Employee Participation

Employee Participation September 5, 2022

The Working Catholic: Social Doctrine, Part Nine
by Bill Droel

Capitalism today is of the libertarian or wild cowboy style. It destructs our middle-class way of life plus, let’s admit, it erodes the well-being of its supposed mega-beneficiaries. Alternative styles of capitalism are available. They preserve an industrial base, increase employee participation in the economy and improve the odds of maintaining peace. Along the way, the alternatives strengthen economic competitiveness. They support long-haul capitalism, a democratic capitalism.

Germany has an alternative capitalism embedded in its economy, writes Tom Geoghegan in Were You Born on the Wrong Continent?. Its elements are works councils, co-determined boards and regional wage-setting institutions. Employees in Germany can also, if they like, vote for a union to negotiate their wages and pensions. The works councils, each specific to one store or factory, give some managerial responsibility to an elected employee or two. “On layoffs and other issues [like store hours] the employer has to reach an agreement with the works council,” Geoghegan explains. On a co-determined board half the members are from among employees. (There is one extra member from the executive ranks who breaks a tie vote.) This board, which exists only in bigger companies, does not make all the decisions but it receives company information, considers normal operations and sets general direction. There is a separate board of directors elected by shareholders.

All well and good for Germany, you might say. But it can’t happen in the United States. Surprisingly, Geoghegan says, this German model gained its practical traction from the United States in the months following World War II. And guess what? There are elements of this model in our country.

The latest push for an alternative capitalism comes from California. Like a regional wage-setting institution in Germany, California may soon have sector bargaining for fast food employees. Workers in the United States normally bargain store-by-store, company-by-company. That is why each week a dozen Starbucks’ employees over here and another dozen over there file paperwork for a union at their corner store. And that is why employees at each Chipotle must follow the same protracted process. If Assembly Bill 257 is approved by California’s governor, there will be a ten-member council (some employees, some executives and two public officials) to review wage and safety standards across the fast food industry. The California example of sectional bargaining will not deal with everything. Sick leave, paid leave or scheduling issues are off its agenda. Also, the 257 Bill does not hold corporate headquarters liable for violations by one of its franchise owners. (N.Y. Times, 8/30/22 and In These Times, 5/22)

There’s another surprise regarding alternative capitalism. “There is a whiff of Catholicism about it all,” Geoghegan tells us. Well, maybe more than a whiff. In Catholic doctrine it is called collegia ordinum, Latin for arrangement committees. Other names include joint consultative committee (England), enterprise committee (France) and delegates for personnel (Belgium). In the United States labor leader Philip Murray, a Catholic, (1886-1952) promoted the concept, calling it the industry council plan. It is under discussion in our federal Congress, where it is called accountable capitalism.

Matt Majewski provides the Catholic development of the concept, primarily as it came about in Germany. Franz von Baader (1765-1841), a Catholic mining engineer and philosopher, was the first to outline what he called “factory councils.” Fr. Franz Hitze (1851-1921) and Fr. Heinrich Brauns (1868-1939) wrote its legal structure. Fr. Oswald von Nell Breuning, SJ (1890-1991) devoted an entire book to the topic and included themes of alternative capitalism as he assisted Pope Pius XI (1857-1939) in composing Reconstructing the Social Order, the important 1931 encyclical. Following World War II, German Chancellor Konrad Adenauer (1876-1967), a Catholic, embraced co-determinism as a recovery tool. (Commonweal, 3/22/19)

Co-determinism, its proponents believe, is good for capitalism. It decreases strife between managers and employees, prevents unfair competition among similar businesses and mitigates excessive state intervention in business by encouraging self-regulation. Our society cannot continue without a large number of steady working-class jobs, sufficient to support family life. Without alternatives to our current runaway cowboy capitalism, our society will only devolve further into resentment and sporadic violence. Co-determinism and other alternatives like cooperatives are guideposts on the way to an upwardly mobile common life.

For more on co-determinism get Were You Born on the Wrong Continent? by Tom Geoghegan from National Center for the Laity (PO Box 291102, Chicago, IL 60629; $9).


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