Eric Dirnbach reviews Elizabeth Anderson’s Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It).
The tyranny all around us
One of the primary critiques of capitalism from the Left for well over 150 years is that the capitalist workplace is a dictatorship. The boss or a group of investors owns the workplace and a group of managers or directors set all the rules that govern it. There is no democracy within the company. The workers either accept these rules or they can quit. But quitting generally means seeking employment within another workplace dictatorship.
Some workers are fortunate to have valued, marketable skills that yield highly paid, comfortable jobs where the lack of democracy is not so painful. Others may escape the formal workplace by becoming an independent contractor. A few will start their own business and employ other workers, thus becoming a new dictator. But most workers throughout their working lives move through a series of undemocratic workplaces at the complete whim of their boss’s rules, where they spend about a third of their time for four or five decades. We can see the consequences of this in surveys which show that a majority of people are unhappy at work.
And yet we are constantly told that the capitalist market offers freedom for all. How is it that mainstream discourse won’t recognize the obvious dictatorships that dominate the lives of most people? And how can we organize and fight for real freedom?
The promise of capitalism
With these questions in mind, I was really interested in the book Private Government by Elizabeth Anderson. A philosophy and women’s studies professor at the University of Michigan, Anderson covers the early development of the ideology of the “free market” and the brutal reality of the modern undemocratic workplace. She states, “We are told that our choice is between free markets and state control, when most adults live their working lives under a third thing entirely: private government.” The book centers on two of her lectures and then provides responses from other scholars.
Chapter 1 is an interesting tour through some of the thinkers and movements that arose during the early development of capitalism in the 17 th and 18th centuries. Many of the political leftists of that time were primarily concerned with what were then the salient factors in their lives: state oppression and the domination of feudal relations. They fought against then-hegemonic ideas such as the “great chain of being” where everyone had their social rank in a rigid hierarchy fixed at birth. They often supported the development of capitalism.
For example, the Levellers movement of 17th century England challenged the entrenched hierarchy of the time, and supported free trade and private property. For them, “the personal independence of masterless men and women in matters of thought and religion depended on their independence in matters of property and trade.” Thomas Paine criticized the corrupt and undemocratic state and advocated for markets and limited government. Anderson also discusses Adam Smith and John Locke, hardly considered leftists today, but who held radical anti-hierarchy and pro-market ideas at the time.
The main idea for what Anderson calls these “egalitarians” was that the development of the capitalist free market would bring more freedom for the growing class of independent, self-employed artisans and farmers, who would then no longer be under the domination of feudal lords. And a limited state for them meant fewer oppressive regulations that always favored the rich and powerful.
Knowing what we know now, we may think they were naïve to place such hopes in a market economy. Many of the artisans had terrible working conditions even in their own time. And even if their dreams were realized and everyone owned their own blacksmith shop, how truly free are people subjected to the gyrations of the market? However, in the context of the politics of their time, these ideas and hopes made some sense.
But then the economy changed dramatically with the development of industrial capitalism, which was soon dominated by large workplaces, miserable jobs, and a growing class of impoverished wage workers. As Anderson states,
The Industrial Revolution dramatically widened the gulf between employer and employees in manufacturing. Employers no longer did the same work as employees, if they worked at all. Mental labor was separated from manual labor, which was radically deskilled. Ranks within the firm multiplied…This facilitated a severe degradation of working conditions. Workers were subjected to the relentless, grueling discipline of the clock and the machine…Conditions were harsh, hours long, wages low, and prospects for advancement, regardless of how hard one worked, minimal.
These were the working conditions criticized by Marx and other left radicals of the 19th century, as the socialist and anarchist movements grew.
For Anderson, the main issue is that the economy became undemocratic and terrible for most workers, while these idealized, positive notions about a “free market” of self-employed workers remained in place. As Anderson states, “Images of free market society that made sense prior to the Industrial Revolution continue to circulate today as ideals, blind to the gross mismatch between the background social assumptions reigning in the seventeenth and eighteenth centuries, and today’s institutional realities.” The egalitarians thought capitalism would bring freedom but instead they got wage slavery.
It is beyond the scope of Anderson’s book, and this review, to outline all the reasons why the egalitarians’ dreams of capitalist freedom failed. The important point is that they constructed a compelling fantasy that still rules our discourse today.
Chapter 2 has Anderson’s critique of the current tyranny of the workplace. Provocatively, she calls it a “communist dictatorship,” invoking the authoritarian communism of the Soviet Union and other countries. The “dictatorship” part makes sense, since companies are organizations ruled through a hierarchical command structure. Leaders at the top issue orders that flow down to subordinates, with no meaningful democracy for workers. Furthermore, workers are subjected to total surveillance in the workplace, can be punished for their private behavior completely unrelated to work such as political activity, and can even have their restroom visits limited.
Moreover, it’s “communist” in that companies successfully employ internal central planning. So the “free market” is, strangely enough, a network of competing, centrally-planned dictatorships.
Anderson objects to the lack of public scrutiny of the fact that “Most workers in the United States are governed by communist dictatorships in their work lives.” This applies to, in her estimate, the 80% of the workforce who are not managerial employees, high paid superstars, self-employed, or working under union contracts.
Anderson considers the corporate workplace a “private government.” The state is one kind of government but employers are another. She says,
You are subject to private government whenever (1) you are subordinate to authorities who can order you around and sanction you for not complying over some domain of your life, and (2) the authorities treat it as none of your business, across a wide range of cases, what orders it issues or why it sanctions you.
Anderson discusses the “theory of the firm,” which attempts to understand why so much production happens within large, corporate “hierarchies of authority.” In this view, as capitalism developed in the 19th century, economies of scale proved valuable. Large amounts of capital could create vast factories that produced goods much cheaper than independent artisans could. Furthermore, she argues, internal corporate central planning is much more “efficient” than using a network of independent contractors. Large numbers of contractors negotiating agreements with each other to get work done leads to continuous transaction costs and information hoarding, which are a drag on efficiency. So it’s much easier and faster to give managers broad authority to give orders that are followed by workers.
So managers can direct the work process, but what gives the employer such power over workers’ lives? The overall rules are set by the state through labor and other laws. Anderson discusses the key doctrine of “at-will employment” which “entitles employers to fire workers for any or no reason”. This is what
grants the employer sweeping legal authority not only over workers’ lives at work but also over their off-duty conduct…workers, in effect, cede all their rights to their employers, except those specifically guaranteed to them by law, for the duration of the employment relationship…Employers’ authority over workers…is sweeping, arbitrary and unaccountable – not subject to notice, process or appeal.
But don’t workers entering into a labor contract with an employer negotiate these terms and thus find them acceptable? Anderson reminds us that in the real world, most individual workers are unable to negotiate anything — they simply accept the employer’s terms.
Why are advocates of capitalism unconcerned about this unfreedom of the workplace? Anderson returns to her main idea, that pre-industrial ideas of capitalism mask the current reality, stating that “…a representation of what egalitarians hoped market society would deliver for workers before the Industrial Revolution has been blindly carried over to the post-Industrial world” and that these ideas treat, “in Orwellian fashion, subjection as freedom.”
Three responses push back against some parts of Anderson’s argument, but I’ll briefly focus only on the exchange with Tyler Cowen, a well-known conservative economist, since it is the most interesting.
Cowen gives an extremely aggravating critique, where he asserts that workplaces aren’t really so bad, that “corporate impositions on worker dignity aren’t nearly as great as Anderson makes them out to be” and that employers create pleasant workplaces because they want to “attract and keep talent.” This breezy disregard of the terrible work-lives of millions makes you wonder how an educated man could have learned so little.
Anderson calls him out that, sure, things look pretty good from his perspective at his well-paid university job and drops the mic with a withering compendium of terrible workplace data on wage theft, health and safety, harassment, discrimination, and other problems that I wish appeared in her original essay. Cowen also says that the costs and benefits of the private government model need to be compared with alternatives, and I absolutely agree. He thinks it looks pretty good, but really, a fair comparison never happens. More on that later.
What is the solution?
Where I am most disappointed is Anderson’s discussion of answers to the dictatorship problem she exposes so well. She makes clear that her aim is not primarily proposing solutions, but she does have a few brief pages outlining four ways that the lack of democracy at work is typically addressed. 1) Exit, 2) Rule of Law, 3) Workplace Constitution, and 4) Worker Voice.
Exit is quitting, which is to move, in most cases, to another dictatorship. Quitting is regarded as the principal way that workers can respond to workplace tyranny, exercising their right to withdraw from the labor contract. But Anderson raises a good point that quitting typically imposes great costs on the worker and minimal costs on the boss. Moreover, the worker is often worse off quitting than getting fired, since in many cases they wouldn’t qualify for unemployment benefits. Thus “Exit” is a poor way to discipline the tyrant at work.
“Rule of Law” and “Workplace Constitution” mean government laws or internal workplace rules that constrain employer discretion and bad behavior in favor of the workers. Examples include laws covering health and safety, and wage and hour laws, which mandate certain minimum standards in the workplace. Another example, which doesn’t exist for most workers, is ”just cause” employment, where workers can only be fired for a good reason, and which generally includes a system of due process. Surprisingly, Anderson doesn’t mention that various workplace rules are included in union contracts, a key way that workers bring some “rule of law” to the workplace.
Regarding “Worker Voice,” she considers two traditional strategies – workplace democracy through worker-owned firms, and labor unions — only to brush them aside fairly quickly. She doesn’t think worker cooperatives are viable and faults unions for harming efficiency and bringing an “adversarial stance toward management” in the workplace!
Anderson wants a “workplace constitution where workers have a non-adversarial voice in workplace governance” and the solution she appears to favor is a German-style co-determination system where workers have seats on the company board, though she doesn’t develop this idea much. It’s clear that Anderson is not opposed to capitalism or workplace hierarchy in principle, only the extreme power of employers over workers within these private governments. She favors better regulations and a labor-management partnership system where workers get a voice in how the company is run and rejects a class-struggle framework.
This is an underdeveloped analysis to say the least. The bosses of private government will not simply be talked into a co-determination scheme or any other new system. Any reforms or regulations have only happened thanks to a strong labor movement, which necessarily had to take an adversarial stance. That’s how power is built to win improvements. The prevailing social relations of the workplace, and any laws that govern them, reflect the result of past labor-capital power struggles. There’s no engagement with the labor literature in Anderson’s analysis, and it shows.
If Anderson wants reforms that make the workplace more humane, that leads I think to an unresolved problem regarding democratic oversight. For Anderson, private government is illegitimate because it is unaccountable to its subjects, the workers. State government is democratic because people have formal rights, including the right to choose their political representatives. But if a democratic state regulates private government, why don’t we have democratic private government? Why are workplaces still so inhumane?
This is where Anderson neglects further questions about how “private governments” generate tremendous political power for their owners, with devastating effects on democracy in the political system at large. Ultimately, workplaces are abusive because the state allows them to be. Though state reforms are certainly possible, the outsized influence of the owners of business or capital distorts democracy and makes robust regulation very difficult. This crippling of democracy means that we never get to really try out other systems of workplace governance on a wide scale. Thus capitalism seems to many the only realistic possibility.
Overall, I found this book half satisfying. Anderson raises the neglected issue of the workplace authoritarianism that governs a huge amount of the majority of people’s lives. But then she disregards the working class power that’s required to bring any improvements to “private governments,” or overthrow them entirely.
Eric Dirnbach is a labor movement researcher and activist in New York City.