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Theresa May, Lucas Aerospace, workers’ self-management and decarbonising the economy

What are Britain's corporate leader so worried about?

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Lucas Aerospace workers proposed a bus that could run on rails as an product for their arms company. A model was built and tested, and toured the country to rally support for the Lucas Plan. PHOTO: Gillett’s Crossing [CC BY 2.0] via Wikimedia Commons

By the time this issue lands on your doorstep, it will probably have become clear just how much British prime minister Theresa May has been forced to back down from her signature policy of putting workers’ representatives on company boards.

Responding in May 1977 to the British government’s Bullock Report on industrial democracy, Noam Chomsky quoted the Dutch left-Marxist Anton Pannekoek. Pannekoek wrote decades earlier that the workers’ revolution ‘is not a single event of limited duration’, but ‘a process of organization, of self-education, in which the workers gradually... develop the force to... build up their new system of collective production.’ Similar things have been said of ‘nonviolent revolution.’

Chomsky suggested that radicals should welcome proposals for worker representation in management, while criticising their limitations and ‘emphasizing the immense gap between participation and true common ownership and management’. Working people could use the opportunity of participation to gain a better understanding of their own powers, and of the ‘absurdity of the claims of authority’.

PN has been committed for decades to workers’ self-management as a core component of a nonviolent economy and a nonviolent society, and has long recognised that workers’ participation in decision-making and planning is crucial to any genuine conversion process for either demilitarisation or decarbonisation of the economy.

The debate around ‘co-determination’ (as board-level worker representation is called in Germany) brings up important issues for both the peace and the climate movements, severely limited as the current measures are.

Hallelujah

Launching her campaign for party leadership (and prime minister) on 11 July, Theresa May twice promised that ‘under my leadership, the Conservative party will put itself – completely, absolutely, unequivocally – at the service of ordinary, working people’.

Addressing the Conservative party conference in October, the new prime minister made one of the boldest political speeches of modern times, in which she again posed as an ally of the poor and oppressed. She used the phrase ‘working class’ – positively – seven times, talked about the ‘workers’ – positively – eight times. She claimed the Tories were ‘the party of the workers’. (Jeremy Corbyn, in his two leader’s speeches to Labour party conference, hasn’t said ‘working class’ once, or that Labour is ‘the party of the workers’.)

“There are too many work places in Britain where people are expected to keep their heads down and their mouths shut”

May announced one policy that would demonstrate her commitment to ‘shifting the balance of Britain decisively in favour of ordinary working class people’. (This phrase echoes the Labour party’s 1974 manifesto pledge to ‘Bring about a fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families’).

May’s flagship policy was ‘to have not just consumers represented on company boards, but workers as well’. (When she first launched this idea on 11 July, she talked of ‘employees’, not ‘workers’.)

Since her strong public re-commitment to the idea at her party conference on 5 October, May has been beaten down, in a process recorded in the paper of the corporate elite, the Financial Times.

On 11 October, one senior cabinet minister told the FT: ‘it is not going to happen’.

The Confederation of British Industry (CBI) were opposed. The Institute of Directors were in favour –but only as long as it was voluntary; in other words, meaningless.

On 31 October, the FT noted fierce opposition from ministers including Greg Clark, business secretary, and Philip Hammond, chancellor, reporting: ‘One possible alternative to having workers on the executive board itself is to follow the German model of placing worker representatives on a supervisory board, or subcommittee.’

An aide to May told the FT: ‘The issue here is whether [a new policy] can be communicated as being in the spirit of the original promise.’

On 1 November, Legal & General, one of Britain’s biggest investment groups, suggested an alternative to worker-directors: a ‘Nominated Employee Non-Executive Director’ who would seek out employees’ views. This idea, given in written evidence to a parliamentary inquiry on corporate governance, was watered down further in the FT on 5 November by Richard Lambert, a former director-general of the CBI, who wrote about ‘a possible compromise’, giving an existing non-executive director ‘responsibility for channelling the interests of different stakeholder groups’.

“A nonviolent economy is one in which human beings are able to fulfil the deep human need to be involved in self-government”

On 7 November, The Times reported the collapse of May’s signature policy; companies will now be ‘encouraged’ to involve workers more, through ‘guidance’ from government.

Is this what you wanted?

Capitalism, it seems, will now be gently ‘encouraged’ to shift the balance in favour of ordinary working class people. This is not nonviolent communication. It is continued classist dictatorship.

Within conventional companies, there is a clear, strict authority system with severe penalties for disobedience, and no room for transparency, accountability or selection of those holding power over us. These are things we expect but don’t get enough of in our political lives; they are excluded in principle from our economic or working lives. That is structural violence, making people into things.

One of the most subversive things about the 1976 Lucas Plan for converting the arms company Lucas Aerospace to socially-useful civilian production was the process by which the detailed twelve-product plan was developed. A Combine Committee of shop stewards was formed over several years, uniting workers from different sites and different trade unions (across job demarcation lines), which became a decision-making body for the entire workforce, making proposals for products as well as defending jobs and pay conditions. This frightened Lucas Aerospace (because it challenged ‘management’s right to manage’) and it frightened trade union bureaucrats as well (because it formed a new power base and a new model for organising).

Everyone serious about converting military production to socially-useful work recognises that the process must involve workers in the planning and coordination of conversion. Without the support of workers, conversion will falter and fail. Without workers’ detailed knowledge of work processes, production cannot evolve. Workers’ support and participation in planning and decision-making is just as important in conversion to a zero-carbon economy. In both cases, what is needed is a ‘Just Transition’ that is as concerned with the welfare and needs of working people today as it is with the needs of peace and of future generations. (See pp 12–13 for more on these topics.)

Waiting for the miracle

Coming back to the present situation. As Stephanie Baker wrote in the Independent in July, May’s initial policy of putting workers on company boards ‘goes further than the opposition Labour Party’s 2015 election manifesto, which called for employee representation [only] on corporate compensation committees’ (which decide executive pay).

“Giving the representatives of employees a real and not a sham or token share in making the strategic decisions about the future of the enterprise”

One thing May shares with former Labour leader Ed Miliband is her opposition to trade union involvement in worker representation on boards. Elsewhere in Europe, trade unions are often directly involved on company boards. In Germany, Europe’s largest industrial union, the 2.3m-strong metalworkers’ union IG Metall, is represented, for example, on the secondary, supervisory board of car manufacturers Volkswagen and BMW. Of the 20 members of the Volkswagen supervisory board, seven are elected directly by the workforce; another three are representatives of the trade unions elected by the workforce.

It is hard to see what Britain’s corporate leaders are so worried about. In six EU countries, workers are represented on the boards of state-owned or in-the-process-of-privatisation companies. In another 12, workers are also represented on the boards of private companies. In none of these countries has co-determination caused a ‘decisive shift’ in the balance of national power ‘in favour of ordinary working class people’. Despite the presence of worker representatives on boards, companies have carried on with plant closures, job and pay cuts for workers, and sky-high pay for executives.

Perhaps executives see in the May initiative the same thing that the Trade Union Congress (TUC) sees. On 8 September, Frances O’Grady, general secretary of the TUC, spoke up just after Sports Direct appointed a worker representative to its board, after a storm of criticism over the pay and conditions of its staff. O’Grady said that having workers on the board could ‘herald a different kind of relationship between employers and employees’: ‘There are too many work places in Britain where people are expected to keep their heads down and their mouths shut. I think having workers on boards sends a very different signal where you say actually the success of our company depends on the workforce.’

In other words, at this point in time, in Britain, worker representatives on company boards, while exercising little actual power over the firm, could be an encouraging sign of increasing dignity and empowerment for workers.

The TUC has made some sensible proposals for enacting May’s promise, building on the European experience of co-determination. The federation has suggested that l workers should have the right to board-level representation in companies with 250 or more workers; l they should elect one-third of board members (with a minimum of two worker representatives per board); l trade unions as well as individual workers should be able to nominate candidates for election; and l elections should involve the entire workforce (apart from senior management), including overseas staff. (In Germany, some boards with only domestic worker representatives have been accused of discriminating against workers in foreign subsidiaries.)

It is often – wrongly – said that ‘co-determination’ was an initiative of the British military in the parts of Germany that it occupied after the Second World War. In fact, the push for trade union involvement in management came from the German labour movement (which was no longer focused on winning nationalisation of industry after its experience of state ownership under the Nazis). Worker representation was tolerated but held back by the British occupation, as Kings College London law lecturer Ewan McGaughey has shown.

Later, after the West German government confirmed that co-determination was contained to the supervisory board level, and would not spread to the executive, it became a fundamental part of German society.

There have been problems along the way. In 2005, a scandal erupted when it was discovered that Volkswagen had passed £1.2m to a leading member of IG Metall, the long-time worker-elected head of Volkswagen’s works council, one Klaus Volkert. Over nine years, Volkert used the company slush fund to pay for prostitutes and sex holidays for Volkswagen shop stewards – to soften union resistance to anti-worker policies. (A trade unionist, Volkert was jailed for almost two years; the two executives convicted of corruption didn’t see the inside of a prison.)

That’s no way to say goodbye

The 2005 Volkswagen scandal is only one tiny tip of the huge iceberg of trade union collaboration with corporations – and not only in countries with co-determination. This kind of co-option is one of the reasons many radicals opposed the Bullock Report recommendations on worker representation on British company boards in 1977.

The majority report (of the inquiry chaired by Alan Bullock) said that what was needed was to give ‘the representatives of employees a real and not a sham or token share in making the strategic decisions about the future of the enterprise which in the past have been reserved to management and the representatives of shareholders.’

In reply, many militant trade unionists would say: ‘It is not the job of unions to manage – but to oppose management.’

In reply to that, the left-wing leader of the Transport & General Workers Union, Jack Jones, argued: ‘it took nearly a hundred years to extend the suffrage to every adult man and woman. We cannot afford the luxury of a 100-year wait for the industrial franchise’.

The Bullock Report recommendations for worker representation on boards did not add up to an ‘industrial franchise’, but they could be used by a radical labour movement as a step in that direction.

It may be useful at this point to clear up the differences between ‘workers’ participation’, ‘workers’ control’, and ‘workers’ self-management’. Different people draw the lines differently, but most people agree there are different levels of democracy involved.

‘Workers’ participation’ is consultation with a real say in what is happening at work; it will be critical for Just Transition processes to demilitarise and decarbonise the economy.

‘Workers’ control’ happens when workers are democratically running many – perhaps all – activities in a workplace (perhaps with a veto on important issues), but investors still own and ultimately control the workplace.

‘Workers’ self-management’ happens when there is no room at work for ownership or control by outside owners or the state. In its fullest sense, it means an entire economy built on the co-operation of worker-controlled enterprises.

A nonviolent economy is not just one directed to creation rather than destruction. A nonviolent economy is one in which we are all able to fulfil our deep human need to be involved in self-government. An economy in which workers are human beings, not instruments directed, driven and discarded by others.

Converting the economy to workers’ self-management is a crucial way of shifting the balance of power ‘decisively in favour of ordinary working class people’. Workers’ self-managment is structural nonviolence.

Different sides

One of the ways that the mainstream media contributed to Theresa May’s climbdown on worker representation on company boards was through its thorough distortion of the views of one of the most worker-friendly major companies in Britain, the employee-owned John Lewis Partnership. (John Lewis calls its 88,900 permanent staff ‘partners’, and they get to elect a third of the board, among other democratic structures).

This is a report in the Telegraph on 2 November: ‘The John Lewis Partnership, one of the UK’s most progressive companies, has led criticism of Theresa May’s plan to put workers on boards.’ The paper quoted the partnership’s written evidence to a parliamentary inquiry: ‘We do not believe that encouraging or mandating employee representation on boards will, in isolation, create a strong system of corporate governance.’

The Telegraph then quoted companies and individuals who said worker representation on boards was not ‘feasible’ or ‘destroyed a firm’s value’. John Lewis was associated with these criticisms.

There was a report in The Times that the prime minister was influenced by this rejection by John Lewis.

Actually, as the Telegraph conceded in the final paragraph of its story: ‘The John Lewis Partnership’s submission did however say it derives “significant value” from having a shop-floor staffer on the remuneration committee’.

It would have been more accurate to report that John Lewis supported:

  •  ‘employee representation on Remuneration Committees’;
  • ‘wider system[s] of accountability’ within firms – in addition to worker representation;
  • ‘incentivisation’ of ownership models which focus on long-term reward; and
  • ‘employee ownership’ in particular.

These were the four points made at the end of John Lewis’ evidence to the business, energy and industrial strategy inquiry.

Milan Rai is editor of PN