A basic tenet of belief often preached is that capitalism is a partnership between labor and capital, or capital and labor.
It shouldn’t matter which is listed first in a true partnership where profit is divided 50-50.
Since it’s inception, probably because it benefited them, and not from some confusion, capitalists have structured most corporations to transmit 100% of profits to the humans who contribute capital and 0% of profits to the humans who contribute labor to the partnership.
Some may protest at this point that the human laborers are paid a wage. That is true. Whether it is a whip or a wage, an incentive is required to transform a human into labor. To create a profit-creating corporation the owners, the creators, needed labor.
Captured slaves were burdensome to own and created multiple problems, while the capitalists realized that rather than providing food and shelter to the captured slaves, letting free-range humans struggle and fight for wages that indirectly provided them food and shelter could be more profitable. Higher finance evolved from profiting from owned humans to profiting from leasing the necessities of life to the humans, on credit. Humans will go into debt for food and shelter … and education and healthcare and transportation and …
So preaching that capitalism is a partnership while structuring the corporations to transmit all profits to the capital owners appeared most beneficial. But Henry Ford yelled long ago to the other capitalists that labor needed to at least have enough cash to purchase the products the capitalists were selling.
But it is just too counter-intuitive to believe that paying higher wages, or, horror-of-horrors, sharing profits with labor, could somehow benefit the owners of capital. Naturally, most wages were always set at the lowest rate required to create the incentive for the human to correspondingly go into an offsetting debt for education and such. Doctors and lawyers demand higher wages because of the increased risk (of unemployment and debt) to the humans. Finance is about shifting risk. The risk of a slave owner having to feed valuable slaves through a drought has been shifted to the free-range humans gambling with their lives that they can reap enough in wages to pay off so much debt as they may acquire, from tech school to a doctorial degree.
So the connection between the health of humanity, and the health of humanity’s environment, is not naturally obvious to capitalists, though it is slowly becoming more apparent from observation. And individual examples are appearing throughout the economy.
Nucor Steel (wikipedia) is the most sacred corporation in the world, as far as I am concerned, though I am biased and have a US-centric worldview. Nucor Steel pays labor a percentage of profits, and shareholders receive a respectable dividend. Nucor corporate charter requires that at least 10% of profits be paid to labor’s profit sharing plan, but often pays extraordinary bonuses to labor based on strong profits. There’s even an entertaining book about Nucor.
I have always been perplexed by sports fans. It is readily apparent that we become fans of football teams based on random geographical criteria, not because of the personnel, or management, or behavior or what-have-you. Why should I be a Clemson or Georgia fan? Wouldn’t it make more sense to research teams and choose one based on the quality of players or coaches? Or because the team donates some profits to a worthy cause?
I have researched the teams and Nucor Steel is the most ethical I have found. I am a Nucor Steel fan.
Publix Supermarkets and the Evergreen Cooperatives are close runner-ups. Publix is an ESOP and the Evergreen Cooperatives are cooperatives. Merging the labor and capital categories avoids the ethical decision about the division of profits between labor and capital, but the lack of incentive to the capitalists makes creation, and existence, of such companies unique anomalies. New Era Widows is a new team that I’m watching, and there is of course the big foreign coop, Mondragon.
ESOPs were created by some visionary loon and are now primarily used by owners wanting to cash out. Banks are actually quite amenable to financing workers who are purchasing their own means of survival. For some reason there is an unacknowledged belief by all involved that the workers will try hard to survive, or even prosper.
Worker coops can be tricky to create and have utilized worker contribution, grants, loans, and selling partial ownership equity. Again, worker coops are unique anomalies that satisfy equitable concepts by completely avoiding the division of profits question. Except in the case of selling partial ownership equity, which seems the a just and equitable course. Structuring the creation of a worker coop so that the ownership is 50-50 between labor and capital, resulting in a partnership between labor and capital, seems perfectly equitable, providing both short-term and long-term incentives to both labor and capitalists. Sharing ownership with the workers actually makes the workers more productive and creates more profit for capitalists. It is counter-intuitive but studies consistently agree that is the result. So ownership sharing is financially logical, but apparently not sexy.
But all of the above is complex to explain, to either the labor or the capitalists. You would have to explain the big picture, and Henry Ford, and all the studies that prove that ESOPs and coops consistently have higher productivity, and that Nucor is just the best damn steel company in the world. So if you are a GE or McDonalds or Wal-Mart fan — I sneer at you. If you are a Publix or a coop fan, well, I’d at least have a beer with you.
But, while ESOPs and co-ops have some great teams, I still love Nucor Steel. Nucor thrives by just executing the basics of profit sharing, like a football team having a solid running game and a strong defense.
Nucor runs with the big dogs on the NYSE and still walks on the ethical side of the line. In a land of many capitalists and corporations wearing black hats, a lone cowboy like Nucor unashamedly wearing a white hat gains my respect, and wins my heart.
So, while I may be a Clemson fan by a geographic idiosyncrasy, I am a Nucor fan based on equitable principles.
Giving all workers
A STAKE IN THE COMPANY
At Nucor, everyone’s compensation is based on pay for performance. That means income is tied directly to the amount of “prime” steel produced each day. And for management, how well the company does overall. You see, in our experience, teammates perform better when they have the opportunity to earn according to their productivity. Maybe that’s why they enjoy pay above the industry average, and why our productivity records are the envy of the industry.