America’s inequalities are outrageous – and are suddenly all the rage. Thomas Piketty’s Capital in the Twenty-First Century and various social movements have given us a new language to dissect it: the “99 percent,” “r > g,” the “Fight for $15,” and “Uberization.” Policy professionals are taking note, with the Washington Center for Equitable Growth and various foundations funding research into its causes and consequences. Even Silicon Valley is talking seriously about a universal basic income.
This is all to the good. And yet the debate is tepid in an important respect: It largely disregards the relationship between inequality and democratic participation. Granted, many criticize our campaign finance laws for tilting the playing field toward the rich. But the economic policy debate largely revolves around forms of tax-and-transfer. Picketty, for example, ultimately proposes little more than a global wealth tax. A universal basic income, for all its virtues, takes the same form.
But aggressive campaign finance reform and a far more progressive tax code – even if politically possible – cannot ensure equality. The reason is simple: To succeed, egalitarian policies must be intertwined with more democratic economic and social structures. The good news, as discussed below, is that the rise of information technology is creating new opportunities to build a more inclusive democracy.
Before discussing the path forward, though, I should say more about why equality requires economic democracy. The welfare states during the post-WWII “Golden Age” of egalitarian capitalism varied in many respects, but all involved extensive systems of worker representation. Those states enjoyed far less economic inequality than we see today, and this wasn’t just a correlation. Unions enhance equality in many ways. They tend to encourage wage compression; to check the power of elites within the political process; to enforce solidaristic norms; to advocate for broader social insurance; and to serve as “schools for democracy,” giving workers concrete experience in deliberation and collective decision making.
To carry out those functions, however, unions require affirmative governmental support, which Golden Age states provided in various ways. Some held employers to duties to bargain and enabled unions to negotiate clauses that require union membership or at least dues payment from represented workers; others encouraged employers to form encompassing associations whose negotiations would take wages out of competition; still others granted unions some powers to develop and administer social insurance programs.
Granted, those policies meant that union representation was nearly mandatory in many sectors. But that was usually a good thing. Even workers who didn’t like their unions retained all their other rights as citizens and usually had guaranteed rights to participate in setting union policy. Moreover, state “neutrality” toward unionization would have been far less equitable, and in many ways far less democratic, since it would have left workers – and even employers – subject to the unchecked whims of the market. In Friedrichs v. California Teachers Association, an upcoming case before the Supreme Court, the plaintiffs’ claim of a First Amendment right to not help defray a union’s representational costs, threatens to overturn this last vestige of economic democracy in the U.S.
Can we build a new set of “Golden Age” policies? I think we can, though we’ll need to take account of how the world has changed. Today’s economies are far more open and diverse, both in terms of production methods and in terms of ensuring access to work regardless of race, gender, or nationality. Many of our leading firms, particularly in the tech sector, do not utilize the sorts of hierarchical organization that characterized the Golden Age. Much of the least desirable work occurs in small worksites for subcontractors of larger firms, rather than in factories. And of course global competition and global markets are a reality.
The good news is that we can link open and innovative markets with social protections. Indeed, this is the “flexicurity” model of various European states, which combine relatively flexible labor markets, basic social security including, in some cases, a basic income, and support and training for the unemployed. The very good news is that information technology can help us build the new workers’ and citizens’ associations that flexicurity almost certainly requires.
The Golden Age was dominated by the large bureaucratic workplace and the mass media; today’s economy is organized around online as well as offline networks. Online platforms drive the marginal costs of communication to zero and enable new communities of interest to develop. Occupy, #BlackLivesMatter, and #FightFor15, for example, have all organized faster and moved more people into public action than could have been imagined 15 years ago.
Some existing online platforms also suggest paths forward for worker organizing. Coworker.org enables workers and others to begin online campaigns for workplace reform and democracy. The Freelancers’ Union provides insurance and other benefits to members, and advocates for their rights. Unions are already experimenting with online platforms to organize “peer-to-peer” economy workers for some combination of advocacy and service provision.
While such organizations may never have the depth of social structure and interpersonal solidarity of classic unions, they could presumably scale up very fast, just like Silicon Valley startups, and become a counterweight to moneyed interests. Critically, they could organize workers in the “offline” economy as well, in sectors such as retail, food service, security, health care, and hospitality.
The state can positively encourage such associations by devolving some governance authority to them. In some ways, this is just what labor law does: It establishes rules under which labor and management jointly set terms of employment. Our labor law is dysfunctional in many ways, not least because obtaining representation is extraordinarily hard, but it could be reformed to make that process far easier. We should also explore law reforms to encourage companies to consult or otherwise engage with less formal worker organizations – so long as those reforms do not undermine traditional unions. The state could also help new online organizations grow by giving them some power to design and implement welfare institutions, as states have done in the past with unions.
Of course, work isn’t everything, and policymakers could also get more creative about building these new organizations outside the labor sphere. Cities, states, and the federal government could fund incubators to develop new modes of citizen engagement in the economy and in governance, thinking creatively about how to involve citizens in budgeting (as in various Brazilian cities) or in commons-based production (as in Seoul). Governments could also do more to encourage apps that enable better service provisions like PulsePoint Respond, which alerts CPR-trained citizens when there is an emergency nearby. We might use technology to reduce the costs of citizen engagement around development projects, around local labor market policies, around transportation needs—you name it.
A society that becomes too unequal ceases to be a democracy. But democracy is about more than citizens’ relationships to the state – it is also about our relationships to one another. If we want to rebuild an egalitarian society, we’ll need to re-democratize the economy.
This blog post originally appeared as a guest post on the American Constitution Society for Law and Policy Blog.
