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How Corbyn-Style ‘Democratic Ownership’ Is Taking off in Denmark

This month's Danish budget promised more state spending, but also to help workers take control of their workplaces. The democratic ownership agenda might be dying in Labour – but it lives on elsewhere.

As Denmark’s dominant political force over much of the last century, today the Social Democrats lead a minority government dependent on smaller allies. Important among these is the Red–Green Alliance, known as a particularly strong defender of the welfare state. Red–Green Alliance economic adviser Poyâ Pâkzâd and MP Pelle Dragsted authored an influential report in 2018 highlighting how democratic ownership of workplaces could empower citizens and make the economy fairer, and on December 6, a new budget committed the government to pursuing this agenda. In this article, Poyâ explains how putting workers in charge of our workplaces can make the economy work for society and our environment, not just for profits.

On 6 December, Denmark’s Social Democratic government signed the annual Finance Act together with its parliamentary supporters — a document marking a break from at least a decade of austerity and tax cuts for the rich. Instead of the usual neoliberal assault on Social Security, the new budget increases public spending and boosts central parts of the welfare system such as child and elderly care, education, and health. The act also brings a sizable stimulus package in the wake of the Covid-19 pandemic — and historically high levels of investment in climate action and defending biodiversity.

So, the budget as a whole is encouraging. But speaking as an economic adviser employed by the Red–Green Alliance, there’s one small corner of the document that interests me the most. On the suggestion of the Red–Green Alliance, the act establishes an ‘expert working group’ to promote democratic ownership and workplace democracy. If successful, this promises to put local communities and working people in charge of their own fate — the first time in decades that there’s an alternative to the privatisation juggernaut.

Minority Government

Before diving into this promising agenda, it’s worth saying a few words about the Danish political situation. The Social Democrats lead a minority government whose majority relies on the Socialist People’s Party, the Social Liberals, and the Red–Green Alliance (and, informally, the ecologist Alternativet). Its stability is based on principles outlined in a ‘government understanding’ negotiated between these parties after the June 2019 election. In these talks, the Red–Green Alliance managed to extract promises from the Social Democrats that ‘inequality will be reduced’ over the next four years, ‘taxation at the top will not be lowered’, and ‘the social safety net will not be impaired’. The positive direction of the Finance Act, and the one before it, harks back to this understanding.

This doesn’t mean that all the parties agree on everything. Indeed, the Red–Green Alliance and the Social Democrats have intractably divergent aims — and different ways of thinking. While a minority government rules based on the interests it has in common with its other parliamentary supporters, historically, the Social Democrats haven’t shied away from partnering with the Right when needed. Moreover, their successful run in last year’s election relied not only on promising early retirement for workers made ill or exhausted by jobs—a couple of years before they would normally become eligible—but also a commitment to continue the outgoing right-wing government’s ‘strict immigration policy’. The repetition of the claim that we have thus far been too lenient and naïve about immigration and integration of ‘non-Westerners’ and their children is a piety of mainstream Danish politics.

Now, if the Red–Green Alliance had the mandate to draw up the budget by itself, we would today be celebrating a democratic-socialist program of the ages. Sadly, this isn’t the case. But even so, the act is quite a satisfying compromise given the power balance in Danish politics. And the budget also contains several small but important steps in shaping the future of economic policy. For example, we have commissioned a review of the macroeconomic models which the Ministry of Finance uses to gauge the economic consequences of potential policy measures. The current models systematically favour tax cuts and reduced social spending, but they neglect the positive dynamic effects of welfare investments or climate measures. Hopefully, with the new agreement, this travesty will soon come to an end.

The Democratic Ownership Agenda

So, the really promising part of the budget bill concerns democratic ownership. Around $690,000 has been dedicated to an ‘expert working group’ to analyse and come up with recommendations to remove barriers to establishing a ‘democratic company’ or democratise an already existing business. Clearly, this initiative is just a beginning — but if done right, it could spark a cooperative movement.

Under modern neoliberal capitalism, the form of ownership that has come to dominate is joint stock ownership of capital, where your say in the company affairs is relative to your investment. This is not property in the sense of possession, like owning a bike or a toothbrush. This is by definition exploitative class property — the economic foundations of the formation of classes.

The cooperative idea has always been a so-called third string of the labour movement, alongside trade unions and party-political organisation. Yet in recent decades it has been relatively neglected by socialists. There is a healthy dose of scepticism and a recurring discussion among socialists about the nature and quality of cooperative experiments. Would a cooperative economy supersede capitalism? Could it serve as a transition to socialism? Would it mark an end to the compulsions of market competition and profit-maximisation?

These are all good questions, which I do not pretend to know the final answer to. But try for a minute to turn such questions into a litmus test for just about any improvement large or small that you can think of. If socialists did that (much too often we do!), we would get nowhere at all.

Property relations and the ownership structure of an economy underpin wealth distribution, social relations, and market interactions. On an individual level, having some property is a big factor in your ability to participate in the economy, access credit, negotiate your wage, determine your own work time, and plan your future. A democratically owned company not only benefits its employees in these pre-distributive ways, but it would also behave radically different from companies owned by a single capitalist, a family, or a small group of shareholders.

This also has effects for society at large. Shareholders will tend to seek short-term profits through short-term investments, the reduction of workers’ wages and labour costs, externalisation of risks, minimisation of taxes, maximisation of executive salaries and shareholder dividends, financialization of wealth, and so on. They also accrue political power, which they use to pursue such ends to the detriment of workers and society at large. Democratically owned companies, on the other hand, tend to give much higher priority to their employees — and be much more responsive to the local community and the health of the environment.

Taking Control

Democratic ownership makes sense in Denmark. To begin with, it has a long tradition in our history. Politically, it enjoys support across the spectrum. And economically, we are facing a major generational shift in ownership — with a likely loss of productivity as a result. Boomers, who make up most business owners, are getting ready to retire within the next ten years, affecting up to 60 percent of all businesses and hundreds of thousands of jobs. Such companies will typically be inherited by the next in line or sold to private equity firms. Most such businesses are ripe for democratisation, but legal and monetary barriers—and sheer force of habit—need to be cleared out the way in order to incentivise owners, employees, and consumers alike to go in that direction.

The hope is the new working group will allow such barriers to be removed, while pointing to concrete actions the state can take to promote democratic ownership. This could take the form of easing access to capital by establishing a cooperative investment fund, implementing laws that secure workers’ democratic rights and protect cooperatives against external takeovers. Other positive measures would be to allow workers to take over ailing companies or giving tax breaks for allocating a set percentage of the business surplus to an indivisible reserve and so on.

Today, approximately 70 percent of all conventional private companies in Denmark have just a single owner — the remainder is largely owned by private investors and investment firms. There is no sound reason to repeat this concentrated ownership structure other than serving a small elite.

The economic benefits of democratically owned companies are considerable. They are more productive, more resilient in times of crisis, more conducive to change (such as a green transition), more oriented toward the long term, sustain a higher degree of employment stability, and have larger incentives to serve the common good outside the workplace itself.

Achieving a ‘mixed economy’ of publicly owned critical infrastructure (e.g., health, education, energy, and banking) and a democratic sector instead of private dictatorships would mark a transformation of the capitalist economy to an associated one, which serves the many instead of the few.

The most important aspect of the democratic ownership agenda is the battle against the class tyranny of property. We take our democratic rights for granted in the political sphere — so why on earth should it be any different in the vast and powerful economic realm, where we spend the better part of our lives?

Democracy, equality, and autonomy are ends in themselves, values to be won — and quite possibly necessities for decent survival. Denmark’s democratic ownership agenda is a step in that direction.