Academic journal article Management Revue

Industrial Democracy: Historical Development and Current Challenges**

Academic journal article Management Revue

Industrial Democracy: Historical Development and Current Challenges**

Article excerpt

The following article gathers notes and comments on industrial democracy, its terminology, history and current developments. Industrial democracy is an enigmatic term whose spectrum of meanings is explored in the first section. The Anglo-Saxon terminology, going back to S. and B. Webb will be compared with the German vocabulary of Wirtschaftsdemokratie and co-determination. The following sections deal with the peculiarities of German co-determination. First the emergence of co-determination is explained by a conflictual interplay of employers, state and trade unions, followed by a sketchy number of the crucial steps of its development up to today's challenges. An additional section is devoted to the rationale of the works council, which has surprisingly evolved from a Cinderella to the most significant institution of industrial relations in contemporary Germany. The final discussion focuses on the ideological permutation of co-determination changing its socialist embeddedness into a market-economy one. The paper concludes with a proposal to couple the legitimacy of co-determination with the normative framework of social market economy.

Keywords: industrial democracy, economic democracy, co-determination, works council, workers committees, social market economy, industrial relations, Germany

1. Industrial Democracy in comparison with Wirtschaftsdemokratie

The term 'industrial democracy' is an intricate one. Sidney and Beatrice Webb (1897) introduced it to the vocabulary of social sciences at the end of the 19th century, whereas the German term 'Wirtschaftsdemokratie' was coined by Frit2 Naphtali and his distinguished collaborators, among them Rudolf Hilferding, Hugo Sin2heimer and Frit2 Baade, in the late 1920s.

The Webbs published their collective work "Industrial Democracy" in 1897 just three years after they had published their masterpiece "History of Trade Unionism". Surprisingly the book contains a completely different meaning of industrial democracy as contemporary industrial relations experts (e.g. Blumberg 1968; Hammer 1998) understand by this term. They usually locate industrial democracy at shop-floor level (participation, works councils) and the company level (co-determination, workers' directors).

The Webbs, however, use industrial democracy in a twofold manner:

The first meaning is laid down in Part I of dieir book, titled "Trade Union Structure". Their conclusion: "We find that Trade Unions are democracies; that is to say their internal constitutions are all based on the principle 'government of the people by the people for the people'" (1911: Vf); and further: "they have solved the fundamental problem of democracy, the combination of administrative efficiency and popular control" (1911: 38). This is the internal dimension of the Webbs' industrial democracy which one could call, with Seymour Martin Lipset, "union democracy" (Lipset/Trow/ Coleman 1977).

The second meaning is incorporated in the much larger Part II on "Trade Union Function" and indicates an external dimension. Here it is primarily "the method of collective bargaining" which - in the reading of Hugh Clegg's work (see below) - is the equivalent of industrial democracy.

Fritz Naphtali and his collaborators chose the term 'Wirtschaftsdemokratie' as the title for a programmatic report elaborated on behalf of the German Trades Union Congress Allgemeiner Deutscher Gewerkschaftsbund). According to the authors' claim the term was understood as the German equivalent of the Webbs' 'Industrial Democracy' to which they referred to in their introductory chapter explicitly. Nonetheless 'Wirtschaftsdemokratie' predominantly refers to co-determination at the sectoral and national economic levels. Co-determination at establishment and enterprise levels, although covered by this term, too, was regarded to be of secondary importance. Naphtali stated explicitly: The works council cannot be a pioneer of the new socioeconomic order (1966: 163). …

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