‘Employee Owned’ Identity?

By H.B. Paksoy, D. Phil. Lectures prepared for the course entitled, “Rewriting History: Emerging Identities and Nationalism in Central Asia”, at the Central European University, Budapest, July 2004

The men I should be tempted to commemorate would be the originators of transforming thought. They often are half obscure, because what the world pays for is judgment, not the original mind.

Justice Oliver Wendell Holmes (1841–1935)

It is the privilege of anyone to engage in any intellectual pursuit; provided, laws appertaining are not violated.

If the above statement is read to mean, for example, “While engaged in the study of physics, if you violate the laws of nature in your deliberations, such a shortcoming will lead you to erroneous results,” it would be logical. But, it becomes ominous if the same statement is made as a “political warning to an individual not to transgress the dogmas of the institution or state” which employ that person. Yet, the statement fits both occasions effortlessly. In the latter case, if not an outright offense, it may even be seen as a violation an unspoken law. And, in some cases, unwritten (secret) laws have precedence over the published ones.

Creating a governance code, on the other hand, requires more; it is not a simple intellectual pursuit. The entire process has been through a longish period of evolution, the ‘governance strata’ and ‘individual will’ doing battle against each other throughout history. What is more, the ‘governance strata’ has tried a variety of ideologies in order to win over individualism and pluralism. These ranged from strength of arms to claims of divinity of a human; single dictatorship to institutional autocracy, and everything else in between.

Background

While there are probably a significant number of unknown natural laws in physics, perhaps nothing is left more to learn about human governance principles. In being creative, it is necessary to be the sun; not just son of sun. Nor will it suffice to be an astrophysicist writing on the solar disk. Discovery and originality does not fall into the same bin.

States, polities and principalities arise of necessity, desire and determination. This endeavor requires not only blood, but brains. And the emphasis is on creation. This does not mean that any and every creation will be beneficial to all. Most, as events have demonstrated, are not. Communism, for example, as a governance system, was, at least for a while, seen as the savior of humanity. Let us overlook, for the time being, the fact that the root idea of communism goes back to Plato’s Republic c.360 B.C.E. and then to Thomas More’s Utopia c.1515 C.E. Some of these failures have come about due to inconsistencies between the Designer of the system and the Applicators. Those who wished to apply the system either did not understand the principal tenets, or were corrupted. Another possibility is that the system was not a major shift from those already existing, too confusing or not necessarily sufficiently mature to be introduced to the world.

Even the above mentioned example of Thomas More (1478–1535) and his Utopia is full of irony. More and Erasmus (1466–1536) were very good friends, adoringly close. During a visit by Erasmus to More’s house in England during1509, Erasmus caught a cold, and while recuperating, Erasmus wrote Moriae Encomium (The Praise of Folly), with a word play and pun on More’s name. They were also contemporary with Henry VIII (1491–1547), and well acquainted with the monarch well before his ascent to the throne. In the same breath, let us also remember three more individuals before exploring Identity relationships and how they evolve. In chronological order: The English religious reformer John Wycliff (1324–1384); The Czechs religious reformer Jan Hus (1369–1415); The German religious reformer Martin Luther (1483–1546). We also need to recall that Wycliff was the first translator of the bible into English; and Luther has the honor of rendering the same holy book into German for the first time. It was the reformist writings of Wycliff that influenced Hus, whose life and writings caused Luther to turn religious reformer. These three never met.

In their part, More and Erasmus were religious reformers, too, even if, in the end, in different directions. Both remained Catholic all their lives, much like Wycliff and Hus. While Luther was protesting, and laying the foundations of a new path to a new approach, Erasmus was very sympathetic. They briefly met and discussed the issues. Erasmus was in favor of working gradually and from within Catholicism to reform it, while Luther was in a great hurry. Luther gradually became aware of his position that his noble ideas were hijacked by his protectors in Germany. And Luther needed German nobility’s protection from the Italian based Pope’s allies. The German nobility had finally discovered a reason not to pay a portion of their annual income to the Papacy. When Luther perceived Erasmus not to be in support of Protestantism in the open and full force, he turned against Erasmus.

On the other hand, More joined the administrative strata of England, even serving under Henry VIII, who founded the Church of England. This was another irony, because, earlier, Henry VIII personally wrote a pamphlet attacking the ‘heresy’ of Luther. More objected to the expropriation of the Catholic Church and its holdings by Henry VIII in favor of this English Protestantism. More was in opposition to Protestantism, and being one of the two undersheriffs of London, may have persecuted the ‘new men.’ By this time, Luther’s ideas were primarily transmitted into England through Geneva, by those around John Calvin (1509–1564). Ulrich Zwingli (1484–1531) was following a similar line of Lutheranism in Zurich. And the term ‘new men’ became a code word for Protestants.

Thus, the efforts to reform the financial and moral excesses of the Papacy led to a new religion, Protestantism—with many branches. As a side effect, the process of translating the Bible into ‘national’ languages only strengthened the formation of nations and states. But, the works by Erasmus and More took their place in this new world, within Protestantism, alongside the works and commentaries of all other protesters. The efforts to reform the religion also fueled the impetus to have a new governance system; one that is more ‘individualistic’ than the communitarian one prevailing under an authoritarian, religious Identity.

Development of Cooperation

No amount of regulation, by whatever means, will suffice to maintain civility. Only the willingness of the population to get along with each other can. So far, the population on this earth has not uniformly demonstrated that can be done. Ideologies have been used to wrest more of the resources into the hands of an ever smaller group. As the population grows, the pressures of resource access are transferred to other areas; or so they are presented.

The collaborative experiences of a society, in part, are responsible for the formation of its Identity. If those experiences are recorded in the form of belle letters and popular literature, than that corpus become the vertebrae of that polity. Most, if not all, Identity systems insist on a single or oligarchic leadership for a polity, from imperialism to mercantilism; regardless of its other functions. Even pluralism does not seem to result in broad based rule but tends to elect ‘representatives’ to undertake the task.

Every Identity system defines itself through sets of formal rules and adumbrated doctrines. These related words place more stress on goals then methods. Such inflexible rule-setting hampers coordination among diverse groups who need to collaborate for the success of all. This set of objectives must seek to accommodate more than the basic necessities for all concerned. The extent of the prize pie is generally known. If the distribution of the pie falls too short of expectations, there is likely to be an attempt at revising the rules, and the Identity.

The cooperative production unit, legally favored in the 19th and the early 20th centuries, heavily depended on a self governance model. This self governance model did not arise independently, but out of the ‘pie distribution’ necessity. The wealth created by the onset of industrialization had to be distributed a bit better across the labor force to prevent outbreaks of violent wage protests. Even though the parents of the cooperative movement were social activists, the midwife was a rather high ranking politician, intending to rein in galloping capitalism in its harshest form. The politician’s objective was to keep his polity together, to moderate deeply divisive issues and to create a counterbalance to unchecked moneymaking by the nascent industrialist. He wanted his polity to succeed in the world.

The employee owned corporations followed on as legal entities, as a result of a century long evolution of the cooperative production unit. By that time, the coop did not have to ‘produce,’ but could be a service organization. This began to form the Employee Owned Identity, over and above the hopes of the midwife European politician of the 19th century.

Observation

The employee-owned corporation is rarely formed and reared into successful operation by a collection of owner-employees. Rather, an entrepreneurial individual (or, small number of individuals, usually working in pairs) establishes a business. The founder(s) either sell it, or otherwise transfer the ownership of the enterprise to the employees. In a plurality of the cases, the business involved has either a local a regional base. Provided the owner-employees take a continuous interest in the heath and welfare of the enterprise, it will live and even flourish. This constant participation of all owner-employees, in a rational manner, is imperative. This rational manner here is defined as pulling on the assigned oar at least one hundred percent and not engaging in capricious tangents.

Is the Employee Owned Corporation representation, then, the ‘ideal’ model for a new Pluralistic Identity? Is it the most rational economic unit? Should there be a limit on the corporate charters much like patents, trademarks and copyrights? For example, should an entrepreneur be given a corporate charter to start a business, with the provision that after 30 or 50 years later the enterprise must be turned over to the employee ownership? Of course, the founder(s) or their legitimate heirs would be compensated at the prevailing market value. This, of course, can be foreseen in addition to the revenue derived from the operation of the enterprise throughout the specified charter period.

As a further inducement, for the purpose of encouraging the use of limited time charters (rather than making them compulsory), the corporate tax rate may be kept some percentage points lower than the regular corporate charters. Would this provide for smoother labor-management relations? Would this structure reduce the dreaded turnover, secure job continuity?

If the limited charter holders chose to revert to a regular charter, meaning, change their minds, might they be permitted to do so by paying additional taxes, and granting minority ownership in the corporation to the employees? Or would all that lead to abuses? Would all the foregoing remind us of the guild system of yore, where the entered apprentice toiled until he became a journeyman, and finally a master and owner of a craft shop (akin to the present day corporation, but, perhaps smaller in scale)? In other words, there are precedents to this type of thinking. However, at this point all we have are questions.

Identity Implications

The guild system was widely in use in Central Asia, and in Europe. Though not founded on the exact same principles, both varieties of guilds operated on the foundations of strict discipline. This was done in order to:

limit the number of craftsmen in a given specialty regulating wage and price stability assuring quality control favoring the consumers leading to the formation of Identities in a given polity

All this is a necessity, if the polity is to be kept intact. In both Europe and in Asia, there was a secondary and generally unverbalized reason for supporting the guild system: Keeping the population stable and preventing the flight of taxable talent from a polity. This aspect especially required the formation and maintenance of an Identity. Nowadays, that is known, in the business-speak (and, beyond) as ‘brand recognition.’ When the polity is well regulated, including the legal system, individuals living in that society will take pride and will want to further better the conditions for selfish reasons. Those noticing those desirable qualities will want to move in, thereby swelling the population numbers, taxable businesses and disposable income. A highly respected ‘brand recognition’ of a city will ensure not only survival, but also future prosperity. Same goes for continents.

Therefore, it is a legitimate question to ask: Which came first, Identity or economics? So, what we started considering, a particular activity (interaction of Identity and economics) of a given polity, managed to force itself on the rest of life in that polity. Not only in the specified area, but in the largest sense; order in life and governance system of a polity. That we must observe, is not the only binary question that may be posed. As noted above, the idea of religion also played a prominent part in the formation of Identity; both for and against. Moreover, that struggle, to find and preserve the Identity of the self and the larger polity also influenced the nature and formation of the governance systems now in use. The process is inseparable.