Arguing that socialism could return to the center of political life in advanced capitalist countries, this book aims to convince socialists and nonsocialists alike that there is both a strong moral case for economic democracy and a feasible strategy for achieving it. The author defines economic democracy as a system in which firms operate in a market economy but are governed by their workers. He shows that it appeals to the value of individual freedom while retaining the advantages of a corporatist industrial relations system. This work will be of interest to scholars of political theory, sociology, economics, and industrial relations.

The aim of this chapter is to develop a model of economic democracy. By economic democracy I mean a system in which the basic units of economic activity, namely firms or enterprises, are governed according to the democratic principles that I have been elaborating.

My strategy will be to undertake a critique of the capitalist firm. I will try to establish whether the capitalist firm measures up to the principles that we have been discussing. In setting out a model of economic democracy I will not be proposing change for the sake of change. Where existing capitalist practices live up to democratic principles they will be incorporated into the model unchanged. But where they do not, something new will be required.

It is possible to measure firms against the democratic principles of Chapter 1 because each consists of a group of individuals who co-operate over a period of time in order to achieve a common purpose, and is thus, by definition, an association. Typically this common purpose concerns the production of certain goods or services. To say that the members of a firm share this common purpose, is not to say that they all place the same priority on it. For example, some workers may consider earning an income or developing a skill to be more important purposes. Nevertheless, perhaps because of these more important purposes, they will, for the duration of their co-operation, share a common purpose with other members of the firm. Some firms, such as those that have adopted the technique of 'management by objective' (Odiorne, 1979), will seek to set out explicitly what their common purpose is, but this is not essential for their status as associations.

Because firms are associations they ought to be governed, like all other associations, in accordance with the all-affected principle. In a capitalist economy there are at least six groups of individuals who are affected by the activities of a firm. In the . . .