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International Institute for Self Management REFLEXIVE STATEMENT
Since the days of the student movement at Frankfurt University, I have been convinced that a democratic society must extend democracy to the workplace and that no society would be worth fighting for if it did not include economic democracy. I therefore studied the Yugoslav system of “self-management” as it was developing in the seventies and eighties, to get a better understanding of the problems and prospects of implementing democracy in the workplace. .
My experience as a consultant to co-operatives and other forms of self-managed enterprises in Britain and Germany showed me that this form of enterprise is the most efficient way that self-help groups can be organized. Moreover, even large “degenerated” co-operative systems work in a different way than “normal” capitalist enterprise. Over the years, I met many co-fighters for self-management, especially at the Inter-University Centre in Dubrovnik, when it was still part of Yugoslavia. Hoping to exchange ideas and experiences with other activists and scholars worldwide, I founded the International Institute for Self management (IIS) in 1988, and continue to participate in its meetings held in different countries every year or so.
INTRODUCTION
I see economic systems based on workplace democracy as preferable to those based on neo-liberalism. The neo-liberal theoreticians of the “pure market approach” in economy argue for an efficient and rational allocation of resources in order to increase productivity and growth rates. (See, for example, Friedman, 1983). And they try to convince us that all of these terms are themselves objective and value-free. Neo-liberalism distinguishes itself from liberalism in that it seeks the destruction of all state activities that seem to limit the freedom of the market. Privatization of public services is a main focus of this argument. More often than not, this means their sheer elimination without replacement. All institutions of solidarity and community have to be destroyed leaving every individual to face and solve their problems entirely on their own.
As a precondition for applying the pure market approach, any state that allies itself to neo-liberalism has to destroy the institutions that were fought and paid for by our ancestors. These institutions were designed to secure some
minimal standards of quality of life in highly industrialized, wealthy societies. Their destruction, politically willed, is nothing but state planning—just as much as the drafting of a five-year plan. By deciding about taxation, provision—or better non-provision—of public services,s about increasing or decreasing public expenditures, by planning new arms projects, the state under neo-liberalism is strongly involved in the markets. In this “best of all worlds, where the state does not interfere”, neo-liberal ideologists themselves heavily rely on the state and its police and military power to put their theory into practice. In all of these ways, as Polyani (1944) pointed out, the pure market economy paves the road for an authoritarian state.
The neo-liberalist approach does not work even in its own terms, does not deliver the goods. The promise to ordinary women and men that they would find employment, that ecological disaster would be prevented, that the “third world” would be developed—all these promises are still unfulfilled. Neoliberalist politics work against the common person especially in countries of the “third world”, where again it is closely allied to either dictators, warlords, or other non- democratic forms of government.
ECONOMIC DEMOCRACY IS ALIVE AND WELL
Economic democracy is as vital to a democratic system as political democracy. At the core of the philosophical concepts of liberty, human rights, justice and equality are not only political values but also the way these principles are realized in everyday life. And everyday life, in most people’s cases, is closely connected with work (even when out of employment). The way we earn our means of existence determines where and how we are living and (going from there to politics) how we vote, which decisions we take, locally, nationally or even globally.
Democratic economies go beyond so-called pure market systems. Karl Polanyi (1944) said that an economy that places the uppermost priority on the functioning of the pure market constitutes a “utopia” that will necessarily lead to authoritarian, if not fascist, political rule. He gave Italian and German fascism as examples. Polanyi’s most important point is that labour cannot be treated as a commodity. It is an absurd principle that a person should follow the goal of a pure market system without ever realizing gains for themselves in their lifetime. People would have to be forced to pursue such an irrational goal. There cannot be a free market of labour in the same way as there are markets for commodities and capital. Every attempt to enforce a pure labour market must lead to extreme political suppression; must necessarily be undemocratic.
I do not want to go into the philosophical or theoretical justification for the demand for workplace democracy, though I think the discussion is of high
importance. My point is to show that democracy—when extended into economic life—works. And that it has proven to do so throughout the-co-operative movement, i.e., for at least 150 years. It works under strong constraints such as hostile markets, adverse state regulation and legislation, unfriendly banks, etc. Workplace democracy is better able to deal efficiently with economic problems than neo-liberal capitalist industry. It normally starts off as an economy of self- help, as a way in which groups of people—often excluded from mainstream society—successfully fight poverty. 1 Whatever locus of workplace democracy we examine: one co-operative on its own, a regional network of co-operatives such as the Basque Mondragon, or industrial self-management in an entire nation, as in the former Yugoslavia, we find that there is a very high level of reinvestment of profits back into the co-operative system, thus creating jobs locally. Millions of jobs have been lost over the last thirty years in every society of the industrialized world. In contrast, co-operative systems have constantly— if sometimes slowly—increased job growth. This is because, co-operatives, while competing on all capitalist markets, do not take part in anything like a labour market. Labour is not treated as a commodity.
Further, as people have a strong interest in developing their own region and in creating jobs for friends and relatives, they will not decide to invest somewhere on the globe where the cost of labour is lower than in their own region. Thus, Capital loses one of its essential or constitutive features: its mobility. Within a cooperative firm, network, or self-managed economy, capital is bound to the local region and its development; it cannot go where it achieves highest profits. Labour hires Capital, and not vice-versa.
Now I expect that relatively few co-operativists intentionally decide to act against the labour market, and thus against neo-liberal capitalism. But by deciding to create new jobs locally rather than getting the highest returns on capital, they are regularly, albeit unintentionally, doing so. In this sense, there is an invisible hand at work in workplace democracy on behalf of local or regional development. t
Of course, there might be many reasons for the state wanting to get rid of social and health services. Moreover, we might agree that the state is often not their best provider. I do not want to defend the overlarge bureaucracies that regularly develop in state-run services and industries. But is it not an option to encourage people to run their services on their own; e.g., to create health care cooperatives of many sorts, as has been done in the current UK and Italy? There are many ways the state could encourage this—by tax policies, professional start-up advice, preferring commonly owned businesses for public orders and many more. It only requires the political will! The belief that we cannot do anything against the so-called economic necessities is paralyzing and unjustified.
DEGREES OF WORKPLACE DEMOCRACY
Workplace democracy can exist in various degrees. There are forms of workforce participation in decision-making within private enterprises, for example, where workers’ councils exist and have a say much as it used to be-^and still exists in some measure—in German “Mitbestimmung”. Many other European countries have similar systems of co-participation of the workforce. Sometimes this right is restricted to a limited range of questions, for example, work environment design. Very rarely do we find that the workforces’ decision-making power extends to questions of investment, organizational changes in the enterprise, or hiring and firing.
“Workplace democracy” is a system where people who earn their living by working in an enterprise own and control that enterprise collectively. The idea is to secure democracy not only in political, but also in economic life. It is the theoretical concept for enterprises such as co-operatives, businesses which are owned and controlled by their members, with membership being open to all employees. The principle of one member, one vote is vital. These businesses can operate in many different sectors. There are successful co-operatives in housing, banking, insurance etc., some more than a century old. (My housing co-op in Frankfurt, for example, was founded in 1900 and still is going strong).
Self-management is the political movement which aims to achieve decisive primacy of the political (and/or moral) aims of a society over the economic sphere through continuous democratic decision-making involving all individuals concerned, and dealing with all aspects of life. When we refer to self¬managed organizations and institutions in this context, we basically mean co¬operatives and their democratically elected and controlled superstructures— associations, federations, technical assistance organizations, etc.
Even under economic conditions of extreme constraint and market- driven pressures, people working in co-operatives or with some form of workplace democracy are able to decide differently about almost everything concerning their enterprise. The ideologists of “the pure market,” on the other hand, are trying to make us believe that in times of crisis there is only one choice, namely the constantly pressing urgency to behave according to the demands of the markets, i.e., to destroy the social institutions, state provision of services, production-capacities, to kill jobs, to intensify work for those still employed.
In workplace democracy, however, terms such as efficiency and rationality serve aims different from those in conventional industry. This is almost another “law”, a development that regularly happens in enterprises with workplace democracy: every group of people organizes its working environment in a different way.
One example of an enterprise exposed to extreme world market competition is the Yugoslav shipyard 3.May. Before the wars of the 1990s, the Yugoslav shipyard industry was the second largest in the world after Japan. In the 1980s, the management of 3.May in Rijeka introduced a new Japanese welding technology which required each worker to serve nine welding points per minute, though they were used to serving only three. The workers refused to accept the Japanese intensity of work. After some short strikes and long discussions between management and the workers council, a compromise was found: the new technology was introduced, but only five welding points per minute had to be served. Thus, work intensity was allowed to be considerably lower than in the Japanese case. However, as the management made quite clear, competitiveness on the world market would demand that the workers agree to no wage increases in the immediate future. The workers accepted this.
This example reveals that workers in democratic workplaces still have to accept the constraints of the world market. In some way, they do have to follow suit in increasing their productivity. However, through their self-managed negotiation processes, they are able to gain knowledge about those constraints and to diminish the harshness of their effects.
Similarly when Mondragon underwent production restructuring, its workers also decided to freeze their wages for three years while the company was reorganized, in order to stay competitive on the world market. Thus, they did not need to sack any co-workers. After the restructuring of Mondragon’s Fagor, this refrigerator factory doubled production with a third of the workforce. Employment was found for every person that did not continue to work in Fagor.
Gabriele Herbert
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CONCLUSION
I have wanted to show with these examples that workplace democracy works on a very large scale, such as the whole of the former Yugoslav economy and the large Mondragon co-operative system of more than 60,000 employees—20*000 more than in 1980. The case of the Yugoslav shipyard (at the time about 6,000 workers) shows that internal organization of work can still be adjusted to the needs of the workers, even when exposed to extreme competition on the world market. Beyond these specific examples, we find throughout the world co¬operatives in diverse activities of humankind that were founded as self-help organizations and are still there. 2 Democratic workplaces benefit their own workers, their local communities, and the entire global village.
ENDNOTES
1 See, for example, Comforth et al (1988); Howard (2000); Yeo (2002); Herbert (1991); Sacks (1983); Thomas and Logan (1982); and Quarter (1990).
2 See citations in note 1 above.
REFERENCES
Comforth, Chris, Alan Thomas, Jenny Lewis, and Roger Spear, 1988 Developing Successful Worker Co-operatives. London: Sage Friedman, Milton and William Richard Allen, 1983. Bright Promises, Dismal Performance. Harvest Books Herbert, Gabriele, 1991. The Significance of Co-operatives and their Umbrella-
Organisation for Employment and Development Studies. Bremen: Mehrwert Howard, Michael W., 2000. Self-Management and the Crisis of Socialism. Maryland: Rowman and Littlefield Polanyi, Karl, 1944. The Great Transformation
Quarter, Jack and Melnyk George (1990) Partners in Enterprise. Montreal: Black Rose Books
Sacks, Stephen, 1983, Self Management and Efficiency, London: George Allen & Unwin Thomas, Henk and Chris Logan, 1982. Mondragon: an Economic Analysis. London: George Allen & Unwin Yeo, Stephen. (2002) The Making of a Successful Co-operative Business.
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