👉The table of contents so far is here.
Chapter 12: Planned Economy and Corporate Management
12.2. Democratic corporate governance
Corporate governance in planned economies sees significant progress in the democratization of corporate governance. As the saying goes, "Democracy ends at the factory gates" in market economies, market-based corporate management, including joint-stock companies, tends to be top-down, led by the CEO or through consensus among a small number of executives.
This is because profit generation is the primary goal of market-based corporate management, and competitive relationships with competitors necessitate quick decision-making.
In contrast, as discussed last time, decision-making based on democratic deliberation—democratic corporate governance—is both possible and necessary in planned-economy corporate management, which aims to promote the public interest.
While this approach can vary depending on the various corporate structures discussed in the previous chapter, what they all have in common is that employee organizations serve as the primary decision-making body. In this respect, there are similarities to the general shareholders' meeting system in joint-stock companies. However, the general shareholders' meeting is merely a management oversight body for investors. Employee organizations in joint-stock companies are not sufficiently internalized, with labor unions as external organizations effectively substituting for it. The ultimate form of democratic corporate governance based on employee organizations is self-management, in which the workers themselves are directly involved in management. In this respect, a production cooperative, as self-managed enterprise equivalent to communist private enterprise, is model company for democratic corporate governance.
However, this is a company outside the scope of a planned economy, and for a production business organization as a public enterprise subject to a planned economy, literal self-management is not possible given the company's size. Therefore, in this case, a labor-management co-determination system is appropriate.
The details of this were already mentioned in the previous chapter when discussing corporate forms, but to reiterate, it is a system of co-determination between a management committee and a workers' representative committee. In particular, matters related to working conditions and benefits cannot be decided without the consent of the workers' representative committee.
Furthermore, another key to democratic corporate governance is the consensus system of the management body. In either corporate form, there is no top person given great authority. Whether it is the chairperson of the management committee of a production organization or the president of a production cooperative, they are merely chaipersons who bring together the management bodies, and there is no room for so-called one-man management.
In order to thoroughly implement this type of consensus system, it may be worth considering a system in which the management body does not have a chairman of the board of directors, chairman of the board, or other representative positions, but rather each member of the management body shares their respective duties and shoulders management responsibilities on a completely equal basis.
👉The papers published on this blog are meant to expand upon my On Communism
