Covid-19 pandemic shows why people and the environment should be at the heart of business

Prioritising profit imperils people and the planet. As firms reach for bailouts, they must be required to democratise, to give workers an equal say with investors, and adopt strict environmental standards
Meanwhile, a job guarantee scheme that gives all people access to work would allow them to live with dignity

Isabelle FerrerasandJulie Battilana

Published: 1:05am, 16 May, 2020

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One of the central lessons of the current crisis is that working humans are far more than “resources”: the people keeping life going through the Covid-19 pandemic prove daily that work cannot be reduced to a commodity.

Human health and the care of the most vulnerable cannot be governed by market forces alone. To do so exacerbates inequalities to the point of forfeiting the very lives of the least advantaged. How to avoid this?

By involving employees in decisions relating to their lives and futures in the workplace – by democratising firms. By decommodifying work – collectively guaranteeing useful employment to all.

Making these strategic changes would allow us to ensure the dignity of all citizens while marshalling the collective strength and effort we need to preserve our life together on this planet from pandemic and environmental collapse.

Each morning, men and women rise to serve those among us who are able to remain under quarantine. The dignity of their jobs needs no other explanation than that eloquently simple term, “essential worker”.

In it, we see that human beings are not one resource among many: without labour investors, there would be no production, no services, no businesses at all. And each morning, quarantined men and women rise in their homes to fulfil the missions of the organisations they work for.

To those who believe employees cannot be trusted without supervision, surveillance and external discipline, these workers demonstrate the contrary, that they are not one type of stakeholder among many; they hold the keys to their employers’ success.

But although they are the core constituency of firms, workers are mostly excluded from participating in firm governments – a right monopolised by capital investors.

How might firms and society as a whole recognise the contributions of employees in times of crisis? We must lower income inequality and raise the income floor – but that alone is not enough.

Democratising firms is also necessary. About a century ago, women’s undeniable contribution to society helped win them the right to vote in many countries. Now it is time to enfranchise workers. Representation of labour investors in the workplace has existed in Europe since the close of the second world war, through Work Councils.

Yet, these representative bodies have a weak voice at best in firm governments, always subordinate to the executive teams appointed by shareholders. They have been unable to stop or even slow the momentum of self-serving capital accumulation, particularly in its destruction of our environment.

These bodies should be granted similar rights to those of boards: firm governments (that is, top management) should be required to obtain double majority approval from workers as well as shareholders.

Different forms of co-determination implemented after the second world war were a crucial step towards giving voice to workers in some countries – but remain insufficient to create actual citizenship in firms.

There is now a growing global call to give labour investors the right to elect representatives with a supermajority within boards. Issues such as choosing a CEO, strategy-setting, and profit distribution are too important to be left to shareholders alone.

What kind of capitalism does the world need? There’s only one choice

A personal investment of labour – of one’s mind and body, one’s health, one’s very life – ought to come with the collective right to validate or veto these decisions.

This crisis also shows that work must not be treated as a commodity. For years now, jobs and supplies in the health sector have been subject to the guiding principle of profitability; the pandemic has painfully revealed why market mechanisms alone cannot make the choices that affect our communities most deeply.

This still-unfolding tragedy enjoins us to remember: certain strategic and collective needs must never be treated as commodities. Profitability is an intolerable yardstick when it comes to our health and life on this planet. To continue arguing to the contrary is to imperil our communities with dangerous ideology.

Decommodifying work also means ensuring that all people have access to work and the dignity it brings, as Article 23 of the Universal Declaration of Human Rights reminds us. The creation of a job guarantee could offer each citizen access to work that allows them to live with dignity as well as helping rise to the pressing social and environmental challenges we currently face.

It could allow governments, working through local communities, to provide dignified work while helping to fight environmental collapse. As unemployment skyrockets, job guarantee programmes can play a crucial role in assuring the social, economic and environmental stability of our democratic societies.

Coronavirus pandemic lessons will show fallacy of current economic models

In 2008, governments responded to the economic crisis with an unconditional bailout. In the name of the democratic societies they serve, and which constitute them, in the name of their responsibility to ensure our survival on this planet, governments cannot react now with the same innocence.

As they step in to save businesses today, they must demand that businesses step in as well. Firms should be required to meet the basic conditions of democracy internally, as well as strict environmental standards.

A successful transition from environmental destruction to recovery and regeneration will be best led by democratically governed firms, in which the voices of those who invest their labour and those who invest capital work together with an equal voice to address these issues.

Research from the University of Cambridge shows that “achievable design changes” could reduce global energy consumption by 73 per cent. But those changes are labour intensive, and often costlier over the short term. So long as firms are run in ways that seek to maximise profit for capital investors alone, in a world where energy is cheap, why make these changes?

Certain socially minded or cooperatively run businesses – pursuing hybrid goals that take financial, social, and environmental considerations into account, and developing democratic internal governments – are already showing the positive impact of such shifts.

Let us fool ourselves no longer. We have had more than enough time to see what happens when labour, the planet and capital gains are placed in the balance under the current system: labour and the planet always lose. Another option is available. Democratise firms; decommodify work; focus together on sustaining this planet.

Isabelle Ferreras is a professor at the University of Louvain, a tenured fellow of the Belgian National Science Foundation and a senior research associate of the Labor and Worklife Program at Harvard Law School.

Julie Battilana is the Joseph C. Wilson Professor of Business Administration at Harvard Business School and the Alan L. Gleitsman Professor of Social Innovation at the Harvard Kennedy School.

Dominique Méda, a professor of sociology at the University of Paris-Dauphine also contributed to this article. For a full list of the more than 3,000 signatories to this article, see here

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