The U.S. Employee Ownership Bank Is A Path to Socialism
The U.S. Government should help workers buy their workplaces.
Hey folks! Longtime readers will remember I wrote about this subject back in 2021. Back then, JoeWrote exclusively focused on the transition to socialism but quickly evolved to cover other subjects. As these answers are still crucial for the leftist movement, I’m rewriting the most important articles to provide updated explanations of how we can achieve socialism. I had less than 100 subscribers when I first published this idea, so it will be fresh for most of you. Enjoy!
In Solidarity — Joe
At its core, socialism is a socio-economic system in which the means of production (businesses, industry, natural resources) are collectively owned. Collective ownership is exactly as it sounds — instead of businesses being owned by capitalists, they would be owned by their workers, or in some cases, the public. Through a socialist system, your local Starbucks wouldn’t be run by union-busting stockholders, but by the baristas, who would elect their managers and receive the full value of the labor they create. This model of direct worker ownership is called a “worker cooperative,” which functions very much like current, capitalist businesses, except it is the workers, not the owners, who are in charge.
To transition the United States from capitalism to socialism, we’ll need to convert the millions of capitalist businesses into cooperatives. There are many ways in which this could be done, but one potential path has already been introduced to the U.S. Senate.
The U.S. Employee Ownership Bank Act
In 2012, Vermont Senator Bernie Sanders introduced the United States Employee Ownership Bank Act. Among other things, this bill would establish the United States Employee Ownership Bank (which I’ll now refer to as “the Bank”), which would have one goal: transition capitalist enterprises into socialist ones. Once established, the Bank would give workers low-to-no-interest loans to purchase their companies and turn them into worker cooperatives through employee stock ownership programs, also known as ESOPs. According to the bill, the Secretary of the Treasury would charter the Bank and appoint a Director, who would hire agents as they see fit. The bill specifically states that the Bank can only assist with creating ESOPs that are “no less than 51 percent employee-owned,” ensuring its low-interest loans won’t go to private owners looking to cheat the system with a free handout. It also calls for independent monitors to determine if particular loans could be repaid, bars any lending term longer than twelve years, and includes an opportunity to purchase clause, which gives workers the chance to buy their workplace if their owner tries to sell. (You can read more about Opportunity to Purchase Laws, here.)
How The Bank Works
While this bill is expansive, it doesn’t specify the Bank’s day-to-day operations or detail how it would assist worker acquisitions. Fortunately, by borrowing the model private banks use to issue loans, it is easy to envision how the Bank would run:
Step 1. Contact. A group of workers files a claim with the Bank indicating their desire to purchase their workplace or start a worker cooperative.
Step 2. Financial Planning. The workers, business owners, and Bank officials would meet to find a timeline and financing plan that satisfies immediacy and goals.
Step 3. Acquisition. Once the financing is secured, workers will begin to acquire the company according to the buyout plan agreed upon with the owner. This could be a quick overnight sale or a gradual process that transfers a set percentage of equity to the workers every year.
An added benefit of establishing the Bank is that, unlike a private bank, the United States Employee Ownership Bank has no profit motive. This means interest rates, overhead costs, and other premiums the workers would have to pay to a for-profit bank will be nonexistent, lowering costs across the board.
While the Bank will likely have no shortage of inquiries in which the owner is interested in selling, inevitably, the Bank will come across a case in which a business owner does not want to sell. Or, the U.S. Government may determine that a company is so exploitative of its employees that allowing it to remain under private ownership would raise human rights concerns. (For example, Amazon’s strict delivery quotas that force workers to urinate in plastic bottles.) In such a case, it is necessary to shift ownership of the harmful enterprise away from its current owners for the betterment of its workers and the public interest.
In such a scenario, the Bank would have two options. The first is to wait until the company requires a government bailout, as happened with leading automakers and banks during the Great Recession. In 2008, the U.S. government acquired a majority stake in General Motors, making the world’s largest automaker a publicly owned company. Unfortunately, the Obama administration decided to sell the company back to private owners (who had once run the business into the ground) at a net loss for taxpayers. If the Obama Administration had workers’ interests at heart, they could have given the equity to GM’s workers, turning it into a worker cooperative. This would have avoided giving a handout to some of the richest people on the planet while establishing a democratic workplace in the ever-vital auto manufacturing industry. Instead, Obama chose the lose-lose scenario.
The second option for acquiring a hostile company would be for the U.S. government to collect taxes in equity. Instead of Amazon, Apple, or other large corporations paying taxes in dollars (which they seldom do), the Treasury could mandate they pay the American people a percentage of their company. Once collected, shares could be diverted to the Bank before being sold or given to the company’s workers, gradually shifting power from owners to their employees. Though it may sound complex, collecting corporate taxes on shares would be quite simple. Currently, businesses pay taxes to the Internal Revenue Service, the largest bureau of the Treasury Department. As the U.S. Employee Ownership Bank Act would see the Bank established under the Treasury Department, it could easily work with its department partner to determine a company’s true value and claim a proportional number of shares.
Though The U.S. Employee Ownership Bank Act has sat idle for a decade and is unlikely to pass anytime soon, it shows a tangible path to a worker-run economy — a.k.a. socialism. This transition will take effort, struggle, and patience, but it is possible. While capitalists and reactionaries malign socialism as a pie-in-the-sky fantasy only held by starry-eyed college kids, this is far from the truth. Socialism is an obtainable, viable system that has only yet to be implemented in the United States because it would cost the powerful their prestige and profits.
This is only one path to socialism. Subscribe below to learn about other methods and tactics to achieve a worker-controlled society free from capitalist exploitation.
Don’t forget to like this article (click the ❤️ button) and share your thoughts in the comments. What do you think about the proposal for an Employee Ownership Bank?
I've always loved this idea but the fact that the bill has lay dormant since 2012 tells you the political will makes this a fantasy. I wonder if we couldn't shift the mission of unions. Instead of being soley a negotiating body for wages with basically strikes as their only weapon, perhaps unions could help employees buy out employers or fund new worker owned business like the employee bank would. Unions could directly negotiate with the government for additional funds, giving employees a stronger advantage to buy out failing businesses. Just a thought. Do you know if this has been tried, Joe?
I’ve never heard of this. Cool idea