Do the workers also share in the risk?

Was this question asked when slavery was abolished and wage-slavery introduced? Was not the real question then whether slavery was unjust? Now that we are preparing to diffuse capital ownership, gradually turning wage-slaves into partners, should not the first question be whether this is more just?
If we agree that it is, and if we agree that justice leads to peace, shouldn’t financial considerations come second? Especially since we do not propose to take from the rich; we propose to raise the economic level of the poor.

To be clear, we are not proposing to ‘abolish’ the wage-slave system. We believe in freedom. Companies remain free to offer wage-jobs instead of partnership-jobs. People who prefer to work for a wage only, remain free to do so. What we are proposing is that the State (the Central Bank) promote ESOP-partnership by means of various incentives, so that it will gradually become the norm. But in the solidarist system, wage-slavery - which is not slavery when it is freely chosen - is not ‘illegal’. On the contrary, in some instances (e.g. in case of temporary jobs), it may be the best option for both parties.

The transition to Solidarism in Cuba will be quicker and easier to realize than in capitalist countries, because the conversion of State-held companies into ESOP’s is less complicated and time-consuming than the gradual process of privately negotiated ESOP-transfers. As this series of articles primarily focuses on Cuba, we will not enter into the details of how a privately negotiated ESOP-transfer is effected, but we stress that it is a free process (no State-coercion) and that shares are bought and have to be paid for in full by the ESOP-trusts acting on behalf of the workers. Companies in capitalist countries remain free to reject the ESOP-incentives and to continue operating as before.

What seems to be the real problem?

The person posing the question we’re considering in this article, is probably not referring to the risk of default once an ESOP has been established and recourse is only possible to the company’s assets. For in such a case, obviously, the ESOP workers/partners (by the way, please don’t call them ‘porkers’!!) do indeed also share in this risk. In fact, this is part of the point. It will make them work harder and more

The questioner is probably worried about the risk of the one who would ultimately be responsible for paying back the bank. Who would be responsible for that? The easy answer would be: ‘The company, of course’, which means that the ESOP-owners fully share in this risk in accordance with their percentage of ownership. But this ignores the fact that private banks usually not only require collateral on the company’s assets, they also require the private owner or owners to personally guarantee the loan.

We’ll ignore the fact now, that most present owners are inheritors of capital and never had to go through this grueling process personally. We’ll also ignore the fact that it is a sick mind indeed who would commit suicide after losing about 1/3 of his capital as a consequence of last year’s bank crisis, seeing that his total personal assets - after the loss - still amounted to more than US$ 1 billion. This happened in Germany recently, the point being that rich people in practice usually don’t risk all. So, let’s focus strictly on those owners, usually of new companies, who do risk all personally. This means that if the loan is not repaid, the bank eats up their house, wife, children, dog and cats! Ouch! This personal risk is a huge fire behind such owners’ backs, which makes them work like hell. We speak from experience.

Now, if this huge risk pays off, obviously such an owner would be loathe to share any profits with workers who were already compensated for their efforts (they received wages), but never participated in the personal risk. What’s more, the workers were disinterested in the risk and, as long as their wages were paid, couldn’t care less.

Cross-paradigmatic mistake

The described situation can be a harsh reality in the wage-slave system (capitalism) and is fundamentally wrong. On top of the other inherent flaws (such as the economic power concentration mechanisms explained earlier), it is indeed unfair that workers would want to participate in the profits, if they are unwilling to participate in the risk. A company is a co-operative effort and everybody, from top to bottom, should participate in both risk and profit. This is precisely one of the reasons why Solidarism is more just
than capitalism. For it does not deny the risk-reality and has its own solution to the problem.

In Solidarism, you see, owners of ESOP-companies will not be required to personally guarantee any company loans extended by the Central Bank. Loans will require collateral on company assets plus default risk insurance, the premium of which would be a fraction of what private vulture-banks usually charge in interest. The questioner is thinking within the capitalist paradigm and then makes an (implicit) judgment about the new (solidarist) paradigm. Such cross-paradigm criticism will of necessity result in wrong
conclusions. It’s like saying that the sun revolves around the earth, because one can see it rise in the morning and set in the evening. In the heliocentric paradigm this sense-based reasoning is proved to be illusory.