ABSTRACT
Restructuring the corporation to create a democratic firm does not mean just finding a new set of owners for that bundle of rights. It means taking the bundle apart and restructuring the rights so that the whole nature of “corporate ownership” is changed. The principle of democratic self-government or self-management is built into the structure of an institution by assigning the right to elect the governors to the functional role of being governed. The democratic principle assigns the direct control right giving the ultimate authority for governance decisions to the governed. Neo-classical economics has focused on the labor theory of value as a theory of price, but it is “the labor theory” as a theory of property, that is, the labor theory of property , that determines the structure of property rights in a democratic firm. The democratic labor-based firm does not just supply a new set of owners for the conventional ownership bundle of rights.
