Reimagining Capitalism Series: Building Counterweights to Power

This post expands on the third key pillar for building a new economic paradigm as outlined in Our Call to Reimagine Capitalism. Read the first post in this series, “An Introduction to Ideas, Rules, and Power and How They Shape Our Democracy and Economy” here.

By Audrey Stienon, Associate, Reimagining Capitalism

Labor Day represents an important moment to commemorate the essential contributions of working people to our country.

The holiday was created at the height of the Gilded Age, a time when the American economy was booming, the likes of John D. Rockefeller, Andrew Carnegie, and J.P. Morgan were making their fortune, and most people toiled in exhausting, unsafe jobs for paltry wages. Working people, including children as young as five, labored in 12-hour shifts, seven days a week—and still were not paid enough to escape poverty. Individuals had little power to change the status quo, but when they banded together in labor unions, they were able to effectively demand better pay, hours, and working conditions from their employers.

This shift in power didn’t happen quietly or easily. The wealthy few who profited by exploiting labor wielded their money and political connections to mobilize private security forces, police, and the judicial system against working people. In turn, the labor movement used all the tools at its disposal—from strikes and boycotts to protests and marches—to fight for change, even in the face of violence. In 1894, after twelve working people were killed during the Pullman railroad strike, President Cleveland tried to repair the government’s frayed ties with working Americans by declaring the first Monday in September “Labor Day,” a holiday commemorating the essential contributions of working people to our country.

A new holiday, of course, did not suddenly balance power between working people and their employers. Today, working people—along with the labor unions, grassroots movements, small business associations, and community organizations that represent them—continue to engage in many of the same battles for equal power that they fought more than a century ago.

Equal power means freedom of choice for working people. That freedom is what makes possible the American Dream, with its promise that everyone should have the equal right to build the life they desire by participating in the economy in whichever way they choose—through hard work, risk-taking, innovation, or entrepreneurship.

Like democracies, capitalist markets—especially those intended to support democratic societies—work best when participants enjoy a high degree of equality in decision-making power. Ideal markets, after all, depend on individuals’ ability to buy what they choose as well as to walk away from any exchange that does not satisfy them—something true for people entering a store just as much as it is for people assessing how they want to spend their time and labor.

But whereas democratic power is shared through the vote, markets’ power often comes from money. Any capitalist system intended to support a democratic society depends on checks and balances that prevent any one group from writing rules that benefit themselves at the expense of everyone else. A society in which this power of choice is not balanced—in which the rules of the economy leave working people with no choice but to accept jobs that leave them in poverty, and with no way to achieve meaningful change—cannot be truly democratic.

We know American capitalism has routinely failed to live up to this ideal. The two-pronged restriction on voting access and market participation by race, gender, disability, and class ensured that whole swaths of our society were (and in many cases, continue to be) robbed of both the political power to write economic rules that protect their interests and the economic power to gain enough resources to live with dignity. And yet, by learning from the combined struggles of the labor movement, civil rights movement, and alliances between them, we know that it is possible to build an economy truer to our democratic values.

We are currently experiencing two crises simultaneously: both American democracy and capitalism are in critical condition owing to the increasingly unequal concentration of political and economic power throughout our society.

Of the many failed ideas US policymakers have implemented in recent decades, one of the most dangerous has been to systematically erode the checks and balances within both government and markets. Lax regulations have made markets less competitive, allowing corporate behemoths to block the entry of new competitors, robbing consumers of the freedom to buy alternatives to products they do not like—including digital products that require them to give up personal data— and depriving working people of the ability to find better jobs. Right to work laws and anti-union employers have produced a steady decline in the wages paid by industries that used to be pillars of the middle class. Our political system has been corrupted by private money that fuels election campaigns and lobbying efforts, giving the wealthiest in our society an unparalleled ability to influence the policymaking process and ensure that the rules continue to work to their advantage.

All of this means that, even as most of us recognize the socio-economic status quo is harming many Americans, we lack the power to enact the change necessary to bring it more in balance.

We at Omidyar Network believe that if we want our democracy to survive, we need a new form of capitalism that promotes and protects balanced power. As in our democracy, we need checks on those with the most power to make sure they cannot rig the rules to their benefit, and we need to build counterweights to concentrated power so that the people who suffer under unfair rules are certain to have their voices heard.

One of our priorities is to help build the power of working people so they can advocate for the wages, working conditions, and policies needed to thrive. That’s why we endorsed the Protecting the Right to Organize (PRO) Act of 2021, which would expand people’s right to organize and engage in collective bargaining, ensuring their interests are well-represented when employers respond to economic shocks like the COVID-19 pandemic and prepare for future trends, such as automation.

In addition to the PRO Act at the federal level, many of the fights for worker power are taking place closer to the ground. As the pandemic increased people’s recognition of the importance of caregivers, hospital employees, and service workers—whose jobs typically pay low wages and provide little protection—we have supported the National Essential Workers Campaign, an initiative intended to coordinate state and local efforts fighting to give essential workers more voice and power, especially over health and safety. We have also supported the California Coalition for Worker Power, a new coalition anchored by a number of partners dedicated to ensuring that every worker in the state has the power to come together and improve their work conditions and communities.

We also recognize that a rapidly changing economy requires new strategies and tools to help workers organize. We support Unemployed Workers United (UWU) and their experimentation in the use of digital organizing tactics to engage people who have lost their jobs—especially in communities of color—in local grassroots campaigns. We also support an idea lab at The Aspen Institute’s Business in Society Program to allow a number of stakeholders— including corporate governance experts, business leaders, and worker organizers—to explore solutions for increasing worker voice in corporate governance structures.

Working people, however, are not the only group that needs a greater say in the future of our economy. Alongside the Ford Foundation and W.K. Kellogg Foundation, we launched the Carry on the Fight Fund to support grassroots organizations so they have support beyond Election Day to hold elected officials accountable to their campaign promises and build long-term power. We have also partnered with organizations such as Main Street Alliance, which advocates for policies that support small business and helps small business leaders become their own advocates for policy change. We’re working with Change the Chamber, a student movement taking on the Chamber of Commerce through social media campaigns and direct conversations with companies and policymakers in response to the Chamber’s continued lobbying efforts on behalf of fossil fuel interests to hinder essential climate change regulation.

We are also focused on ensuring economic policies do not concentrate wealth—and the power that comes with it—in the hands of a few individuals and corporations. To do so, we support groups such as Better Markets, a watchdog organization that advocates on behalf of the public interest for a fairer financial sector and serves as a check on Wall Street’s immense lobbying power on financial regulatory matters. We are also working with several organizations pushing to reform the outsized impact large corporations currently have on the American political processes. Notably, the Center for Political Accountability (CPA) is working to increase accountability and transparency for companies’ political spending. They developed the CPA-Wharton Zicklin Model Code of Conduct for Political Spending, which is intended to guide companies on how to ethically engage in political activities and helped mobilize shareholders to win an unprecedented number of fights, resulting in requirements that companies disclose their political spending.

We recognize that many of these efforts have been guided by organizations that provide the research and ideas for how different stakeholders of the economy can work together toward a more equal distribution of economic power. The Economic Analysis and Research Network (EARN), for example, is a network of research, policy, and public engagement organizations that provide resources and technical assistance to local groups. Through their Worker Power Project, they aim to bolster the ability of working people to achieve racial, gender, and economic justice through organizing, collective bargaining, and advocating for state and local policies that promote worker power. Meanwhile, the merger of the Center for Responsive Politics and the National Institute on Money in Politics created OpenSecrets, which will build on the extensive datasets of its two parent organizations to track the money being invested in political campaigns and lobbying at both the federal and state level. This information is crucial for efforts to hold policymakers accountable to the public.

We celebrate this Labor Day amid a pandemic that has acted as a shock to the system and has given may people the power—often for the first time—to make a conscious choice about how they want to participate in the economy. Many are choosing not to return to jobs that paid low wages and had erratic schedules or poor working conditions. These decisions are proof that the economy people want is very different than the one we have. Even a pandemic has not been enough to disrupt the systemic power imbalance that exists in both our economy and democracy. We must continue the legacy of the working people and labor leaders who have stood up to hoarders of power; we must continue to fight for a future in which each of us has the power and voice to determine how we live our lives.