A New Theory of Industrial Relations

People, Markets and Organizations after Neoliberalism

Conor Cradden

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781317299912
• Edition: 1
• Topic: Business
• Subtopic: Human Resource Management
• Index: Business

Most existing theoretical approaches to industrial relations and human resources management (IR/HRM) build their analyses and policy prescriptions on one of two foundational assumptions. They assume either that conflict between workers and employers is the natural and inevitable state of affairs; or that under normal circumstances, cooperation is what employers can and should expect from workers. By contrast, A New Theory of Industrial Relations: People, Markets and Organizations after Neoliberalism proposes a theoretical framework for IR/HRM that treats the existence of conflict or cooperation at work as an outcome that needs to be explained rather than an initial presupposition. By identifying the social and organizational roots of reasoned, positively chosen cooperation at work, this framework shows what is needed to construct a genuinely consensual form of capitalism. In broader terms, the book offers a critical theory of the governance of work under capitalism. 'The governance of work' refers to the structures of incentives and sanctions, authority, accountability and direct and representative participation within and beyond the workplace by which decisions about the content, conditions and remuneration of work are made, applied, challenged and revised.

The most basic proposition made in the book is that work will be consensual—and, hence, that employees will actively and willingly cooperate with the implementation of organizational plans and strategies—when the governance of work is substantively legitimate. Although stable configurations of economic and organizational structures are possible in the context of a bare procedural legitimacy, it is only where work relationships are recognized as right and just that positive forms of cooperation will occur. The analytic purpose of the theory is to specify the conditions under which substantive legitimacy will arise. Drawing in particular on the work of Alan Fox, Robert Cox and Jürgen Habermas, the book argues that whether workers fight against, tolerate or willingly accept the web of relationships that constitutes the organization depends on the interplay between three empirically variable factors: the objective day-to-day experience of incentives, constraints and obligations at work; the subjective understanding of work as a social relationship; and the formal institutional structure of policies, rules and practices by which relationships at work are governed.

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Can Industrial Relations Save the World?

Introduction

Industrial relations is potentially much more significant a discipline than its rather marginal academic status might suggest. Granted, someone writing a book offering a new theory of industrial relations (IR) does have an interest in saying that, but the claim is made very seriously. Although its theoretical tradition is fragmented, IR remains the discipline that has engaged most consistently with the question of how actors in organizations navigate a passage between individual and collective interests, between utilitarian and deontological ethics, between material incentives and social norms. It has resisted the temptation to focus exclusively either on the macro or micro level and continues to try to connect the perspectives of different individual and collective actors with the functioning and impacts of social and economic structures.

The contemporary significance of these achievements is bound up with the impasse in which progressive politics currently finds itself. As I write this in the spring of 2017, the USA is enduring the chaotic early months of the Trump presidency. In the UK, government and opposition alike are struggling with Brexit, the consequence of a colossal political mistake made by a prime minister under threat from right-wing populists. In France and the Netherlands, although they failed to take power, extreme right anti-system parties have made significant electoral gains. Across the developed world, social market politics is under attack from economic nationalists who argue that global capitalism has nothing to offer ordinary people. Mainstream left-of-centre parties, which built their historical base of support on the proposition that capitalism and social progress are compatible, have successfully been portrayed as part of a metropolitan elite whose interests are tightly bound up with the maintenance of international free trade and its counterpart, the free movement of labour. The multicultural social liberalism that, in the absence of any distinctive economic policies, has become the badge of the left is derided as at best an irrelevance and at worst an attempt to suppress the ‘native’ cultures of the developed world.

It may not be immediately obvious that IR has anything to contribute here, but a moment’s reflection should be enough to see that the epicentre of the political earthquakes that progressives are currently failing to withstand is work. Work is critical not only for the satisfaction of our basic material needs but also for the construction of individual and collective identities. The critical policy issue, then, is control over work: Who gets work, who gives it and who takes it away? What is it worth and who profits from it? Who says what it is and what it is not, what it must be and what it cannot be?

The ‘old’ left promised at least a negative kind of control in the shape of strong unions able to negotiate improvements to pay, conditions and job security on the basis of their capacity to disrupt production and veto management-driven change to work organization. The defining feature of the ‘new’ left that emerged in the 1990s was its willingness to accept that the freedom to organise and remunerate work exactly as we wish is a luxury we cannot afford. Mainstream socialist parties bought into the technocratic logic of management, accepting the argument that there are narrow technical limits to effective business and economic decision-making. To this extent, they slipped back into what Beatrice and Sidney Webb—writing in 1897—thought was the rather ludicrous and old-fashioned idea that the “conditions of social life” cannot be “a matter of human arrangement” and that the possibility and desirability of deliberately altering these conditions is to be “regarded as unscientific, if not as impious” (Webb and Webb, 1902, p. 559). The Webbs mocked the idea that intentional change to societies is somehow artificial, “it being apparently supposed that changes unintentionally produced are more ‘natural’ than others, and more likely to result in the ends we desire” (Ibid.). They argued that the goal not just of trade unionism but of civilisation itself is precisely to create social types different from those which “the free play of social forces would have produced” (p. 560).

120 years on, though, this foundational article of social democratic faith has been all but abandoned. Its scope of application has been so narrowed that there seems to be barely any room left for ‘human arrangement’. When it comes to pursuing social and political goals, the position of the contemporary mainstream left is that our margin for manoeuvre in policymaking is only whatever remains once the demands of an impersonal, uncontrolled and uncontrollable market have been met. In trying to move past the old left’s grudging and limited accommodation of the market to a more serious and forward-looking engagement with capitalism, the new left rejected the social veto power that was the lynchpin of traditional labour politics, but failed to replace it with any plausible positive conception of social control over the economy (Cradden, 2014).

This failure goes a long way to explaining why the radical right has been able to colonise a niche in the political ecosystem that the traditional parties of the left could previously count on having to themselves. That we can and should ‘fight back’ against a system that limits the pursuit of non-economic social and political values is no longer exclusively a trope of the radical left. The populist right too now argues that we should reject the narratives of the possible handed down by the corporate establishment and the conventional parties of government.

The argument that a wide range of decision-making prerogatives that ought to belong to the people have been handed over to the anonymous and unaccountable functionaries of ‘the system’ clearly has some resonance with the public. What is not so clear is why the right is currently having so much more success with this argument than the left. One possible explanation is that the values the right proposes to pursue once ‘the system’ has been relegated to its proper place in the socio-economic order are the permanent and immutable values handed down by national tradition. Precisely what these values and priorities are is less important than the supposed link between policy choices and the permanence of blood and soil. For the Front National in France, for example, policy should be guided by ‘economic patriotism’. Former Trump administration adviser Steve Bannon has called the new US government approach ‘economic nationalism’. Those who campaigned for a ‘leave’ vote in the UK’s referendum on its membership of the European Union emphasised the impossibility of governing in the national interest while remaining within the EU. The logical sleight of hand here is the implication that national values and interests are not only permanent but well defined and well understood. On this reckoning, there is no shadowy cabal of technocrats that gets to determine the content of policy according to the narrow political and economic exigencies of the moment. It is not the outcome of behind-the-scenes wrangling and under-the-table deals but is determined by simple, common sense extrapolation of our national interest. The values pursued are not just uncontroversial, then, but add up to a set of goals and priorities that demand our adhesion in the name of our shared history and culture and can brook no change or disagreement—least of all from those groups who draw on other, potentially competing sources of ethno-national identity.

In the face of this competition for the anti-system vote, mainstream socialists and social democrats continue to struggle to find enough scope to develop convincing policies within the very limited terrain on which they allow themselves to operate. Their more radical comrades, whether traditional eurocommunists, newer movements like Die Linke in Germany and Podemos in Spain, or the revived radical left currents within mainstream parties like the UK’s Labour Party, have in some cases adopted genuinely innovative policies like universal basic income. They are also careful to stress the need for environmental protection alongside industrial and agricultural development. Nevertheless, their main focus is on Keynesian macroeconomic management, indicative industrial planning, public ownership and strengthened individual and collective rights for workers. Aside from the emphasis on sustainability, there is little in the manifestoes of Europe’s contemporary radical left that would have looked out of place in the programmes of the Labour Party or the Parti Socialiste of the 1970s.

Regardless of any assessment of the likely effectiveness of this kind of approach in practice—and there is a lot to be said in its favour—it poses exactly the same problem that it has always posed and that the new left tried and failed to correct. This is that the typical radical left programme contains vanishingly little that looks likely to open up a new space for positive popular control over the economy. Instead, it simply proposes to shore up an existing anti-system political force, the labour movement, which is viewed by many as at least as inaccessible and unaccountable as the economic system it opposes. Even where it manages to escape identification with the infamous metropolitan elite, the question of why the labour movement can save us when it has had such little success in resisting neoliberalism up to now is still difficult to answer.

The project of the contemporary radical left is problematic because it involves (re)institutionalising a permanent social opposition to the existing market economic system rather than presenting a positive conception of a socio-economic structure we can all unequivocally support. The recognition of the need for such a positive conception is exactly what brought the ‘new’ left into being in the 1990s. Parties like the UK’s ‘New Labour’ offered a vision of a political community at ease with its economy, where business was a force for the good of all and not just the few. Justice, fairness and sustainability was to be built into decision-making from the outset rather than tacked on at the end when the major parameters of action were already fixed. From an electoral perspective, this vision had some success. In practice, however, the policies of the pro-business left have tended simply to carry on a slightly attenuated version of the neoliberal project of reducing the capacity of workers and unions to oppose management and of government abstention from intervention in the market. Decisions about the level of justice and fairness that is compatible with business success and about the degree of market regulation that is appropriate have simply been handed over to ‘business leaders’. The contemporary radical left is certainly proposing to roll this strategy back, thereby increasing social oversight of economic activity, but its approach remains external to business decision-making. There is no suggestion that either the process or logic of decision-making within business enterprises should be changed. As French sociologist Danièle Linhart recently put it, the organization of work was and remains something unthinkable (‘un impensé’) for the left. Rather than trying to improve or at least to prevent the further degradation of the quality of working life, she argues that the reaction of the CGT, the historically dominant French union federation, has simply been to negotiate some kind of compensation, a process she describes as the “monetization of the deterioration of the condition of the manual worker” (Jami and Achin, 2017, p. 169; my translation). Although Linhart’s comments were directed at the French trade unions, they would be equally valid for most other labour movements. Occasional counter-movements like the Institute for Workers’ Control in the UK or the ‘autogestionnaire’ (self-management) movement in France have remained marginal.

This brings us back to industrial relations and the reason for this book. The proposition of the populist right is both hateful and fraudulent, but its success shows that voters respond to the idea that there is a set of social norms, values and conventions that will in the end take priority over policies that merely reflect the strategic calculations of those who hold the reins of the economy. The relative failure of the radical left alternative, a political project based on reinforcing an existing social capacity to resist the owners and managers of capital, shows that mere opposition to capitalism without a positive vision of what the economy is for is a poor substitute for even so transparently dubious a project as the pursuit of ‘national values’. The implication to be drawn here is that the future of progressive politics depends on being able to offer the public a convincing vision of a capitalist economy that works for everyone because it is under social control from the inside. Rather than some mechanism that allows us to step in to limit the damage once business strategies have already been formulated and critical decisions already taken, the vision needs to involve the integration of moral and ethical criteria into organizational processes from the outset.

A basic premise of the book is that this kind of social control is actually possible; that there is nothing inevitable or given about the structure of social relationships within business organizations nor about the substantive choices that businesses make. This is not to say that the market in the sense of the actual or potential demand for particular products and services at specific prices has no influence on what businesses decide to do. Clearly it does. However, it does not by itself determine organizational action. More importantly, neither does it dictate how decisions are made nor the systems of coordination and control by which they are translated into action. Markets do not design production systems or determine the content of jobs. Markets do not decide what conditions workers will accept or when they should go on strike. Markets do not decide on the length of the working day or whether workers should wear uniforms. For all that the decisions by which organizations are animated are subject to certain constraints, they are ultimately the result of choices made by real living people.¹ My concern is with how these choices are made, and how they might be made differently.

In addressing these questions, I am not proposing to consider the potential of revolutionary reorganisations of production: those that would entirely overturn the fundamental principles of private ownership of the means of production, production for profit and exchange via markets. This is to some extent a pragmatic choice made to limit the scope of the book, but it also reflects a conviction that the possibilities for the radical reform of capitalism are far from exhausted. While there is much that is wrong with what we have, there are also many aspects of the system that are valuable. We do not have to stray too far into Burkean conservatism to recognise that, for the moment at least, revolution is a counsel of despair.

This book, then, is about making capitalism better by changing the organizations we already have. It does not envisage any alternative system of production, supposing instead that economic and social justice is possible within capitalist societies. It assumes that justice is a question of the structures of social relationships that are the fabric of every organization, but that the nature of these structures does not depend solely or even mainly on the ownership of capital.

What Is a Theory of Industrial Relations About and What Is It For? Normative and Analytic Orientations

The theory proposed here is aligned with the larger project of critical theory which, in Bohman’s words, aims to “transform contemporary capitalism into a consensual form of social life” (Bohman, 2016, p. 3). A consensual capitalism would be one in which we possess the social control over the economy that currently seems to be out of our reach. In pursuing this goal, critical theory aims to be

explanatory, practical, and normative, all at the same time. That is, it… explain[s] what is wrong with current social reality, identif[ies] the actors to change it, and provide[s] both clear norms for criticism and achievable practical goals for social transformation.

(Bohman, 2016, p. 2)

If capitalism is to be consensual, the single most important thing that needs to change about our societies is work. As Ackers puts it, “nothing is more central to the reconstitution of community and civil society than rethinking work, which consumes so much of our daylight hours, confers income and status, and shapes life-chances in so many ways” (2002, p. 15). To the extent that the transformation of capitalism demands the transformation of work, the critical theory of industrial relations I want to construct is intended to provide analytic resources for those involved in pursuing that transformation.

The first broad concept we need to address is what it would mean for work to represent a consensual form of social life. By definition, a consensual social relation can only exist if those involved have chosen it. At this early stage in the argument I want to make a hopefully uncontroversial theoretical assumption, which is that human beings will not freely choose to spend their lives in any of the astonishing range of miserable situations that the world of work has to offer. If they are in misery it is because they have no choice about it. They can see no alternative way to support themselves and their families. The empirical fact of widespread misery, therefore, must mean that the availability of choice—the most vaunted characteristic of the market economy—is for most workers entirely illusory.

This is hardly a novel observation. In volume one of Capital, Marx observes with biting sarcasm that labour power is bought and sold in the sphere of the market, which is

a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham. Freedom, because both buyer and seller of a commodity, say of labour power, are constrained only by their own free will. They contract as free agents, and the agreement they come to is but the form in which they give legal expression to their common will. Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent. Property, because each disposes only of what is his own. And Bentham, because each looks only to himself… no one troubles himself about the rest, and just because they do so, do they all, in accordance with the pre-established harmony of things, or under the auspices of an allshrewd providence, work together to their mutual advantage, for the common weal and in the interest of all.

(Marx and Engels, 2010, p. 186)

There are two elements to the illusion. First, there is the simple truth that, as Korpi reminds us, capital can be accumulated but labour cannot (Korpi, 2006). This means that capital and labour do not confront each other in the labour market as equals despite the nominal equality of employers and workers as legal persons. Second, but no less important, labour power is not what employers actually need. Rather, they need labour. In order to get it, Marx argues, labour power has to be consumed in “the hidden abode of production” (ibid.). The potential and the promise to work has to be transformed into actual productive labour. Th...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of Figures and Tables
• Preface
• 1 Can Industrial Relations Save the World?
• 2 Industrial Relations Policy: Conflict & Cooperation in the Governance of Work
• 3 Industrial Relations Theory: From Industrial Democracy to the Web of Rules and Back Again
• 4 System, Lifeworld and Points in Between
• 5 Frames of Reference
• 6 A New Theory of Industrial Relations
• 7 What Can We Do with NTIR? Implications for Research and Policy
• Appendix: Outline of a Q Study of the Frames of Reference
• Bibliography
• Index