The ideal of democracy is exalted by many in the United States as a central feature of the constitutional regime that has, at least in the public imagination, secured us an exceptional degree of liberty, equality, and prosperity. The uncomfortable reality that the framers of the U.S. Constitution deliberately limited popular influence over the mechanisms of government and designed a political system that presently operates as more of an oligarchy than a republic has evidently done little to diminish the pervasive conviction among many that the United States remains a nation devoted to, predicated on, and characterized by principles of democratic empowerment. But as leftwing political thinkers have long theorized, the conception of democracy existing in the public imagination is incomplete, for it is premised on a superficial distinction between the “private” and “public” sphere. In reality, the promise of democracy is exceedingly diminished, perhaps even rendered illusory, if confined solely to the electoral realm. To create a political economy truly embodying democratic ideals, then, popular participation must penetrate into the hearts of the powerful institutions wielding tremendous authority to shape the socioeconomic conditions to which we are all subject. In short, if we wish to live in a democratic society, we must democratize the corporation.

At its core, democracy rests on the idea that individuals should be empowered to exercise a meaningful measure of influence over the decisions that affect their lives. Yet the authority to formulate many of the most consequential policies shaping the U.S. political economy is removed from the purview of the nation’s ostensibly representative legislative chambers and instead bestowed on the unelected and self-serving economic elite convening in fancy corporate boardrooms. Corporate leaders make decisions about employment, compensation, production, investment, and resource-allocation that have enormous implications for broader socioeconomic conditions, which is problematic given that the corporation is effectively structured as an autocratic institution. Indeed, a corporation’s internal management structure is a rigidly hierarchical one that vests ultimate sovereignty in the hands of extravagantly wealthy executives and investors, affording them virtually unbridled authority to control the employees whose toil generates the firm’s resources and profits as well as tremendous influence over the communities in which they are situated. In light of corporations’ power over our lives, then, so long as they remain autocratic, it is difficult to view our society as democratic.

A vision of democratic economic institutions has deep roots in the labor movement. Unions in the 19th and 20th centuries routinely advocated for worker control of factories—establishing democracy in industry constituted one of the original objectives of the Industrial Workers of the World, for example, and the Knights of Labor enshrined the establishment of cooperative firms as a priority in their constitution. Even today, democratic control of corporations remains popular across ideological lines. The concept of economic democracy is a simple and intuitive one. At bottom, it requires that decisionmaking in a firm must, to some meaningful extent, be subject to input from the firm’s employees. The ideal serves as more of an orienting principle than a specific policy prescription, and many attractive proposals aimed at making corporations more democratic have been articulated. Expanding collective bargaining, for example, presents one such avenue. Labor unions, which are themselves democratically structured institutions, redistribute power within a firm from capital to labor and thus have a democratizing impact on the workplace (although, to be sure, their capacity to fundamentally transform the economic order may be limited). Another path toward economic democracy could be some form of a powersharing arrangement between owners and employees; such proposals range from establishing representative institutions to govern corporations to mandating that workers elect a certain segment of the firm’s board of directors. A limited version of the latter approach is practiced extensively and successfully in many European nations. The most transformative model would, of course, be some form of workers’ cooperative or self-directed enterprise, a model in which employees own the firm and either entirely select the board of directors or, in the most comprehensively democratic enterprises, each participate equally in the firm’s decisionmaking. Thousands of such worker-owned commercial entities exist around the world, including hundreds in the United States. Some are impressively large and successful.

Democratizing economic institutions has the potential to vastly mitigate the inequality, displacement, and suffering intrinsic to shareholder capitalism. This is because when workers control management, production, and investment decisions, they tend to resist the temptation to pay top executives hundreds of times more than employees, spend trillions of dollars to inflate stock values, or outsource their own jobs to labor markets more susceptible to exploitation. To the contrary, research reveals that workplace democracy, particularly the worker cooperative model, enhances wages, economic security, job satisfaction, and productivity, reduces income disparities, unemployment, and crime, and even fosters local economic development. Indeed, the average wage paid at a worker co-op in the United States is more than double the federal minimum wage and, astoundingly, the vast majority report a top-to-bottom pay ratio of 2:1. By way of contrast, the average CEO in a traditionally structured U.S. corporation rakes in a salary more than 300 times that of an ordinary employee.

Beyond its implications with respect to distributive justice, economic democracy is to a large extent fundamentally inextricable from political democracy. Private control of corporations has produced such exorbitant disparities in wealth as to, in a system in which money is equated with speech, largely preclude any meaningful political equality. Progressive thinkers have long perceived the danger that private control of such vast economic resources poses to the vitality of the political system. In the early 20th century, for example, future Supreme Court Justice Louis Brandeis, regretfully observing “the contrast between our political liberty and our industrial absolutism,” concluded that “industrial democracy should ultimately attend political democracy.” Similarly, the Walsh Commission, ordained by Congress in 1912 to examine labor conditions, explained in its final report that “political democracy can exist only where there is industrial democracy,” and thus recommended “the rapid extension of the principles of democracy to industry.” And in formulating the National Labor Relations Act of 1935, Senator Robert Wagner was in part animated by the nexus existing between industrial and electoral self-determination, insisting that “democracy cannot work unless it is honored in the factory as well as the polling booth.”

To be sure, it remains uncertain how democratized firms might operate and interact within a ferocious regime of competitive capitalism. In other words, corporate democracy will not entirely eradicate the destructive pressures of commercial competition, and complete democratization of the economic order will likely require transcending even employee ownership of private firms. But at the very least, democratizing corporations will enable working people to more meaningfully control their own lives. If we cherish the principle of democratic rule and wish to exist in a free and equal society, we must rectify the absurd contradiction of democracy in politics and tyranny in the economy.