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Industrial Democracy

By Bertell Ollman

Democracy, industrial, is the application of the doctrines of democratic theory to people's lives as workers. Democracy is always rules by the people, and the key questions it raises are which people? Over what range of problems are they to rule? How much power should they have? And through what mechanisms and procedures should these powers be exercised? Industrial democracy is the attempt to supply answers to these questions in regard to people's lives as workers. At a minimum the questions raised by industrial democracy represent dissatisfaction with those views of democracy that limit its application to the sphere of politics. Given the importance of work to a society and to the health and well being of workers, which is to say to most citizens of society, extending democracy to the economy has struck many as the obvious thing to do.

What industrial democracy is, however, has been a matter of serious dispute. For some it is simply a mater of workers participating in decisions that affect minor working conditions; with all real control left in the hands of the owners of the enterprise. For others it involves workers having full control over most factory floor matter operations but of nothing else. Others extend the definitions to include these functions as well as to allow worker participation in making the later decisions that affect the life of the enterprise with final decisions, however, remain with the owners. For some industrial democracy means that workers own a significant portion of stock in the company but have no more influence on management than minority shareholders typically have. Others favor codetermination, an arrangement that gives workers or their representatives half the seats on the board of directors so that nothing of importance can go on without their cooperation. Still others believe that workers ought to have full workers' ownership, with workers or their representatives making all the decisions that capitalist owners now make but with the market economy taken as a given. And, finally, some advocate workers' controlling not only individual enterprises but the whole economy, and with a democratically arrived at plan substituting for the free market.

The actual mechanisms by which worker's participation or control is exercised vary considerably not only between these various versions of industrial democracy but within each one. What they all have in common is the extension of workers' rule into the economy, albeit with great differences of degree and in the particular decisions affected. The label favored by both proponents and critics has changed over the years. Although "industrial democracy" was widely preferred in the period before World War I, "economic democracy", "workers' control", "producers' cooperative", and "workers' self-management" have acquired greater currency since then, especially as applied to the more advanced forms of workers' rule. These terms have proved useful in preventing the misunderstanding that these reforms are intended only for industry, but they have not replaced the term "industrial democracy," which remains the most accurate general label for the entire range of practices.

As an idea, industrial democracy arouse from the perceived limitations of political democracy. It gained widespread popularity only in the second half of the nineteenth century with the development of large-scale industry and the rise of an organized labor movement. Instead of making work easier and improving the life of workers, the rapid scientific and technological advances of the time shocked contemporaries by doing just the opposite. What could be done about it? Although usually associated with anarchism and anarcho-syndicalism, which sought to bypass the political process by seeking immediate changes in the economy, every school of socialism advocated some kind industrial democracy. The anarchist Pierre-Joseph Proudhon may have written more on this subject than his contemporary Karl Marx, but Marx was equally committed to the general aim. Earlier thinkers, such as Jean-Jacques Rousseau, and more modern ones, such as Cole, Clegg, Branko Horvat, and David Schweickart, have also made important contributions to the discussion.

As a practice, industrial democracy, in one or another of its versions, can be found in most countries today. Although only one post-World War II country, Yugoslavia, organized all production along these lines, many others have applied advanced versions of industrial democracy to major sections of their economy. Italy, for example, has more than 20,000 workers owned cooperatives. Spain has a giant self-managed enterprise in Mondragon that coordinates the economic activities of more than 200 firms in a variety of fields. Germany has given workers equal representation on the boards of directors of companies in some of its most important industries, including steel and coal. The only form of industrial democracy that has not yet occurred is one in which the workers not only control their enterprise but also help to draw up a democratic plan for the entire economy.

The fundamental questions debated in discussions of industrial democracy deal with three topics: efficiency, democracy, and socialism. As the first question concerns efficiency does giving workers more of a say and a stake in what they do increase the likelihood that they will worker harder and with greater care than otherwise? The debate on democracy involves what happens at work as well as work related events affect the larger society. With in the individual enterprise, how much power is required for what workers want make a difference? There is always the danger that an employer may use the semblance of industrial democracy to bypass trade unions and obtain a greater effort from workers. Within in a larger society can industrial democracy help to make political democracy work better by reducing the unfair advantage that capitalists, with their wealth and social power, now enjoy in the political process?

Finally, the question of socialism is largely over whether industrial democracy is itself a form of socialism or merely a "germ" of socialism inside capitalism. Even if industrial democracy is not itself socialist, two questions can be raised. First, does its existence under competitive market conditions help to raise workers' consciousness as to the desirability of socialism? And, second by introducing new divisions into the working class (between workers in competing enterprises, between those in successful enterprises and those in failing ones, and between the employed and the employed) does industrial democracy actually reduce the unifying class consciousness that is necessary for socialism to come about? With the myriad changes occurring in work, business, and politics, these highly charged debates may be more relevant not than ever before.


Clegg, A New Approach to Industrial Democracy. Oxford: Blackwell, 1960.

Cole, Self Government in Industry. London: Bell, 1920.

Ehrenberg, John. The dictatorship of the Proletariat: Marxism's Theory of Socialist Democracy. New York: Routledge, 1992.

Horvat, Branko. The Yugoslav Economic System: The First Labor-Managed Economy in the Making. New York: International Arts and Science Press, 1976.

Horvant Branko, et al., eds. Self-Governing Socialism. Vol. II. New York: International Arts and Science Press, 1975.

Hunnis, Gerry, et al., eds. Workers Control. New York: Random House, 1973.

Schweickart, David. Capitalism or Workers Control? An Ethical and Economic Appraisal. New York: Praeger, 1980.

Democracy Library

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