Memo to Michael Moore: Workplace Democracy and Capitalism Go Together

I missed Michael Moore's Capitalism: A Love Story when it was in theatres (and I wasn't alone, apparently, as it did not do nearly as well at the box office as many of his previous films). But I was intrigued by the interviews Moore gave for the film, such as this one with Wolf Blitzer in which Moore declares that we should replace capitalism with "democracy." "You and I should have a say in how this economy is run," he told Blitzer.

Blitzer misses some golden opportunities to ask Moore what he really means by this proposal. How can voters run an economy? Will the ballot box determine what new goods should go on sale? Will there be a referendum whenever we need to figure out the price of a loaf of bread?

As it turns out, there is a way democracy can coherently make economic decisions. But it's not what Moore wants. Many firms—profit-seeking, capitalist ones—around the country and world are implementing "workplace democracy," in which workers are given voting power over certain aspects of how the business is run.

My friend Greg Ferenstein, a researcher on this subject at UC Irvine, recently had a great op-ed in the Christian Science Monitor that explains where Moore gets democracy wrong, and how workplace democracy can actually help capitalists make money.

One example of the change: Harvard Business Review contributor Ricardo Semler saved his manufacturing plant from bankruptcy by replacing middle management with autonomous, employee-run teams.

Teams at his plant, Semco, set their own salaries, schedule their own hours, and are offered finance classes so they can understand Semco's transparent record books. Mr. Semler found that devolving power to employees made them happier — and happier workers were more productive.

I'm not sure about how much workplace democracy will catch on. But the nice thing about the market is that it generally rewards what works, from the profit-making standpoint. So if workplace democracy really is a good way to provide goods and services that people want, we will see more of it. That's a much easier way to figure out the extent to which democracy should run our economy than, as Moore would advocate, having the government impose it from the top-down.