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Industrial Democracy
A Forward Step in the Advance towards a Socialist Society?

Eddie Cornock looks at models of workers control around the world and asks how we can implement these ideas

Zanon workers meeting

Workers at the Argentinian Zanon factory meet during their occupation. Photo: Orionomada on flickr

In Lewis Carroll's Through the Looking-Glass, when Alice challenges Humpty Dumpty’s careless use of  words his disdainful reply is:  “When I use a word it means just what I choose it to mean – neither more nor less." 

Humpty Dumpty’s cavalier attitude towards the meaning of words would appear to be commonplace, since, for example, the words ‘socialism’ and ‘democracy’ have been given different meanings by different people in different periods of time.  No wonder then that there is widespread misunderstanding and confusion about what exactly the terms ‘socialism’ and ‘democracy’ represent.

For instance, ‘socialism’ has for the bulk of the population in the so-called ‘free world’, including among many of its most progressive elements, negative associations such as Mayday parades glorifying military power, a brainwashed citizenry ruled over by the brutal dictatorship of a privileged party elite and economic inefficiencies on a heroic scale.  Likewise, the term ‘democracy’, is generally used in reference exclusively to the political systems in the West.  Nations that have different polities to the West are most usually considered to be ‘undemocratic’ and in need of ‘democratisation’.

Needless to say for socialists interpretations of the type outlined above are misconceived not only for the reason that they fail to elucidate the true essence of ‘socialism’ and ‘democracy’ but also because they imply that ‘socialism’ and ‘democracy’ are diametrically opposed concepts.

For socialists, socialism (i.e. the idea that the means of production, distribution and exchange should be owned and regulated by the community as a whole for the benefit and free development of all) and democracy (i.e. the idea that ordinary people should have a controlling influence over all aspects of political and economic life) are inextricably linked since each concept embodies the other.  There can be no socialism without democracy and no democracy without socialism.

During this current period of economic turbulence and high unemployment a shift in the balance of power in the workplace has taken place most decidedly in the employers’ favour. However, every cloud has a silver lining and for socialists there is now a stronger likelihood that their ideas will be heard by receptive ears as working people experience for themselves the shortcomings of the capitalist system and ‘bourgeois democracy’ and are more willing to countenance alternatives.

A possible way, amongst many others, for socialists to put across their ideas to working people in these more propitious times is the promotion of ‘industrial democracy’.   This paper will attempt to provide the following:

 

Industrial Democracy

Industrial democracy is a generic term that can be applied to any situation where workers have a say in decision-making and share responsibility and power in the workplace, no matter how little.  There is a spectrum of industrial democracy which includes the following broad categories (within each of which there are variants), starting at the bottom end of the scale where workers have minimal influence in their workplace and moving upwards, by gradation, towards what socialists, at least, would regard as true industrial democracy (i.e. workers’ self-management set within the framework of a new socialist order):

Workers’ Participation: This can take many different forms but is basically a matter of workers participating in decisions that affect working conditions through ‘joint consultation’ procedures.  Real control under workers’ participation schemes, however, is left in the hands of the owners of the enterprise or most often their proxies (i.e. the ‘management’).  These schemes are set up by employers not so much to empower workers but more to benefit management by providing them with work-related information and suggestions from the workforce and a communications channel for management instructions to be transmitted downwards to the workforce.  Moreover, workers’ participation schemes can further benefit employers by, for example,  acting as a safety-valve for workers to let off steam without recourse to industrial action,  enticing workers' representatives into situations where they take the responsibility for decisions that impact badly on the workforce that are really those of management, and giving workers a spurious sense they have real influence in decision-making and thereby inculcating the belief that there is no need for them to be represented by trade unions in the workplace.

Workers’ Control: This is a term that covers a variety of schemes which aim to give workers a large degree of influence over the organisations in which they are employed. It describes something more than just rights of consultation and participation and points to the acquisition by workers of real power to influence key decisions in their workplace.  Variants stretch from a lower range – with the extension of the scope of collective bargaining and increased influence over the labour process and erosion of the managerial prerogatives – to a higher range, with wide-scale involvement of the workers in strategic decision-making. Whilst preserving the distinction between the workers' representatives and the management, this would mean in its highest level a form of dual-management or ‘co-determination’ in the workplace such as happens, for example, in Germany where  the Law provides for worker participation in the management process of  larger private companies and, to a lesser extent, public organisations through representation on supervisory boards.

Under workers’ self-management (WSM) the workers collectively have total control; managers, in the traditional sense at least, cease to exist, and ‘management’ is eliminated as a function separate from the workers themselves.

Workers’ Self-Management: (aka ‘autogestion’) This refers to forms of workplace decision-making in which the workers themselves agree collectively on choices (for issues like customer care, general production methods, scheduling, division of labour etc.) instead of being subject to management diktak telling them what to do, how to do it and where to do it. Under workers’ self-management (WSM) the workers collectively have total control; managers, in the traditional sense at least, cease to exist, and ‘management’ is eliminated as a function separate from the workers themselves. It is a system of direct democracy in the workplace as all workers participate in decision-making and the workplace takes on a communal form, collectively run at the various levels. Worker cooperatives (organisations owned and democratically controlled by its worker-owners) operate according to WSM principles but critics argue that WSM is inefficient because it takes up too much of employees’ time in decision-making rather on what they are trained to do.  However, in practice, under WSM, the burden of decision-making on workers is not too onerous since they only make strategic and important tactical decisions during works council meetings whilst minor decisions are left to the initiative of individual workers as and when the necessity arises. 

A Brief History of Industrial Democracy

The idea of industrial democracy is an old one if it is accepted that any arrangement that allows workers a degree of control over the work process is a form of industrial democracy such as the Guild system, which existed during the Medieval period.  It can be regarded as a form of industrial democracy because under this system, each occupation had its own guild, to which all employers and employees in that line of work belonged.   More to the point, the guild collectively decided and regulated such aspects of business as prices, wages, hours of operation, and product quality.


However, industrial democracy, as presently understood, only started to gain currency in the second half of the nineteenth century with the development of large-scale industry and the rise of a labour movement. Instead of making work easier and improving the life of workers, the rapid scientific and technological advances of the time did just the opposite thus giving rise, inter alia, to anarcho-syndicalism (i.e. the theory and practice of revolutionary industrial unionism to create a stateless socialist society) and the demand for industrial democracy.


Anarcho-syndicalism was a major tendency within the revolutionary left until the Bolshevik Revolution of 1917 but thereafter declined and all but gave way to Marxism-Leninism (i.e. the doctrines of Marx as interpreted by Lenin and applied in the Soviet Union) in the battle of ideas.  Nevertheless, anarcho-syndicalism remains a significant intellectual current of socialist thought to the present day, most clearly in such organisations as the International Workers of the World (aka the Wobblies) which view industrial democracy as a staging post for a new socialist order.


Although the Bolshevik Revolution brought many benefits to the peoples of the former Russian Empire and boosted the socialist cause worldwide, it, nevertheless, had a downside which included the emasculation of the soviets (i.e. workers’ councils) that had spontaneously arisen prior to the Revolution.  Once the Bolshevik Party seized power, a state apparatus, separate from the masses, was gradually created which bureaucratically controlled workplaces and stifled industrial democracy.   Despite the rhetoric that the ‘Soviet Union’ was the world’s first workers’ state, Soviet workers were never given the opportunity to create new institutions through which they could have managed both industry and society for themselves since the reins of power remained firmly in the hands of an authoritarian CPSU oligarchy.

Nevertheless, the Bolshevik Revolution served as a constant reminder to the ruling class in capitalist countries that workers could only be pushed so far and that, all things remaining equal, it would serve their purposes better to ensure cooperation rather than risk all-out confrontation with their workforces. In Britain, ‘Mondism’ (i.e. a model of joint consultation advocated by Sir Alfred Mond of ICI)  in the late 1920s, the World War Two productivity committees  and  worker directors on the Board of the British Steel Corporation in the 1970s were examples of employers conceding a measure of industrial democracy with the expectation this would lead to a more fully engaged, happier and more productive workforce.

However, not all within the ruling capitalist class have been convinced of the case for power sharing in the workplace as became clear in the 1980s when the Tories under Margaret Thatcher pushed through anti-union laws in an effort, as she put it, to give back to managers the right to manage.  Thatcher’s mission was to break the power of the working class and to allow private enterprise and market forces to operate freely without let or hindrance from organised labour.

Be that as it may, prevailing ideas tend to change over time and the present trend is for a shift away from conflictual to consensual relationships in the workplace.  Employers, by and large, now seek ‘social partnership’ and the more enlightened ones accept that a measure of industrial democracy, far from hindering, can actively help create the conditions for commercial success in the modern economy.

Current Examples of Workers’ Self-Management

Workers’ self-management (WSM) is a democratic form of organisation for the workplace which is distinct from the hierarchical systems of capitalist management and the bureaucratic centralist systems that once prevailed in the Soviet Union and its satellite states.  Outlined below are three different examples of WSM that currently operate in countries with capitalist economies.


The John Lewis Partnership: is a major UK retailer that runs department stores, supermarkets and a direct services company. Every permanent employee is a ‘partner’ (i.e. part-owner) and has a possibility to influence the business through branch forums, which discuss local issues at every store.  Above all these is the Partnership Council, to which the partners elect at least 80% of the 82 representatives, while the chairman appoints the remaining. The councils have the power to discuss ‘any matter whatsoever’, and are responsible for the non-commercial aspects of the business, The Partnership Council also elects five of the directors on the partnership board (which is responsible for the commercial activities), while the chairman appoints another five. The two remaining board members are the chairman and the deputy chairman. These routes ensure that every non-management partner has an open channel for expressing his/her views to management and the chairman.  Every partner receives an annual bonus, which is a share of the profit. It is calculated as a percentage of salary for every partner.


The Mondragon Cooperative Corporation:  is a group of manufacturing, financial and retail companies based in the Basque Country and extended over the rest of Spain and abroad. It consists of worker-owned businesses, supported by a savings bank that raises money for the cooperative enterprises. The MCC is not part of the traditional cooperative movement, and is instead based on ten principles: equality of opportunity; the democratic election of managers; sovereignty of labour; a requirement for capital to be used by labour rather than labour used by capital; participative management; low pay differentials; cooperation with other cooperative movements; social change; solidarity with those working for peace, justice, and development; and education.  The sovereign body for the MCC is the 650-member Co-operative Congress, its delegates elected from across the individual co-operatives. The annual general assembly elects a governing council which has day-to-day management responsibility and appoints senior staff. For each individual business, there is also a workplace council, the elected President of which assists the manager with the running of the business on behalf of the workers.

FaSinPat has been the largest and most successful example of worker self-management in Argentina even though it had to function for its first four years without any legal standing whatsoever.


FaSinPat: is a ceramic tile factory in the southern Argentine province of Neuquén. It was formerly known as Zanon but was re-named after the workforce took over the factory when the owner attempted a lockout in 2001. The factory is now managed by the workers themselves.  Once a month, one shift is dedicated to an all-factory assembly where important decisions are made by a vote of all workers The factory is divided into 12 sections (production, planning, sales, maintenance, etc.). that each elect a delegate. Each day these 12 delegates meet to decide how to proceed with the necessary tasks of the day. Delegates rotate frequently and periodically administrators are chosen, with the old administrators returning to the shopfloor.  FaSinPat has been the largest and most successful example of worker self-management in Argentina even though it had to function for its first four years without any legal standing whatsoever.  Eventually, it won legal recognition in 2006, albeit temporarily, for three years but can still be put out of business at anytime, according to Argentine Law, due to the debts accumulated by the previous owner. Nevertheless, FaSinPat, along with other factory occupations and ‘recovered’ enterprises in Argentina, are proving that workers facing factory closures and exploitative conditions can fight back and need not passively accept their fate under the capitalist system. By its very nature, workers’ self-management challenges the logic of capitalism and instils feelings of pride, self-worth and confidence among those who participate.


The Case for Industrial Democracy


The idea of industrial democracy arose along with socialism in the nineteenth century and continues to be an issue of great importance to working people because what takes place in the workplace affects their health, wealth and status.  In general, the case for industrial democracy rests on a number of arguments each of which falls into the category of either political, moral or economic arguments.
The main political argument in a nutshell is that good citizenship and active participation in the wider political sphere can be fostered by greater worker participation in industry. Another such argument is that allowing workers to have a greater say in decision-making at work helps improve political democracy by reducing the imbalance that exists in society on account of the unfair advantages enjoyed by capitalists by dint of their wealth and social influence.
The moral argument is about the need to provide for the personal development and satisfaction of individual workers. The tenets of democracy, namely freedom of expression, access to information, participation in decision-making and equality of opportunity, must be made available to every member of society in order that there can be a truly democratic system. These principles must extend into every facet of life, not least of all, the workplace. Efforts to improve the influence workers have over what occurs in the workplace must be supported because it impacts on the lives of such a large proportion of the population in many different ways.


Finally, the economic argument relates to the belief that improving industrial democracy, by giving workers more rights to participate in the organisation of their work, will improve job satisfaction, increase motivation and lead to higher productivity.   Productivity growth in an economy is the main determinant of per capita income growth and a key factor in raising living standards.


From the socialist perspective, the case for industrial democracy is irrefutable and is a basic tenet of socialist belief.  This, however, does not mean that all socialists necessarily agree that industrial democracy should be promoted at every opportunity.


In politics there are fundamentalists (i.e. ‘fundis’) who say stay true to your principles and realists (‘realos’) who say  politics is the art of the possible and you must be prepared to compromise.  On the question of industrial democracy there tends to be a ‘fundis’- ‘realos’ type of dichotomy amongst those who would classify themselves as being socialists.


Generally, fundis tend to subscribe to ideas located on the far left of the political spectrum and, believe that any form of industrial democracy within the context of capitalism is more apparent than real.  Their standpoint is that it is impossible to have meaningful industrial democracy within a capitalist society since capitalism, by its very nature, produces contradictions which cannot be resolved until and unless there is a transition to a new socialist order. In short, fundis believe that the capitalist system has to be replaced by socialism before true industrial democracy can be achieved.

By contrast, realos are more pragmatic and less driven by ideology in their views compared to fundis.   They would agree with the fundis that any increased level of participation by workers in decision-making granted by capitalist employers does not in and of itself constitute true industrial democracy since this is only possible under socialism, but part company with fundis by maintaining that any such concessions should be accepted and used as a launch pad for further demands;  not rejected, as fundis would do, on the grounds that ‘collaborating’ with employers’ manipulative participative schemes helps to prolong capitalism.  In other words, the disagreement about industrial democracy between fundis and realos in the final analysis concerns means (i.e. whether or not to go along with concessions as a step to achieving true industrial democracy) not ends (i.e. workers’ self-management set within a fully functioning socialist society) which fundis and realos fully share.

Conclusion

There can be little doubt that the term ‘socialism’ is in need of rehabilitation.  Over the years it has acquired negative connotations among the general population not least as a result of relentless and prolonged cold war propaganda that portrayed socialism as the antithesis of democracy.

The truth, however, is that, far from being the diametric opposite of democracy, socialism is its corollary.  There can be no meaningful socialism without democracy and no real democracy without socialism.

The authors of the Communist Manifesto linked socialism and democracy together as end and means. In the view of Marx and Engels, the transition from capitalism to the classless society of socialism could only be carried out by an ever-expanding democracy, involving the masses of the workers more and more in all aspects of social and economic life, by direct participation and control.

Accordingly, by promoting industrial democracy which involves workers making decisions, sharing responsibility and authority in the workplace, socialists would not only be helping to rehabilitate ‘socialism’ in the eyes of the public but also be paving the way towards a socialist society.