Inequalities and the reasonable utopia of corporate governance democratisation: a viable proposal for Works and in-Company Citizenship Councils

Abstract

Through taxation, the redistributive policy of the welfare state has an important impact on income inequality. Yet it is not capable of making significant corrections to a disproportionate inequality in ‘market’ income, which (i) develops out of the unequal distribution of property and control over resources, capabilities and rights; and which (ii) then increases through market mechanisms and the institutions operating in the market – especially firms, i.e. institutions wherein residual control rights base authority relations and are far from being neutral when it comes to the distribution of wealth and income (in other word, authority relations based on the allocation of residual control rights substantially affect the appropriation of the firms’ surplus obtained through the cooperation of its essential stakeholders). This happens not only as a result of the different professional qualifications of those who are involved in the labour market, or their marginal productivity, but because the initial unequal distribution of control and decision-making rights generates inequalities in terms of distribution of the corporate earnings, increasing the income and wealth gap well beyond any level that could be justified in terms of desert or personal contribution. Consequently, any aspiration to put a brake on inequality requires not only redistribution (through taxation) but also the pre-distribution of resources, abilities and rights (of ownership, decision-making and participation) that will allow individuals to take part in market operations and shape the functioning and outcomes of market institutions and organization – first of all the firms.