1st Edition

Political Economy of the Firm Authority, Governance, and Economic Democracy

By Helena Lopes, Christophe Clerc Copyright 2024

    An alternative theory of the firm is needed that helps better understand the nature and actual functioning of firms as well as the challenges raised by digital platform firms. In defining firms as economic collective ventures organised by political means, this book offers a “political economy” vision of firms.

    Specifically, the book provides an authority-based conception of the firm that supplies a theoretical grounding for democratic governance. It is argued that workers must be viewed as actors of the firm, not passive subjects of capital, given that authority is a non-coercive form of power. The book examines authority and subordination from the workers’ perspective and argues that when workers accept authority, it is because they see it as facilitating mutually beneficial cooperation between people with divergent interests. As managerial authority is based on its acceptance by workers, it calls for legitimacy. Neither ownership nor the function that authority performs makes it legitimate. The book shows that legitimacy entails the democratisation of corporate governance, within the framework of “pluralistic companies”, and thus joins the many voices that increasingly question shareholder primacy.

    The book will be of great interest to researchers and students in economics and law as well as labour professionals, employers, unions, policymakers and anybody interested in economic democracy.

    Introduction   Chapter 1: The agency theory of the firm – Discarding authority and the collective   Chapter 2: Authority in work organisations – Definitions and challenges   Chapter 3: The firm considered from the work standpoint – Why do workers cooperate?   Chapter 4: Governance models and the constituent parties of the company   Chapter 5: The pluralistic model of corporate governance    Chapter 6: Digital labour platforms – Algorithmic authority?   Epilogue: Using the concepts developed in the book to address the ecological transition


    Helena Lopes is Full Professor at Iscte-University Institute of Lisbon (Department of Political Economy) and senior researcher at Dinâmia’Cet-Iscte.

    Christophe Clerc is a lawyer. He teaches at Sciences Po Paris the allocation of power within firms and is a corporate governance expert for the European Commission.