a worker-owned free market?

Many thanks to Gabriel Mihalache for his thoughtful comments on my last post.

Critiques of free-market capitalism are often greeted with "at least it's better than communism, where everyone gets paid the same."

Why force the either/or choice? Communism (the state owns and controls everything and everyone gets paid the same) and laissez-faire capitalism (private individuals own and control everything without state interference) are both ideological extremes, both bound to reproduce the same anti-democratic polarization between haves and have-nots that they were allegedly conceived to cure.

My proposal (in two parts) for an economy both more equitable and fair than either extreme:

1) All major corporations become worker-owned cooperatives. Workers would own the vast majority of shares in the corporation for which they work, elect the board of directors, etc. Both pay and dividends would be distributed according to merit, performance, and productivity measures. Corporations would still compete with one another on the global market to maximize profit, but would be limited in size to ensure a healthy and diverse competitive environment (i.e., anti-trust laws would significantly broadened and aggressively enforced).

2) The state would fund enough social services to ensure that no one starves, goes without adequate shelter, medical care, and education. Such services would, for the most part, guarantee little more than subsistence-level living and thereby not eliminate the "I want to work hard and get ahead" incentive. The state would additionally fund "institutions of cultural enlightenment" (artistic, educational, religious, etc.), some in full and others in part, in order permit them to flourish outside of and beyond the marketplace.

Worker-owned corporations would both minimize exploitation and provide incentive for maintaining high levels of productivity. State funding of social services and cultural institutions would provide a humane counterbalance to the violence of the market's volatility without neutralizing its productive power.