The forgotten workers’ control movement of Prague Spring

At the time of the [August 1968] Soviet invasion [of Czechoslovakia], two months after the first workers’ councils were formed, there were perhaps fewer than two dozen of them, although these were concentrated in the largest enterprises and therefore represented a large number of employees. But the movement took off, and by January 1969 there were councils in about 120 enterprises, representing more than 800,000 employees, or about one-sixth of the country’s workers. This occurred despite a new mood of discouragement from the government from October 1968.

From the beginning, this was a grassroots movement from below that forced party, government, and enterprise managements to react. The councils designed their own statutes and implemented them from the start. The draft statutes for the Wilhelm Pieck Factory in Prague (one of the first, created in June 1968) provide a good example. “The workers of the W. Pieck factory (CKD Prague) wish to fulfill one of the fundamental rights of socialist democracy, namely the right of the workers to manage their own factory,” the introduction to the statutes stated. “They also desire a closer bond between the interests of the whole society and the interests of each individual. To this end, they have decided to establish workers’ self-management.”

Prague (photo by Beentree)

Prague (photo by Beentree)

All employees working for at least three months, except the director, were eligible to participate, and the employees as a whole, called the “workers’ assembly,” was the highest body and would make all fundamental decisions. In turn, the assembly would elect the workers’ council to carry out the decisions of the whole, manage the plant and hire the director. Council members would serve in staggered terms, be elected in secret balloting and be recallable. The director was to be chosen after an examination of each candidate conducted by a body composed of a majority of employees and a minority from outside organizations.

A director is the top manager, equivalent to the chief executive officer of a capitalist corporation. The workers’ council would be the equivalent of a board of directors in a capitalist corporation that has shares traded on a stock market. This supervisory role, however, would be radically different: The workers’ council would be made up of workers acting in the interest of their fellow workers and, in theory, with the greater good of society in mind as well.

By contrast, in a capitalist corporation listed on a stock market, the board of directors is made up of top executives of the company, the chief executive officer’s cronies, executives from other corporations in which there is an alignment of interests, and perhaps a celebrity or two, and the board of directors has a duty only to the holders of the corporation’s stock. Although this duty to stockholders is strong enough in some countries to be written into legal statutes, the ownership of the stock is spread among so many that the board will often act in the interest of that top management, which translates to the least possible unencumbered transfer of wealth upward. But in cases where the board of directors does uphold its legal duty and governs in the interest of the holders of the stock, this duty simply means maximizing the price of the stock by any means necessary, not excepting mass layoffs, wage reductions and the taking away of employee benefits. Either way, the capitalist company is governed against the interests of its workforce (whose collective efforts are the source of the profits), and by law must be.

National meeting sought to codify statutes

The Wilhelm Pieck Factory statutes were similar to statutes produced in other enterprises that were creating workers’ councils. It was only logical for a national federation of councils to be formed to coordinate their work and for economic activity to have a relation to the larger societal interest. Ahead of a government deadline to produce national legislation codifying the councils, a general meeting of workers’ councils took place on 9 and 10 January 1969 in Plzeň, one of the most important industrial cities in Czechoslovakia (perhaps best known internationally for its famous beers). A 104-page report left behind a good record of the meeting (it was also tape-recorded); representatives from across the Czech Lands and Slovakia convened to provide the views of the councils to assist in the preparation of the national law.

Trade union leaders were among the participants in the meeting, and backed the complementary roles of the unions and the councils. (Trade unions, as noted earlier, convened two-thirds of the councils.) One of the first speakers, an engineer who was the chair of his trade union local in Plzeň, said a division of tasks was a natural development: “For us, the establishment of workers’ councils implies that we will be able to achieve a status of relative independence for the enterprise, that the decision-making power will be separated from executive powers, that the trade unions will have a free hand to carry out their own specific policies, that progress is made towards a solution of the problem of the producers’ relationship to their production, i.e., we are beginning to solve the problem of alienation.”

Some 190 enterprises were represented at this meeting, including 101 workers’ councils and 61 preparatory committees for the creation of councils; the remainder were trade union or other types of committees. The meeting concluded with the unanimous passage of a six-point resolution, including “the right to self-management as an inalienable right of the socialist producer.”

The resolution declared,

“We are convinced that workers’ councils can help to humanize both the work and relationships within the enterprise, and give to each producer a proper feeling that he is not just an employee, a mere working element in the production process, but also the organizer and joint creator of this process. This is why we wish to re-emphasize here and now that the councils must always preserve their democratic character and their vital links with their electors, thus preventing a special caste of ‘professional self-management executives’ from forming.”

It's Not Over coverThat democratic character, and the popularity of the concept, is demonstrated in the mass participation—a survey of 95 councils found that 83 percent of employees had participated in council elections. A considerable study was undertaken of these 95 councils, representing manufacturing and other sectors, and an interesting trend emerged from the data in the high level of experience embodied in elected council members. About three-quarters of those elected to councils had been in their workplaces for more than ten years, and mostly more than 15 years. More than 70 percent of council members were technicians or engineers, about one-quarter were manual workers and only 5 percent were from administrative staffs. These results represent a strong degree of voting for the perceived best candidates rather than employees simply voting for their friends or for candidates like themselves—because the council movement was particularly strong in manufacturing sectors, most of those voting for council members were manual workers.

These results demonstrated a high level of political maturity on the part of Czechoslovak workers. Another clue to this seriousness is that 29 percent of those elected to councils had a university education, possibly a higher average level of education than was then possessed by directors. Many directors in the past had been put into their positions through political connections, and a desire to revolt against sometimes amateurish management played a part in the council movement. Interesting, too, is that about half the council members were also Communist Party members. Czechoslovak workers continued to believe in socialism while rejecting the imposed Soviet-style system.

Government sought to water down workers’ control

The government did write a legislative bill, copies of which circulated in January 1969, but the bill was never introduced as Soviet pressure on the Czechoslovak party leadership intensified and hard-liners began to assert themselves. The bill would have changed the name of workers’ councils to enterprise councils and watered down some of the statutes that had been codified by the councils themselves. These pullbacks included a proposed state veto on the selection of enterprise directors, that one-fifth of enterprise councils be made up of unelected outside specialists, and that the councils of what the bill refers to as “state enterprises” (banks, railroads and other entities that would remain directly controlled by the government) could have only a minority of members elected by employees and allow a government veto of council decisions.

This proposed backtracking was met with opposition. The trade union daily newspaper, Práce, in a February commentary, and a federal trade union congress, in March, both called the government bill “the minimum acceptable.” In a Práce commentary, an engineer and council activist, Rudolf Slánský Jr. (son of the executed party leader), put the council movement in the context of the question of enterprise ownership.

“The management of our nation’s economy is one of the crucial problems,” Slánský wrote.

“The basic economic principle on which the bureaucratic-centralist management mechanism rests is the direct exercise of the ownership functions of nationalized industry. The state, or more precisely various central organs of the state, assume this task. It is almost unnecessary to remind the reader of one of the principal lessons of Marxism, namely he who has property has power…The only possible method of transforming the bureaucratic-administrative model of our socialist society into a democratic model is to abolish the monopoly of the state administration over the exercise of ownership functions, and to decentralize it towards those whose interest lies in the functioning of the socialist enterprise, i.e. the collectives of enterprise workers.”

Addressing bureaucrats who objected to a lessening of central control, Slánský wrote,

“[T]hese people like to confuse certain concepts. They say, for example, that this law would mean transforming social property as a whole into group property, even though it is clearly not a question of property, but rather one of knowing who is exercising property rights in the name of the whole society, whether it is the state apparatus or the socialist producers directly, i.e. the enterprise collectives.”

Nonetheless, there is tension between the tasks of oversight and of day-to-day management. A different commentator, a law professor, declared,

“We must not…set up democracy and technical competence as opposites, but search for a harmonious balance between these two components…It would perhaps be better not to talk of a transfer of functions but rather a transfer of tasks. It will then be necessary for the appropriate transfer to be dictated by needs, rather than by reasons of dogma or prestige.”

These discussions had no opportunity to develop. In April 1969, Alexander Dubček was forced out as party first secretary, replaced by Gustáv Husák, who wasted little time before inaugurating repression. The legislative bill was shelved in May, and government and party officials began a campaign against councils. The government formally banned workers’ councils in July 1970, but by then they were already disappearing.

This is an excerpt from It’s Not Over: Learning From the Socialist Experiment, officially published February 26 by Zero Books. Citations omitted. The omitted sources cited in this excerpt are: Robert Vitak, “Workers Control: The Czechoslovak Experience,” Socialist Register, 1971; Oldřich Kyn, “The Rise and Fall of the Economic Reform in Czechoslovakia,” American Economic Review, May 1970; and several articles anthologized in Vladimir Fišera, Workers’ Councils in Czechoslovakia: Documents and Essays 1968-69 [St. Martin’s Press, 1978]

What might a cooperative economy look like?

In any country in which a model of worker cooperation or self-management (in which enterprises are run collectively and with an eye on benefiting the community) is the predominant model, there would need to be regulations to augment good will. Constitutional guarantees would be necessary as well. Some industries are simply much larger than others. In a complex, industrialized society, some enterprises are going to be much larger than others. Minimizing the problems that would derive from size imbalances would be a constant concern.

Furthermore, if enterprises are run on a cooperative basis, then it is only logical that relations among enterprises should also be run on a cooperative basis. An alternative to capitalist markets would have to be devised—such an alternative would have to be based on local input with all interested parties involved. Such an alternative would have to be able to determine demand, ensure sufficient supply, allow for fair pricing throughout the supply chain, and be flexible enough to enable changes in the conditions of any factor, or multiple factors, to be accounted for in a reasonably timely and appropriate fashion.

It's Not Over coverCentral planning in a hierarchal command structure with little or no local input proved to not be a long-term viable alternative system. What of tight regulation? That is not a solution, either. Regulators, similar to central planners, can never possess sufficient knowledge to adequately perform their job and local enterprises can use their special knowledge to give themselves an advantage rather than share that knowledge with regulators.

Responsibility, then, would have to be tied to overall society. Negotiations among suppliers and buyers to determine prices, to determine distribution and a host of other issues would be necessary. Such negotiations are already common in certain industries; for example in the chemical industry, where companies negotiate commodity prices on a monthly or quarterly basis. Those are competitive negotiations in which the dominant position oscillates between buyer and supplier, resulting in dramatic price changes.

In a cooperative economy, negotiations would be done in a far more cooperative manner, with a wider group participating in the discussions. In this model, prices of raw materials, component parts, semi-finished goods, finished goods, consumer products and producer products such as machinery would be negotiated up and down the supply chain, leading to a rationalization of prices—markups to create artificially high profits or pricing below cost to undercut competitors would be unsustainable in a system where prices are negotiated and pricing information is widely available.

These would have to be fair negotiations—prices throughout the supply chain would have to be set with an eye on rational economics. Industry facilitators to assist negotiations and/or a government arbitration board to make decisions when parties are unable to agree to terms might be necessary. Community input would also be desirable, in the industries in which a given community is directly involved and for retail prices of consumer goods. It may be desirable to include these community interests in pricing negotiations directly. As more people take on more responsibility, more will gain the experience of fair negotiations, enabling more to peer over the shoulders of those involved in these decisions. In turn, more experience means more people within the community who can shoulder responsibility.

Regulating social standards

Although regulation, as noted above, is not in itself a solution, that is not a suggestion that regulation should be done away with. One method of using regulation to ensure socially positive economic activity might be a system of certification. Enterprises would be responsible for investment, production and financial decisions, but might be required to demonstrate full compliance with a range of standards on issues such as equal opportunity, workers’ rights, health and safety, environmental protection and consumer protection. Enterprises could be required to be certified on all relevant issues before conducting business, and perhaps be re-certified at specified intervals.

The allusion to “workers’ rights” in the preceding paragraph might seem a bit odd. These are enterprises under workers’ control already, so what rights are contemplated? That is a more specific question than can reasonably be answered in all situations ahead of time, but in large enterprises workers might still need protections codified in the laws covering the governance of enterprises. In the Czechoslovakia of Prague Spring, as we saw in Chapter 3, this issue was directly confronted. There, the enterprises were under state ownership, and no change was contemplated to that status—enterprises were to be managed directly by their employees on behalf of the country and its people. Activists had begun to set up (until the Soviet occupation stopped it) a system of workers’ councils as the instruments through which enterprises would be directed by all the employees.

Although these have a similar name, they should not be confused with the councils and soviets set up in 1917 and 1918 across Europe; these councils were enterprise-management bodies, not alternative government bodies. The Czechoslovak workers’ councils were designed to give the entire workforce of an enterprise a say in management and would also send representatives to national conventions that would coordinate production at the national level. These councils were to exist simultaneously with trade unions, which would represent the same workers as employees. The activists, mostly trade unionists and grassroots Communist Party members who worked in these factories, believed that separate organizations were necessary to represent workers properly in both their roles because there are potential conflicts between being a member of an organization and an individual worker.

Socialist triangleIn a country where capitalism has been transcended, and a new system of social control and democracy is being established, employees in those large enterprises that are to be formally owned by the state will have the same dual role of managing the enterprise collectively at the same time they remain workers. It is not impossible that biases or favoritism could slowly arise in such enterprises; a union would provide another source of protection that could defend a worker as an individual when necessary. Trade union membership, then, would remain a social value to be respected.

Workers in enterprises that are collectively owned, since they would be owners and not simply managers, might find less ambiguity between their two roles, as long as strategic decisions are made collectively. Still, it may be that there remains a place for trade unions even in these types of enterprises, or it could be that unionization is simply a social value and all members of the enterprise join or form a union for reasons of social solidarity or to provide another check against any centralizing tendencies emerging within the enterprise or within government.

Open information for social accountability

A system of democratic control and social accountability would require open information. Records and accounts of all enterprises and major production units of enterprises would have to be made available to all other parties to negotiations in order for the fairest deals to be reached and to prevent attempts to unfairly benefit at the expense of suppliers or customers. Social-justice organizations—such as those upholding civil rights, consumer rights or the environment—should also have a role, perhaps in enterprise negotiations when appropriate, but more likely in helping to set social goals, in monitoring compliance with standards and possibly being the bodies that issue certifications to enterprises that achieve the standards.

Some amount of planning and coordination would be necessary as part of the process of determining raw materials needs and ensuring that those needs are met. Any planning committee would have to be democratically controlled and have wide social representation to oversee production and to assist in the determination of investment needs.

Co-op symbolInvestment would need to go to where it is needed, a determination made with as many inputs as possible, but because of its importance banking is one area that would have to be in state hands and not in collectives. Financial speculation must be definitively ended, with banking reduced to a public utility. Enterprises seeking loans to finance expansions or other projects will have to prove their case, but should have access to investment funds if a body of decision-makers, which like all other bodies would be as inclusive as possible, agrees that the project is socially useful or necessary.

Government infrastructure projects should be subject to the same parameters as enterprises, with the added proviso that the people in the affected area have the right to make their voices heard in meaningful ways on local political bodies and on any other appropriate public boards. No private developer wielding power through vast accumulations of money will be able to destroy forests or neighborhoods to build a project designed for the developer to reap profits while the community is degraded. Development would be controlled through democratic processes at local levels, and regional or national infrastructure projects should require input from local bodies representing all affected areas.

Capitalist ideology holds that the single-person management that goes with private ownership produces the most efficient system, and soon after the October Revolution communist leadership agreed that single-person management is best. But in contrast to these “givens,” is it not true that a content workforce able to have control over its working life will produce better than a workforce that is alienated by a lack of control? Studies consistently conclude that measures of workers’ control increase satisfaction in work, productivity and solidarity. But workers’ control threatens the domination of elites.

An unprecedented level of democracy would be possible in a cooperative economy because the power of capital would be broken. Social constraints ensuring responsibility to the larger community would be required to prevent the accumulation of capital that translates into power, although such tendencies would be countered by a system that rewards cooperation rather than greed. The society that has been sketched out in these very broad strokes is a society with no classes. Working people—the overwhelming majority of society—have taken control. The (ex-)capitalists are just as free to go to work as everybody else. When the power of capital is abolished, capitalists are converted into ordinary people. Surely some, those with expertise and an ability to work well with others, would be among those cooperative members elected into administrative positions; regardless, they would have to become regular cooperative workers, contributing to the production of a quality product or service and having their say equal to all others who do the work.

This is an excerpt from It’s Not Over: Learning From the Socialist Experiment, officially published on February 26 by Zero Books. Citations omitted. Sources cited in this excerpt are: Pat Devine, “Self-Governing Socialism,” anthologized in William K. Tabb (ed.), The Future of Socialism: Perspectives from the Left [Monthly Review Press, 1990]; Diane Elson, “Socializing Markets, Not Market Socialism,” The Socialist Register, 2000; and Herbert Gintis, “The Nature of Labor Exchange and the Theory of Capitalist Production,” anthologized in Randy Albelda, Christopher Gunn and William Waller (eds.), Alternatives to Economic Orthodoxy, [M.E. Sharpe, 1987]

Solidarity instead of hierarchy as “common sense”

When the serious work of building a better world starts, we will have no choice but to use some of the bricks of the current world as we begin that construction. A social or economic system does not completely eradicate all traces of the immediately preceding system overnight. Nonetheless, the repressive elements of the prior system must be eliminated as quickly as possible, with new structures and thinking capable of defining the better world.

If socialism is to be that better world, what structures might be necessary? Socialism can be defined as a system in which production is geared toward human need rather than private profit for a few; where everybody is entitled to have a say in what is produced, how it is produced and how it is distributed; that these collective decisions are made in the context of the broader community and in quantities sufficient to meet needs; political decision-making is the hands of the communities affected; and quality health care, food, shelter and education are human rights. There is no class, vanguard or other group that stands above society, arrogating decision-making, wealth and/or privileges to itself.

A blueprint for such a future is not possible; a better world will be created in its making. But neither can we leap to a different world empty-handed or without a compass. Tangible counter-examples and concrete ideas are necessary if working people — the vast majority of humanity — are to break free from their acceptance of capitalism as “common sense” or the “only alternative.” When ideas become rooted in masses of people, they become a natural force, argues Michael Lebowitz in his latest book, The Socialist Imperative: From Gotha to Now.* He uses the example of the “socialist triangle” to explicate a structure for a better, democratic system.

Socialist Imperative coverThe three sides of the socialist triangle (a concept put in this form by Hugo Chávez) are production for social needs and purposes, social production organized by workers and social ownership of the means of production. None or any two of the three sides stand on their own; each is dependent on the other two.

Production for social needs is defined as production accomplished for our common needs. This is envisioned as production in which we would go beyond self-interest and therefore create a “solidarity economy.” Social production organized by workers is essential for developing the capacities of working people. Decisions in the workplace are made by the workforce as a whole, developing the capacities of all. Social ownership of the means of production does not mean the state owns all enterprises; it “implies a profound democracy” in which people, in their capacities as workers and as members of society, determine the results of their labor.

A society in which all can freely develop

Professor Lebowitz proposes a “Charter for Human Development,” offered as “self-evident requirements”:

“1. Everyone has the right to share in the social heritage of human beings — an equal right to the use and benefits of the productions of the social brain and the social hand — in order to be able to develop his or her full potential.
2. Everyone has the right to be able to develop his or her full potential and capacities through democracy, participation, and protagonism in the workplace and society — a process in which these subjects of activity have the precondition of the health and education that permit them to make full use of this opportunity.
3. Everyone has the right to live in a society in which human beings and nature can be nurtured — a society in which we can develop our full potential in communities based upon cooperation and solidarity.” [page 174]

The goal of these three points, Professor Lebowitz writes, is to redefine the concept of fairness:

“It is unfair that some people monopolize the social heritage of human beings; it is unfair that some people are able to develop their capacities through their activities while others are crippled and deformed; and it is unfair that we are forced into structures in which we view others as competitors and enemies.” [page 174]

We are talking about a different world than the one we live in now. Quite different. A world in which these are guiding principals is a world that has a new concept of “common sense.”  Any ideology, if its hold on a sufficiently large percentage of people is strong, becomes a material force. Industrialists and financiers, who constitute the dominant class in the present world and thus decisively shape contemporary belief systems, can and do wield an enormous and deadly apparatus of violence to maintain their dominance, true, but that is insufficient in itself. Capitalism’s staying power rests on the widely held belief that there is no alternative to it.

Capitalism “tends to produce the workers it needs,” Professor Lebowitz argues, drawing on Karl Marx’s insights. People’s need to sell their labor power — that is, their need to obtain employment in order to survive — and the creation of perpetual unemployment creates a dependency on capital that has continued for so long that the capitalist mode of production comes to be seen as “self-evident natural laws.” Struggles are therefore contained within the confines of capitalism. Bargaining over wages and working conditions can become contentious, but this is never more than bargaining over the terms of exploitation; the relations within this system are never touched. Thus an alternative common sense must be constructed.

Going beyond limitations of past models

Neither the Soviet model, overly centralized and lacking in democracy, nor the Yugoslav model of cooperative enterprises constitute that alternative common sense. The Socialist Imperative argues that the Soviet system discouraged innovation because workers and managers saw it as disruptive. Moreover, initiative was monopolized by central planners and party elites, reproducing problems of alienation even if workers’ expectations of guaranteed employment and rising consumption were sufficiently strong to constrain leaderships.

In the case of Yugoslavia, unemployment was produced because workers (who were self-managers) sought to maximize their enterprises’ income per worker. Workers acted in solidarity, but only within their own enterprise; eventually loans were used to finance higher pay in weaker enterprises. The logic of capital gained ground, Professor Lebowitz argues, until Yugoslavia accepted an International Monetary Fund loan and passed a 1988 law that substituted stockholders for workers’ councils, hastening the end of the Yugoslav experiment.

Solidarity across society and a decoupling of consumption with work capacity are offered as the keys to a socialist society. Income distribution based on an individual’s capacity to work is a distribution based on unequal personal endowment or inheritance and thus a “right to inequality.” In other words, different people are born with different capacities, and social solidarity mandates that those accidents of birth not be made into permanent sources of inequality. Permanent inequalities are products of capitalist relations.

We are stunted individuals under capitalism; paid a small fraction of the value of what we produce and, given the dictatorial nature of relations in the capitalist enterprise, told we are incapable of making decisions and thus unable to develop ourselves. We are also kept divided along gender, racial, religious and national lines and fighting among ourselves, helping keep capitalists in power. Going beyond reformism and instead struggling together to overturn capitalist relations creates the capacity to do so:

“The working class makes itself a revolutionary subject through its struggles — it transforms itself.” [page 143]

Who is this working class? It everybody who has no choice but to “sell their labor power” — those who can not survive other than by hiring themselves to a capitalist. Those who have a job, those out of work and those who survive in the informal sector. Crucially,

“They may not correspond to the stereotype of the working class as a male factory worker, but that stereotype was always wrong.” [page 145]

Building a solidarity state from a local base

A social state can only be constructed from the bottom up, The Socialist Imperative argues. Drawing on the example of the communes of Venezuela, the book envisions neighborhood councils as the basis of local decision-making, with successively larger representations through councils established on city, regional, state/provincial and national levels. Mechanisms would be needed to transmit information up and down these levels for national-level decisions to be made as democratically as possible and for communities to have proper input. Needs and capacities would be assessed to democratically plan to meet those needs and make adjustments based on available capacities.

Socialist triangleEnterprise transparency and worker education would be established in the workplace to begin the process of social production. Worker decision-making would be increased step by step through negotiations between workers and management on the basis of social contracts filed with a ministry of work. These would be steps toward social ownership of the means of production necessary for the full development of human beings and society. The local self-interest that would exist at the start of this process would be a relic of the old (capitalist) system that would need to be overcome to establish a system fully rooted in social solidarity.

The movement must go beyond simply taking state power, Professor Lebowitz writes, but must create spaces for the grassroots to transform into active agents. Old structures must be subordinated:

“Working within a hierarchy, functioning without the ability to make decisions in the workplace and society, and focusing upon self-interest rather than upon solidarity are activities that produce people on a daily basis; this is the reproduction of the conservatism of everyday life — indeed, the reproduction of elements of capitalism.” [pages 189-190]

No blueprints are offered in the book; properly so as pre-conceived conceptions are useless. It would have been useful to have had more concrete examples in a book that is sometimes a little too abstract, but it does provide a thorough grounding in why the salvation of humanity and Earth itself rests on a transition to a rational, democratic system, one based on human need and not the profits of a privileged few. The form of that system will be different from 20th century systems that called themselves “socialist” and necessarily vastly different from any form of capitalism. We have a world to win, a goal for which Michael Lebowitz has given us an inspirational guide.

* Michael Lebowitz, The Socialist Imperative: From Gotha to Now [Monthly Review Press, New York 2015]

What if Bernie Sanders were really talking about socialism?

Socialism has re-entered the realm of popular political discussion in the United States, for the first time in decades. There are several reasons for this, the most important being that a quarter-century has passed since the fall of the Soviet Union and the force of the bogey it represented has little resonance for a younger generation; several years of ongoing economic turmoil has led to more people being willing to question capitalism; and the popularity of Bernie Sanders’ presidential campaign because of the Vermont senator’s willingness to challenge the status quo.

Senator Sanders routinely speaks in front of large, enthusiastic crowds and although it remains unlikely that he will win the Democratic Party nomination, his strong showing and common-sense demeanor has forced the corporate media to expand the ordinarily heavily constricted boundaries of political and economic discourse. He calls himself a “democratic socialist,” and the corporate media by and large seems content to use his label, often even dropping the “democratic” and simply referring to him, without the usual rancor, as a “socialist.”

So is it really true that socialism has become acceptable and mainstream? Or, to be more direct: Is Bernie Sanders really a socialist?

Bernie Sanders rally in Louisiana (photo by Bart Everson)

Bernie Sanders rally in Louisiana (photo by Bart Everson)

The answer to the first question remains to be answered, but the answer to the second is “no.” Senator Sanders offers reforms to the capitalist system. Significant reforms, ideas and platforms far beyond any other major-party candidate for president. These would certainly be welcome if they could be enacted. But they are still reforms, not real change. Reforms, unfortunately, can and are taken away — as the past three decades have vividly demonstrated. Just as Keynesianism is not going to save us, there is no going back to the past nor is it still possible to believe capitalism can be a progressive force.

In the first Democratic Party presidential primary debate, Senator Sanders offered Denmark and Sweden as examples of the democratic socialism he has in mind. The front-runner, Hillary Clinton, immediately parried with a claim that the United States dare not “turn our backs on what built the greatest middle class in the history of the world.” That more of those in the broad middle or with less are struggling just to keep a roof over their heads and keep from drowning in debt, that wages have been stagnant since the 1970s while the one percent grab all the gains, that prospects for students and recent graduates are more dismal than for their parents or grandparents, it would seem that Secretary Clinton’s middle class doesn’t have it so good.

Europe versus the United States

It tales no more than a cursory glance at Denmark, Sweden or many other countries to see the unreality of her claim. For one thing, health care is a right in most of the countries of the world, but in the United States health care is a privilege reserved for those with money or a full-time job (if it has reasonable benefits). In Denmark, all people who reach age 65 are entitled to a retirement pension, all residents have sickness benefits if they are unable to work, health care is a right, stays in public hospitals are free and paid parental leave is available up to 46 weeks. Danish workers are entitled to five weeks of vacation each year by law and many workers have a negotiated sixth week of vacation.

European countries require 20 to 30 day of vacation, and Australia and New Zealand require 20 days. The United States is the only advanced capitalist country that mandates none.

The idea that working people in the U.S. have it good is laughable. Secretary Clinton is no different than her Republican challengers in her ideological belief in “American exceptionalism,” the nationalist term used by United Statesians to claim theirs is the greatest country and a mandatory ideology for those seeking political office. However much better life may be there, however, it isn’t true that Denmark or Sweden are socialist countries. Those countries, and others applying versions of the Scandinavian welfare model, are capitalist countries that have laws and regulations to ameliorate the conditions of capitalism. So austerity is not an impossibility there; the relentless downward pressure applied to working people under capitalism is in force across Europe.

It is no accident that the European Union bureaucracy is unaccountable to any democratic vote; the E.U. is designed by central bankers to benefit European big business and financiers. European capitalists desire the ability to challenge the United States for economic supremacy, but cannot do so without the combined clout of a united continent. This wish underlies the anti-democratic push to steadily tighten the European Union, including mandatory national budget benchmarks that require cutting social safety nets and policies that are designed to break down solidarity among wage earners and different regions by imposing harsher competition through imposed austerity.

The European Union, in its current capitalist form, is a logical step for business leaders who desire greater commercial power on a global basis: It creates a “free trade” zone complete with suppression of social accountability while giving muscle to a currency that has the potential of challenging the U.S. dollar as the world’s pre-eminent currency. Europeans’ ability to keep the reforms they have won are dependent on their organizing and going into the streets, the same as in the U.S. or any other country.

A basic sketch of socialism

What would socialism look like? There is no specific set of formulae, but some basics are:

  • Everybody who contributes to production earns a share of the proceeds — in wages and whatever other form is appropriate — and everybody is entitled to have a say in what is produced, how it is produced and how it is distributed, and that these collective decisions are made in the context of the broader community and in quantities sufficient to meet needs, and that pricing and other decisions are not made outside the community or without input from suppliers, distributors and buyers.
  • Nobody is entitled to take disproportionately large shares off the top because they are in a power position.
  • Every person who reaches retirement age is entitled to a pension that can be lived on in dignity. Disabled people who are unable to work are treated with dignity and supported with state assistance; disabled people who are able to work can do so.
  • Quality health care, food, shelter and education are human rights.
  • Artistic expression and all other human endeavors are encouraged, and — because nobody will have to work excessive hours except those who freely volunteer for the extra pay — everybody will have sufficient time and rest to pursue their interests and hobbies.

In such a world, there would not be extreme wealth and the power that wealth concentrates; political opinion-making would not be dominated by a numerically tiny but powerful class perpetrating its rule. Without extreme wealth, there would be no widespread poverty; large groups of people would not have their living standard driven as low as possible to support the accumulation of a few.

In any country in which a model of worker cooperation or self-management (in which enterprises are run collectively and with an eye on benefitting the community) is the predominant model, there would need to be regulations to augment good will. Constitutional guarantees would be necessary as well. Some industries are simply much larger than others. In a complex, industrialized society, some enterprises are going to be much larger than others. Minimizing the problems that would derive from size imbalances would be a constant concern.

Furthermore, if enterprises are run on a cooperative basis, then it is only logical that relations among enterprises should also be run on a cooperative basis. An alternative to capitalist markets would have to be devised — such an alternative would have to be based on local input with all interested parties involved. Such an alternative would have to be able to determine demand, ensure sufficient supply, allow for fair pricing throughout the supply chain and be flexible enough to enable changes in the conditions of any factor, or multiple factors, to be accounted for in a reasonably timely and appropriate fashion. Prices would be negotiated, with all enterprises’ financial information publicly available so no unfair profiteering could take place.

Investment would need to go to where it is needed, a determination made with as many inputs as possible, but because of its importance banking is one area that would have to be in state hands and not in collectives. Financial speculation must be definitively ended, with banking reduced to a public utility. Enterprises seeking loans to finance expansions or other projects will have to prove their case, but should have access to investment funds if a body of decision-makers, which like all other bodies would be as inclusive as possible, agrees that the project is socially useful or necessary. Energy, another critical industry, would also be nationalized and under democratic control.

Government infrastructure projects should be subject to the same parameters as enterprises, with the added proviso that the people in the affected area have the right to make their voices heard in meaningful ways on local political bodies and on any other appropriate public boards. No private developer wielding power through vast accumulations of money will be able to destroy forests or neighborhoods to build a project designed for the developer to reap profits while the community is degraded. Development would be controlled through democratic processes at local levels, and regional or national infrastructure projects should require input from local bodies representing all affected areas.

None of the foregoing is being talked about by Bernie Sanders, and certainly not any other candidate for the U.S. presidency. But such gains are unattainable under capitalism, no matter how many reforms are (temporarily) extracted from industrialists, financiers and the politicians who whistle their tune.

Audacity, not hoping for reforms, the route to a humane world

Working people in the core capitalist countries have received benefits from imperialism (even if only crumbs) that workers in the rest of the world don’t receive. That dichotomy is a barrier that has hindered the building of global alliances necessary to reverse neoliberalism.

Or, going beyond, to create an international social movement strong enough steer the world from its present course of economic and ecological suicide to a sustainable system oriented toward human need. A further division among the world’s working peoples between the diminishing numbers with reasonably secure, regular employment and the vast numbers of those without available regular work — the “reserve army of labor” or, to use the increasingly popular term, the “precariat” — and divisions within these broad categories also, on the surface, seems to imply that the world’s workers don’t have any unifying interests.

On the contrary, an international movement that brings together the peoples of the global North and the global South, with a common goal of nationalizing the monopolies that currently have a stranglehold on the world’s economy and a commitment to “de-financialization” (a “world without Wall Street”) is not only possible but indispensable, argues Samir Amin in his latest book, The Implosion of Contemporary Capitalism.* These would not be ends unto themselves, but rather the first necessary steps on a long road toward a sustainable and equitable future.

The Implosion of Contemporary CapitalismCritical to developing strategies to transcend an “imploding” capitalist system is developing an understanding of the world’s current organization. In the current stage of “generalized monopoly capitalism,” as Dr. Amin defines today’s world, monopolies tightly control all systems of production and thereby extract extraordinarily large profits. These surpluses are so large they can’t be invested rationally and therefore can only be deployed in speculation, fueling financialization. The process of financialization in turn enables banks to amass vast power and create debt that they profit from.

Increases in productivity outstripping growth in wages further fuels this process. But these monopolies are not located just anywhere — they are located in the capitalist core of the United States, Europe and Japan. Thus the power amassed by these monopolies is inflated by the extraction of capital from peripheries to these centers. Dr. Amin writes:

“In its globalized setup capitalism is inseparable from imperialist exploitation of its dominated peripheries by its dominant centers. Under monopoly capitalism this exploitation takes the form of monopoly rents (in ordinary language, the superprofits of multinational corporations) that are by and large imperialist rents. … [T]he material benefits drawn from this rent, accruing not only to the profit of capital ruling on a world scale but equally to the centers’ opulent societies, are more than considerable.” [pages 20-21]

(The term “monopoly” here is not meant in the “pure” sense of one single corporation dominating an industry, but rather refers to a handful of corporations that, as a group, act in a monopolistic manner. “Rent” is a macroeconomic term meaning the extraction of profits above the ordinary level derived from an advantage.)

The ability of monopoly capital to exploit the global South is aided by the collaboration of local elites, a class of “corruptionists,” to use Dr. Amin’s pungent phrase, who are “highly compensated intermediaries” allowed to take a slice of the extracted superprofits. The whole is partially masked by the fragmentation of production, which nonetheless remains tightly controlled by monopoly capitalists.

This creates the illusion of a divergence in the interests of working people, both within and among countries, but differences in skill levels and ability to earn higher wages has always existed. All working people have in common that they are exploited; the challenge then becomes to effect the unity of workers (including those in informal sectors), peasants and the middle classes in a united front crossing borders.

Smaller enterprises and farmers subordinate to dominant firms

The latest stage of capitalism, starting with the late 20th century, is the era of “generalized monopolies” in which monopolies command the heights of the economy and directly control entire production systems, reducing small, medium and all peripheral enterprises to subordinate roles. Those subordinate enterprises, as well as farmers, have become subcontractors whose operations are subject to rigid control by the monopolies. From this, Dr. Amin concludes:

“There is no other possible answer to the challenge: the monopolies must be nationalized. This is a first, unavoidable step toward a possible socialization of their management by workers and citizens. Only this will make it possible to make progress along the long road to socialism. At the same time it will be the only way to develop a new macro economy that restores genuine space for the operations of small and medium enterprises. If that is not done, the logic of domination by abstract capital can produce nothing but the decline of democracy and civilization, and a ‘generalized apartheid’ at the world level.” [page 113]

The “imperial rent” that accrues to the capitalist core’s monopolies mainly flows to the capitalists, but the workers of the North also benefit from it, and this creates a barrier to North-South alliance building. Workers of the South can’t help but be acutely aware of global imbalances that impoverish them, in contrast to many workers of the North tacitly embracing the relative crumbs they receive at the expense of their Southern brothers and sisters through uncritical acceptance of nationalist ideologies extolling the supposed superiority of imperial countries; this acceptance is reflected, for example, in the U.S. labor federation AFL-CIO’s decades-long uncritical embrace of Washington’s imperialist foreign policy.

Creating a better world — a world in which economic decisions are reached through democratic processes in which all affected parties have a voice and in which the economy is run for the benefit and development of all humanity rather than the private profit of capitalists — is therefore inextricably linked with providing solutions and better living conditions to the majority of the world who live in the peripheral countries.

Change must be in three “dimensions,” Dr. Amin writes — peoples, nations and states. The liberation of a nation and achievements by a state are complements to the advancements of the people; the idea that people can transform the world without taking power is “simply naïve,” the author writes. But it is the people who must be at the forefront:

“[T]he notion of national liberation ‘at all costs,’ in other words being independent of the social content of the hegemonic coalition, leads to the cultural illusion of attachment to the past (political Islam, Hinduism, and Buddhism are examples) [that] is in fact powerless. The notion of power, conceived as being capable of ‘achievements’ for the people, but carried out without them, leads to the drift to authoritarianism and crystallization of a new bourgeoisie. The deviation of Sovietism, evolving from ‘capitalism without capitalists’ (state capitalism) to ‘capitalism with capitalists,’ is the most tragic example of this.” [pages 116-117]

The impossibility of reforming away concentrated power

Additional illusions are that the South can “catch up” with the core capitalist countries or that the maldevelopment of capitalism can be wished away through reforms. The imperialist system blocks the development of new industrial contenders; moreover, the rise of European capitalism required the “safety valve” of emigration to the New World as peasants were forced off the land. There are no new worlds that can absorb the many millions of peasants displaced and to be displaced as capitalism washes over all parts of the globe.

And, although this was not discussed in The Implosion of Contemporary Capitalism, anarchist and Proudhonist ideas that employees can gradually take control of their workplaces while ignoring the state are also illusions. You may wish to ignore the state, but that does not mean the state will ignore you, nor will capitalists, with the powerful coercive apparatus of the state at their disposal, idly sit by and allow their property and prerogatives to be gradually taken away. Similarly, reformist ideas such as more regulation or a return to the post-World War II model are illusions — reforms can and are taken back and there is no going back to the past because the conditions of today are not the conditions of yesterday.

What Dr. Amin does advocate is “audacity, more audacity.” The proposed audacity centers on three programs: socializing the ownership of monopolies, “de-financialization,” and “de-linking” at the international level. Reversing the current social order is impossible without expropriating the power of monopolies.

Economic activity should be organized by public institutions representing groups up and down production supply chains, consumers, local authorities and citizens self-organized democratically. Management of monopolies should include workers in the enterprise as well as representatives of consumers, citizens, (democratically controlled) banks, research institutions and upstream industries. Large-scale production would continue to exist because it is unrealistic to believe that artisans and small local collectives could replace the production of large enterprises, the author writes, but production must be done on the basis of being answerable to society’s collective choices.

“De-financialization” is conceptualized as not simply the abolishment of “shareholder value” as the supreme force animating production but going beyond nationalization/socialization to establish direct participation in management by relevant social partners. Ecological impact, minimization of risk and client participation would be the foundation of banking. The focus on community control and international “de-linking,” however, does not mean a retreat into isolationism; rather it would be a reconstruction of global relations through negotiation rather than the current system of submission to the imperial powers.

These programs can’t be implemented on a global or regional basis, Dr. Amin argues, but only within countries committed to socialization and democratization of the economy. Thus the South must de-link from international institutions controlled by the imperial powers and Europeans must dismantle their undemocratic institutions responsive only to “market” reactions. There are no alternatives, the author writes:

“Capitalism is now an obsolete system, its continuation leading only to barbarism. No other capitalism is possible. … Either the radical left will succeed through the audacity of its initiatives to make revolutionary advances, or the counterrevolution will win. There is no effective compromise between these two responses to the challenge.” [page 146]

There is no guarantee as to what will succeed capitalism. We can sit back and let history unfold, continuing to cede the initiative to elites who have imposed austerity on the world and can only offer ever more harsh and repressive policies while consuming the Earth’s resources until nothing is left. Or we can collectively work together to create a humane, democratic future by overturning capitalism. If we don’t accomplish the latter, we will surely find ourselves in the hell of the former.

* Samir Amin, The Implosion of Contemporary Capitalism [Monthly Review Press, New York, 2013]

Bankruptcy of Mondragon company demonstrates limits of cooperation under capitalism

The announcement that one of Mondragon’s companies is filing for bankruptcy isn’t a commentary on cooperatives, but it is a reminder that even the world’s largest cooperative enterprise is not immune to capitalist competition.

Cooperatives point toward a more humane way of organizing production, but in themselves don’t necessarily alter market relations. That is true not only because cooperatives are yet minuscule islands in a vast sea of capitalism, and thus must make decisions strongly impacted by a continual buffeting by market forces, but because a cooperative economy would require that cooperation, rather than competition, be the basis of relations.

The shuttering of Mondragon’s household-appliances company, Fagor Electrodomésticos, is also an opportunity to ask if there comes a point where a cooperative becomes too big. Mondragon has expanded steadily, through internal growth and creating new businesses but also through buying companies outside Spain. Although that expansion is not a factor in Fagor’s closing, Mondragon has had difficulty absorbing some of its acquisitions, with the result that at least 14,000 workers are actually employees of the cooperative.

Mondragon UniversityThus the cooperative members profit through extracting surplus value from these employees, who do not share in the decision-making. In fact, Fagor’s Polish factory (where the workers are employees, not members of the cooperative) was the subject of a slow-down strike in 2011. Fagor, reacting to capitalist competitive pressures, had moved some production there from France to take advantage of lower wages.

The failure of Fagor, unable to survive the drastic downturn in the Spanish economy, is also noteworthy because it is Mondragon’s original business, and one of the larger among Mondragon’s federation of 110 cooperatives. A manufacturer of washing machines, refrigerators, dishwashers and other “white goods,” Fagor’s revenues declined to €1.1 billion in 2012 from €1.8 billion in 2008, the year of the financial crash, and has not earned a profit since 2008. Revenue has been hurt by the intensity of the economic downturn in Spain, where unemployment is 27 percent amidst a collapse of the housing market.

Cooperative members better off than capitalist employees

Unlike at a capitalist corporation, where workers are routinely laid off merely because of a slight decline in profits, Mondragon strives to keep all its members employed. Decision-making is made by the workers themselves, in assemblies and through their elected, accountable managers, representatives and board members.

In the case of Fagor, its cooperative members had previously agreed to cut their pay by 20 percent. In addition, Mondragon had provided €300 million in financing in an effort to keep the appliance maker afloat. But Mondragon’s general council, which coordinates the policies of the various companies, decided it would provide no more funds, rejecting Fagor’s request for another €180 million that Fagor believed would finally stabilize itself.

A Mondragon press release issued on October 30 said:

“[T]he proposal submitted by Fagor Electrodomésticos is not viable, and [Mondragon’s general council] has unanimously agreed the company no longer responds to market needs, and the financial resources it requests would not ensure its business future.

“The [Mondragon] Corporation has analysed the situation following the financial assistance given to Fagor Electrodomésticos in recent years both by the cooperatives themselves and through sundry corporate instruments, and it has considered that the feasibility plan submitted by Fagor Electrodomésticos is not viable.”

Because each of Mondragon’s companies are autonomous, self-managed cooperatives (which assist each other through mutual support mechanisms), Fagor’s closing has no effect on the viability of other units. But because one of the mutual-support mechanisms is retraining workers in struggling companies and their transfer to stronger businesses, Mondragon may have difficulty absorbing a bankruptcy unprecedented in size.

On the other hand, the cooperative members of Fagor are not simply out in the street, as they would be at a top-down capitalist corporation. Mondragon’s press release went on to say that its general council pledges to:

“[C]ontinue to activate all the support mechanisms required to reduce to the furthest possible extent the impact on employment due to the circumstances of Fagor Electrodomésticos. These measures will range from reassignments to early retirements and the implementation of training schemes that will reinforce the employability of the worker-members of Fagor Electrodomésticos. … The diversity of sectors and markets in which our cooperatives operate is an assurance that leads us to believe they will continue to launch new activities in the short-to-medium term, with a positive knock-on effect on job creation. The fact our businesses are competitive in their respective markets is good news for the absorption of any redundancies forthcoming at Fagor Electrodomésticos.”

Given Mondragon’s history, that is not empty talk, although El País reports that Fagor’s employed workers, which would include those in its Polish factory, are not covered. There have been no layoffs in Mondragon despite the exploding Spanish unemployment rate; instead workers have agreed to reduce their wages by an average of five percent with a shifting of some to stronger from weaker companies. Fagor’s cooperative members will be paid 80 percent of their salaries for two years through Mondragon’s own insurance company.

Forced to ‘become their own capitalists’

Mondragon’s growth from a handful of people in the 1950s to its status as a major competitor in a range of industries rests on its ability to successfully compete against capitalist enterprises while riding the ups and downs of market competition. No article about Fagor’s closing — not even the sneering “I told you so” of The Economist’s report — so much as hints at any quality-control issues. Rather, Fagor went under due to slack demand in Spain and France, and stiff competition from low-wage Asian imports.

Therein lies a contradiction. Mondragon operates as a cooperative, fully under the control of its workers (at least those in Spain), in which all management and oversight posts are elected internally, wages are vastly more equal than in a capitalist enterprise, and it is owned exclusively by its workforce. In other words, the cooperative members share in the risks, gains and decision-making, with profits distributed to the workers themselves, to investment funds and to the overall organization’s internal support fund.

Despite that internal cooperation, Mondragon must operate like a traditional capitalist enterprise outside its gates. Forced to compete against capitalist corporations operating in capitalist market conditions, it can not do otherwise if it is to survive. This is the case for other cooperatives today. In essence, cooperative workers in a capitalist economy are, in the words of Karl Marx, forced to “become their own capitalists.”

Because of Mondragon’s size, Fagor’s workers may be able to secure work elsewhere in Mondragon. They didn’t face the prospect of their jobs being moved to a low-wage haven on the other side of the world, but they also could not stay in business in the face of capitalism’s worst slump since the Great Depression.

Moreover, Mondragon also acts like a capitalist corporation in that it acquires businesses and sometimes the employees of those acquired businesses, particularly those outside Spain, remain employees of the cooperative rather than become full members. Such a result flows from the need to expand to survive the rigors of capitalist competition. Any economy that operates on the basis of market competition — that is, in which markets are allowed to determine social outcomes — will lead to some form of “grow or die,” in which enterprises struggle to survive.

Cooperators’ own wages remain a commodity if everything else is a commodity priced by markets. In an economy dominated by cooperatives but with capitalist market relations intact, collective workers would face market pressure to reduce their own wages in order to compete better against their competitors. Some enterprises would become much bigger than others; smaller enterprises would be compelled to sell themselves to larger competitors, consolidating production until an oligarchy arose. Some industries would be much bigger than others. As market competition intensified, survival would require more ruthless behavior.

Democratic control as the basis for a new economy

A cooperative economy, therefore, has to not only be based on enterprises run on cooperative lines, but the cooperatives must cooperate with each other as well. The entire economy would have to be based on democratic control, with commodity prices negotiated in fair and open talks, and with a rational system of distribution that would be supple enough to respond to changes in consumer demand while not over-producing. Such an economy might largely be in the hands of cooperative enterprises, but with critical industries, such as banking and energy, in state hands, under democratic control.

Successful cooperative enterprises such as Mondragon provide glimpses of an economy organized for human need rather than uncontrolled private profit, but are insufficient by themselves. That is not a criticism of cooperatives; on the contrary, the growth of cooperatives should be encouraged as strongly as possible. In present circumstances, they exist on the margins, fully subject to the rigors of capitalist competition.

No cooperative today, no matter how successful, can operate outside the demand of the “market” — and the capitalist market is the aggregate interests of the world’s largest industrialists and financiers. As more industries follow the leads of textiles and electronic gadgets — that is, move production to places with ever lower wages and ever less regulations — the more pressure there will be to follow suit or go out of business. Fagor will not be the last cooperative to face this dilemma. It is inevitable as long as cooperatives remain small islands at the mercy of capitalist competition.

A better world, a rational economy geared to human need, requires a different system. As large as Mondragon is, it is has no ability to operate outside the logic of capitalism. Overall, it has thus far competed successfully, but at the price of becoming too large to integrate all its workers. The world would need many more Mondragons, cooperating and negotiating with one another, to even begin to crack the façade of capitalism, and capitalists are not likely to sit by idly while an alternative to their rule grows.

As worthy a model as cooperatives can be, they are not a substitute for working people around the world struggling collectively to create a better world. All the advances of the 20th century are the product of collective struggles, but because those movements settled for reforms while leaving the system in place, the gains have steadily been taken back.

If capitalism is to be transcended, the relations among enterprises, and between people and enterprises, have to be put on a new footing — one based on cooperation, not competition.

One small step for French workers but no giant leap

France appears on the verge of advancing the rights of workers, and although such a victory will be slight, even a tentative step forward is welcome. But it is no more than that: Once we get past the comedy of business leaders wailing that the sky is falling, do we really have anything other than a small reform that leaves the system intact?

It would seem not. The French National Assembly, on September 30, passed a bill that would grant employees a voice when their company is the target of a takeover attempt and require owners of companies with at least 1,000 employees to seek a buyer for a plant intended to be closed. The French Senate must also approve the bill before President François Hollande can sign it into law.

Marching in Paris against pension reformShould the bill be passed, a committee of workers would be organized inside a company being targeted for a takeover, which would be empowered to appoint an accountant to assess the bid. The board of the target company would be required to take the assessment under consideration before making its final decision. Although it is unclear what legal force this workers’ assessment would have, the company’s “works council” (an employee oversight body larger French companies are required to have) could ask a judge to intervene if it believes the board has not responded adequately to its queries, potentially delaying any deal.

The bill would also put a temporary roadblock in the path of a company that intends to shut a plant or some portion of its operations. Enterprises with more than 1,000 employees that intend to shut a facility with more than 50 workers would be required to seek a buyer for three months. Judge would be authorized to impose a fine if the company fails conduct a search or turns down a serious offer.

The French Senate has a narrow majority bloc of Socialists, Communists, Greens and other Left-leaning members, so it would appear that the bill is likely to pass the Senate, enabling President Hollande to fulfill a campaign pledge to give workers more say in the running of their enterprises.

A tiny change, a giant rage

In reality, these new powers, should they enter into law, would do nothing to alter existing relations within the workplace. Nonetheless the principal of the bill — that workers are entitled to a modicum of control over their working lives, at least in theory — has driven business leaders and the corporate media that loves them into fits of rage.

A Bloomberg report on the bill quotes a series of speculators in full indignation, including a Paris investment banker:

“In the M&A [mergers-and-acquisitions] world, the image of France viewed from outside is deplorable, and this law is adding extra complexity.”

Quelle horreur! Bloomberg itself grumbles:

“Foreign companies have spent $14.8 billion on French targets this year, putting 2013 on track to be the weakest for such deals in at least a decade, according to data compiled by Bloomberg. The new rules may further dissuade potential buyers. France hasn’t seen a major hostile takeover since Mittal Steel Co. bought Arcelor SA in 2006 in a transaction then valued at about $36 billion.”

Oh, the humanity! Seven long years of only relatively smaller takeovers. How is a poor investment bank supposed to keep its speculators in the style in which they are accustomed? Although the underlying imperative of capitalist competition — expand or die — propels the frenzy of corporate mergers and acquisitions, the proximate cause is to enable enormous profits for corporate executives, investment bankers and partners at corporate law firms. The bigger the deal, the bigger the payday for those on the inside.

Keeping score of the money but not the human cost

Definitive totals on the numbers of jobs lost to takeovers are extremely difficult to come by; this is not surprising when the corporate media reports on mergers and acquisitions in breathless terms of the size of the deal and with assurances that jobs will be sacrificed on the alter of “efficiency.” In other words, the human cost is not even an afterthought. To take just two examples, Washington Monthly, in a report detailing the increasing monopolization that characterizes most industries, wrote:

“Consider two recent deals in the drug industry. The first came in January 2009 when Pfizer, the world’s largest drug company, announced plans for a $68 billion takeover of Wyeth. The second came in March 2009, when executives at number two Merck said they planned to spend $41.1 billion to buy Schering-Plough. Managers all but bragged of the number of workers who would be rendered ‘redundant’ by the deal — the first killed off 19,000 jobs, the second 16,000.”

The money to pour into these deals has to come from somewhere. So can measures like those passed by the French National Assembly reverse this trend? Because the limited “voice” to be granted workers is connected to France’s “works councils,” a look at these councils will help us answer that question.

Although only a minority of workers in France are protected by a traditional labor union, all who work in enterprises with 50 or more employees are represented by a works council. French law proscribes fines and even jail terms for employers who interfere with the functioning of these bodies. In unionized companies, trade unions put forth the candidates for the works council, although if more than 50 percent of the eligible voters do not vote, a second election is organized in which any employee is eligible to run.

The works councils are required to be consulted on the management and general organization of the company; personnel decisions, including dismissals; and changes to equipment, working conditions, professional-training procedures, or hygiene and safety issues. The opinion of the works council is not legally binding, however, unlike a collective-bargaining agreement negotiated with a trade union. Works councils decisions are binding in only a small number of minor issues, such as the hiring or dismissal of the labor doctor.

As private-sector union membership in France is low, the works councils provide a modicum of enterprise participation for French workers. The bill that has passed the National Assembly represents a tiny incremental gain while leaving all the prerogatives of ownership firmly in the hands of capitalists. The wailing from capitalists and the corporate media is more of a reflection of their desire for total control than any actual change in labor relations.

Works councils as controllers rather than consultants

Although their consultative status currently makes them little more than a safety valve, France’s works councils could, in theory, form the nucleus of actual workers’ control. The concept of real workers’ councils, assuming control over the decision-making of an enterprise, has taken root at different times in several countries. All the workers collectively make strategic decisions, and elect a council to oversee the running of the enterprise (including supervising management) and to act as links with other enterprises.

Meetings to discuss, and vote on, the enterprise’s business would be a part of the regular workweek. All ownership would stay within the workforce — each would own one share and relinquish it upon leaving or retiring. Shares could not be transferred or sold, except to the collective. Management would be recallable and promoted from within.

Why should democracy stop at the entrance to the workplace? Cooperatives are already flourishing. There are the examples of the Mondragon collective and the recovered factories of Argentina, among others, in which assemblies of all the workers make the strategic decisions and elect supervisory boards that are responsible to the assemblies. Mondragon has been a planned enterprise from its foundation; Argentina’s recovered factories are the products of workers struggling to restart production while slowly gaining the confidence to be their own managers.

Cooperatives are as yet minuscule islands in a vast sea of capitalism. Several countries have works councils, including Germany, where employers must reach agreement with them in regards to rules covering, inter alia, smoking bans, dress codes, overtime, introduction of new technical equipment and policies on pay bonuses. Employees are also represented on corporate boards of directors in Germany, Sweden, Denmark, Norway and several other European countries.

Reforms should be taken whenever possible, but reforms can always be taken away. Instead of being the basis of minor tinkering, why shouldn’t works councils be one starting point for a complete transformation? Top-down authoritarian enterprises that give an elite dominating power over the overwhelming majority of humanity hasn’t been working out so great.