Participatory Corporatism: Introductory Summary

Zak Wear

Business systems are frequently riddled with cookie-cutter methods and weak social constructions. This recent wave of social entrepreneurship is impeded by the business tradition—from commodity fetishism to narrow viewpoints of how business can better adopt a mission of social responsibility. We can start a conversation on adaptive, realistic and simple business systems that facilitate this movement towards a more socially-responsible, democratic global economy. In discussing methods that may take part in this conversation, the term “Participatory Corporatism” best identifies the overall objective of this work—to form a model that will maximize a participatory, democratic environment in the current ways we do business.

This essay provides an introduction to the discussion of  “Participatory Corporatism” as an umbrella concept of business methodology. Included will be core models of workforce income, organizational construction and systemic transparency. These core models stage further details on how participatory corporatism can be applied for a radically democratic supply-side economy.

Furthering participatory methodology in the most immediately accessible and relevant manner is principal in this narrative. Participatory Corporatism emphasizes market-compatible methods for moving socio-economic equality, political inclusion and systemic justice to the forefront of business consciousness. Corporatism as a legal framework has come to focus in exploring this effort—that we currently possess the tools and rights necessary to shift the capitalist paradigm if addressed with the right organizational framework.

            Three core methods support the participatory corporatist method, all of which are wholly vulnerable to theoretical development as malleable and interchangeable ideas. First is an alternative labor compensation system called Engaging Income; a method to provide market-yielding compensation to labor that continuously reduces income stratification while shifting actor rationality from individual betterment to civic betterment. Second, the development of a modular, decentralized organizational approach to corporatism that enables high freedom of association and democratic decision-making whilst building a macro-scale, critically-effective movement of participatory economics. Last will be narrative on developing a sense of “Open-Sourced Business” that would establish transparency and public permeability far surpassing publicly-traded or even labor-owned companies. These combined methods account for plausible tools that would facilitate a radically participatory and proliferative business model that can be applied today.

The Engaging Income: A Participatory Method in Motivating Surplus Value for Balance of Wage Stratification

            Traditional business functions to maximize motivations to propel private livelihood—the “me” complex that is not culturally universal or socially sustainable. A sense of stakeholdership to the public and personal accountability to income may be hybridized by re-approaching workforce income. Supported by an algorithmic method of wage circulation process; “Engaging Income” defines a simple way to tether the success of private enterprise with the public interest. Presented in a context of a large company, this is accomplished by two primary efforts. First, compensation targets based on a weighted mean income index of affected areas in the business process. Second is to enable participatory budgeting in the application of surplus value. Engaging income effectively motivates workers to boost personal income by increasing the standard of living in their communities, fosters maximum employment in the economy without suffering stagflation, and effectively democratizes the credit system in a macro-level act of angel capital.

            Redistributive policies are typically criticized for their social functions at the expense of market equilibrium. The Engaging Income method is designed to maintain market equilibrium, promote the choice of rational actors to foster income equality and augment capacities for competition in the marketplace. In developing this concept three rules are maintained:

1.      Compensation must always yield to market equilibrium.

2.      Actors must rationally desire the promotion of income equality.

3.      Wages provided to labor must afford opportunity for capital investment and creation of new competitors so as to avoid monopoly on specific goods and services.

The Engaging Income is intended to shift systematic motivations for workers and consumers alike in the free market environment. This is first done by reserving payment of salaries beyond living wages (base salary) for investment in new entrepreneurial projects. These new projects are funded by participatory budgeting, in part by individual workers applying their Engaging Income. If a worker has a $15,000 bonus beyond the base salary (as determined by their share of total profits,) then that is their portion to nominate for investment allocation. This scalable method allows for workers to participate in the political process of credit allocation with emphasis on (optional) individualized responsibility. As many workers participate in this program, an economic facet of democratic buy-in is developed for new projects. Stakeholders receive the remainder of their paychecks when returns are generated from invested projects, fostering more explicit, systematic forward-thinking rationalization at the ground floor of income rather than short term gain maximization. Essentially, workers are able to vote with their money in such a way that decommissions the necessity of an investor class.

Profit-sharing, cooperative ownership and stock options have been applied before as plausible democratic methods within business development, however a multitude of gaps exist in such systems. The resources set aside for investment may remain needlessly centralized within a controlled, collective political process that may be contrarian with majority interests. These programs may not fundamentally motivate growth, but rather maintain stability for existing owners. At times, organizations with “progressive” and worker-centric models of empowerment are oddly similar to traditional counterparts.

While the “elective investment” part of Engaging Income may impact some of these barriers, an additional layer may allow stakeholders opportunities to transcend the motivation of success for an individual or singular firm alone. Typically sought is business that creates jobs, builds communities, and functions generally within the public interest. For workers to be fully empowered and motivated in this capacity, a weighted cap of salary based on the mean income of local, national and international populations could be applied. It is important to create some kind of systematic weight between socio-economic entities (neighborhoods, cities, nations) in the system’s efforts to depress social stratification. This model weighs this process by the model’s market share, so as to provide heavier accountability for the model as its proliferation takes place. A 20% adjustment above the metropolitan mean allows jobs under this model to actually raise mean, after which weighted by the geo-economic environment. This also allows for a cushion from which the weighted average can apply itself without pulling workers in industrialized areas below their own national mean. This weighted approach is defined by a Maximum Income Potential, accounting for the cap on which workers can take as personal income that is levied tax, pays for goods, etc:

            Group collaboration is an equally significant necessity as individual participation in the political economy. Resources to define its goals and directions are essential. Profits left after workers within the firm receive Maximum Income Potential will be split between committees from the project to international levels. Investments and allocations these committees make will be returned to workers in the form of a group-level dividend wherein workers receive proportional returns accrued by the committee that facilitated the additional portion of their investments.

This may accomplish three desirable dynamics. Allowing for a balanced dividend in this context provides for sustained motivation to earn profit beyond the Engaging Income Cap. In how the Engaging Income provides calibrated compensation on the firm level, the Group Level Dividend is a relatively fair, calibrated compensation for all workers of this program on a particular geographic market level. This could be a relatively fair compensation method that is empathetic of the higher capacities for some firms to amass surplus value. Finally, this (what is essentially a mutual fund) provides motivation for the diverse groups of firms within this franchise to see mutual profit maximization and sustainability. To the perspective of a single worker, a sum of group-level dividends is attributed to final income regardless of Maximum Income Potential:

Engaging Income may provide for more effects than a decrease of social stratification or maximum employment. Because stakeholders/workers accept losses as part of their investments, personal income in this context appears to mitigate the inflationary threat of maximum employment. As an economy becomes more mature and full employment is attained, the diminishing return on engaging income investments may prevent an overheated market by allowing market equilibrium to take hold of compensation beyond base salary to workers. By attaining a systematically-driven middle class accumulation, a greater socio-economic balance of risk acceptability and capital to provide for risky investments on the individual level may be found (see Milton-Savage Utility Function.) One concern is short run wage rigidity as an income scheme of this complexity would best be done on a quarterly level. Workers may also become disgruntled with each other’s efficiency for short run fluctuations; however this is more of an organizational development problem. Short run wage issues may be mitigated with stability planning.

The social merits of this design may provide for expedited growth beyond its own proliferative properties as a reinvestment tool. It affords, without a purely ideological shift in paradigm, the opportunity to systematically pay workers an honest share that explicitly takes into account the interconnected, interdependent web of economics. To make the statement that absolute equality must be attained, starting with a state-run 5-year program is an unsustainable and ideological affair. However, to explicitly establish something that systematically moves us in that direction, without significant illusions of “human nature” in relation to free market play, we could observe a plausible paradigm shift.

For the sake of simplicity, this discussion presumes that the participatory corporatist model is implemented in one incorporated body that functions as a capital sandbox—legally a non-stock corporation that grows with EI investments, builds market share, and systematically fosters more participatory methods. When the public patronizes this firm, they are buying into an alternative way of doing business. A “header brand” that identifies a firm’s part of the overall movement in addition to locally-identified monikers can provide for a universally understood brand and freedom of association. This leads to our franchise of methodology.

A Franchise of Method: Defining Freedom of Association in Corporatism

            Traditional corporatism presents a variety of shortfalls in facilitating democratic process, requiring another look at corporate organizational structure. The executive-centric model is not critical to leading products, services, and ideas in a perpetual hierarchy. Rather, Participatory Corporatism operates itself as a “franchise of method” wherein systemic justice is the common denominator for the organization. This system leaves community-level firms the freedom to associate, develop self-management and change the marketplace while facilitating important connections of collaboration.

It is important to question the importance of centralization, specialization and compliance in the development of socially-balanced economic activity. Can task specialization be made accessible for the majority? What forms of accountability on what matters prove most useful for a democratic workplace? How should one organize and define an appropriate scope for decision-making? The academic community has already delved into these kinds of questions regarding business. However, participatory corporatism as a theoretical construct allows for a more rigorous approach to discussing these issues without compromise for undemocratic anchors such as stockholders and other wealth proprietors. At the same time, codifying this large-scale organization in a manner that is accessible to the mainstream (while providing radical results) will prove challenging.

            To first discuss the reasons for why I present this concept as a unified, singular entity and not a model that would be reciprocated in many separate companies. In summary, this is the best path that I see for a genuinely strong, adaptive, accountable and relevant movement of change for the global economy. This is for three reasons:

1.      The “brand” of this company is its participatory, democratic method. With the objective of maintaining a higher level of democratic process than a vast majority of political/economic actors and entities, the public will be able to scrutinize and support a single movement rather than become confused over whether other entities (possibly those that may co-opt parts or this entire model) are legitimate or proverbial lipstick pigs.

2.      Singular, radical businesses that attempt to build participatory methods often become subdued to market forces for various reasons (virulent competition, temptation to sell the business, etc.) A larger collaboration would aid in providing stability.

3.      Singular, radical businesses that attempt a reformist approach are typically dominated by privilege in numerous forms. A large collaboration of this kind will remove a vast majority of traditional barriers to starting a business, allowing underprivileged groups to build participatory business in their communities in an explicit, transparent and accessible manner.

Considering these concerns, it is reasonable to provide focus on developing a large-scale system that is justifiably sustainable in providing social, economic and political justice.

            Firms that wish to organize a traditional franchise that standardizes products and services are free to do so by forming parallel committee structures. These committees organize quality, labeling, logistics of independent shops around a single brand. Of course because this association is fundamentally left to individual shops/firms, there is a reserved right to break such agreements after any contractual obligations are satisfied.

            Decision-making is facilitated with a coordinated yet decentralized approach. Firms on the local level can ascertain their own hiring, firing and management style so long as its operations are conducted on a majority rule basis. Elected representatives from each firm attend group-level committees that allocate profits. Representatives’ time is paid in part by an allocation of organizing/decision-making as part of their weekly agenda—something established universally on the firm level for all workers and as such easily displaceable for higher committees. The top, international level of representation facilitates the standards of this “franchise of method.” Web servers are maintained, marketing campaigns for the movement are coordinated and unscrupulous behavior that is not self-managed on the firm level is addressed. On an annual basis, workers could vote for an average allocation of funds to this body by profit margin, minimum allocation or a combination of both. This simple modular approach allows for transparency, accessibility and cost effectiveness.

            As this movement matures, there are ample opportunities to see this become a direct stepping stone to a pareconish system. When communities mature in this transition by practicing participatory methods and building capital for workers, many may choose to take the step of establishing workers/consumers collaborations, foregoing the EI system and its market-based approach overall.  This however is a very detailed conversation that may be addressed later.

Open-Source Business

            A final selling point to this “brand” or “franchise” of democratic method is transparency. Trade secrets are kept to an absolute minimum as receipts, reports and minutes are actively published. This is not simply for the purposes of being transparent to outside consumers, but makes a system of accountability more effective for workers.

Workers would enjoy a far more efficient experience with bureaucracy. Rather than having a management tree that aggregates reimbursement forms for example, an online collaboration cloud allows workers check off each other’s claims based on smart phone pictures of receipts, emailed bank statements, etc. Revenues/expenses reports on a daily basis automatically calculates and analyzes the EI bonuses that have been earned—allowing mutual cooperation and understanding of any changes that may need to occur in the workplace, in real time. In a sense, with all out in the open and on record, the system could be drastically more efficient.

             This efficiency extends to the public as well. Rather than forcing consumers to vote with their feet, OSB can be applied to promote public buy-in for new products and services. A coffee shop has to make the decision between the source of their beans. One is a sustainable, direct trade coffee that would cost an additional 20 cents per cup whereas a more traditional source would cost the same as before. A more open-sourced approach to business would be to pose this query to people—when waiting for a cup to be poured, a customer may receive a modest incentive (or not) to assist in making the decision. Of course traditional businesses conduct market research on scrupulous samples of consumers to make these decisions, however this approach exemplifies what could be exceedingly democratic and necessary; that people are systematically enabled to participate. This can be built with a kind of transparency that makes this organization deliberately permeable with the public conscience.

Before closing I want to appreciate the academic capacity of our radical communities. My immense amount of respect for detail, discourse, and absolute standards for principles of human equality as expressed by radical leftists is exactly why I choose to expose this article (as a rough draft) here first. My limitations in providing simple, accessible writing is also evident with the density I have provided. That said, I will work hard to provide questions and queries with a deliberate amount of attention. This work may have also developed an identity easily labeled as too mainstream in some respects, diminishing the potential of this conversation. I hope we remain conscious of that dynamic if it emerges.

            The design intention of this system is to establish an approach to elapse social stratification, be compatible with our current laws and markets, and promote increasingly democratic principles in both the workplace and economy overall. This is a reformist approach, however not so meek in its methodology that it would be easily co-opted by disingenuous actors. A good business model, particularly one taking the risk of applying itself in today’s system, must be fully compatible with the marketplace yet accomplish significant systematic shifts as the effort expands, proliferating naturally and motivating workers (by both traditional and radical measures) to grow the effort and its ability to facilitate a systematic shift.

            Participatory Corporatism is defined as an umbrella concept for the development of several key organizational methods that are intended to provide a realistic reformist approach to the current capitalist environment. It applies an alternative labor compensation scheme that functions as its core model, driving an association between profits and community upliftment on the systematic level. This is not a social entrepreneurship venture that slices off a piece of the pie to the underprivileged. This is intended to foster a systematic redesign of how business operates in such a way that it will build a more participatory society now.