This essay, which is quite different than most of the essays on this site (especially as it unavoidably includes mathematical equations) explores that which is deemed here as the ‘second mystery’, which concerns why there are not more employee owned firms, given that they have been shown to be objectively more productive. The first mystery, which was the focus of an investigation by Roger McCain in his ‘The Mystery of Worker Buyouts of Bankrupt Firms,’ examines the reason why workers will take over a bankrupt firm (a bankrupt country, global governance), even if it means a short-term fall in wages. His conclusion is that the Neo-Classical economic theory of John Bates Clark, which depends upon the reductive notion of rational self-interest among workers, sets forth a false conception of the interests of the worker as a ‘one-dimensional man’ (Marcuse), and thus, cannot explain the complexity and depth of the decision-making process of workers in the crisis situation of a bankrupt firm or a bankrupt planet.
In this current essay, ‘The Second Mystery: Employee Ownership and the Democratic Economy’, in addition to giving a detailed account of McCain’s essay, sets forth the political and cultural reasons for the lack of confidence and interest by the banking sector in employee owned firms. These reasons turn on the false picture of the worker in Neo-Classical economics and the anti-democratic prejudices of the ‘movers and shakers’ of the capitalist economy, including scholars of economics. Beyond the alternative theoretical model set forth by McCain, which is based upon Game Theory (the expertise and theoretical basis of Syriza’s Yanis Varoufakis’ thinking in Greece) and the capacity of workers to initiate subgame strategies in the context of an employee buyout of a bankrupt firm, the essay lays out historical examples of previous successful and non-successful attempts of employee ownership, emphasising the need for the creation of a Democratic Economy which is based on a revaluation of the intelligence and capacity for self-management of employees in the context of an ongoing concern – one of the most important of which is democracy itself (and its meaning).