Participatory Ownership in general: Conceptualization, Viability and Potentials Part I 6 Participatory Ownership and Manage- ment in Greenland and Other Circumpo- lar Regions Gorm Winther In November 2000 the Greenland Home Rule Department of Culture, Education, Research and Church in cooperation with the Department of Administration at the ‘Ilisimatusarfik’ (University of Greenland) and the Centre for North Atlantic Regional Studies at the Roskilde University, Denmark organized a four-day seminar in Ilulissat. The purpose of the seminar was to learn from participatory alternatives in other parts of the world than Greenland. Especially experiences in Alaska, Nunavik and Nunavut were in focus. Yet, general experiences with these alternative enterprises in The United States, the former Soviet bloc and the EU were in focus too. Moreover, the purpose was to debate theoretical contributions in the social scientific field of participatory economics and sociology. In Greenland as in other parts of the Arctic, there are already some experiences with these alternative or- ganizations, wherefore this field of research may gain significantly in importance. This is especially the case in Greenland, where most of the economy is characterized by Government operations. This is not just the case in traditional Government sectors such as education, health care, infrastructure, administration and the like - in tradable goods sectors such as fishing and food production, the companies are Home Rule owned and operated. In the none-tradables sector even such areas as retail and whole sale operations, tele- communication, transportation and tourism are operated by the Home Rule Government. The so called ‘percentage of collectivism’ is high leaving some 20% of the GDP to private small and medium sized firms. This has led to labelling Greenland as a so-called ‘classic socialist’ economy along with Cuba and North Korea. For several reasons this is of course bogus, first Cuba has moved in the direction of market reforms and second planning in Greenland after the inception of Home Rule in 1979 never really gained the same prominence as it did in the sixties, when the Danish State established its industrialization pro- gram. In those days and in terms of material development, central planning was a tremendous success, creating record high economic growth rates. Looking at Greenland and comparing her to other Arctic re- gions, one should not forget, that Government always was a necessary prerequisite for development and supply of goods and services. Yet, one may focus on one important difference and that is, that State own- ership plays a larger role in Greenland than in Alaska and Arctic Canada. The traditional social democratic model of the welfare state in 1959 took another path - for a decade the State was expecting that private investors would engage in development ventures especially in exports and import substitution. It never happened! For pragmatic reasons, the State then established fishing industries along the West Coast and launched State firms for all the activities where private initiative showed a low propensity to invest. It has ever since been the idea, that a privatization should take place, nonetheless it never happened and there- fore the Home Rule State is still a dominant factor of the economy. Recalling, that this has happened because there was nothing else to do, it seems far-fetched to engage in value impregnated discussions on ‘Classic Socialism in Greenland’. If we for a while take up this discus- sion, which besides the entertainment value only may call upon an intellectual’s affection for giving ‘the mode of production’ a correct label, it would be more correct to label the social formation of Greenland ‘Etatism’ or ‘State Capitalism’. This is due to the fact that the Government controlled and operated firms never took up forms of management that points to self-management of workers and other producers like for instance fishermen and sheep breeders. Experiments have been commenced in that direction. Never- 7 theless, they never got off the ground and today a techno-structural network of the local elite and Danish enterprise managers, administrators and planners control the economy. That is why ‘a third way’ between traditional private and state firms becomes so interesting. For the last decade a privatization debate has been on going. A debate that much too often aims at traditional take overs by foreign, in some cases transnational investors. Yet, many Greenlanders want something else. In the Spring session of the Home Rule parliament, this became quite obvious in relation to the privatization plan of the Government owned retail chain ‘KNI corporation’. It was difficult to reach an agreement be- tween the majority parties, because of the question regarding, how much should be sold to a foreign inves- tor in a joint venture. The majority in the Home Rule parliament opted for a ‘forty nine-fifty one’ solution, i.e only 49 percent of the shares should be sold to foreign investors. In the public debate and in the parlia- ment, voices have disclosed sympathetic feelings for the idea of employee ownership as a part of the take over process. The decision has been postponed to the Fall session in Parliament, because the politicians did not feel that the decision base was sufficient. A Conceptualization of Participatory Ownership and Management In his work from the early seventies ‘The General Theory of Labor-managed Market Economies’, Jaro- slav Vanek makes distinctions as to what is the qualitative difference between Labor-managed Systems and Systems controlled by either Capital or State (Vanek, 1970). In the privatization debate it seems fruit- ful to consider labor-managed systems as an alternative to foreign and local private take overs or contin- ued Home Rule operations in Greenland. This type of model for running a market-based system can be an important alternative for two reasons. First, it is a part of Inuit culture to operate things collectively, this has been the case since the early days, when hunters went to the hunting grounds to engage in common endeavours to sustain their livelihoods. Second, the motivation of the local work force is still low and embodied as alienated perceptions of work. There is a high labor turnover in most firms, shirking among employees is quite common - the work force is an unstable factor. Research on employee ownership has demonstrated that there may be a positive effect from ownership and participation that lead to a higher motivation, a higher labor productivity and better economic results. In the figure Vanek makes a first order distinction and a second order dist inct ion in order t o distinguish between labor-managed systems and Capitalist and Etatist systems. The first order distinction refers to control and management of the firm and income of capital either related to ownership per se or de facto control to assets in the same way as private owners in capitalist social settings, while the second order distinction refers to different types of ownership. Ownership is either State ownership, private ownership or joint ventures between the State and private investors. The term ‘national’ refers to the Vanek concept of U and B-ownership - U owners being active participants in the firm, i.e the employees and B-owners being investors, e.g the State, trade unions and other associations, private investors and pension funds. The term B-owner does not include traditional ownership rights to control and manage the firm. B-owners can only earn an income on their investment, hence the B -owner does not invest in stock instead he puts his capit al int o specially issued bonds. Despit e it s ingenuit y, t he U-B ownership concept never gained popu- larity in relation to the operations of participatory and labor-managed systems. In former Yugoslavia workers’ self-management involved the same features regarding management and control as in Vanek’s model. Nonetheless, social ownership prevailed as something distinct from state and national ownership. Social ownership meant that employees had a de facto right to an income and could participate democratically in decision making through workers’ assemblies and councils. The phrase ‘private’ could be anything from traditional forms known from publicly traded or closely-held companies to consumers’, suppliers’ or employees ownership. Mixed ownership, a model very well 8 known in Greenland often means a joint venture of either equal shareholding between the Home Rule state and private investors or unequal holding based on a majority - minority split. The first order distinction between participatory and traditional firms relates to control, management and capital income. In traditional firms these are related to ownership per se, and this implies that the capital owner controls and manage the operations of the assets and he receives an income or a profit for his out- lay. Control and management can take different forms from the owner managing the closely-held firm to professional management responsible to the stock holders in public companies or to a politically appointed board in a State enterprise. Whatever constellation in Capitalist or Etatist type firms either private owner- ship, the disposition of assets by privates or the actual control of State owned assets by the State prevent labor’s inclusion in significant participation in decision making, finance and capital income. This is the gist of Etatism, Capitalism or combinations of them - it is Capital or State that hires and commands labor, it is Capital or State that gains from ownership and not the opposite of Labor hiring, disposing of, or con- trolling Capital or State and earning an income of capital. Taken as an archetype system, the opposite of capital or State, the labor managed system presupposes that labor collectively owns capital or enjoy a ‘usu fruct’ right to the assets.