Conclusion. The difficulties of production, consumption, distribution and exchange are many and serious. Whether they are surmountable is a question to which we cannot give final answer, either in the affirmative or negative. But if we have in mind what these difficulties are, we are in a position to understand better the forces of evolution which are gradually deciding the outcome of the struggle between capitalistic and socialistic principles. However much one may differ from socialists, he is bound to observe that their leaders possess much brilliance of thought and skill of expression. Nothing is gained by taking an attitude of derision toward their incisive criticisms of capitalism. Socialism would not have aroused such bitter and desperate antagonism had not a number of its generalizations disclosed vulnerable places in the existing industrial order. Those people who want most to smite socialism usually do so the least, for the reason that their emotional reactions are so strong that they lose the power to respect integrity of mind wherever it may be found. The more vehement opposition becomes, the less intelligent it becomes. On the other hand, to concede the ability of socialistic thinkers is not to concede that their conclusions are right. Effective analysis of radical programs must endeavor to estimate the weight of socialistic ideas at their actual value. BIBLIOGRAPHY BEER, M., History of British Socialism. BRISSENDEN, P. F., The I. W. W. BROOKS, J. G., American Syndicalism. BRYCE, JAMES, Modern Democracies. BUDISH, I., and SOULE, G., The New Unionism. COLE, G. D. H., Guild Socialism. HILLQUIT, MORRIS, History of Socialism in the United States. Socialism in Theory and Practice. KROPOTKIN, P., Modern Science and Anarchism. LAIDLER, H. W., Socialism in Thought and Action. LEROSSIGNOL, G. E., What is Socialism? MALLOCK, W. H., Critical Examination of Socialism. MORRIS, WILLIAM, News from Nowhere. RUSSELL, BERTRAND, Proposed Roads to Freedom. The Prospects of Industrial Civilization. SELIGMAN, E. R. A., The Economic Interpretation of History. SPARGO, JOHN, Applied Socialism. Syndicalism, Industrial Unionism and Socialism. WALLING, W. E., Progressiveism and After. Socialism as It Is. CHAPTER XXXVIII ECONOMIC DEMOCRACY Economic democracy is a broad term and varied definitions are given to it from time to time. The two most common definitions refer to democratic control over industry exercised through the medium of the political government, and to democratic control exercised through the medium of some special form of organization within industry itself. The first concept of economic democracy would cover practically all of the matters which have already been discussed under the section on public control. The American government is a democracy, and when democratic government controls and regulates economic affairs, the process is certainly in the nature of economic democracy. This form of economic democracy covers government ownership and operation of industries, and would, for instance, include the Post Office or the Panama Canal as typical illustrations of economic democracy. Certain observers are disposed to term such uses of government authority state socialism, whereas others are disposed to term them state capitalism. The dispute over terms is non-essential. The inclusion of public control or of government ownership and operation under economic democracy may be allowed as legitimate. It is not intended to analyze this form of economic democracy at this point, for the reason that most of what has been said under public control and under radicalism applies to economic democracy of this type. The mechanism of public control provides for a moderate assertion of democratic power through the agencies of the State, and the same mechanism expanded provides for the assertion of democratic power in the form of state ownership and operation. Moreover, although the form of democracy under a capitalistic state and a socialistic state would differ profoundly; nevertheless, in either case, state ownership and operation of industry is subject. to the same institutional and psychological difficulties as were discussed under radicalism. Consequently, the discussion contained in the foregoing sections have a direct bearing on the problems of economic democracy attained through the framework of political democracy. The discussion of this section has to do primarily with the second form of economic democracy, namely, that attained through the direct organization of industry itself on a democratic principle. Democracy is a term loosely used to cover a host of economic programs, and it is the general impression that as soon as a program of action has been labelled "Democracy," its success is predestined. Not a few economic thinkers voice the opinion that political democracy is already won in most modern countries and that economic democracy is the next great human step forward. Assuming that political democracy is practically an unqualified success, they assume that to inaugurate the same structure of government for industry will assure similar happy results in that department of modern life. Such an attitude is uncritically optimistic. It trusts credulously in some obscure magic of "Democracy" to set industry at rights, and grossly overrates the power of a form of organization to escape from or to overcome the grave defects of human nature in the people who live within the organization and through whom it functions. As a preparation, therefore, for a careful and critical analysis of economic democracy, it is desirable to have a correct view of the present status of political democracy. Probably the best account for this purpose is that given by James Bryce in his work on Modern Democracies. The general nature of his conclusions is admirably summarized in the following quotation: I may here... sum up in a few propositions certain broad conclusions which may be drawn from a review of modern popular governments. They are stated subject to certain exceptions, already mentioned, in the case of particular countries. Democracy has belied the prophecies both of its friends and of its enemies. It has failed to give some benefits which the former expected, it has escaped some of the evils which the latter feared. If the optimistic overvalued its moral influence, the pessimists undervalued its practical aptitudes. It has reproduced most of the evils which have belonged to other forms of government, though in different forms, and the few it has added are less serious than those evils of the older governments which it has escaped. I. It has maintained public order while securing the liberty of the individual citizen. II. It has given a civil administration as efficient as other forms of government have provided. III. Its legislation has been more generally directed to the welfare of the poorer classes than has been that of other governments. IV. It has not been inconstant or ungrateful. V. It has not weakened patriotism or courage. VI. It has been often wasteful and usually extravagant. VII. It has not produced general contentment in each nation. VIII. It has done little to improve international relations and insure peace, has not diminished class selfishness (witness Australia and New Zealand), has not fostered a cosmopolitan humanitarianism nor mitigated the dislike of men of a different color. IX. It has not extinguished corruption and the malign influences wealth can exert upon government. X. It has not removed the fear of revolutions. XI. It has not enlisted in the service of the State a sufficient number of the most honest and capable citizens. XII. Nevertheless it has, taken all in all, given better practical results than either the Rule of One Man or the Rule of a Class, for it has at least extinguished many of the evils by which they were defaced. In 1914 there were signs of decline in some countries where decline was hardly to have been expected, and of improvement in other countries, but nothing to indicate in any country either a wish to abandon democracy or the slightest prospect that anything would be gained thereby. Disappointment is expressed, complaints are made, but no permanent substitute has been suggested. . . ... Within the century and a half of its existence in the modern world free government has passed through many phases, and seems now to stand like the traveller who, on the verge of a great forest, sees many paths diverging into its recesses and knows not whither one or other will lead him.1 The two most important forms of economic democracy which command deep interest at the present time are works councils and labor unions. The works councils are organizations of workers which are formed usually at the initiative of employers and in which powers are granted to laborers by the voluntary action of employers. Labor unions, on the other hand, are organizations of workers which are formed at the initiative of workers themselves and in which powers are won usually as grudging concessions from employers. Works Councils.-The essential structure of the dominant types of works councils is fairly simple. The workers in a plant elect representatives who confer with representatives of the management. Nominating and balloting procedure takes place in much the same way as in a political organization. The representatives who are elected organize as a body, with a chairman and other officers, and establish the necessary committees and subcommittees to deal with special problems. The workers' representatives constitute the works council or shop committee and meet the representatives of the management in joint conference for the discussion of industrial problems, for the adjustment of grievances, and for general collective bargaining. These works councils confine their attention to those phases of industrial problems which directly affect the welfare of labor. Such problems include, for the general run of plants, hours of labor, wage scales, and methods of payment. A large proportion of, but not all, works councils deal with social and recreational activities, mutual benefit, charity and relief, housing, coöperative stores, insurance, education, Americanization, rest rooms, lunch rooms, prizes, working conditions, accident prevention, factory sanitation, medical care and hygiene of the workers. A smaller proportion of the works councils deal with shop discipline, discharge, promotion, hiring, and transfer. Only a few councils deal with the technical improvement of production or with the problems of production management. None are allowed to concern themselves with the phases of management centering around finance, capitalization, or matters which are not directly of importance in the life of the worker. The power and authority of works councils vary from company to company. In some cases, if workers and management fail to agree on an issue, it is referred to arbitration, but in most cases it is referred to high officials of the company or to the board of directors. Representatives of both workers and management vote on questions and in the overwhelming bulk of cases it is assumed, as a matter of course, that the voting power is equal. This assumption gives rise to the theory that 1 Bryce, Modern Democracies, Vol. II, pp. 562-563, 597-598. works councils give workers a share in the management. In all ordinary cases, the workers do participate in the management of the affairs which affect them. It should not, however, be overlooked that with most plans the company in the last analysis has ultimate authority in its own hands. Boards of directors do not surrender their ultimate authority in the event of a showdown, but in the everyday administration of works councils, a spirit of give and take and of sharing in management is maintained, and the ultimate location of authority is ignored as much as possible. In fact the success of collective dealing through works councils depends upon the thoroughness with which all questions as to the relative power of the two parties, labor and management, can be relegated to the background. Collective bargaining through works councils succeeds only in so far as fairness is substituted for force in industrial relations. If the management convinces labor at the outset that every principle and every detail of the council plan will be treated on the part of the company with perfect justice, candor and honesty, the plan is in a fair way toward success. But if the management hedges, misrepresents, or threatens, the plan is almost sure to collapse.2 Obviously, therefore, the installation of the machinery of industrial democracy merely creates an opportunity for the management to evoke a favorable response from labor. The mechanism of organization itself does not insure at all that industrial democracy will be attained. The importance of a good plan of industrial democracy does not consist in any power of the plan as a plan to secure industrial democracy; the importance of the plan consists merely in the fact that it provides a channel for the spirit of management to react on the spirit of labor. Of course, it is equally necessary that the spirit of labor shall be honest and fair, and that labor shall genuinely respond to the responsibilities and powers conferred upon it by the works council plan. But in most plans of this sort the genius and inspiration behind the plans comes from management, and unless management firmly takes the initiative in establishing a basis of confidence and fairness the plan will fail. For instance, the International Harvester Company has had works councils in twenty-four of its plants, and the success of the councils varies considerably in these plants. The degree of success varies, it is found, in direct ratio to the efficiency and spirit of the local management at each plant in applying the system to that particular plant. Moreover, it is necessary to have not merely the local superintendents and executives imbued with the proper attitude and understanding, but also the bosses, sub-bosses and foremen. To this end, many companies have established training schools for bosses and foremen, to acquaint them with the purpose of the works council plan, with its technique and with the new spirit which it is necessary for them to evince if the plan is to be a success. Finally, workers themselves have to be educated to understand the significance of the democratic policy, and have to receive correct and 2 See address by L. W. Wallace, President of Society of Industrial Engineers, Proceedings of 1919. |