BROADER DEBATE OF INDUSTRIAL RELATIONS – 3 THESES The three theses discussed by John Godard in Chapter 2 of “Industrial Relations the Economy and Society” are (a) The Capitalism Thesis; (b) The Industrialism Thesis; and (c) The Industrial Capitalism Thesis. I shall outline the three theses, then discuss the contribution each makes to an understanding of historic, and contemporary labour relations. Such discussion is important in setting the stage for an assessment of the respective roles that unions, corporations and other employers, governments, and civil society may play in the social and economic activities of Canadian society. (1) The Capitalism Thesis – a Summary (i) Definition Karl Marx first expounded the critique of Capitalism as an economic and social system. Marx’s thesis is expounded most fully in his work “Capital”. It should be noted that, while there continue to be contemporary Marxist critiques of Capitalism, non-Marxists, such as Harvard professor David Korten, advance criticism of modern corporate capitalism. See David Korten, “The Post-Corporate World”. For Marx, Capitalism is defined as the relationship between those who own the means of production (the capitalist class) and those who do not (the working class).The latter must sell their labour to capitalists in order to earn a living. Though the capitalist and the working classes presuppose each other, their interests are, for Marx, in fundamental conflict. The capitalist’s interest is always to extract maximum labour for a minimum wage, while workers seek the converse. (ii) Exploitation In this fundamental conflict, workers are at a serious disadvantage, because the economic forces of Capitalism create chronic unemployment, and an “industrial reserve army” of workers. This enables capitalists to bid wages down to the minimum acceptable level, thereby paying workers less than the 1 productive value of their labour. This “surplus value” is not distributed in wages to the workers who earned it, but to the capitalist, in the form of profit. Marx refers to this phenomenon as exploitation. Note that, in contemporary Canada, the “industrial reserve army” can take the form of immigrants, temporary young children, contracting out work abroad, and creating technology that replaces workers and makes them available to the “industrial reserve army.” More recently, the “reserve army” is workers abroad including children. See, for example Firestone rubber plantation workers in Liberia, cocoa workers in Ivory Coast, workers in cotton and banana plantations. Frequently there is forced child labour, from ages 8 to 12 (see International Labor Rights Fund – also the International Labour Organization, ILO). (iii) Alienation Marx also views worker alienation as an inevitable outcome of Capitalism. When workers sell their capacity to labour to a capitalist, such labour is owned and controlled by someone else (the capitalist). It is thus alienated from the worker. The second aspect of alienation occurs when capitalists “intensify” the labour process. Work becomes increasingly stressful, and devoid of meaning or fulfillment. While the means of their consumption of goods and services, workers are unable to realize in their work their creative capacities as human beings. Pope John Paul II discusses the creative, or “subjective”, dimension of work, in his Encyclical Laborem Exercens (1985). See also the human relations writers such as Maslow who identify the importance of selfactualization for individuals through work. See also Heather Menzies (article on class website). (iv) Ineffectiveness of unions and governments Many Marxists see unions as relatively ineffective as defenders of workers within Capitalism. While unions may reduce, to some extent, wage competition among some workers, the exploitative relationship between capitalists and workers remains, whereby the latter transfer control of their labour power to the capitalist. Unions essentially concede that workers have no ownership rights in the organization for which the provide labour and profits. 2 For Marxists, governments cannot be relied upon to promote the interests of the working class, because they are essentially instruments of the capitalist class. It is true that governments and courts have passed and interpreted legislation to the substantial benefit of the corporate sector. See e.g. the broad powers of corporations compared with the early 19th Century. See also corporate status as persons under the Charter of Rights and Freedoms. Large corporations also have the resources to lobby governments and to contribute substantially to election funding. The Temporary Foreign Workers Program in Canada is the result of corporate lobbying. Unions argue that this has the effect of reducing wages and benefits in the various industries and increasing corporate profits. See also Bill 46 in Alberta that would give power to the Energy and Utilities Board to use private land of farmers and ranchers to build electrical power lines to export power to the United States. Marxists also see the media as instruments of Capitalism that control the ideas and intellectual debate on economic, social and cultural matters. See reliance of government and media on capitalists. The media are hooked on advertising money and must take care not to offend large advertisers (see “Desperate Housewives” which one US TV station banned because of complaints from large advertisers). Also, governments in Canada and beyond depend substantially on donations particularly large corporate donations. It is likely that corporate interests will be reflected in law and government policy. (v) Problems of capitalism Capitalist domination leads to increased polarization between the capitalist and the working classes, as control of capital becomes increasingly concentrated within the capitalist class, and workers find themselves performing increasingly unskilled work. Note the increased concentration of power through mergers and acquisitions. A further difficulty with Capitalism is that, because workers are paid less than the full value for their labour, it becomes increasingly difficult for capitalists to stimulate the demand necessary to take up output and productive capacity. The result is increasing economic and social crises in the form of recessions, or wars that rescue the economy from recessions, setting the stage for the demise of Capitalism. 3 A further manifestation of the difficulties facing Capitalism is the successful lobbying by corporations for privatization of public services (health, housing, education, social security etc.) to increase opportunities for acquiring more business and more capital. (2) The Industrialism Thesis (i) Transitory nature of problems of industrialization Emile Durkheim explained “class” conflict not in terms of Capitalism but as reflecting the transition from a pre-industrial society characterized by “mechanical solidarity” to an industrial society, characterized by “organic solidarity”. Organic solidarity highlights peoples' dependence upon rewards gained from bureaucratic work organizations. Durkheim saw industrial society as producing a variety of interdependencies due to a complex division of labour and a concomitant decline in “external inequalities”, that is, inequalities of opportunity arising from socioeconomic background. Durkheim saw external inequalities as the cause of a “forced division of labour”, and largely responsible for the “anomie” or sense of normlessness that underlies conflict. Durkheim’s “industrialization” explanation of class and conflict forms the basis of the “industrialism thesis” developed in the post-World War II era by such writers as Kerr, Harbison, Dunlop, and Myers. Such authors rejected Marx’s prognosis for Capitalism on the bases that: (i) due to the emergence of a professional managerial class and the diffusion of ownership of capital, corporations are no longer managed exclusively in the interests of the owners; (see A. Berle and G. Means, “The Modern Corporation and Private Property”(1932); (ii) increasing affluence and the growth of white collar/managerial work results in a blurring of class distinctions, and a more pluralistic society; and (iii) unions and collective bargaining both delimit and institutionalize conflict within the economic sphere. 4 (ii) Development of post-industrialism The result of the foregoing phenomena is a more egalitarian and stable society than Marx predicted. Also, in industrial relations and political activity, class conflict ceases to play a role. Meanwhile, unions, and collective bargaining, mature. Godard also discusses the “post-industrial society” variant of the “industrialization” thesis. That is expounded in the work of Daniel Bell (The Coming of the Post-Industrial Society, 1973, New York, Basic Books), who sees the emergence of a service/information economy as giving rise to the virtual disappearance of conflict and alienation. Related to Bell’s thesis are those of J. Woodward (Industrial Organization, 1965, Oxford, Oxford University Press) and R. Blauner (Alienation and Freedom, 1964, Chicago, Chicago University Press). Those authors postulate that, as mass production is replaced by process production, alienation and conflict will virtually disappear. Is there evidence to support this? (iii) An end to conflict? The difference between the post-industrial society variant and the industrialization model is that the latter contemplates legitimate conflicts of interest between and among groups. The post-industrial variant of Bell et al. suggests an end to industrial interest conflicts altogether. These analysts suggest that most of the problems of industrialization have been conquered, ending the need for “adversariness”. There has emerged, they suggest, a new era, characterized by much more “positive-sum”, harmonious, or “win-win” relations between labour and management. The emergence of “team” production, job enrichment, greater attention to health and safety at work, profit sharing, etc. are viewed as evidence of the new era of industrial harmony instead if traditional conflict. It is likely that such measures produce a measure of improvement in working conditions. However, workers continue to be killed and injured on the job. In the USA General Motors moved into crisis due in large measure to its inability to sustain paying for their workers’ health insurance premiums. Statistics indicate that, in spite of rising profits of large corporations, workers’ real wages have not risen over the last 20 years. The de-skilling of work and the de-humanizing of workplaces continue to affect adversely workers’ sense of self-worth. Capitalism continues to wrestle with 5 the problems of economic booms and busts and these affect adversity workers’ sense of security, particularly workers on the periphery of society, often receiving no benefits, no job security, low pay, and working two or three part-time jobs. Employers continue to have the legal right to contract out work to usually non-unionized sub-contractors. More and more frequently, such sub-contractors operate overseas and exploit their labour, often child labour. One effect of this is that, as consumers, workers and their families buy food, toys and other products that are unsafe and harmful. Various studies of workplaces indicate high levels of stress and burnout. It is true that industrial peace exists in many organizations in Canada, if we measure peace by the relatively low number of strikes and lockouts. However, peace may also have to be looked at more broadly to include the issues referred to above. It is not clear that there evidence of an end to industrial conflict, in spite of the efforts of employers, unions and governments. Much of our task is to identify the extent of industrial peace and conflict, their causes, and action that can be taken to diminish destructive conflict. (3) The Industrial Capitalism Thesis (i) Management as legitimate domination This thesis is founded on the work of Max Weber and Godard sees it as a “middle ground” between the extremes of the Marxist Capitalism and the Industrialization theses. Weber recognizes the disadvantaged position occupied by workers as a result of the existence of a “free labour market”. Weber recognizes the “whip of hunger” associated with coercive market forces. In accordance with Marx, Weber further recognizes that basic conflicts exist between workers and investors. Yet Weber argues that the effective exercise of managerial control or domination requires not only coercion, but consent, or legitimacy. Weber defines authority as “legitimate domination”. Weber notes that industrial conflict, such as strikes, is not class conflict, rather labour/management conflict, as it is management, not capitalists, that exercise authority. He observes that, as industrial capitalism develops, 6 workers enjoy favourable living standards, largely because of the superior efficiency of bureaucratic organizations. The “problem” with “industrial capitalism”, as Weber sees it, is a “paradox of consequences” produced by the rationalization and bureaucratization processes of modern capitalism. Accordingly, along with the world of greater material affluence for workers has come their sense of being trapped (inside and outside work) by the “iron cage of bureaucracy”. The result is that the material gains of modern capitalism are offset by widespread “cultural disenchantment”. Such culture is cold, depersonalized, and devoid of meaning or moral purpose. It results from the growth of calculative rationality as a predominant ethos. The use of rational calculation as to the best means of pursuing a given end. Lack of empathy? (4) Comparison and Discussion of the Theses (i) Introduction It would be simplistic to view the theses as mutually exclusive versions of reality from which we are obliged to choose one. Preferable is the approach that each thesis sheds important light on the past, and contemporary, forces shaping social and economic relationships in Canadian and other Western societies. Our discussion will examine the empirical support that appears to exist for aspects of the three theses. First, we shall compare the respective empirical support for the Capitalism and the Industrialism theses. Thereafter, we shall comment on the “Industrial Capitalism” thesis of Weber. (ii) Empirical inadequacies of Marxism The Marxist thesis appears to be deficient in empirical verification in Western societies on several fronts. Post World War II affluence in the West, and in some Asian countries, appears to discredit Marx’s prediction that Capitalism would collapse under the weight of its own internal contradictions. By and large, labour, at least until the mid-1980s, seemed to share in the benefits of economic prosperity in many capitalist states. Indeed, it was in the communist states of Poland, East Germany, Hungary, Czechoslovakia, and the Soviet Union that social, political, and economic difficulties brought radical changes. 7 Also, Marx’s portrayal of a polarized class war has arguably not materialized in most Western societies. Indeed, there seems to be a distinct lack of solidarity among workers within Canada, the U.S.A., and many Western European countries. Scarcely 12% of US workers are unionized, the old British Labour Party has been reborn into New Labour, a right-of-centre party with relatively little influence by organized labour. In Canada, the traditional union-supported NDP has all but disappeared federally and remains a force of any kind in only three provinces. Even then, most social activists in Canada have rejected the NDP as an essentially mainstream party. Indeed, workers across Canada typically elect into government political parties that are heavily financed by the capitalists that Marxists would have us believe have interests that are in conflict with the substantial majority of voters who elect them. Few people in Canada would identify themselves as “working class”, never mind act in solidarity on “working class” issues. Workers with pension plans and RRSPs have a stake as investors in the stock markets, and some have stocks in the companies that employ them. See however Latin America, Middle East where there is substantial opposition to Capitalism. (iii) Support for Durkheim's industrialization thesis? The foregoing may provide prima facie evidence that the Industrialism thesis, based on Durkheim’s theory, seems to reflect more accurately than Marx’s Capitalist thesis the social and economic stratification in Canada. While societal conflicts do exist within Canada, they are arguably not between two polarized classes, but across a plurality of interests not related to class. The media and politicians talk of “western alienation” in Canada. Quebec separatists have for several decades sought new political relations with “Canada”. Aboriginal peoples continue their struggles to persuade the Federal and provincial governments to honour treaty rights, recognize aboriginal rights to self-governance and to redress wrongs perpetrated against aboriginal children in state-sponsored, churches-administered boarding schools. Feminist organizations seek pay and employment equity, while gays and lesbians seek an end to systemic discrimination in family and employment law. Proponents of the Industrialism thesis will point to public social programs such as the Canada Pension Plan, Employment Insurance, progressive 8 income tax, and publicly funded health-care and education as symbols and agents of social “equalization” in contemporary Canada. Legally sanctioned collective bargaining, and employment standards legislation arguably serve to adjust the adverse effects of unequal "market forces" in the realm of employment, preventing the emergence of an exploited under class, as envisaged by Marx. (iv) Bell's post-industrialism thesis – some support? There is also some empirical support for the “post-industrial” variant of the Industrialism thesis, inspired by Daniel Bell. “Flatter” organizations, with workers operating in teams, total quality management programs, job enrichment schemes, less physically grueling work due to labour saving technology, and the creation of “knowledge-based” jobs seem to be evidence of a “unitarist” consensus in many workplaces. On the basis of the post-industrial variant of the "industrialism thesis", one would expect unions to be generally unnecessary to workplace decision making, due to the presumed harmony of interests among workers, investors, and management. Arguably, this view is supported by the fact that, while most Canadian workers have the legal right to form, and retain membership in, unions, the significant majority do not belong to a union. Furthermore, the unions that do represent around thirty percent or so of the Canadian workforce typically do so through collective bargaining, usually without a strike or a lockout, and virtually never with the street and picket line violence that accompanied many industrial disputes from Marx’s era to the early post-World War II years. Proponents of the "industrialism thesis" will point to the social programs, and government-sanctioned and supervised collective bargaining and employment standards of the post-World War II era as the successful instruments of the social and industrial consensus that did not exist during the transitional phase of industrialization. Indeed, such commentators will observe that, historically, in the United States and Canada, the very raison d’etre of such social programs and institutions was to shield workers from the transitional problems of industrialization, and to pre-empt the threatened substitution of state communism in North America, in lieu of market capitalism. 9 None of this is to suggest that proponents of the "industrialism thesis" deny that problems attend our social, economic, and industrial systems in Canada and other Western societies. The key to their thinking is that such problems are not “class” based, and can be resolved successfully within the institutions and processes of political democracy, and of relatively free markets, the non-egalitarian and potentially de-stabilizing forces of which can be adjusted appropriately, through government intervention. While the Marxist Capitalism thesis appears to have significant flaws, it would be misguided to reject out of hand some of the concerns that it raises. Indeed, there is arguably substantial contemporary empirical evidence to support the Marxist analysis of Capitalism, and its inherent conflicts. Unfortunately, there tends to be a predisposition to discount Marxist analysis as lacking authority, apparently on the grounds that its recognition may precipitate the end of democracy, private property, a market driven economy, and pluralism and their replacement by a despotic communist state, corrupt, oppressive, and economically inefficient. Yet the underclass of the working poor remains in Canada and the United States. Soup kitchens, food banks, and homeless shelters are frequented by people who are employed but cannot afford to buy food and rent or own homes. Unemployed people living on the streets, many consigned to prostitution and drug abuse are plentiful in Canada’s major cities and even in Lethbridge, are potential recruits for the reserve army of working poor. The number of working and non-working poor is substantially higher in “developing” countries than in Canada. (v) Useful elements of Marxism In spite of the apparent flaws in Marx’s "class analysis", and in his prognosis of the nature and timing of capitalism’s demise, there are important elements of Marx’s Capitalism thesis that must be examined seriously within faculties of management, governments, corporate boardrooms, and trade union meetings and conventions. A key assumption of the "industrialism thesis" is that chronic or excessive imbalances of power within society can be prevented by the intervention of free market forces, government regulation, or economic activity, and by action by the diverse, organizations, individuals, and interest groups that make up civil society, or the “civic sector”. Included 10 in the civic sector are non-government organizations such as trade unions, professional associations, the media, colleges and universities (including their students), churches, environmental protection groups, consumers, voters, political lobby groups, and so on. Social programs Arguably, this occurred in the three or four decades after World War II, at least within the so-called “developed” world. In Canada and other industrialized countries, something approaching universally accessible, public health care was established. Public education was universally available, indeed mandated, at elementary and secondary levels. Postsecondary education became available to all who qualified for it, without exclusion on grounds of personal or family income. Publicly funded social safety nets were established, such as Canada Pension Plan, for seniors and the disabled, social welfare for those without the means of assistance, child allowance for those with children, subsidized school meals for the children of low income families, unemployment insurance, workers compensation, and so on. In Europe rather more than North America, governments invested in affordable housing for low-income individuals and families. Governments created, regulated, and in some cases financed, programs such as Unemployment Insurance, Workers’ Compensation, Health and Safety at Work, monitoring, minimum wages and employment standards, human rights protection, and so on. Such programs were funded by a combination of public borrowing, and a progressive income taxation system that obtained the significant majority of its revenue from large corporations. For their part, trade unions in the private and the public sectors negotiated higher wages and benefits, such as pensions, job security, etc. directly for their members, and indirectly for the non-unionized workers in the same labour market as the unionized ones. Throughout the 1980s and ‘90s, corporate influence on global economic activity and on the public policy of governments in industrialized and developing societies has escalated. 11 Corporate tax In Canada, the share of tax revenue paid by corporations has fallen from a high of around 70% in the 1960s to around 20% at present. Accordingly, governments seeking to fund the social programs viewed to be part of the Industrialism formula for a stable, egalitarian society are faced with three options. One is to cut the social programs, another is to borrow to finance such programs, and a third is to increase the burden of taxation on wage earners. Heavily influenced by national and international business lobbies, including the World Bank and the International Monetary Fund, Canadian, and virtually all other Western governments, have chosen to keep corporate taxation relatively low, cut public programs, such as social safety nets, public health care, public education, and regulatory bodies such as occupational health and safety, human rights commissions etc. A specific example of a hidden cut in a public program for the benefit of workers has occurred in the Canada Employment Insurance program (governments do not like the term “Unemployment Insurance”). Qualifying periods of work have been set at a point where eligible claims have been slashed, and huge surpluses built up in the program. A further example of corporate inspired cuts to public programs occurred in Canada in 1995, when Finance Minister Paul Martin received a letter from the World Bank, informing him that benefits for seniors in Canada were too generous. The Federal Government cut seniors benefits. Corporate-influenced public policy has also focused on public deficit and debt reduction, contributing to the lesser ability of governments to fund the social programs outlined above. While such a policy may have economic advantages, it should be noted that, while public deficits and debt may have been tumbling recently, private debt of individuals and small businesses has been soaring. Students who must borrow to meet the costs of substantial tuition fees know first hand about the escalation of private debt, which must be repaid of course out of future anticipated earnings from work. Corporate economic policy implemented by most Western governments has also keyed in on tax reductions financed by surpluses earned in large measure by the huge cuts in public services and safety nets. Typically, as in Canada, such tax breaks, and schemes such as a flat tax, favour higher income earners. 12 As we contemplate the significant cuts to public programs and safety nets, we must recall that these were introduced in the first place as a response to the inability of unbridled capitalism and market forces to deliver to significant sectors of the population minimum standards of nutrition, housing, job security, health care, and education, etc. We must ask why it is that, in a time of unprecedented material wealth, and capacity to produce, and destroy through war material wealth, it is appropriate or necessary to dismantle the very programs and institutions that arguably rescued capitalism from disrepute and dismantling in 1935 in the United States and post-World War II in Canada. Is it because we have completed the transition to industrialization, contemplated by the Industrialism thesis? Has Canadian society now developed to a point where acceptable levels of economic equality and social integration can be delivered by Capitalism without resort to such programs? Alternatively, are such programs being sacrificed solely to preserve the Capitalist system, and the perceived self-interest of capitalists, neither of which can ultimately survive without the exploitation and alienation of workers? Finally, inequality of wealth under capitalism has increased not only within countries such as the USA and Canada, but between the developed countries of the Northern hemisphere and the so-called "developing" countries of the southern hemisphere. Marx predicted that capitalism would produce exploitation of workers abroad. The sweatshop conditions in many "developing" countries such as Pakistan, Thailand, China, and the collapse of economies such as Argentina continue to raise questions posed by Marxism. Indeed, Harvard professor David Korten argues in "The PostCorporate World" that corporate capitalism is out of the control even of those who purport to be in control. The foregoing questions are important because they focus on, among other things, the appropriate responses of trade unions in both workplace negotiations, and political and social action. The questions also bring into focus the matter of whether contemporary trade unionism is sufficiently well-equipped to meet effectively the needs of workers. 13 Corporate influence on governments is not confined to fiscal and internal economic policy. The Free Trade Agreement (FTA), and the North American Free Trade Agreement (NAFTA), are less about trade than allowing corporations to escape the “burden” of high wages in the USA and Canada. In the Mexican Maquiladora, corporations can engage labour at a dollar an hour or less, with little fear of independent unions to bid the wages higher, and insist on higher standards of workplace health and safety. Such operations do nothing to develop the Mexican economy and have contributed to unemployment in Canada and the United States. They are designed to reduce wage costs, and to put downward market pressure on wages in the United States and Canada. Similar activities are commonplace across the globe, as corporations move their operations from Mexico, to Pakistan, to Indonesia, in search of lower wage rates for manufacturing products that the workers in those countries cannot afford. President Clinton’s deal with the People’s Republic of China was hailed as a trade deal, but, once more, it is a “labour racketeering” exercise, in which Chinese labour works for bare or below subsistence wages, in dangerous unregulated workplaces. Once more, a spin-off is downward pressure on wages in the United States, Canada etc. Marx spoke of the inherent need of Capitalism to force down labour costs, even to the extent of moving operations abroad to exploit cheaper labour than at home. The new globalization so romantically portrayed in Management texts may be no more than what Marx saw as the inevitable forces confronting Capitalism as it tries to rescue itself from the constant need to force down labour costs, in the face of conflict and resistance from workers. Accordingly, by relocating from Canada to Indonesia, a corporation can escape (at least temporarily, the inherent conflict of Capitalism). Finally, each thesis contains truths. As Weber argues, while bureaucracy has efficiencies it contributes to cultural disenchantment. Individualism is a strong societal value but bureaucracy tends to conflict with the needs of individuals. Workers’ experiences in bureaucratic unions epitomize the problems of bureaucracy. Kathy Ferguson (see internet under her name) puts forward a powerful feminist critique of bureaucracy. Marx’s class analysis does not seem to fit developed countries at least as far as popular consciousness is concerned. Arguably society is stratified across 14 many bands of interest perhaps because the institutionalization of conflict through collective bargaining, minimum workplace standards, social programs has prevented the polarization that existed in Marx’s time. Nevertheless, the CBC documentary on sweatshops in Canada gave us a glimpse of an underclass in Canada beyond the pale of social programs and employment standards. Also economic data confirm that the gap between rich and poor in developed countries is widening. The middle class appears to be shrinking. Also if we factor in the under-classes of “developing” countries, we see clear signs of Marx’s concerns. These are real concerns to world aid organizations who attach economic aid to the capitalist economic and political model. Durkheim’s industrialism thesis seems to be reflected in the apparent success of post-WWII economic policies of government intervention, collective bargaining and enlightened management. The whip of hunger, access to education and health care, minimum work standards all appear to have helped move developed economies from the polarization caused by early capitalism into the consensus of the welfare state. Yet, the pressures of globalization and free trade may be unraveling the consensus. 15