way to escape the asymmetry in this relationship. Market transactions are between independent parties, and so authority doesn’t continue over time. And if you break up monopolies and open markets, then people will be free. If you’re self-employed, you’re independent and you stand on a plane of equality with every other farmer and shop owner. This provides an image of how an egalitarian society could be pervasively mediated by market relationships, as opposed to the relationships of domination and subordination which are characteristic of employment relations.

It turned out that that vision came closest to realisation in the United States – at least in the states that didn’t recognise slavery. Out West, land was virtually free, so it was impossible to hold people subject to employers. They could just head West and stake out their own plot. Lincoln campaigned on a platform of making that a reality through the Homestead Act, which gave away free plots of land to anyone who was willing to farm them. Lincoln explicitly campaigned on the idea of universal selfemployment, seeing this as the essence of a free society of equals – the idea that we’ll all be equal when we’re all independent entrepreneurs employed by ourselves rather than having to follow the orders of somebody else.

ML: The Industrial Revolution was crucial in shattering this vision of universal, egalitarian self-government in the realm of production. Can you explain how the concept of what it meant to be free in the realm of production changed, how your story went from Smith to Marx in the space of a few decades?

EA: The Industrial Revolution monumentally refuted the assumption that economies of scale were negligible. New technology came on board that made economies of scale completely overwhelming – gigantic factories with machinery that no individual worker could work on their own, or buy. Consequently, the scale of factories increased, and organising them became very difficult without some kind of hierarchical management.

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That’s pretty inescapable for modern production, even in the post-industrial era when we’ve moved more to a service and information economy. We still have the unit of production as a multi-member firm with an internal hierarchical organisation.

ML: That links neatly to the central argument of your book: that the modern firm is a form of private government of arbitrary and unaccountable power, which means that many people spend large parts of their life in unfree situations.

EA: Yes, so it’s important to keep in mind that any complex organisation needs a hierarchy of offices in order to make it work. Any large-scale organisation is going to have a government. But, more importantly, the question that I’m raising is: why is firm government a dictatorship with unaccountable power accumulated at the top? Why is it that the subjects of that government – the firm’s staff – don’t really have a say in how that government runs? This answer, which is particularly true for English-speaking countries, is that the state has made that the rule.

The game really is rigged and, primarily, this happens through the common law rule of employment at will. The default condition is that employers can fire workers for any reason or no reason at all. This gives employers sweeping authority over their workers, off and on duty. In the United States, workers do not generally have protection against being fired because they express political opinions on Facebook that are contrary to their boss’s political preferences. They can be fired for off-duty sexual and recreational activity.

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In American law, there are a few prohibited grounds for firing people. They’re basically about discrimination on the basis of age, gender and race; virtually anything else is permitted as a ground for firing people. That makes employees vulnerable to all kinds of domination by their employers that are entirely irrelevant to productive efficiency.

ML: If state-sanctioned legal infrastructure underpins many inequalities of power at work, this opens up potential new avenues of reform for progressives, while undermining the claim that labour relationships are entered into via neutral market forces, by free contract, by individual preferences. Is that right?

EA: Yes, exactly. One of the things I’m arguing for is to bring the tools of political philosophy to bear on the government of the workplace and not just the government of the state. I think political philosophy is too statecentred. It fails to recognise that government is everywhere that we find the authority being exercised. We can also look at the government of the family, for instance, and that’s a major topic of feminist exploration.

ML: On the issue of the family, are there any reflections from your book that inform how we should conceive of the government of the family and ensure it isn’t a space in which hierarchies are reproduced?

EA: This is especially an issue in the United States, where religious conservatives are bending over backwards to limit women’s access to abortion and even to contraception. When women lose access to the means of reproductive freedom, that makes them vulnerable to male domination within a family. Of course, that’s what social conservatives want. They want to restore the patriarchal family in which patriarchs have ownership and governance of women’s reproductive powers. So we should also think carefully about the family as a unit of governance and worry about inequality between men and women in that context.

ML: Why do you think that philosophy and public discussion has been so silent on the relations of power that characterise the workplace relative to discussions of public government and other issues?

EA: This is the key focus of the book. It’s an examination of ideology, and how ideology masks certain realities that prevent us from seeing them clearly. This is where the early egalitarians set the terms of the debate. Of course, they were looking at a very different social context in which there were good reasons to believe that opening up free markets would radically expand the scope of self-employment and radically reduce wage labour.

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In that context, you could model a free-market society as a system of relations between completely independent people, none of whom is taking orders from anyone else in the realm of production. What’s weird is that vision survived the Industrial Revolution. But you now have people continuing to talk that way, even though the background assumption on which that ideology rested was completely undermined by the Industrial Revolution.

The result is that we have a free-market, libertarian ideology which is blind to the realities of systematic subordination within the firm because they’re working from an archaic picture of what free markets would deliver, and haven’t updated their picture of how markets operate under vast economies of scale. They are simply blind to a whole sector of government – namely the governments of the workplace – and this blindness runs through economic theory. This sees relations in the firm as simply a bunch of contractual relations between independent people. But the whole point of building a theory of the firm was to try to explain why we have firms at all, as opposed to just relations between independent contractors!

ML: Talking of ideology, one of the respondents in the book is Tyler Cowen, the well-known libertarian, whose arguments do precisely as you say: they fail to recognise that there are arbitrary forms of government, that they exist in the workplace, and that constraining some people’s negative liberties can hugely expand republican and positive freedoms for many others.

EA: Cowen and other modern libertarians argue that it’s all a matter of freedom of contract and that if people want to strike a bargain with employers and enter into the employment relation, rather than selfemployment, then they should be free to do so. It’s all worth it to them, what’s the problem?

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My argument is that a rational choice made within a certain set of options cannot justify the fact that this is the set of options that people are given. And, crucially, the state has rigged the options in such a way that, for the vast majority of people, access to self-employment is not a viable way to support themselves. I’m not in favour of the early egalitarian vision that imagines that universal self-employment is the right way to go.

We’ve seen that vast economies of scale are reaped with larger-scale organisations. Collectivism in team production is the order of the day. It’s delivered all kinds of benefits that we couldn’t get from universal self-employment. My argument is not to revert back to the early egalitarian vision, but rather to revise what employment should look like – to revise the constitution of the workplace. Given that we have large-scale organisations, how do we ensure they aren’t governed as a dictatorship? We have ways of organising states to avoid this, and we should move in a more democratic direction in firms, giving voice to workers on how they are governed.

ML: What would a just government of the firm look like? Would it apportion governance rights to labour currently only enjoyed by capital?

EA: Yes - let’s explore one possible model that was taken quite seriously in the 19th century, including by John Stuart Mill. He envisioned that each corporation would ultimately be a little republic, where the workers would collectively manage the firm together on a basis of equality. An important assumption was that the workers would also own the capital of the firm, and, as workers and owners, would enjoy equality in governing the firm.

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Now, as it happens, Mill’s model doesn’t really make a whole lot of sense in a contemporary world. It’s imprudent to advise workers to invest their entire savings in their own firm because if the firm goes under then they’re wiped out. We want people to diversify their savings. Also, the scale of many corporations is so vast that the workers couldn’t possibly raise enough capital to own it all, so it’s not really a viable system. So the question becomes, “If capital owners are going to be different from workers, should they have any governance rights at all?” I think a viable firm is going to require that capital has some representation in the governance of the firm.

Indeed, empirically we know that solely worker-managed firms encounter many challenges in self-governance. One of the biggest is the heterogeneity of interest among workers. Higher-skilled and lower-skilled workers have competing interests, and so it’s hard for them to agree on things. This also means it’s harder for such firms to attract capital on the necessary scale. They tend to restrict the scale of employment in order to maximise average profits instead of total profits. One method to counter this is co-determination, where the governance of the firm is managed jointly between managers who represent capital owners and workers’ representatives. That works from the shop floor all the way up to the board of directors of the firm. This system seems to simultaneously respect the interests of workers and enable the firm to raise capital and organise itself, without too much conflict between workers.*

*Please click here to continue reading. This issue of Progressive Review is free until 6th of October 2017.

Elizabeth Anderson is Arthur F. Thurnau Professor and John Dewey Distinguished University Professor of philosophy and women’s studies, and one of America’s leading moral and political philosophers. Her most recent book is Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It), published by Princeton University Press, 2017.

Mathew Lawrence is an editor of IPPR Progressive Review and a senior research fellow at IPPR.