Fabian Pamphlet on the Future of Industrial Democracy: Part 2

This is the second part of my article on William McCarthy’s Fabian pamphlet, The Future of Industrial Democracy, published in 1988.

The section on Ideas in chapter 3: Composition and Principles of Representation runs as follows

At this stage all one can do is propose a number of suggestions and options for further consideration by the Movement. I therefore advance the following cockshy in an attempt to start a debate. No doubt it fails to grapple with many of the problems and oversimplifies others. It should be regarded as written with the lightest of pencils. Three ideas come to mind.

First, why not retain the Bullock notion of a universal enabling ballot, to test whether workers in a given firm or establishment wish to exercise their statutory rights to participation? As the Bullock Report recognised unions would retain the right to “trigger” such a ballot in the groups they represented. Well-intentioned employers, in association with recognised unions, could agree to recommend the establishment of such statutory councils; but there would be a need to be a ballot of all workers involved.

Where a majority of workers voting favoured the establishment of participative rights the employer would be under a legal obligation to establish statutory joint councils. The composition of the workers’ side would be broadly defined by statute, as would be their powers and right. Management would be free to decide its own representatives who served on the council, but the statute would specify the obligations of the employee.

Second, why not let worker representatives emerge by means of a universal secret ballot-open to both unionists and non-unionists-with recognised unions enjoying certain prescribed rights of nomination? Here there a considerable number of European examples to choose from. In France and Luxembourg as I understand it, only unions can nominate for the “first round” of elections. If less than 50 per cent of the electorate vote there is a second election and any worker can nominate. In Belgium unions have an exclusive right to nominate “lists” of candidates where they have representative rights; non-unionists may make nominations elsewhere. Alternatively, there are systems where a given number of workers can nominate if unions fail to provide sufficient nominations. In the Netherlands, for example, any thirty workers can nominate in the larger enterprises, if unions fail to do so. In Germany any three workers can put up a candidate. For myself I favour certain limited rights of nomination in cases where unions are recognised. This is the area where the spectre of “company unionism” is most easily perceived and rightly resisted.

Third, why not specify that in areas where unions can demonstrate that they have members but no recognition any “appropriate” union has the right to make nominations? This need not prevent a given number of workers from enjoying analogous rights.

The section on Legal Framework also says

The best possible combination of nomination and electoral arrangements needs further thought than I can give it as this point. What I believe is that given suitable arrangements it would be possible both to safeguard the position of established unions and create conditions favourable to trade union growth; yet it would not be necessary to insist on a quasi-monopoly of representative rights confined to recognised unions. I suggest that after further debate within the Movement, Labour should propose an enabling statute which provides for joint participation councils in all private firms employing more than 500. The figure of 500 is itself open to debate. But in this way, I estimate it would be possible to show that the intention was to provide participation opportunities for something like 50 per cent of the private sector labour force. A worthwhile beginning to further advance, based on experience and proven worth. Where it was evident that a company employing more than 500 was divided into more than one “establishment” or was composed of a group of companies under the overall control of a “holding company” or its equivalent, power would exist to demand additional joint councils, with rights related to decisions taken at appropriate management levels.

Consideration would need to be given to the creation of a similar framework of rights in appropriate parts of the public sector of employment. So far as I can see there is no good reason why workers in the nationalised industries, national and local government or the NHS should be deprived of statutory rights to participate in management decisions affecting their working lives. No doubt the representation of “management” will pose different problems, the appropriate levels of joint councils will need to be tailor-made to fit different parts of the public sector and there will be different problems of confidentiality. But I doubt if the needs of workers and the benefits to both employers and the public will be found to be all that different.

It will be said that this cockshy for further consideration is superficial, with several critical problems and difficulties left unresolved. Those who like its general drift, but feel fear that the sceptics may have a case, could not do better than look again at some of the less publicised parts of the Bullock Report. One of the more lasting services performed by the Committee of Inquiry was that it set out to explore and overcome almost all the practical objections that could be raised to any form of statutorily based workers’ participation (see Bullock op. cit. chapters 11 and 12).

For this reason its says wise and relevant things about the need to avoid allowing all kinds of exceptions to a participation law, based on the alleged differences that are said to exist in banks, shipping lines, building firms and other parts of the private sector where employers would like to escape the effect of legislation. It also provides a clear account of the problem of “confidentiality” and how best to deal with it. It makes a convincing case for an Industrial Democracy Commission (IDC) to administer and apply the legislation and monitor its effects in an objective and impartial way. (In our case an additional essential task for the IDC would be to decide when multi-level joint councils were justified in the case of a particular firm or group of firms.) Above all, perhaps, it provides a guide through the complexities of company structure-with its spider’s web of holding boards, subsidiary boards, parent companies, inter-locking “subsidiaries” and “intermediate” organisations. It even follows these labyrinth paths into the upper reaches of British and foreign-based multi-nationals.

Of course the Committee’s primary objective in tracing out the lines of corporate responsibility and influence was to decide how to apply its own benchmark of “2,000 or more employees”. After much consideration they decided that this should apply “…to the ultimate holding company of a group which in toto employs 2,000 or more people in the United Kingdom, as well as to any individual company which employs 2,000 or more people in the United Kingdom, whether or not it is part of a group” (Bullock, op. cit. p. 132).

With appropriate emendation to fit the lower thresholds advanced in this pamphlet the Bullock formula seems to me to provide the essence of the right approach.

It is also important to remember that the legal framework advanced above would its place alongside Labour’s overall programme for extending rights at work-eg the restoration of trade union rights, improved rights of recognition and an expansion of individual rights against employers in cases of unfair dismissal and discrimination. All British workers would gain from such a programme and good employers should have nothing to fear.

The proposals should also be seen against the background of the first report of the Labour Party National Executive Committee’s People at Work Policy Review Group, with its emphasis on the need for a new training initiative and action to raise economic efficiency and the quality of life at work.

A legal framework of the kind envisaged here would provide trade unions and trade unionists with unrivalled opportunities. In areas where unions were recognised union representatives would find it easier to service members and influence the decisions of management. In areas where non-unionism is now the norm there would be greater incentives to organise and recruit; it would be easier to demonstrate what unionisation could do and easier to move to a situation in which recognition became a natural development. Of course, unions and their workplace representatives would need to become experts in explaining and using the rights embodied in the new framework. There would be a need for professional and prompt guidance and support in local and national union offices.

Unions should also find it easier to tackle their media image as negative and reactionary forces-opposed to the narrow “consumerism” peddled by the Government and its allies: engaged in a perpetual battle against management-inspired improvements in productivity and efficiency. In time, and before very long, it should be possible to demonstrate the contribution which can be made by the right kind of alliance between management, workers and unions. Benighted market men and women can be relied upon to misunderstand and misrepresent any teething problems and difficulties that arise; but for trade unionists of all sorts and persuasions there will be very little to lose and a great deal to gain.

This article will conclude in Part 3, which will discuss the pamphlet’s last chapter, Summary and Conclusions.

Fabian Pamphlet on Future of Industrial Democracy: Part 3

William McCarthy, The Future of Industrial Democracy (1988).

Chapter 4: Summary and Conclusions

This, the pamphlet’s final chapters, runs as follows

This pamphlet has concerned itself with the change required in Labour’s policies for extending the frontiers of industrial democracy. It has been suggested that the objectives in People at Work need to be given concrete expression in an enabling statute which provides for the creation of elective joint councils at establishment level in all private firms employing more than 500 workers. In the case of multi-establishment firms joint councils will be needed at both establishment and enterprise level. Similar arrangements should be introduced into the public sector.

The primary condition for the establishment of joint councils would be an affirmative ballot of the workers concerned. Employers would be entitled to “trigger” such a ballot in association with recognised unions. In the absence of employer agreement recognised unions would be able to invoke the ballot procedure unilaterally. Where there were union members, but no recognition had been granted, a union with members would still be entitled to trigger a ballot covering the workers it wished to represent. Where no union members existed a given proportion of the labour force, say 10 per cent, would also be free to demand a ballot.

In all cases there would need to be a majority of the workers affected voting in favour of a joint council under the terms of the enabling Act. Such a vote would be legally binding on the employers; and there would be suitable sanctions to secure enforcement. Worker representatives would emerge by means of a universal secret ballot. Recognised trade unions would be given certain prescribed rights of nomination. Where unions had members, but were denied recognition, appropriate unions would also have the right to make nominations. This need not prevent a given number of workers from enjoying analogous right to make nominations.

Statutory joint councils would have the right to be informed about a wide variety of subjects which would be specified in the enabling Act-eg intended redundancies, closures and reductions in labour demand. Management would also be under a more general obligation to provide worker representatives with a full picture of the economic and financial position of the firm-including cost structures, profit margins, productivity ratios, manpower needs and the use of contract labour. Information could only be refused on limited and specified grounds of commercial confidentiality in parts of the public sector somewhat different criteria of confidentiality would be specified in the Act.)

Councils would have a similar right to be consulted on all decisions likely to have a significant impact on the labour force-using words similar to those set out in the EC draft Fifth Directive. This would be complemented by an obligation to consult the joint council on a number of specified subjects-such as manpower plans, changes in working practices, health and safety matters, etc. There would be a right to propose alternatives and a limited right of delay. Worker representatives would be under an obligation to present management proposals to their constituents for their consideration. The statute would stress that one of the main objects of consultation would be to raise efficiency and improve industrial performance.

The workers’ side of a joint council would have a right to complain to a special court if any of their statutory rights were ignored or denied by an employer. This would be empowered to make orders against a defaulting firm as a final resort.

The most radical changes in established Labour party policy that are recommended in this pamphlet concern the need to modify the principles of single channel representation, as these were expressed and applied to worker directors in the majority report of the Bullock Committee on Industrial Democracy. It is argued that if Labour is to establish a positive and convincing case for industrial democracy in present day Britain it must be prepared to urge its introduction over the widest possible area. To help retain the justifiability of single channel representation at board-room level Bullock understandably felt the need to confine his proposals to a fraction of the labour force. It is suggested that this degree of selectivity would not be acceptable today.

There should also be a limited area of joint decision taking or co-determination covering such matters as works rules, health and safety policies, the administration of pension schemes and training. Joint councils should also be given rights to develop and monitor equal opportunities policies and administer various government subsidies. They could also be linked to a Labour government’s regional or industrial planning process. They should provide the final internal appeal stage in cases of unfair dismissal and discrimination.

Labour should place much more emphasis on the positive case for industrial democracy. They should focus on the extent to which workers need to feel that they have some degree of influence over their work situation. Above all, Labour should stress the well-established links between participation and improvements in industrial efficiency and performance. They must emphasise that the development and extension of industrial democracy would produce substantial benefits for the community as a whole, quite apart from its impact on working people.

By stressing these aspects of the argument, it would be possible to attack the credibility and naivety of Thatcherite assumption concerning the need to ‘liberate’ British managers from all forms of regulation and responsibility-irrespective of the effects on workers in their employ. It should also make it more difficult for Labour’s opponents to misrepresent the negative case for participation as a mere cover for union restriction and control.

My Conclusions

The pamphlet makes a strong case for the establishment of joint councils below boardroom level, which would extend workplace to democracy to a greater proportion of the work force than recommended by the Bullock report. It shows how arguments for control of the means of production by the workers themselves have been around ever since Gerard Winstanley and the Diggers in the 17th century. He also shows, as have other advocates for worker’s control, that such schemes give a greater sense of workplace satisfaction and actually raise productivity and efficiency, as well as giving workers’ greater rights and powers over the terms and conditions of employment.

This is in very stark contrast to the current condition of the British economy, created through the Thatcherite dogmas of deregulation, privatisation and the destruction of unions and worker’s rights. British productivity is extremely poor. I think it’s possibly one of the lowest in Europe. Wages have been stagnant, creating mass poverty. This means that seven million now live in ‘food insecure’ households, hundreds of thousands are only keeping body and soul together through food banks, three million children subsist in poverty. And the system of benefit sanctions has killed 700 people.

This is the state of Thatcherite capitalism: it isn’t working.

As for the proposals themselves, they offer workers to become partners with industry, and contrary to Thatcherite scaremongering that ‘Labour wants to nationalise everything’, G.D.H. Cole, the great theorist of Guild Socialism recognised not only the need for a private sector, but he also said that Socialists should ally with small businessmen against the threat of the monopoly capitalists.

Thatcher promoted her entirely spurious credentials as a woman of the working class by stressing her background as the daughter of a shopkeeper. It’s petty bourgeois, rather than working class. But nevertheless, it was effective propaganda, and a large part of the electorate bought it.

But the Tories have never favoured Britain’s small businesses – the Arkwrights and Grenvilles that mind our corner shops. They have always sacrificed them to the demands of the big businessmen, who manipulate and exploit them. For the examples of the big supermarket chains exploiting the farmers, who supply them, see the relevant chapter in George Monbiot’s Corporate State.

Coles’ support for industrial democracy was thus part of a recognition to preserve some private enterprise, and protect its most vulnerable members, while at the same time socialising the big monopolies and extending industrial democracy to the private sector, in order to create a truly democratic society.

This is another point that needs stressing: without workers’ control, democracy in general is incomplete and under severe threat. The corporatism introduced by Thatcher and Ronald Reagan, and extended by subsequent neoliberal administrations, including those of Blair and Clinton, has severely undermined democracy in both America and Britain. In America, where politicians do the will of their political donors in big business, rather than their constituents, Harvard has downgraded the countries’ status from a democracy to partial oligarchy. Britain is more or less the same. 75 per cent or so of MPs are millionaires, often occupying seats on boards of multiple companies. Big business sponsors party political conferences and events, even to the point of loaning personnel. As a result, as Monbiot has pointed out, we live in a Corporate State, that acts according to the dictates of industry, not the needs of the British public.

This needs to be stopped. The links between big business and political parties need to be heavily restricted, if not severed altogether. And ordinary workers given more power to participate in decision-making in their firms.

‘Red’ Ken Livingstone’s Arguments for Industrial Democracy

In his 1989 book, Livingstone’s Labour: Programme for the Nineties (London: Allen Hyman Ltd) the much reviled leader of the GLC and bête noir of Thatcher and Blair, presented a case for the introduction of industrial democracy into British firms. This, he believed, would make state intervention popular, and increase the efficiency of the firms themselves. He writes

Once the idea of intervention is accepted, the question is how should it be done? No one in their right mind would wish to repeat the mistakes of previous forms of public ownership in Britain in which vast, remote, undemocratic, Morrisonian bureaucracies alienated the groups they were supposed to serve. Nor do we want some state-owned investment bank based in London and managed by a few well-meaning City bankers who have at sometime in the past been known to vote Labour in a good year. It would be a great mistake to recreate in our new system the inherent failings of the present centralised metropolitan financial system.

We must ensure that what Labour creates is based on the different regions of Britain and is inherently partipatory and democratic. If we can create an investment system which involves the workforce on an industry by industry, company by company, and plant for plant basis, it would not only be very difficult to abolish following a change of government but it would usher in economic rights for the individual citizen in addition to our traditional electoral rights.

I have no doubt that people in the future will look back at the present time and express amazement that private investors and accountants could intervene to contract and close firms based solely on a short-term financial decision, while the people and sometimes whole communities who had given their lives to that firm had no rights except to draw the dole.

It will no doubt come as a shock to those who wield power and influence at the top of great bureaucracies and corporations to suggest that their workforce should have control over the investment programme of their company, but in the long term they are the people who have the greatest stake in the success or future of the firm. Instead of the investment decisions being taken solely by a firm’s directors and accountants, who are so often only interested in the quickest short-term return and therefore decide to invest the company profits in stock market or property speculation rather than expanding production or developing new products, we should give the workforce in each firm a power of veto over all investment plans and the power to initiate an alternative strategy. The workforce would require access to all the relevant information about the firm or industry concerned, plus adequate research resources for it take part in any debate about future prospects. The most obvious way to provide such resources is on a regional basis and this would be the most important function of elected regional authorities, discussed in the next chapter.

All the evidence from other parts of the world and the more limited experience of Britain in this field, shows that workers in a firm take a much more long term, strategic view, if for no other reason than their jobs depend on the survival and success of the company concerned. I have no doubt that had such economic rights and responsibilities been introduced by the post-war Labour government under Attlee, then the British economy would by now be a lot closer to that of West Germany in strength and size.

These sentiments will seem alarming here in Britain where the class system is still so much more of a barrier to judging individuals on their merits than in the other more modern Western democracies. Indeed, there is no doubt that these reactionary and arrogant attitudes have been strengthened during the Thatcher premiership with the constant emphasis on the theme that ‘managers must be free to manage’. Given the gross mismanagement of our economy by our ‘managers’ over the past decades, there is little empirical evidence to suggest that British managers’ ability to run the economy is such that the rest of us should simply do as we are told whilst fervently hoping that their success rate improves. (pp. 33-4).

I’ve blogged about the West German co-determination system, in which workers are elected to the boardroom, and have wide rights regarding the supervision and management of personnel issues, though they don’t control investment or the business plan. The Fabian pamphlet ‘The Future of Industrial Democracy’ and the evidence presented to the Bullock Report in the 1970s noted the unanimous evidence that while workers generally say they don’t want to be managers, they do work harder and better when they feel that they have a say in the firm’s management. There are various systems of industrial democracy across northern Europe, including the Netherlands, Austria and Denmark. It’s only the British class system that prevents it from being adopted over here.