Industrial democracy: Labour's plan MONEY
NICHOLAS DAVENPORT
I suppose most people now recognise that our economy is moving swiftly towards a new form of socialism. While the leaders of the Labour party have accepted the notion of a mixed economy—although the extreme left of their party still cling to Clause 4 and pure socialism —they have 'never defined the boundaries between the-public sector and the private sector. It is now clear that they expect the public sector to go on encroaching upon the private sector, so that in the end the public sector will dominate the whole economy. For the moment it is responsible for about 45 per cent of the national investment and for only a tiny fraction of the export trade. But this allocation, they feel sure, will change. The fact that they expect it to change quite rapidly is revealed unintentionally in the report of the Labour party on industrial democracy which was published last week. 'The two sectors of our economy,' it says, 'are no longer self-contained or separated by sharply drawn frontiers . . . The public sector is becoming far more diversified in character and in its organisation than before. Public firms will be operating within sectors of the economy still mainly occupied by privately owned firms.' Thus, they look to an encroaching public sector to advance the cause of industrial democracy so that in the end the workers will achieve the 'effective voice in the control of policy and administration' which 'British socialist thought' has always desired.
Not long ago I reviewed some of the more extreme and ill-thought-out proposals which had been made for workers' participation in company management. These contained not only worker representation on the boards of directors but a workers' share in surplus profits and assets. Some Fabians have even contended that profits do not belong to shareholders but to the community, the shareholders being entitled only to a fixed rate of interest for the use of their capital. If such wild notions were adopted the private sector of the economy would, of course, soon pack up. The ingenious machinery of the capital market, which pro- vides risk capital for the entrepreneur by way of the equity share, would quickly come to a halt. But this report of the Labour working party avoids any such revolutionary approach to the problems of industrial democracy. It argues its case in quiet sober prose and avoids saying anything to frighten the employer. It even pours cold water on the idea of workers sitting on the boards of directors.
The question of worker representatives "on the board" in the private sector,' it says, 'gives rise to a number of difficult problems and we cannot see it as a suitable starting point for the extension of industrial democracy.' The reason is that suspicion of workers being 'got at' by the management if they attend board meetings which are followed by champagne and cigars is still very strong in the trade union movement. Even now worker representatives on productivity councils and committees are kept apart from union affairs and tend to be regarded as 'bosses' men' if they remain long in that position. Do you suppose that Mr Ron Smith at £15,000 a year on the board of the National Steel Corporation will be accepted
any longer as a good trade unionist? Do you imagine that when Lord Melchett appoints a trade unionist to the board of a steel company and asks him to dine with Lady Melchett at his home in Chelsea the workers will regard that lucky fellow any longer as a loyal union man? The truth is that the trade union movement has never wanted its men to have a foot in both camps. It has always feared that if workers associated with directors socially or at board room level they would begin to understand the problems of management and cease to have implicit confidence in trade union policy; they might even see through the moonshine of trade union propaganda. So the Labour party work- ing party which has compiled this careful report was clever enough to drop the social trappings and concentrate on the advances towards indus- trial democracy which would really lead to a trade union voice in company policy and administration.
The whole emphasis of this report is that industrial democracy must develop on the basis of 'a single channel of representation' for the worker, which is the trade union. Although it correctly states that the object of industrial democracy is to 'enable each person employed in industry to realise fully his individual poten- tial,' although it rightly stresses the need of the individual to have time off for meetings and training and education, it does not really approve of the individual worker realising his full potential outside his trade union. It does not want the clever worker to attend night classes in some technology on his own initiative and work his way up into a management job on his own merits. What it has in mind is really the corporate state in which the economy is run through the 'collective bargaining process' jointly by employer organisations working within 'a more controlled framework of social accountability' and by trade union organisations operating at factory level in the control of all the conditions of work. It does not seem to realise that democracy goes out when the cor- porate state comes in.
There are, of course, many good points in this report. There are some valuable suggestions for improving the channels of communication between board room and. factory floor and for improving worker protection, especially in mergers and take-overs. As the authors remark, statutory protection over jobs has not yet gone beyond minimum standards of compensation for redundancy and a minimum length of notice. And I think the authors are justified in arguing that industrial efficiency would be improved by worker participation in the ordering of works routine, layouts, processes and products. This is the first evidence to show that the trade union movement is not disinterested in the advance of efficiency and profitability. But the authors are out of their minds when they suggest that worker participation shoUld go beyond joint control to absolute control of such things as the regulation of overtime working. It is the 'wang- ling' of overtime pay under weak managements which has been one of the main causes of the rise in British industrial costs. Perhaps they are not really as serious as they pretend about industrial profitability? I was glad to see that the authors of this report were not enthusiastic about schemes for co-ownership or co-partnership in individual firms and plants. I hope this extends to profit- sharing which would only create a new privi- leged minority class of worker. They are not against the idea of workers owning shares in the firms in which they work but they see no future for any scheme of industrial democracy Which does not start from the worker as a worker within a framework of trade union representation extending upwards from the work-place. But as they are still suspicious of the private sector they consider that the public sector provides the best chance for worker participation in `decision-making at every level' and they suggest that there should be close relations between the trade unions and the IRC and direct trade union representation on the public boards which run the nationalised indus- tries. This runs counter to the old Labour policy —propounded by Herbert Morrison—of making these boards a 'meritocracy' management un- representative of sectional interests.
But times have changed. The public sector is quietly encroaching on the private sector and developing, as the report says, 'a considerable area of "mixed" enterprise.' Sooner or later it will dominate the whole economy and if by this time worker participation in the management of the public sector has been successfully tried out and adopted, as this report suggests, we shall find ourselves dominated by the trade unions— and much closer to the corporate state.
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