Workers’ Control and Nationalization - Part One

We publish this article based on a speech given by Rob Lyon at the international Marxist school in Barcelona last summer. Part One looks at the revolutionary principles of workers' control and management as opposed to the reformist idea of workers' participation, best realized in Germany in the 1970s.

Comrades, we have spent a lot of time discussing the Venezuelan revolution over the last few days, and one of the most important elements we have discussed is the question of cogestion, or co-management.

Cogestion can mean many different things to many different people, but it is clear that for the Venezuelan working class the struggle for co-management is a struggle for genuine workers’ control and workers’ management, and the socialist transformation of society.

The developing struggle for workers’ control in Venezuela marks the decisive intervention of the Venezuelan working class in the Bolivarian revolution. Because of this developing struggle in Venezuela, it is imperative that we discuss these important questions within our own ranks to give the comrades a clear picture of developments in Venezuela and to explain our position and slogans in preparation for revolutionary struggles in other countries around the world.

Principles of Workers’ Control

Workers’ control means exactly what it says: the working class and its representatives in the factories have the right to inspect the books of a company or industry etc., to check and control all ingoings and outgoings, and the actions of management.

In The Transitional Programme, Trotsky explains that the first step towards actual control of industry is the abolition of “business secrets”. Business secrets, the accounts and the books, are of course used to justify all manner of attacks on the working class such as wages reductions, lay-offs, sackings and increases in working hours.

When the bosses claim bankruptcy, or claim they are losing profits, and demand such things, workers’ control allows the workers to inspect the books and ascertain the real situation. The idea is to lift the veil, to show the working class the detailed workings of the capitalist system as a step towards its elimination.

The immediate tasks of workers’ control should be to explain the debits and credits of society: looking first at individual enterprises to determine the share of the national income of individual capitalists and of course the ruling class as a whole. Another task of workers’ control should be to reveal to society the squandering of human labour and the naked pursuit of profits, as well as to expose secret deals, swindles, and corruption inherent in the system.

Trotsky also explains that workers’ control of industry is a “school for planned economy”, allowing the workers to gain a scientific understanding of how the economy functions so that mankind can consciously and democratically plan production and the economy as a whole. Through the experience of workers’ control, the working class prepares itself for direct management of nationalized industries.

Thus, workers’ control of industry is generally not long-lasting, is not stable, and in fact implies dual power in the factory or enterprise, and cannot last indefinitely unless this control is transformed into direct management.

Here we can see the difference between the revolutionary, transitional demand for workers’ control and management, and the reformist, half-way measure of workers’ participation.

Trotsky explained in the 1930s that, under capitalism, if the participation of the workers in management of production is to be long-lasting, stable, and “normal”, that it must rest upon the basis of class collaboration, and not class struggle.

Such collaboration will always be realized through the upper layers of the trade unions and management. Even in the 1930s there were examples of workers’ participation in Germany (“economic democracy”), and in Britain (“Mondism”). However, as it was later in the 1970s in Europe, this was not a case of workers’ control over capital, but the subservience of the labour bureaucracy to capital. In essence, the labour bureaucrats are used to shore up capital, and to divert the struggle of the workers into “safe” channels.

And what about this idea of workers’ participation in Europe? Workers’ participation, or so-called industrial democracy, was widely discussed and implemented throughout Europe in the 1970s. This was largely in response to the growing militancy of the labour movement expressed in the events of May 1968 in France and elsewhere, the 1972 and 1974 miners’ strikes in the UK, the general strikes in Italy and Denmark, and the wave of strikes that swept West Germany.

The ruling class was desperate to contain these movements through “social partnership”, and to direct workers’ unrest into “safe” channels. By incorporating the top layers of the unions in the office and the shop floor, the bosses hoped to increase the efficiency and raise the level of profits.

In fact, examples of this could be seen as far back as the 1920s in Britain, when Sir Alfred Mond of ICI, the big chemical monopoly, sought to create “industrial democracy” in his factories.

Workers’ participation allowed these labour bureaucrats to provide management with information and suggestions from the workforce. As we all know, and as any shop steward knows, it is the workers – the people who actually do the work – that know best how to get things done. At the same time, through workers’ participation, management can also pass instructions safely to the workforce, and discredit the labour bureaucrats by making it look like they are responsible for unpopular decisions.

The committees of bureaucrats, the organs of workers’ participation, were essentially powerless committees where workers’ could let off some steam. Workers’ participation also created the illusion that the workers had an influence in decision-making – this is in order to avoid the workers and their organizations taking independent action. For example in Germany, these committees cannot call strikes. This allowed the bosses and the labour bureaucrats to by-pass and undermine the trade unions. In fact, these workers’ council were constantly counterposed to the trade unions in an attempt to weaken them. The bosses simply used the age-old tactic of “divide and rule”, playing one organization against the other.

The experience of workers’ participation created a new stratum of industrial functionaries who shared the interests of management – in short, it created a privileged stratum of the working class.

And where has all of this lead? I read an article in Thursday’s Independent (July 28) about a corruption scandal at Volkswagen. A massive scandal has just been exposed in VW which involves slush funds, prostitution, sports cars, etc, and workers’ council directors. Some of them spent millions of Euros of company money on houses, trips, and cars for secret lovers all over the world. This is what The Independent had to say:

The main beneficiaries of Mr. Gebauer’s ample entertainment budget were not the average German, but a handful of lucky VW workers’ council directors. Every major German company is required to make space for these men and women voted in from the shop floor who take part in investment decisions. It is a key part of Germany’s consensus model and helps to keep strikes at a minimum in a country where unions still wield serious power…

This is where workers’ participation ends up. Trade union bureaucrats, who no longer have any connection with the rank file, rubbing shoulders with management and executives. The interests of the workers are sold down the river in exchange for prostitutes, viagra, and trips to Brazil.

On the other hand, workers’ control through factory committees, or workers’ councils is possible only on the basis of sharp class struggle. Under “normal” conditions, the bourgeoisie will never tolerate genuine workers’ control, will never tolerate dual power in its factories. The ability of the working class to impose control over production is determined by the strength of the overall drive of the proletariat against the bourgeoisie. Genuine workers’ control must be imposed on the capitalists, and thus corresponds to the period of the revolutionary crisis of society – it corresponds to the proletarian offensive and the retreat of the ruling class. Therefore, genuine workers’ control corresponds to the period of the proletarian revolution.

This is why in Venezuela, although there are tensions and problems around the question of workers’ control, which we will come to later, we see the extension of workers’ control. This or that struggle may be defensive in Venezuela, but the extension and growth of cogestion relates to the overall offensive drive of the working class and the overall retreat of the ruling class. The country finds itself in a revolutionary situation, the workers are driving forward, and everywhere the bosses are on the retreat.

In the struggle for genuine workers’ control, the working class inevitably moves forward in the direction of seizing power and seizing the means of production. Individual factories or enterprises under workers’ control, or workers’ management, can only operate within the confines of the economy as a whole, i.e. within the confines of capitalism. It is not possible to build an island of socialism within a sea of capitalism.

A good example of this, in a negative sense, is the Alcan smelter in Jonquière, Québec. Alcan is the world’s largest producer of aluminum. The big smelter in Jonquière was scheduled to close in 2014. In early 2004, Alcan suddenly announced they were going to close the smelter. As part of a defensive struggle, the workers’ occupied the plant. They soon became painfully aware of sabotage on the part of management, and removed the supervisors and managers from the smelter. After this, they reported that production was higher than it was before the workers had taken control.

But the entire capitalist system aligned to defeat the workers. The media and the state put enormous pressure on them. Other companies refused to sell them the raw materials needed to produce aluminum and the smelter was starved. Unfortunately, in the end, the struggle was lost. (See Workers in Québec seize Alcan smelter)

Factories or enterprises under workers’ control, such as the Alcan smelter, or those companies under workers’ control in Venezuela today, must interact with, purchase products from, and sell their products to the private sector. They must interact with the market. They are therefore at the mercy of capitalism. This logically leads the workers to struggle against the power of capital.

This question of credits, raw materials, and markets, immediately shows the need to extend workers’ control beyond the confines of individual companies. A good example of this, in a positive sense, is ALCASA, a state-owned aluminum plant in Venezuela, currently experiencing the most advanced form of cogestion. During the bosses’ lockout in 2002-2003, saboteurs had cut the supply of gas to the smelter, halting production. The ALCASA workers, along with workers from a neighbouring steel works, armed themselves, marched to the gas works, broke through the opposition police and forced the restarting of production to guarantee the supply of gas.

With the crushing domination of the world market, and every nation’s dependency on world trade, the question of imports and exports raises the need for workers’ control on a national level. This immediately counterposes the central organs of workers’ control to the organs of the ruling class.

We cannot of course be mechanical or formal in our conception of the development of the socialist revolution, but we can see how workers’ control of industry, or dual power in the factories, generally corresponds to, or leads into the period of dual power in the country. Dual power in the factories, and dual power in the state will not always be born on the same day. In some cases, workers’ control will develop before dual power in the state, and in other cases it will be the opposite.

The irreconcilable contradictions inherent in the regime of workers’ control, inherent in the regime of dual power, will sharpen and reach a critical state where these contradictions become intolerable to both sides. Dual power is a stage of the class struggle where the class contradictions have become so acute that society is split into two hostile camps, two hostile powers, one old and out-lived and reactionary, the other new, in its ascendancy and revolutionary. The only way out of this situation is for the working class to take power and claim victory for the revolution, or it ends in the crushing of the revolution and the victory of the counter-revolution. One only has to look at the difference in the outcome of the Russian Revolution and the Italian and German Revolutions to see this.

As in Venezuela today, workers’ control of industry implies control not only over operating, but also over partially operating and shutdown, locked-out or idle industries. The task of re-opening these idle companies under factory committees, within a sea of capitalism, implies the beginning of an economic plan. These factories must be provided with raw materials and be able to move their finished productr on. This leads directly to the question of the state administration of industry. As we can also see in Venezuela, these state-owned companies face sabotage, and are still at the mercy of capitalism, both nationally and internationally. This will in turn lead directly to the question of the expropriation of the capitalists.

What this all means is that workers’ control is then not a prolonged, “normal” condition. It is indicative of a heightening of the class struggle, and the question of dual power in industry must be resolved. As a transitional measure existing under the highest tensions of the class struggle, workers’ control is a bridge to the revolutionary nationalization of industry, corresponding to the transition from the bourgeois regime to the proletarian.

It is important that we understand the difference between workers’ control and workers’ management. This has been a source of historical confusion, and we must be clear about this issue. Workers’ control means that control lies in the hands of the workers, but that ownership remains in the hands of the capitalists. Workers’ control may be dominant, and all embracing, but it remains control.

Trotsky explained:

"The very idea of the slogan [of workers’ control] was the outgrowth of the transitional regime in industry when the capitalist and his administrators could no longer take a step without the consent of the workers; but on the other hand, when the workers had not as yet provided the political prerequisites for nationalization, nor yet seized the technical management, nor yet created the organs essential for this. Let us not forget that what is involved here concerns not only taking charge of factories, but also the sale of products and supplying of factories with raw materials, and new equipment as well as credit operations etc." (Vital Questions for the German Proletariat, Part Three)

The actual management of nationalized industries requires new administrative and state forms, and above all requires knowledge, skills, and proper organizational forms. For this an apprenticeship is required. In the period of this apprenticeship, whether it occurs before or even after the seizure of power, the working class has an interest in leaving the management in the hands of an experienced administration, under workers’ control. This period only prepares the elements of an economic plan.

Workers’ management of industry, however, proceeds from above, because it is bound up with state power and the economic plan. Whereas control comes from below and is executed by factory committees, the organs of management are centralized workers’ councils, centralized state power. It is important to point out that the factory committees do not disappear, that their role, though changed, is still important.

We are not syndicalists. We do not believe that the ownership of individual factories should pass to the hands of the workers in those factories. One of the key tasks in the socialist development of society is the collective, social ownership of the means of production and the elimination of industrial competition within society – this begins with the state ownership of the means of production.

In 1917, Trotsky was asked in an interview whether the workers in each factory should own the factory they worked in, and whether the profits should be divided amongst the workers. He replied by saying: “No, profit sharing is a bourgeois notion. The workers in a mill will be paid adequate wages. All the profits not paid to the owners [who were to receive 5% - 6% yearly of their investment] will belong to society.” (In Defence of the Russian Revolution, Workers’ Control and Nationalisation by Leon Trotsky).

In a workers’ state, unless the ultimate management of industry is in the hands of the workers’ councils representing the state and the working class as a whole, industries and companies would compete with one another, it would be impossible to coordinate a national plan and essentially we would still have capitalism. This is why we are opposed to the Anarchist and syndicalist idea that the workers in each industry should own their own industries. This idea of “local” ownership, where the workers in a factory own the factory, does not change the productive and social role and nature of the company. It is still an individual company and not owned socially. A company owned by the workers, through a cooperative or self-management committee would still be a capitalist company, dependent on profits – whether it is owned by a workers’ cooperative of 12, 250, or 1 man. This is not social ownership. It is the nationalization of industries, under state ownership and workers’ control that guarantees both the social and nationalized character of industry.

The programme of the Marxists in relation to workers’ management and for the democratically planned economy is for the boards of management of all nationalized industries to be composed of the following: 1/3 should be made up of workers in the industry through their trade unions to safeguard the interests of the workers on the ground and to harness their creativity, knowledge, and skill. 1/3 of the board should represent the working class as a whole and be elected through the TUC or the central trade union body, and the other 1/3 should come from the workers’ state to represent the national plan of production.

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