Workers' self-management
Workers' self-management, also referred to as labor management and organizational self-management, is a form of organizational management based on self-directed work processes on the part of an organization's workforce. Self-management is a defining characteristic of socialism, with proposals for self-management having appeared many times throughout the history of the socialist movement, advocated variously by democratic, libertarian and market socialists as well as anarchists and communists.
There are many variations of self-management. In some variants, all the worker-members manage the enterprise directly through assemblies while in other forms workers exercise management functions indirectly through the election of specialist managers. Self-management may include worker supervision and oversight of an organization by elected bodies, the election of specialized managers, or self-directed management without any specialized managers as such. The goals of self-management are to improve performance by granting workers greater autonomy in their day-to-day operations, boosting morale, reducing alienation and eliminating exploitation when paired with employee ownership.
An enterprise that is self-managed is referred to as a labour-managed firm. Self-management refers to control rights within a productive organization, being distinct from the questions of ownership and what economic system the organization operates under. Self-management of an organization may coincide with employee ownership of that organization, but self-management can also exist in the context of organizations under public ownership and to a limited extent within private companies in the form of co-determination and worker representation on the board of directors.
Economic theory
An economic system consisting of self-managed enterprises is sometimes referred to as a participatory economy, self-managed economy, or cooperative economy. This economic model is a major version of market socialism and decentralized planned economy, stemming from the notion that people should be able to participate in making the decisions that affect their well-being. The major proponents of self-managed market socialism in the 20th century include the economists Benjamin N. Ward, Jaroslav Vanek and Branko Horvat. Horvat says that participation is not simply more desirable, but also more economically viable than traditional hierarchical and authoritarian management as demonstrated by econometric measurements which indicate an increase in efficiency with greater participation in decision-making. Writing from the perspective of socialist Yugoslavia in the early 1980s, Horvat suggested that the larger world was moving toward a self-governing socialistic mode of organization as well.Labor managed firm
The theory of the labor managed firm explains the behavior, performance and nature of self-managed organizational forms. Although self-managed firms can coincide with worker ownership, the two are distinct concepts and one need not imply the other.Neoclassical economics
According to traditional neoclassical economic theory, in a competitive market economy ownership of capital assets by labor should have no significant impact on firm performance.Much of the research on labor-managed firms in the neoclassical tradition revolved around the question of the presumed maximand of such firms and its implications. The first model of a labor-managed firm in this tradition has been suggested by American economist Benjamin Ward in 1958 who was interested in the analysis of Yugoslav firms. According to Ward, the labor-managed firm strives to maximize income per worker as contrasted with the traditional capitalist firms' objective function of maximizing profit for external owners. Based on this assumption, Ward presented an analysis that was critical of labor-managed firms. In particular, he argued that a supply curve of a labor-managed firm has a negative slope: an increase in the market price of the product produced by a labor-managed firm will not make it increase production and hire new members. It followed that an economy consisting of labor-managed firms would have a tendency to underutilize labor and tend toward higher rates of unemployment. Ward's model was developed further by Evsey Domar and generalized by Jaroslav Vaněk.
These purely theoretical analyses were criticized by Yugoslav economist Branko Horvat in 1971 who argued for empirical analysis of actually existing labor-managed Yugoslav firms and practices utilized by their members. In particular, he noted that workers fix wages at the beginning of a year and then adjust them based on the earnings of the enterprise. He noted that this behavioral rule, if made a part of the theoretical model, implies that the market behavior of a labor-managed firm is, contrary to theses by Ward and his followers, much more similar to the hypothetical behavior of a "traditional", profit-maximizing firm.
Building on a larger body of empirical studies, contemporary Canadian economist Gregory Dow has carried out extensive theoretical research on labor-managed firms from the neoclassical perspective, focusing on explaining the rarity of labor-managed firms relative to capital-managed ones.
Classical economics
In the 19th century, the idea of a self-managed economy was first fully articulated by the anarchist philosopher and economist Pierre-Joseph Proudhon. This economic model was called mutualism to highlight the mutual relationship among individuals in this system and involved cooperatives operating in a free-market economy.The classical liberal philosopher and economist John Stuart Mill believed that worker-run and owned cooperatives would eventually displace traditional capitalist firms in the competitive market economy due to their superior efficiency and stronger incentive structure.
While both Mill and Karl Marx thought that democratic worker management would be more efficient in the long run compared with hierarchical management, Marx was not hopeful about the prospects of labor-managed and owned firms as a means to displace traditional capitalist firms in the market economy. Despite their advantages in efficiency, in Western market economies the labor-managed firm is comparatively rare.
Karl Marx championed the idea of a free association of producers as a characteristic of communist society, where self-management processes replaced the traditional notion of the centralized state. This concept is related to the Marxist idea of transcending alienation.
Soviet-type economic planning
The Soviet-type economic model as practiced in the former USSR and Eastern Bloc was introduced in the state-owned enterprises in the 1980s. It is criticized by socialists for its lack of widespread self-management and management input on the part of workers in enterprises.Management science
In his book Drive: The Surprising Truth About What Motivates Us, Daniel H. Pink argues on the basis of empirical evidence that self-management/self-directed processes, mastery, worker autonomy and purpose are much more effective incentives than monetary gain. According to Pink, for the vast majority of work in the 21st century self-management and related intrinsic incentives are far more crucial than outdated notions of hierarchical management and an overreliance on monetary compensation as reward.More recent research suggests that incentives and bonuses can have positive effects on performance and autonomous motivation. According to this research, the key is aligning bonuses and incentives to reinforce, rather than hamper, a sense of autonomy, competence and relatedness.
Political movements
Europe
One significant experiment with workers' self-management took place during the Spanish Revolution. In his book Anarcho-Syndicalism, Rudolf Rocker stated:But by taking the land and the industrial plants under their own management they have taken the first and most important step on the road to Socialism. Above all, they have proved that the workers, even without the capitalists, are able to carry on production and to do it better than a lot of profit-hungry entrepreneurs.
After May 1968 in France, LIP factory, a clockwork factory based in Besançon, became self-managed starting in 1973 after the management's decision to liquidate it. The LIP experience was an emblematic social conflict of post-1968 in France. CFDT, trade-unionist Charles Piaget led the strike in which workers claimed the means of production. The Unified Socialist Party which included former Radical Pierre Mendès-France was in favour of autogestión or self-management.
In the Basque Country of Spain, the Mondragon Cooperative Corporation represents perhaps the longest lasting and most successful example of workers' self-management in the world. It has been touted by a diverse group of people such as the Marxian economist Richard D. Wolff and the research book Capital and the Debt Trap by Claudia Sanchez Bajo and Bruno Roelants as an example of how the economy can be organized on an alternative to the capitalist mode of production.
Following the 2008 financial crisis, many factories were occupied and became self-managed in Greece, France, Italy, Germany and Turkey.
In Greece, solidarity-based distribution is partially the result of austerity policies' privatization of public services, which exacerbates on-the-ground solidarity activities. These have mostly emerged as a consequence of ambitious politicized thinking and mobilization, as well as a practical formulation that ensures degrees of living by transforming informal solidarity networks into remunerative distribution cooperatives. This dialectic, echoes the idea of formally managing the crisis, which reproduces itself not in spite of, but because of, official policy initiatives to combat it. Workers' collectives and cooperatives, Self-Help Groups, Local Exchange Trade Systems, Freecycle networks and Timebanks, and the first worker-occupied factory are examples of non-capitalist social experiments and innovations that have emerged in Greece since 2012.