Negotiating the Future: A Labor Perspective on American Business.

Negotiating the Future: A Labor Perspective on American Business. – book reviews

David Brody

The past twenty years have been a humbling time for American capitalism. The reversal of fortunes that began in the early 1970s was all the more shocking because it came after two postwar decades of unprecedented economic success and because the loss of industrial leadership to the once-despised Japanese was so decisive. In their distress, American employers have looked for culprits in many directions. But no place seemed a likelier candidate than the shop floor, where authoritarian methods of production first conceived by Frederick Winslow Taylor and Henry Ford so obviously contrasted with German craftsmanship and Japanese team spirit. Given the market pressures and the politics of the Reagan era, organized labor would have been thrown on the defensive no matter what. But the rallying cry of American “competitiveness” and managements accompanying enthusiasm for more cooperation with workers gave a license to union-busting. much as had the dogma of the “open shop” had in earlier times. As a result, unions in the private sector have suffered huge setbacks and are scarcely better off than they were before the New Deal.

Embattled unionists have responded ambiguously. They have resisted as best they could the onslaught on their jurisdictions, but many of them–by no means all–also concede that the adversarial system (so-called) within which they operate has become counterproductive and needs reforming. No labor leader has done more to argue the case for joint experiments than Irving Bluestone, pioneer of the Quality of Work Life program at the United Auto Workers in the early 1970s, and, more recently, a professor of labor studies at Wayne State University in Detroit. Negotiating the Future, written in collaboration with his son, the political economist Barry Bluestone, is the ultimate statement of progressive trade unionism today, the most far-reaching exposition of labor’s role in the postindustrial economy to date.

For starters, the Bluestones try to shed labor’s image as a special interest. In the current crisis, they say, the union movement is committed, above all, to restoring American competitiveness. Productivity, quality, innovation are the keywords echoing through the book. Why these broke down in recent years is the subject of a lengthy discussion that concludes, predictably, that the main weakness was the nations failed labor relations. They situate the unions at the center of the competitiveness crisis–not as part of the problem, but as essential to the solution. The Bluestones admit that blame for past error lies partly with the unions. But they are far more critical of corporate management, which after World War II made a determined fight to preserve its prerogatives from the claims of a resurgent CIO. Management rights clauses gained from that fight dealt a fatal blow to any genuine partnership across the class divide. Employers claimed that everything not specified as bargainable in the contract was off-limits to the unions. This covered nearly all decisions regarding investment, products, technology, and pricing. For the Bluestones, elimination of the management rights clause is the sine qua non of future labor relations.

They affirm the principle that has guided American trade unionism since the time of Samuel Gompers: that without co-equal power there can be no economic justice. Arbitrary power in the hands of management corrupts even the most sophisticated nonunion employee involvement scheme that human-resource consultants can dream up. The power workers gain through union organization in turn has to be translated into contractually binding rights. Far from seeking to abolish the contract, the Bluestones see it as the cornerstone on which labor-management partnership must be built.

The union contract of the future gets a new name, however–the Enterprise Compact. It begins with the various forms of workplace participation and gainsharing already in place, but broadened out and articulated to achieve what the Bluestones call the “co-management” of the workplace. Audaciously, they then move out of the factory to advocate co-management at every level of the firm–up to and including the CEO’s office. Three preconditions govern the Bluestones’ proposal: first, that labor commit itself to the goal of a “globally competitive firm” in terms of productivity, quality, and innovation; second, that management commit itself to company growth and market share rather than short-term profit maximization; and third, that all “stakeholders” share on an equitable and specified basis in the earnings of the firm.

From these preconditions, the Bluestones fashion a seven-point compact specifying productivity goals, wage increases, pricing policy, quality as a strikable issue, job security, and gain-sharing for workers. Point 7 bears full quotation:

The company and the union agree that all strategic enterprise decisions will be made through joint action. These decisions include, but are not restricted to, product pricing, the purchasing of inputs, marketing and advertising, methods of production, the introduction of new technology, investments in new capital and products, and the subcontracting of production. The existing management-rights clause in the traditional contract shall be deleted.

All this is not exactly pie-in-the-sky. The Bluestones have a prototype in GM’s Saturn project, in which standard work rules and job classifications have been swept aside in favor of a flexible team system, accompanied by a structure of joint councils that gives the union a voice up to the highest levels of the GM subsidiary. For now at least, the Saturn car is a hit, and the project that produced it serves as a source of inspiration for the Enterprise Compact.

But it’s too early to tell whether Saturn is a genuine breakthrough or only a special case. Better that we take a longer view and consider the Enterprise Compact as an artifact of American labor-management history and of the current trade-union crisis.

The notion of co-managing the firm is not new, although in earlier incarnations it was called industrial democracy. The origin of industrial democracy lies in the late nineteenth century, when small-scale enterprise gave way to the great vertically integrated firm–and with it the modern concept of management as a distinct function.

To American socialists, the emergence of the corporate sector was a new stage in capitalist development, welcomed despite the power it gave the oppressor class. When the Left came to power, ran the prediction, U.S. Steel and the like would be nationalized and managed on behalf of the working class. The vision of the socialist state soon faded, but it left behind an ideal of democratized industry that periodically revived and inspired the labor movement–the Plumb plan for tripartite operation of the railroads after World War I, the industrial councils advocated by the CIO for running defense industries in the early phases of World War II, and Walter Reuther’s abortive drive to get GM to “open the books” during the postwar strike wave.

All these initiatives elicited furious and unrelenting opposition from capital, which invariably defined them as fatal to the American free-enterprise system. And where, as after World War II, the threat seemed credible, no price was too high to thwart it—not the costly 1946 strike GM endured as its competitors picked up market share, nor the generous contract provisions that afterward paid for the management rights clause against which the Bluestones rail.

Why do the authors believe the principle of managerial prerogative no longer commands that deep-seated and unwavering loyalty? It can only be because they sense a drastic loss of confidence by management in its capacity to manage, as if a moment in American capitalism had arrived equivalent to the onset of perestroika in the former Soviet Union.

Measured by performance over the past twenty years, maybe that’s how things should be. But clearly they are not. Witness the ever-more inflated salaries commanded by CEOs; the attentive monitoring of their comings and goings on the business pages of the press; the fact that, while college graduates and newly minted engineers, lawyers, and academics languish, 95 percent of this year’s graduates of the Harvard Business School have jobs before commencement.

If anything, the new competitiveness puts a premium on the management function and casts the Enterprise Compact in a faintly anachronistic light. The elaborate consultative process it envisages assumes a managerial hierarchy now rapidly being dismantled and a deliberate policy making pace just as everything is becoming fast-action. And what of irresolvable differences? One possibility, the Bluestones suggest, is that after exhausting all other avenues, labor might defer to management, not unlike (in a telling simile) the vice president “casting the deciding vote when there is a tie vote” in the U.S. Senate. Alternatively, a mediator might be called in or the issue put to third-party arbitration. One can imagine what a hoot these suggestions might give the new chief at IBM, whose first major act was to jettison the firm’s celebrated job-security policy and announce that the down sizing he intended–39,000 jobs–would take place in one single blow. And beyond the strategic decisions, there are those core rights of private property to which the Bluestones lay a claim for labor–what level of profits to seek and how they are to be divided.

Still, it is true that little is heard nowadays about the sanctity of the managerial prerogative. And there on the back cover is a mild endorsement of the Bluestones’ book by none other than the president of the National Association of Manufacturers. It may be that there are enough instances where corporate distress has drawn unions into the management realm as to have eroded the dogmatism we once would have heard from such a figure. But his complacency probably derives more from a painful truth about the Enterprise Compact. Demands for industrial democracy have characteristically come at flood-tides of the labor movement. This one comes at its nadir and springs not from labor’s sense of power, but from the slim hope that it can make a case for acceptance.

The Bluestones rely on the idea that failed labor relations are the source of America’s economic malaise and that mending the system can only occur in partnership with unions. But we don’t know if the first part of that proposition is true. After all, it was under the discredited Ford-Taylor system that labor productivity rose to a historic high of 3 percent a year in the 1950s and 1960s. Insofar as the sharp decline thereafter can be attributed to authoritarian methods, it’s not clear that participatory programs are a remedy.

Given the hype currently emanating from Washington about “high performance” work practices, being skeptical on this matter is something like being an atheist at a camp meeting. To their credit, the Bluestones take the question seriously and devote a lengthy chapter to the research that has been done on employee participation, with entirely inconclusive results. They argue that the record of success is stronger in union than non-union settings because of the inherent advantages of joint administration and shared power. But even here, the evidence is ambiguous. In the end, they fall back on exemplary cases such as Saturn, which are by definition persuasive. But for every example one can find a counterexample. If the union is crucial at Saturn or GM’s innovative plant in Fremont, California, then why have the Toyota and Nissan managers–whose work practices serve as models for General Motors–fought so hard against organizing drives by the United Auto Workers? The best the Bluestones can say is that the exemplary cases they discuss show “not so much the current state of success” as “the potential of EI |Employee Involvement~ if it is implemented properly and effectively.”

There is a palpable unreality at the heart of Negotiating the Future. The Bluestones speak of the need to create a “benign climate,” as if anti-unionism were a matter of bad temper. “Old grudges” have to be set aside, they say, and so do “misconceptions” about the rigidity and self-seeking of unions. But anti-unionism is not the product of grudges or misconceptions, but of cool business calculation. If, as most labor economists now suggest, union workers are more efficient than nonunion ones, there is no question that unionized firms are less profitable than their non-union counterparts: The gains in labor productivity do not offset the higher wages. In effect, unions redistribute the earnings of the firm to the advantage of their members.

Since they well understand this reality, American employers enter collective bargaining out of necessity, rarely by choice. And while they then accommodate themselves as best they can, and find benefits in collective bargaining of varying magnitudes, we can be sure that when and where the power balance shifts and employers gain the upper hand, they will be moved to drive the unions out. It is not, as the Bluestones say, because “tempers have flared on both sides of the fence” that times are hard for the labor movement. Its decline is the entirely predictable result of economic and political conditions prevailing in this country over the past twenty years.

No one who believes in labor’s cause would deny the ideals of industrial democracy espoused by the Bluestones. They may even be right to claim that American competitiveness would be well served by an Enterprise Compact. The nub of their problem is not so much about ends but over means–of how we go from here to there. And getting on that road means first of all doing something about the gross imbalance in the power relations between management and labor in this country, which is to say, reforming our labor law. Negotiating the Future appeared before the Clinton administration took office, but now labor law reform has arrived on the national agenda, and in a very particular way. The recently created Dunlop Commission is charged with looking into labor law reform and cooperative workplace relations. The Clinton administration (and Secretary of Labor Robert B. Reich, its guiding light on this issue) insistently intermingle reform of labor law with the achievement of high-performance work practices and, hence, American competitiveness.

Something very like what opened the way for the original Wagner Act of 1935 seems to be happening again: The rights of labor are being attached to broader national goals. In the Great Depression, of course, no one worried about American competitiveness–the mass-production system then seemed unassailably the best there was or, indeed, could be–but American labor relations did produce a drag of a different kind on the economy, that is, on consumption. Encouraging collective bargaining meant generating the higher levels of demand needed to drive a robust economy. Secretary Reich et al. have, of course, become cagey about the role of unions in their high-performance vision. And this is where Negotiating the Future comes in: From the perspective of the new Democratic administration, no book could make labors case better. Are Clinton and Reich listening? Well, there they are on the dust-jacket, warmly endorsing the book in their earlier personas as governor of Arkansas and Harvard political economist.

If it helps to restore labor’s rights under the law in this roundabout way, the Bluestones’ book will have brought an Enterprise Compact more within reach. But the path to it may not be the one they anticipate. Their reading of recent history, instructive as it is, has misled them. The labor-management settlement after World War II represented not a norm, but very much an exception in trade-union history, arising as it did out of a hegemonic moment in American corporate capitalism.

What gave legitimacy to the management rights clause was the belief that the General Electrics and U.S. Steels of this world were masters of their economic fates. The unions could take the money and leave the decisions to management. But that exit has not always been open to unions, and whereas in the coal and the garment trades competitive conditions demanded it, they in fact drove deeply into what we would today define as the realm of management. There are signs of a revival of that kind of strategic union thinking.

Concession bargaining also leads in interesting directions. Look, for example, at current airline union negotiations to purchase United Airlines, or the extensive management role the steel union has taken in the formerly bankrupt LTV and Wheeling-Pittsburgh firms, or the seats the same union has recently won on the boards of Bethlehem, National, and Inland Steel–as well as a lien on certain company properties as a guarantee that pension obligations will be honored. In all these cases, the starting point was a strong union, and the venue the give-and-take of collective bargaining.

Perhaps we might coin a maxim: first, power; then, maybe, cooperation. Negotiating the Future may have misplaced the order of things. But that doesn’t mean it evokes the wrong vision or will not contribute to realizing it. Time will tell.

COPYRIGHT 1993 Tikkun Magazine

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