Some Thoughts on Worker Self-management

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Updated August 23:

In the comments section, huy points out that the former Yugoslavia under Tito had a different type of Communist system that allowed worker self-management of plants.

That system provided a quite nice standard of living too, I am told. The former Yugoslavia supposedly had one of the highest standards of living in Eastern Europe, and was particularly good at providing plenty of consumer goods for their people. This is important because many Communist states promoted heavy industry at the expense of consumer goods, leading to much frustration.

A female writer from Czechoslovakia, in a critical book on the Communist experience in that country, said that one of the things that angered the people (I would gather the women) the most was the chronic shortage of washing machines. Who wants to wash your clothes by hand?

The problem with the Yugoslavian model was the workers really did run the enterprises. So they had the choice of whether to take home the profits of the enterprise as spending money or to reinvest in the business. They usually chose to take home the profits for more spending money. Eventually, plants did not receive reinvestment and they fell apart and became uncompetitive.

I do not think that workers should run their own enterprises because they do not know what they are doing and will usually take home profits as pocket money instead of pumping them back into the enterprises. What has to be done is for an outside manager to run the business.

The Mondragon Cooperatives in the Basque Country is a good example of a non-capitalist cooperative economy in Spain. It works very well and has for many years. The cooperatives are formally run by the workers, but actually the owners are some giant regional banks. They operate with the enterprises' best interests at heart and often money is reinvested in the plant. Sometimes workers just get to take it home.

The workers also get to elect their own managers. One would suspect that workers would elect those managers who let them screw off the most and work the least, but that has not been the case.

Bottom line: the decisions are in the hands of people who know what they are doing.

In China, a similar thing is operating. Workers still formally own most of the plants in China. They may even own most of the so-called private plants. Anyway, most enterprises in China are still run by the state, but they are typically run by smaller municipalities and labor collectives.

For instance, the enterprise that is the third largest producer of television sets on Earth, an immensely successful enterprise, is a socialist institution that is state-run. Officially, it is owned by its workers, but they elect managers and abide by their decisions. This worker-ownership thing is seen as a Maoist holdover by rightwingers inside and outside China and they are itching to get rid of it.

As another example, there is a very successful plant in a small city in Northern China that I read about. It is officially owned by its workers, but they are required by law to plow 90% of their share of the profits back into the enterprise every year. Their 10% share is still a fat paycheck in Chinese terms. Workers from all around are flocking to this city to try to work in its enterprises, so there is a competitive system involved.

The cities with more profitable plants attract large numbers of workers wishing to live in those cities. With the money from the plants, the small municipality has made very nice homes for its workers, nice streets, nice cultural and civic programs and structures, etc.

So this is a great example of how worker self-management or the cooperative model, or some strange new socialism, can operate. It is essential to find new models of socialist and cooperative ownership and economics in order to avoid the socialist failures of the past.

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