"Self-governing enterprises have a greater resiliency than American corporations."

[Gravitycollapse]

I have also mentioned the Mondragon producer cooperatives in Spain as an example of success. They include their nation's largest manufacturer of machine tools as well as one of its largest refrigerator manufacturers. During a period of a falling Spanish economy and rising unemployment, between 1977 and 1981, employment in the Mondragon co-ops increased from 15,700 to 18,500 (Zwerdling 1980, 154ff. and The Economist, 31 October 1981, 84). Unless they are denied access to credit ---the Mondragon complex has its own bank (Thomas and Logan, 75-95)---self-governing enterprises have a greater resiliency than American corporations. For in times of stringency or shut down, the members of a self-governing enterprise can decide to reduce wages, curtail their share of the surplus, if any, or even contribute additional capital funds, as at Mondragon. As these and other cases show, self-governing enterprises are likely to tap the creativity, energies and loyalties of workers to an extent that shareholder-owned corporations probably never can, even with profit-sharing schemes (cf. Melman 1958).

...

If democracy is justified in governing the state, then it is also justified in governing economic enterprises. What is more, if it cannot be justified in governing economic enterprises, we do not quite see how it can be justified in governing the state. Members of any association for whom the assumptions of the democratic process are valid have a right to govern themselves by means of the democratic process. If, as we believe, those assumptions hold among us, not only for the government of the state but also for the internal government of the economic enterprises, then we have a right to govern ourselves democratically within our economic enterprises. Of course, we do not expect that the introduction of the democratic process in the government of economic enterprises will make them perfectly democratic or entirely overcome the tendencies toward oligarchy that seem to be inherent in all large human organizations, including the government of the state. But just as we support the democratic process in the government of the state despite substantial imperfections in practice, so we support the democratic process in the government of economic enterprises despite the imperfections we expect in practice. We therefore see no convincing reasons why we should not exercise our right to the democratic process in the government of enterprises, just as we should have already done in the government of the state. And we intend to exercise that right.

- Excerpted from A Preface To Economic Democracy: The Right To Democracy Within Firms by Robert A. Dahl 1985