If we think of the changes in work and human labor over the past three centuries, we might characterize them as a movement from private to public. First, with the industrial and commercial revolutions of the eithteenth century, work was brought out of the domestic sphere and into public space, simultaneously socializing it and freeing it from traditional domestic norms and hierarchies. Second, with the labor movements and socialist programs of the nineteenth and twentieth centuries, attempts were made to bring work fully into the public sphere by bringing it under the purview of public norms. This was borne out in the various attempts to democratize the workplace and bring it under the control of workers, just as democratic reformers and revolutionaries were attempting the same feat in the public sphere more broadly.
As Isabelle Ferreras notes in Firms as Political Entities, however, the latter half of the twentieth century saw this general movement stall. Work is still considered a private concern, thus enabling the persistence of domestic forms of hierarchy and domination within the public sphere. Ferreras’s argument is that this stalling is the result of our understanding of the sort of institution that is the “firm.” By conceiving of the workplace, and therefore work, in purely economic terms, we have missed other values at stake in the institution of the firm. To complete the movement of work from the private sphere to the public requires that we recognize the political and social nature of contemporary labor, and that we restructure the governance of firms accordingly.
On Ferreras’s account, the development of economic theory led to a view of the firm as an institution fundamentally underwritten by instrumental rationality—the idea that human action is motivated solely by the intended achievement of some action-independent end. While various parties may interact with the firm in various ways, they do so for commons reasons, namely, to pursue self-interest, however understood. This theory, according to the author, has had the normative consequence of legitimating and justifying the shareholders’ dominant position within the firm. If both labor and capital are engaging with the firm for instrumental reasons, then it makes practical and normative sense to place control in the group best positioned to make such instrumental judgments. On the economic theory’s account, capital providers are structurally best situated for this charge because they own the right to residual profits and relate to the firm on purely monetary terms. Workers, in contrast, relate to the firm in more intimate ways, which obscures their instrumental judgment. Thus, the workers’ subordination to the representatives of capital is legitimated, supposedly because it best secures the interests of both parties.
Ferreras argues that this theory is crucially flawed. While shareholders may be the best guarantor of instrumental rationality for the firm, the firm is not constituted solely by instrumentally motivated actors. In contrast to investors, she contends, workers are motivated by “expressive rationality” (p. 79) or by how their actions and experience in work are endowed with (or robbed of) meaning and significance. Workers do not assess or understand work purely in terms of ends, but in terms of how autonomous it renders them, how included and useful they are made to feel, and how intrinsically interesting they find it. By mistaking instrumental rationality for the whole of the motivations that push parties to join and interact with the firm, the economic theory commits what Ferreras refers to, evocatively, as the “reductio ad corporationem” (p. 5): the reduction of the firm, and all its messy complicated meanings, into a mere investment vehicle—the corporation. Workers are made subordinate to shareholders within the workplace, not because it is inherently in their interest but because we misunderstand the nature of the firm as a purely economic institution.
The private rule of shareholder over worker, then, is without justification and illegitimate. Taking a cue from the historical development of democratic representation, Ferreras argues that the governance of the firm can only be made legitimate through the institution of bicameralism. Just as noble classes conceded power to a chamber of representatives elected by the people, thereby allowing for more legitimate and better government, so too must the firm come to be governed by two chambers, one representing shareholders and one representing workers. By institutionalizing the instrumental and expressive rationalities within the governance structure of the firm through these two chambers, she argues, we give labor its rightful influence in the firm, while retaining the various advantages brought by capital’s instrumental mind-set. In so doing, not only do we bring the workplace more fully into the public sphere, but we also do it without sacrificing the massive gains in productivity that private capital investment has been able to secure.
By grounding critique and prescription in the idea of “expressive rationality,” Firms as Political Entities refreshingly points us toward a path for critical reflection that is easily occluded by existing theories of capitalism. As Ferreras correctly notes, Marxists, despite their opposition to liberalism, often ground their critiques of capitalism and capitalist workplaces in similar instrumental assumptions about human action, which can lead them to miscomprehend human actions in ways similar to those of their liberal counterparts. By emphasizing the significance of expressive rationality, Ferreras offers a decidedly political account of the workplace, making good on the project of transcending the dichotomies and tensions inherent to “political economy” in a manner that other radical critiques sometimes fail to do.
That said, Ferreras sometimes tries to do too much with the concept of expressive rationality, often discounting how it will conflict with, and be constrained by, instrumental rationality. For starters, it is not so obvious that these concepts attach to parties as distinctively and completely as she describes. Although the author is surely right that workers’ relationship to the firm cannot be reduced to pure instrumentality, it cannot be reduced to mere expression either. She admits as much, though then discounts workers’ instrumentality throughout the book. Laborers no doubt seek to find meaning in their work, but they also seek to get paid, and many will prioritize these elements differently, with some willing to sacrifice the intrinsic value they get for the other, action-independent ends they seek.
To illustrate this argument, consider worker cooperatives and nonprofit corporations (about which Ferreras says strangely little). These are firms where capital has no seat at the decision-making table, and yet we see them make deeply instrumental decisions often, if not most of the time: Nonprofits must tend to their bottom lines if they want to win grants and secure loans; worker cooperatives must choose the best marketing strategies in order to best their competition; and so forth. Instrumental rationality is not imposed solely by shareholders, but by the condition of modern commerce itself. Expressive rationality and instrumental rationality both inhabit the firm, yes, but not with each represented by one stakeholder group independently. Both instrumental and expressive rationalities can be found in messy disarray among shareholders and workers alike.
Once this is recognized, Ferreras’s categorical call for economic bicameralism loses some normative force. “Expressive rationality” is meant to imply that the desire for democratic control already exists among workers, a desire that must merely be institutionally recognized. Surely, some workers want more control than they currently have, and they ought to be able to attain it. But given their instrumental motivations, some will also be willing to sacrifice such control to gain means (wages, free time, etc.) for other ends they seek. Given this, why should we see control as the sine qua non of legitimacy? Note here that Ferreras’s claim that shareholders hold illegitimate rule over workers misses the fact that shareholders do not actually rule as much as it might seem. Instead, we find that shareholders tend to see more instrumental value in being passive investors than in expending the energy to actively participate. We cannot assume away the possibility that workers might have comparable considerations.
None of this discounts the significant merits of Ferreras’s contribution. Aside from offering a useful historical and comparative survey of the different ways in which work is organized, the book’s core insight—that a conceptual and normative account of the firm must recognize the importance of both expressive and instrumental rationality—is fundamentally sound and important. What weight we ought to accord these competing logics in the governance of the firm may not be answered completely in this work, but Ferreras has done a great service by posing the question and illuminating the stakes involved.
