Research Seminar

Bo Rothstein: Why No Economic Democracy in Sweden: A Counterfactual Approach

Date: 17 February 2021
Time: 14:00-15:45

Bo Rothstein hold the August Röhss Chair in Political Science at University of Gothenburg, a position established by a donation to the university in 1901. He has also held positions at Oxford University, Blavatnik School of Government and Nuffield College and University of Uppsala and I have been Visiting fellow at Australian National University, Cornell University, Harvard University, Russell Sage Foundation,  Stanford University and University of Washington Seattle. His research is concentrated on the issue quality of government. This relates to issues about corruption, clientelism, social justice, welfare policies and human well-being. 

Companies, that are owned and/or governed by theiremployees, either through a cooperative, stock option plan or an employeetrust, has been studied empirically for almost four decades. The results showthat such companies such companies are on average performing better and havehigher productivity than firms that are governed by outside capitalists/owners/investorsand they pay somewhat higher wages. In addition, they have far less turnover ofpersonnel and employees are more satisfied with their working conditions. Inmany cases, such companies are contributing to decreasing economic inequalitybecause in addition to their salaries, employees also benefit from the capitalin the company, usually in the form of substantially higher pensions. Peopleworking in such firms tend to be more pro-democratic and civic oriented. Giventhese many positive results, this paper poses a counterfactual question. Namelywhy have economic democracy in the form of employee owned and/or governed companiesnot been on the political agenda in Sweden? The reason to ask thiscounterfactual question is that there are many reasons for why we should haveseen such companies mushrooming in Sweden given its strong labor movement andSocial Democratic party. What needs to be explained is why the country hascomparatively very few such companies? Three answers are presented: Theorganizational interests in organizational learning of the unions, theconflation of capitalism and markets by the political left and the politicaldebacle of the wage-earner funds policy. 

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