Collapse of Eastern European communisms

An earlier post commented on Tony Judt’s magnificent book Postwar: A History of Europe Since 1945. There I focused on the story he tells of the brutality of the creation of Communist Party dictatorships across Eastern Europe (link). Equally fascinating is his narrative of the abrupt collapse of those states in 1989. In short order the world witnessed the collapse of communism in Poland (June 1989), East Germany (November 1989), Czechoslovakia (November 1989), Bulgaria (November 1989), Romania (December 1989), Hungary (March 1990), and the USSR (December 1991). Most of this narrative occurs in chapter 19.

The sudden collapse of multiple Communist states in a period of roughly a year requires explanation. These were not sham states; they had formidable forced of repression and control; and there were few avenues of public protest available to opponents of the regimes. So their collapse is worth of careful assessment.

There seem to be several crucial ingredients in the sudden collapse of these dictatorships. One is the persistence of an intellectual and practical opposition to Communism and single-party rule in almost all these countries. The brutality of violent repression in Poland, Hungary, Czechoslovakia, and other countries did not succeed in permanently suppressing opposition based on demands for greater freedom and greater self-determination through political participation. And this was true in the fields of the arts and literature as much as it was in the disciplines of law and politics. Individuals and organizations reemerged at various important junctures to advocate again for political and legal reforms, in Poland, Czechoslovakia, Hungary, and even the USSR.

Second was the chronic inability of these states to achieve economic success and rising standards of living for their populations. Price riots in Poland in the 1970s and elsewhere signaled a fundamental discontent by consumers and workers who were aware of the living conditions of people living in other parts of non-Communist Europe. Material discontent was a powerful factor in the repeated periods of organized protest that occurred in several of these states prior to 1989. (Remember the joke from Poland in the 1970s — “If they pretend to pay us, we pretend to work.”)

And third was the position taken by Mikhail Gorbachev on the use of force to maintain Communist regimes in satellite countries. The use of violence and armed force had sufficed to quell popular movements in Hungary, Czechoslovakia, and Poland in years past. But when Gorbachev made it credible and irreversible that the USSR would no longer use tanks to reinforce the satellite regimes — for example, in his speech to the United Nations in December 1988 — local parties were suddenly exposed to new realities. Domestic repression was still possible, but it was no longer obvious that it would succeed.

And the results were dramatic. In a period of months the world witnessed the sudden collapse of Communist rule in country after country; and in most instances the transitions were relatively free of large-scale violence. (The public executions of Romania’s Nicolae and Elena Ceaușescu on Christmas Day, 1889 were a highly visible exception.)

There seem to be many historical lessons to learn from this short period of history. Particularly sharp are the implications for other single-party dictatorships. So let’s reflect on the behavior of the single-party state in China since the mid-1980s. The Chinese party-state has had several consistent action plans since the 1980s. First, it has focused great effort on economic reform, rising incomes, and improving standards of living for the bulk of its population. In these efforts it has been largely successful — in strong contrast to the USSR and its satellite states. Second, the Chinese government has intensified its ability to control ideology and debate, culminating in the current consolidation of power under President Xi. And third, it used brutal force against the one movement that emerged in 1989 with substantial and broad public involvement, the Democracy Movement. The use of force against demonstrations in Tiananmen Square and other cities in China demonstrated the party’s determination to prevent largescale public mobilization with force if needed.

It is difficult to avoid the conclusion that China’s leaders have reflected very carefully on the collapse of single-party states in 1989, culminating in the collapse of the Soviet Union itself. They appear to have settled on a longterm coordinated strategy aimed at preventing the emergence of the particular factors that led to those political catastrophes. They are committed to fulfilling the expectations of the public that the economy will continue to grow and support rising standards of living for the mass of the population. So economic growth has remained a very high priority. Second, they are vigilant in monitoring ideological correctness, suppressing individuals and groups who continue to advocate for universal human rights, democracy, and individual freedoms. And they are unstinting in providing the resources needed by the state organizations through which censorship, political repression, and ideological correctness are maintained. And finally, they appear to be willing to use overwhelming force if necessary to prevent largescale public protests. The regime seems very confident that a pathway of future development that continues to support material improvement for the population while tightly controlling ideas and public discussions of political issues will be successful. And it is hard to see that this calculation is fundamentally incorrect.

Jobs, basic income, and the future of the techno-market economy

In the dystopian vision of the future described in William Gibson’s Sprawl novels, there are few people with normal jobs, regular sources of income, retirement plans, and health insurance. Instead, there are hackers, freelance security guards, software traffickers, criminals at many levels, and a few distant corporations with scientists and managers. It is a grim picture.

But how distant is that future from our current trajectory? Is that pretty much where we are heading? With the effort to shed 24 million Americans from health insurance; with the disappearance of “good” industrial jobs; with the rise of the gig economy; with the super-extreme development of inequalities of income and wealth, based on privileged positions in the financial and tech economies — do these trends not seem like early-stage Gibson?

Philippe van Parijs has long been an advocate for a very fundamental change to the legal and economic structure of a capitalist democracy, the establishment of a universal basic income for all citizens and legal residents of a country. A recent statement of his position (with Yannick Vanderborght) is Basic Income: A Radical Proposal for a Free Society and a Sane Economy. The central value that drives van Parijs’ social philosophy is “real freedom”. And he believes that the creation of a legal commitment to universal basic income within advanced democracies is both politically feasible and desirable for the impact it would have on the levels of freedom enjoyed by the most disadvantaged members of society. Here is how van Parijs and Vanderborght put the fundamental point:

A basic income is not just a clever measure that may help alleviate urgent problems. It is a central pillar of a free society, in which the real freedom to flourish, through work and outside work, will be fairly distributed. It is an essential element of a radical alternative to both old socialism and neoliberalism, of a realistic utopia that offers far more than the defense of past achievements or resistance to the dictates of the global market. It is a crucial part of the sort of vision needed to turn threats into opportunities, resignation into resolution, anguish into hope. (kl 81)

What should be the level of a universal basic income? Parijs and Vanderborght choose as a benchmark the 25th percentile of a country’s GDP per capita. In the US this would amount to $1,163 and in Brazil $180 (kl 235). For a US family of five including two adults, this amounts to $2,326 per month — roughly the current level of the US poverty threshold for a family of five. (Van Parijs and Vanderborght address the relation between the UBI and the poverty threshold; kl 252.)

The current issue of Boston Review includes a forum on “Work, Inequality, Basic Income”, with essays and discussions by Brishen Rogers, Philippe van Parijs, Dorian Warren, Tommie Shelby, Diane Coyle, and others. It is “must” reading for anyone concerned about the question of how we can craft an equitable and livable world in the context of a market economy in the coming decades.

Here is how Brishen Rogers describes the idea of universal basic income in his anchor essay:

The idea is simple: the state would provide regular cash grants, ideally sufficient to meet basic needs, as a right of citizenship or lawful residency. Understood as a fundamental right, basic income would be unconditional, not means-tested and not contingent on previous or current employment. It would help sever the link between work and welfare, provide income security for all who are eligible, and perhaps mitigate growing inequality. It could also enable people to provide unpaid work or community service, start new businesses, or get an education. (



Rogers places a great deal of emphasis on the changes in the power relations between capital and labor that are implicit in the technology revolution currently underway. Workers (think Uber drivers or Amazon inventory fulfillers) are more and more disempowered with respect to their conditions of work, including wage levels but also including job satisfaction, job security, workplace safety and health standards, and other features of meaningful work experience. Rogers thinks that basic income is a good idea, but one that needs to be part of a more comprehensive package of reforms.

An alternative case for basic income draws from classic commitments to social democracy, or an economic system in which the state limits corporate power, ensures a decent standard of living for all, and encourages decent work. In the social democratic view, however, a basic income would be only art of the solution to economic and social inequalities — we also need a revamped public sector and a new and different collective bargaining system. Indeed, without such broader reforms, a basic income could do more harm than good. (15)

Elizabeth Anderson’s critique of van Parijs in an earlier Boston Review forum on universal basic income strikes a similar note (link). Anderson believes that the “real libertarian” foundations of van Parijs’s arguments for UBI are unconvincing, and they are inconsistent with the broader goal of establishing a just society within the circumstances of a capitalist democracy. Van Parijs over-estimates income relative to other social entitlements. Her summary is straightforward: “I will argue that Van Parijs’s real libertarianism cannot justify a UBI, but that a UBI may have some promise as a supplementary part of a larger social welfare package that is justified on other grounds.”

So let’s consider whether the establishment of a universal basic income would in fact lead to a substantially better level of quality of life and real freedom for the disadvantaged in a given capitalist democracy. To start, the level of basic income postulated by van Parijs and Vanderborght is by no means comparable to the level of living standards associated with a current unionized American worker. At $18/hour, a single earner family in the automotive manufacturing sector generates about $36,000 per year; with two earners this may rise to $48,000-$72,000 per year, depending on the nature of the second earner’s job and number of hours of work. So the universal basic income does not substitute for “good jobs”.

But this is perfectly clear to the advocates for a universal basic income. Their vision is not that the UBI is the sole source of income for most people most of the time. Both private employment and social provisioning would also be part of the individual’s overall bundle of entitlements.

Contrary to the way in which it is sometimes characterized and to the chagrin of those among its advocates who want to sell it as a radical simplification, a basic income should not be understood as being, by definition, a full substitute for all existing transfers, much less a substitute for the public funding of quality education, quality health care, and other services. (kl 252)

Rather than constituting an all-round solution to the problem of living well in a capitalist democracy, the UBI is a safety net in the context of which individuals can seek out employment of various kinds.

It does not amount to giving up the objective of full employment sensibly interpreted. For full employment can mean two things: full-time paid work for the entire able-bodied part of the population of working age, or the real possibility of getting meaningful paid work for all those who want it. As an objective, the basic income strategy rejects the former but embraces the latter. (kl 617)

Individuals can use their skills and their interests to generate additional income permitting higher levels of prosperity and job satisfaction. And in a country in which access to affordable healthcare and free public education are rights, we can begin to see how van Parijs can assert that UBI would be a foundation for real freedom of choice and life plan.

This, then, is van Parijs’s response to Rogers and Anderson: his view too depends upon a host of social-democratic reforms, including access to healthcare, education, and other critical components of quality of life. But this seems to concede the point: the reforms we need are broader than simply establishing UBI. And that seems to be correct. We need social democracy, and UBI may be a valuable component of a full social-democratic regime.

(The moral basis for an extensive state along the lines of the Nordic examples was discussed in a prior post; link. The topic of rapid change in employment opportunities in advanced capitalism came up earlier in a post about “A Jobless Future”; link. Also of interest is a post on the social construction of work; link. And here is a post on alternatives to capitalism; link.)

How is “work” socially constituted?

How does “work” take shape in an advanced manufacturing and service economy? Is the division of labor a natural outcome of technology, or is it the result of a concrete set of social processes involving the strategies and interests of several groups? What kinds of social processes determine the bundle of skills, knowledge, and training that go together to represent a job classification? How is the suite of tasks and activities assigned to a given job arrived at?

Here is a brief description from the Bureau of Labor Statistics of one specific skilled job function within a factory environment, the millwright (link):

Millwrights install, dismantle, repair, reassemble, and move machinery in factories, power plants, and construction sites. Millwrights typically go through a formal apprenticeship program that lasts about 4 years. Programs are usually a combination of technical instruction and on-the-job training. Others learn their trade through a 2-year associate’s degree program in industrial maintenance. Employment of millwrights is expected to decline 5 percent from 2010 to 2020. Despite declining employment, job opportunities should be good for those with a broad set of skills in machine maintenance.

Here is a description of a low-skill job function, the hand laborer and material mover (link):

Hand laborers and material movers transport objects without using machines. Some workers move freight, stock, or other materials around storage facilities; others clean vehicles; some pick up unwanted household goods; and still others pack materials for moving. Generally, hand laborers and material movers need no work experience or minimum level of education. Employers require only that applicants be physically able to do the work. Employment of hand laborers and material movers is projected to grow 14 percent from 2010 to 2020, as fast as the average for all occupations. Job prospects should be good because the need to replace workers who leave the occupations should create a large number of job openings.

And here is a highly skilled industrial job, the mechanical engineer (link):

Mechanical engineering is one of the broadest engineering disciplines. Mechanical engineers design, develop, build, and test mechanical devices, including tools, engines, and machines. Mechanical engineers need a bachelor’s degree. A graduate degree is typically needed for promotion into managerial positions. Mechanical engineers who sell services publicly must be licensed in all states and the District of Columbia. Employment of mechanical engineers is expected to grow 9 percent from 2010 to 2020, slower than the average for all occupations. Job prospects may be best for those who stay abreast of the most recent advances in technology.

So how is it determined which tasks are assigned to which classifications? And what social processes determine which individuals receive the right kind of training to qualify for any of these jobs?

One researcher who has contributed a lot to this issue is Charles Sabel in Work and Politics: The Division of Labour in Industry and The Second Industrial Divide: Possibilities For Prosperity (with Michael Piore).  Sabel’s work is particularly insightful in the light it sheds on the sociological processes and structures through which the bundles of skills needed in individual workers are determined and then transmitted through a training regime. Here is how Sabel frames the problem I’m interested in here:

This is an essay about the reasons industrialists create different kinds of factory jobs, about why workers put up with these jobs when they do, and about what they want when they do not. It shows how workers’ ideas of self-interest, born of the principles of honor and dignity they bring to the factory, can be transformed by workplace struggles. And it shows how these struggles, colliding or combining with conflicts in the larger society and between nations, can reshape technologies, markets, and factory hierarchies. (Work and Politics, 1)

Notice the most fundamental idea being advanced here: that the natures of work, jobs, and implementation of technology are all the result of active back-and-forth negotiations over time between workers and owners.  The structure of work doesn’t follow from a certain level or kind of technology; instead it is the result of an extended “game” in which the players seek out definitions of work and technology that suit them. Workplace struggles “reshape” technologies and jobs, and the division of labor is a socially mediated and historically conditioned reality.

This chapter argues that the capitalist organization of production creates clusters of jobs offering workers systematically different opportunities for the use and acquisition of skills, and for regular employment. The capitalists create jobs of various types, and the worker tries to find one suited to his ambition. (31)

Essentially the labor process is defined by several constraints, imperatives, and interests.  Products can be made for use and for sale in a market through a variety of combinations of tools, skills, and labor.  By subdividing tasks, economists and managers since Adam Smith have recognized that it is possible to increase efficiency or quality or both. And profit-oriented owners and managers have recognized that skilled workers can demand more for their services than unskilled workers.  So pursuing a combination of specialized tools and machines with repetitive, unskilled labor has been a profit-maximizing strategy since Henry Ford began experimenting with the assembly line.  “Fordism” is a specific economic and technological system, involving factory production for a mass market, specialized tools and machines, and mass unskilled labor.

There are many alternatives that exist for defining skill regimes that would get the job done for a given level of technology and organization. The Fordist regime separates workers into a low-skill group where only a minimal amount of training is required and the worker’s activities are limited to a repetitive and simple set of actions, a smaller group of high-skill technicians, and a group of supervisors who oversee the activities of both groups. In this Fordist regime the low-skill workers are not expected to exercise independent judgment or to function as creative problem-solvers. The high-skill technicians are assigned a greater degree of independence and scope for problem-solving. 

But, as Sabel observed in an important 1985 article with Jonathan Zeitlin (“Historical Alternatives to Mass Production”; link), the Fordist regime is not the only solution possible for advanced science-based production. There were alternatives. One such alternative is a high-skill, high-independence paradigm where ordinary production workers employ much more sophisticated skills and knowledge to carry out the production process. Here is how they describe their central argument:

Mass production — the combination of single-purpose machines and unskilled labour to produce standard goods — has been throughout this century the undisputed emblem of industrial efficiency. No more. Powerful currents of technological change are stirring up this sedimented lesson of the past. The development of numerically controlled machine tools which can be programmed to perform many different tasks automatically; the spreading use of such machines in highly competitive small firms in industries as diverse as engineering and textiles and regions as distinct as Baden-Wurtemberg and Emilia-Romagna; the increasing capacity of some large firms in Japan, West Germany, and the United states to switch production rapidly from product to product; the creation of new jobs which blur the distinction between skilled and unskilled work — all these churn up established understandings of modern production methods. Engineers and managers take increasingly seriously the possibility that economic success in the future may depend on the flexible use of multi-purpose or universal machines and skilled labour to make an ever changing assortment of semi-customized products: a system that reverses the principles of mass production. (133)

The Volvo production system illustrates this regime. This approach bundles the market advantages associated with flexible production with a skills regime that focuses on teams of producers with advanced and flexible skills and an extensive degree of production independence.

These questions are pressing today for two important reasons. First, many of the “good” jobs that existed in the United States in manufacturing have either disappeared or have suffered major reductions in compensation. Moreover, the manufacturing jobs that are returning to the US are coming back at much lower rates of pay.  And jobs have disappeared for reasons that are very consistent with Sabel’s argument: companies have made deliberate, strategic decisions to de-skill labor within their operations and to offshore some parts of the production process. Or in other words, companies have restructured work to increase profits. That is the logic of a capitalist economy.

Second, most observers accept the idea that worker productivity in the future — and therefore worker compensation — will be determined by the level of knowledge and skill the worker possesses. High skill and high knowledge production adds a lot of value to the product, and is compensated accordingly. But companies have a choice to make, whether they adopt production processes that depend on a smaller number of high-skill and high-pay workers, or processes that depend on a larger number of low-skill, low-pay workers.  And the company is of course aware of the terms of bargaining that exist with regard to these two groups; the high-skill group is more able to exercise influence in the bargaining process and thereby increase its compensation more rapidly.  Deskilling of the production process is therefore a tactical choice on the part of the employer.

This line of thought seems to have disjunctive consequences, neither of which is promising for the future of the American middle class: either companies will restructure their activities to incorporate a higher mix of high-skill workers in substantially smaller numbers; or they will continue to expand activities around a low-skill model while exercising substantial downward pressure on wages.  And this implies that employment growth will be slow, or else there will be more robust jobs growth in low-pay jobs leading to a falling standard of living for the majority of workers.

(Here is a post on Stanley Aronowitz and William DiFazio’s version of this kind of analysis in The Jobless Future: Second Edition.)

Contentious politics in China

By official count, the incidence of popular protest in China has increased ten-fold in the past fifteen years.  Kevin O’Brien and Rachel Stern report that the Chinese state reported 8,700 “collective incidents” in 1993, and this number had grown to 87,000 by 2005 (12).  And the issues that have evoked protest have expanded as well: land seizures, egregious local corruption, lay-offs and labor mistreatment, ecological and environmental concerns, and the Sichuan earthquake and building collapses, for example.  (The photo above is drawn from a 2008 story on factory protests in Dongguan in the Telegraph (link).)  A recent volume by O’Brien and Stern, Popular Protest in China, is a collection of some of the best current work by China scholars on popular protest in contemporary China.  Contributors include some of the researchers who are doing the most detailed work on this topic today, including William Hurst (The Chinese Worker after Socialism), Kevin O’Brien (Rightful Resistance in Rural China), Guobin Yang (The Power of the Internet in China: Citizen Activism Online), and Yongshun Cai (Collective Resistance in China: Why Popular Protests Succeed or Fail).  So the volume offers an excellent perspective on the state of the field.

(It is mildly ironic to note that the conference on which the volume is based was held in 2006 — several years before the global financial collapse that threw millions of Chinese workers out of work.  The incidence and severity of factory protests has certainly increased in the intervening years.)

Sidney Tarrow frames the volume by observing that there has been a welcome recent convergence between China studies and the field of contentious politics.  The contributors to the volume have made productive use of some of the core concepts of the theories of contentious politics that have been developed in the past two decades — resource mobilization, political opportunity, issue framing, social networks, issue escalation, etc., that have proven so productive in the analysis of a range of instances of contention and collective action.  And Tarrow poses a comparativist’s challenge: to what extent is it possible to discern similar processes of mobilization and escalation in the China case?  Further, Tarrow points out that much of the theorizing about contentious politics has taken place in the context of more democratic regimes; so how much of a difference does the fact of China’s authoritarian political system make for the occurrence and character of social contention?
One of the important insights offered by several of the contributors is the importance of disaggregating structures like “political opportunity,” “actor,” and “issue.”  O’Brien and Stern put it this way in their introduction:

The essays in this volume show that political opportunity in China depends (at a minimum) on the identity of the participants, the region, the grievance at hand, and the level of government engaged. (14)

The Chinese state is not a “monolith” but a “hodge-podge of disparate actors,” an “attractive, multidimensional target.” (14, quoting O’Brien and Li, Rightful Resistance in Rural China)

And, of course, we have to recognize the widely different circumstances facing potential contentious actors in different regions and segments of the country.  The point is an important one: we should not look to the intellectual framework of contentious politics research as a set of conceptual recipes for deductively explaining contention.  Rather, we are better off looking at the literature on contentious action as a toolbox of “mechanisms and processes” that recur across contexts and that aggregate differently in different circumstances.  (This is, of course, the methodology that Tarrow, McAdam, and Tilly advocate in Dynamics of Contention.)
Each chapter focuses, by and large, on a different thread within the current literature on contentious politics: framing (William Hurst), trust (Teresa Wright), transnational actors (Patricia Thornton), leadership (Feng Chen), networks (Yanfei Sun and Dingxin Zhao), repression (Yongshun Cai), communication (Guobin Yang), and opportunity (Yanfei Sun and Dingxin Zhao). As such, the volume also serves as something like a tutorial on current theories of contentious politics.
Liz Perry’s concluding essay frames the argument around “rebellion” (protest against particular officials) versus “revolution” (protest against principles and structures of government). And she is inclined to think that the rise in protest in China today falls in the former category — mostly harmless from the point of view of the power and structure of the regime. 

Despite its remarkable frequency, then, contention in contemporary China remains limited in size, scale, and scope.  With few exceptions, the social composition, territorial reach, and endurance of individual protests have all been highly circumscribed. (206)

But I’m inclined to think that this misses one of the most important implications of the contentious politics literature, and the import of its most important case. Small-scale mobilization and protest can escalate to fundamental and widespread demands for justice. And a broad movement can emerge that is not revolutionary — devoted to the overthrow of the state — and yet is persistently transformative: dedicated to the long, slow transformation of society and state in the direction of equality and dignity for all members of society. The great historical example of this — the example that motivated some of the best work in the literature of contentious politics — is the American civil rights movement. This movement demanded a fundamental change of law and of culture, and it succeeded. And we might say that this is what ordinary people in China today demand and deserve.  The demand for voice and legal protections of lawful activities that swims throughout the more specific claims currently being made has the potential of becoming a very widespread movement.

(There are a number of earlier posts on these issues, collected under the tag CAT_collective action.)

Works councils and US labor relations

image: Diego Rivera, Rouge Plant mural, Detroit Institute of Arts
The United States has one of the lowest rates of union representation of all developed countries. The 1994 level of unionized workers in the US had fallen to about 12 percent of private sector employment, and the trend is downward.  And the sole institutional form through which representation occurs in the US context is the union.  So the vast majority of American workers are left with no formal representation within the firm when it comes to wages, benefits, or work practices.
This situation contrasts strikingly with the labor-management institutions in place in much of Europe and Japan. In most other countries legislation establishes the opportunity or the mandate for a second form of worker representation within the workplace, the works council. Industry-wide unions establish wage levels; public policy stipulates the level of the “social wage”; and works councils provide an institutionalized context in which management and employees consult with each other, exchange workplace information, and work out firm-specific implementations of industry-wide agreements.  And, as Kathleen Thelen demonstrates, differences in the institutions surrounding labor in a market society can have major effects on important social and economic factors in the societies in which they are embedded (How Institutions Evolve: The Political Economy of Skills in Germany, Britain, the United States, and Japan).
Joel Rogers and Wolfgang Streek’s Works Councils: Consultation, Representation, and Cooperation in Industrial Relations is the result of an extensive NBER cross-country study of the economic and social effects of broadly implemented works councils in Europe and Japan. The bottom line is fairly clear: where they exist, these formal institutions of labor representation within the firm have clear theoretical and empirical benefits for productivity, worker skill levels, and willing patterns of cooperation between workers and management. (Richard Freeman’s America Works: Critical Thoughts on the Exceptional U.S. Labor Market (2007) is a more general discussion of the singular nature of the American labor system.)
Generally speaking a works council system can be defined in these terms:
We define works councils as institutionalized bodies for representative communication between a single employer (“management”) and the employees (“workforce”) of a single plant or enterprise (“workplace”). (Rogers and Streek, 6)
This involves several aspects:
  • It is a system of mandatory consultation by management to give organized expression to the considered views of employees to contemplated changes.
  • Works councils do not have the authority to negotiate for wages and benefits; this is typically done by sectoral unions.
  • Works councils are typically firm-specific, limited to consultation and exchange of information about local decision-making.
The benefits associated with works councils in Europe and Japan are many and well documented  More specifically, the contributors found that works councils facilitate a number of welfare-enhancing outcomes:
  • Exchange of information
  • Enforcement of regulations
  • Improvement of mutual trust and labor productivity
  • Greater democracy and freedom for workers
  • Enhancement of productivity
  • Incentives for both management and employees to increase skill levels
Each of these outcomes is a substantial benefit within a market-based economic system. Take the issue of the enforcement of regulations, including OSHA rules, environmental regulations, and food safety assurance regimes. The inspectorate of the agencies responsible for these regulatory regimes cannot be sized to the levels needed to ensure enforcement through inspection and fines. There are simply too many workplaces and firms. And the only other current mechanism, private litigation when violations lead to individual damages, is too sporadic to constitute an effective enforcement regime.  So, for example, workplace accident rates are dramatically higher in the United States than Japan and Sweden; the US death rate is 3.5 times that of Japan and 5.8 times that of Sweden (398).  Works councils specifically empowered to gain knowledge about the regulatory requirements combined with detailed workplace knowledge can change this situation.
Or take the area of a cooperative exchange of information within the firm. When various actors have the opportunity and incentive to hoard information to further their particular interests — whether management or employee — then decisions will be faulty, efficiencies will be overlooked, and the production process will be less efficient than it could be. Works councils give employees a greater degree of confidence and trust in management and therefore a greater willingness to share useful workplace information. And management has a legal mandate to share pertinent information and to consult with employees about prospective decisions. These intersecting incentives and obligations promote a valuable cooperative exchange of information.
Richard Freeman and Edward Lazear go into detail in laying out the reasons grounded in microeconomics for expecting that works councils will be welfare-enhancing but need to be mandatory rather than voluntary.  Central to their analysis is the issue of information flow within a firm:
Economic theory recognizes that asymmetries in information between labor and management can produce inefficient social outcomes.  Different levels of a firm’s hierarchy can use private information opportunistically, possibly through coalitions against other levels of the hierarchy. …  Legal requirements that management disclose information to elected works councils raises the possibility that councils may help resolve the communication problem and raise rents. (33)
They also emphasize the benefits for quality of decision making that flow from the obligation to consult with employees.  “Consultation can increase enterprise surplus when workers offer solutions to firm problems that management fails to see … and when management and labor together discover solutions to company problems that neither would have conceived separately” (44).
On first principles it would seem that the US economy would be better served by a system that incorporates works councils as a supplement to union representation. And workers are likely to be benefited in very specific ways –greater satisfaction in the workplace, greater involvement in a high-skills (and high-wage) economy, and a greater level of democratic equality. So what stands in the way of reforms leading in this direction? Joel Rogers considers this question in discouraging detail in the concluding chapter. The foundations of US labor law directly prohibit these forms of workplace representation, and the political will for implementing these policy changes is lacking on both sides. And it is difficult to see a gradual process of evolution in this direction based on voluntary establishment of these institutions by employers; the history of labor relations after both world wars suggest that these forms tend to extinguish when based on voluntary choices by enterprise owners. So it is difficult to see where the political will for this major reform of US labor relations might originate.
There is another consideration that favors the establishment of works councils that is not highlighted in this report — the terrible situation of workers in the informal sector in the United States. Restaurant workers, day laborers, taxi drivers, non-unionized hotel workers, nannies, and housekeepers have very little ability to protect their interests and defend their legal rights. Health and safety standards apply to informal workplaces; all workers have a right to receive their wages in a timely way; and physical or verbal abuse should not be accepted in any workplace. But informal sector workers have very few means at their disposal to secure their rights in even these basic ways. Often undocumented, always in desperate need for a job, they are often at the mercy of bosses and managers who take advantage of them. There are emerging efforts to create analogs for works councils to help workers in these sectors to defend their rights and their livelihoods.  Intriguing experiments have emerged; for example, Restaurant Opportunity Centers in several cities (link) and Domestic Workers United in New York City (link). See Janice Fine, Worker Centers: Organizing Communities at the Edge of the Dream.  Here is an extended description of the book (link) and here is a link to her Economic Policy Institute working paper, “Worker Centers: Organizing Communities at the Edge of the Dream”.  Also of interest is the website for WorkingAmerica, the policy organization associated with the AFL-CIO.  Progress along these lines would sigificantly improve basic features of social justice in our society.

Labor abuses in China

The world press has begun to find ways of documenting the conditions of workers in many of the factories in China devoted to manufacturing goods for export to the United States and other countries (for example, In Chinese Factories, NYT, 1/5/08). The reportage is eye-opening but not surprising.  Reporters have documented excessive hours of work, pay that is lower than what Chinese law requires, working conditions that are chronically unsafe, and persistent exposure to the very dangerous chemicals that American toy consumers have been so concerned about. One of the authorities sometimes quoted in these articles is Professor Anita Chan from the Australian National University, and Professor Chan has been documenting these conditions for years. Her book, China’s Workers Under Assault: The Exploitation of Labor in a Globalizing Economy, is a detailed and factual examination of some of these conditions. She documents the fact that the most vulnerable groups of workers — in the range of tens of millions! — are the internal migrants of China, who have left their home regions in search of jobs. Very significantly, Professor Chan bases some of her fact-finding on the slowly emerging field of local investigative journalism in China.

Why do these abuses occur? For several related reasons. First, the motive of generating profits in the context of a rapidly growing economy. Since China’s industrial economy was reformed in the 1990s, permiting private ownership of factories and enterprises, there have been strong incentives to be successful in business and to become rich. There has been tremendous demand for low-cost Chinese-manufactured goods, and great fortunes are being made in consumer electronics, toys, clothing, and dozens of other sectors. And in the downturn of world demand, equally abusive practices have been used to reduce costs.  The profit motive leads factory owners and managers to strive hard to keep wages and factory expenses as low as possible; and the vast population of poor rural people in China who are available for unskilled factory work makes the bargaining position of the factory owner very strong. (Chan documents some of the forms of coercion and intimidation that are used in some Chinese factories to keep workers on the job and to prevent them from leaving or resisting.) And the global purchasers are insistent about cost-cutting and price-cutting on the finished goods. So the result is — a chronic competitive “race to the bottom” in which each factory tries to produce at the require level of quality with the absolutely lowest level of cost; and this means continuous pressure on working conditions, health and safety conditions, and environmental effects.  (C. K. Lee describes the situation of protest and resistance in “sunbelt” and “rustbelt” factories in Against the Law: Labor Protests in China’s Rustbelt and Sunbelt.)

So part of the story has to do with the economic incentives and advantages that factory owners have relative to a large working population that has few alternatives. But this part of the story is familiar from other economies as they have developed through intensive industrialization. It has been learned elsewhere in the world that the imperatives of profitability by themselves almost mandate the abuse of labor; so government regulation and inspection are a necessary part of a manufacturing system if it is to succeed in treating all the population fairly and humanely. We might have imagined that the Chinese government would have been prepared to provide the regulatory environment that was necessary to protect the best interests of farmers and workers; it is, after all, governed by the party of farmers and workers. However, this is not the case. China has been so concerned to support economic growth that it has been very slow to implement effective regulatory systems to protect labor and the environment. Moreover, the balance of power between factory owners and local officials seems to be tilted towards the owners; other Times reporting has documented the fact that local officials cannot impose their will upon the owners. And, of course, there is ample opportunity for corrupt collusion between owners and officials.

This failure to regulate has been evident in other areas besides labor; the Chinese government has shown itself to be unwilling or unable to enact effective environmental regulations or to establish an effective regime of inspection and regulation for foods, drugs, and other potentially harmful products. It appears that middle-class Chinese consumers themselves are now expressing anxiety about the absence of this kind of regulation within their food and drug system.
So what other avenues exist for improving the conditions of workers in China?
There are three possibilities — all mutually compatible. First, workers themselves can protect their interests in fair wages, safe working conditions, and limited hours of work — if they are permitted to organize in unions. Woody Guthrie had it right: as individuals, workers are weak, but together they are strong. It seems inescapable that a major part of the problem is the enormous imbalance that exists between the powers associated with ownership and management, and those assigned to workers and their organizations. So a more just China will need to permit the development of real independent labor unions that work hard for the interests of their members.
Second, labor mobility can improve the conditions of labor everywhere. It is not an accident that some of the worst abuses documented by Professor Chan have to do with the forms of coercion that factory owners use to keep workers in their factories. If workers can vote with their feet, then we would expect that they will migrate to factories and other employers who offer better conditions of work and pay. And this will force employers to bid for qualified labor on the basis of improved working conditions.
And finally, there is obviously a role for consumers and companies in North America and Europe in all of this. North American consumers benefit from the low manufacturing costs currently available in China; but these low costs are unavoidably associated with the labor abuses we see today. We have a model for how international companies can take responsibility for the conditions of labor and environmental behavior, in the form of the Fair Labor struggles of the 1990s on university campuses in the United States. Large apparel manufacturers took on the responsibility of subjecting their suppliers to standards of conduct, and they subscribed to third-party organizations that undertook to “audit” the level of compliance with these standards by the supply chain. (Visit the Fair Labor website for an example of such an organization.) As the Times story observes, this is a tricky business, given the substantial degree of sub-contracting that occurs in the manufacturing process in China. But it can have a measurable effect.
China is plainly destined to be a major economic and political power in the coming fifty years. But to succeed in creating a society in which everyone has a continuing stake in a good quality of life and a fair deal from society, it will have to solve the problems of regulation of labor, health, and environment. And this will mean a degree of redistribution of China’s wealth and power towards its poorest people.
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