Gregory K. Dow, Governing the Firm: Workers’ Control in Theory and Practice, Cambridge: Cambridge University Press, 2003, 343 pp. ISBN: 978-0-521-81853-7 (hardback); 978-0-521-52221-2 (paperback).
Gregory K. Dow’s Governing the Firm: Workers’ Control in Theory and Practice is a comprehensive theoretical and empirical study that seeks to explain why worker-controlled firms are so rare compared with capitalist firms. Dow begins with a simple but fundamental question: if models in which workers exercise democratic control over the firm are viable and in some respects advantageous, why does ultimate control in modern economies usually remain in the hands of capital owners? He approaches this not only as a question about the rarity of workers’ control, but also as a question about why the capitalist form of enterprise persists.
One of the book’s important contributions is its distinction between ownership and control. According to Dow, the question of who owns a firm’s physical assets is not the same as the question of who holds ultimate decision-making authority within the firm. In a capitalist firm, the board of directors is chosen by capital owners and managers are ultimately accountable through this structure; in a worker-controlled firm, governing bodies are chosen by the workforce and are accountable to the workers. Workers’ participation in various committees or their limited influence over management therefore does not in itself constitute workers’ control; what matters is who holds ultimate control over the firm’s fundamental decisions.
In explaining the obstacles to the expansion of workers’ control, Dow focuses particularly on the structural asymmetry between capital and labour. Whereas capital can be transferred from one person to another, labour cannot be separated from the person who supplies it. This difference can create problems for worker-controlled firms in accessing finance, attracting outside investment, transferring membership and control rights, and making collective decisions. In Dow’s assessment, arguments suggesting that worker-controlled firms are rare simply because workers lack sufficient incentives are inadequate; financial constraints and collective-choice problems offer stronger explanations.
The book also provides a comparative examination of different experiences of workers’ control. Plywood cooperatives in the United States, the Mondragón cooperatives, Italy’s Lega system, employee stock ownership plans (ESOPs) in the United States, and German codetermination are examined in terms of financing, governance, membership, income distribution, legal frameworks, and workers’ actual decision-making power. Dow thus does not reduce workers’ control to a single organisational model; instead, he considers within the same analytical framework a range of arrangements extending from full workers’ control to more limited forms of participation.
One of the book’s notable conclusions is that the fundamental problem facing worker-controlled firms is not necessarily their inability to survive. The evidence examined by Dow suggests that, once established, these firms do not have higher failure rates than comparable capitalist firms and may in fact have lower ones. One of the central problems lies instead in the financial, informational, bargaining, and collective-action barriers that make it difficult to establish such firms in the first place or for workers to take over existing capitalist enterprises.
In the final chapter, Dow moves beyond a purely theoretical discussion of workers’ control and considers institutional arrangements that could support employee buyouts and the expansion of worker-controlled firms. Drawing particularly on the experiences of Mondragón and Italy’s Lega, he emphasises the importance of federations, shared financial institutions, and public support beyond individual enterprises. Such structures can facilitate access to finance, pool risks, provide specialised services, and support the creation of new worker-controlled firms.
In this respect, Governing the Firm is an important source that examines workers’ control not merely as a democratic ideal, but as a form of enterprise that emerges and is sustained under specific economic, institutional, and organisational conditions. While defending the possibilities of workers’ control, the book also addresses practical problems such as financing, collective decision-making, scale, membership structures, and market conditions, thereby offering a more critical and institutional perspective on workers’ control and self-management.