Owning Capital or the Enterprise?

Third Quarter 2003

Fourth in a Series on Poverty, Wealth, and Globalization

The text below is excerpted from a longer interview of Herman Dooyeweerd conducted in 1974 by Magnus Verbrugge, a physician and Dooyeweerd 's son-in-law. Dooyeweerd had worked from the 1920s to develop a Christian understanding of society in which state, church, family, enterprise, and other institutions and organizations are recognized as having distinct and independent responsibilities before God. He rejected both the liberal idea of individual autonomy and a completely laissez-faire economy as well as the socialist idea of state dominance over the whole of society. At the heart of his argument about the relation of public law to economic enterprises was the conviction that an economic firm is a community of people, all of whom should have an ownership share in the enterprise. The enterprise should not be identified only with its capital. Capital can be bought and sold, but not the people in an enterprise. This contrasts sharply with the idea that a firm as a whole is a piece of property.—Ed.

Verbrugge: How do you draw the line between the enterprise's service to society and its self-service? And what is the place of workers in the enterprise?

Dooyeweerd: An enterprise is only good when it serves the interests of society. The limited company calls the enterprise into being. The workers are the natural partners of the capital owners. But workers are not members of the company as long as they have no shares. And that is why I propagate the idea of giving workers a sufficient share in the company so they can, as a group, have influence in the management of the company.

Verbrugge:: Do you mean they should own shares not just because they work in the enterprise but because they share in the risks and rewards of the company?

Dooyeweerd: Exactly. They are not only members of the work community but should have a part in the corporation of shareholders and entrepreneurs in the exact sense of that word.

Verbrugge: Some say that shareholders should have no say in the operation of the enterprise. All they do is supply money.

Dooyeweerd: That does not correspond to reality. We can never say that the shareholders have no real function except to supply money. Others say that workers should be given a voice in management but not shares in the company. By contrast, I have long advocated that workers should get shares. And once they have shares, they are completely entitled to have a voice in the management of the enterprise. Shareholders should have a voice in the enterprise since they have taken the initiative to call the whole thing into being.

On this score I was opposed by the Christian trade union in The Netherlands decades ago because they thought that if workers owned shares it would foster a materialistic attitude among them. When a glass factory decided to offer shares to the workers, the experiment did not succeed because the workers were not interested in owning shares or having a voice in management. They were only interested in wages—the only money that counted. In due time, however, favorable results began to appear in different industries.

Verbrugge:: But why did the employees at the glass factory not understand that a share is also money and that having a voice in the firm was something positive?

Dooyeweerd: Apparently they did not like the idea because they considered that once they got shares they would also have to participate in the risk of the enterprise. The enterprise was a profitable operation but the idea of co-determination did not succeed at the start.

Verbrugge: Isn't it sad that a worker would refuse a share in the company?

Dooyeweerd: Yes, but you should consider that the question of employee share [stock] ownership arose in a particular context. The owners offered the shares to arouse in workers a greater interest in the enterprise in order to increase its value and wealth. But share ownership has to be about more than money. Co-determination is about partnership. Workers should participate because they are members of the community—the enterprise. The mere fact that someone works in an enterprise is not sufficient to give him authority. Without some authority the whole idea of co-determination is lost.

Verbrugge: Would you say that from a Christian point of view the norm for a work community should be that workers and managers mutually concern themselves with the welfare of the firm and of each other as human beings?

Dooyeweerd: Yes, on the condition that the workers become members of the company that has called the enterprise into being--that they become shareholders. Only that can make workers and managers full partners. 
 

Previous articles in this series:
First: Law, Politics, and Corporate Enterprise (1st Q., 2002) 
Second: What Is Corporate Enterprise? (2nd Q., 2002)
Third: The New Institutional Economics (1st Q., 2003)