(e) The Jointly-Controlled Organization

The building trade is, as a rule, more extensive and diversified than an ordinary handicraft in the workshop. It comprises not one, but various manual workers, such as masons, carpenters, tilers, etc. Yet each of these tradesmen works about the building for himself. They work side by side, or consecutively, not with each other.

The reverse is the case with large-scale modern industry. Each undertaking comprises members of the most diverse trades, who work with and for each other, each worker being dependent upon the labour of numerous others. Extraordinary organizing capacity and expert management are required to ensure that each individual is allotted his place and work in such wise that no friction or impediments arise, and all the labour-power employed is utilized to the utmost. And to this living labour-power, which frequently comprises a thousand persons, of the most varied kinds, is added an abundance of gigantic machines and buildings, and numerous, often extremely varied, raw materials and accessory materials from all countries, necessitating a complicated commercial apparatus, which is not less requisite for the marketing of the products.

This increases the demands on the knowledge and capabilities of the managing personalities to an extraordinary degree. This knowledge can only be acquired at technical colleges, which have hitherto been inaccessible to the ordinary workers.

Whilst the management is so far removed from the crowd of intelligent and experienced workers, the economic development has, on the other hand, considerably reduced the demands on the knowledge of the mass of workers in many modern businesses. The skilful handicraftsman, acquainted with every side of his vocation, is replaced by a labourer, who is taught to make a few manual operations, which are continuously repeated. Beyond this he knows nothing about the process of production in which he is engaged.

If the processes connected with the building trades and handicrafts are sufficiently simple to permit the majority of workers to elect managers for their businesses, this aspect of the question becomes all the more difficult in the degree that a branch of industry is developed on capitalist lines. At the same time, the consequences of a mistake would be all the more disastrous, inasmuch as the intensity and area of the economic effects are increased with the development of the undertaking.

The following consideration is even more important in this connection. We have already noted that Guild Socialism separates production and consumption on hard and fast lines. From this standpoint the production in each branch of industry is something that only concerns the workers engaged. As Cole says:

“Here it must be evident that the normal conduct of, and responsibility for, industry, will be absolutely in the hands of the Guilds, and that neither the State nor any outside body should have any say in nominating Guild officers or managers” (Self Government in Industry, 4th Edition, p.117).

And later:

“The control of actual production, he (the Guildsman) says, is the business of the producer, and not of the consumer. Only by giving the maker control over his own work can he satisfy the true principle of democracy; for self-government is no less applicable to industrial than to political affairs” (Self Government in Industry, 4th Edition, p.151):

According to this peculiar conception, “true” democracy consists in the fact that the community is not to be concerned with what one of its organs is doing. The State is required only for the purpose of making the individual trade unions masters of the means of production in their branch of industry. What they may do with their common property is nobody’s business but their own.

They are to be entirely independent in the process of production. Not until they bring the finished product to the market are the consumers to have the right to take part in fixing the prices. For this purpose they are to be organized:

“[Guild Socialists] hold that the economic relationship between man and man only finds full expression when producers and consumers alike are organized-when the producer and the consumer negotiate on equal terms” (Self Government in Industry, p.87).

But what if the negotiations should lead to nothing, if a guild should insist on its strong position? Would the result be struggles for power between a number of guilds and a number of consumers’ organizations?

“The nation is in all its aspects so interdependent, production and consumption are so inextricably intertwined, that no mere abstract separation of functions can form a basis for a theory of the modern community. The problem, I admit, cannot be left where it stands.

“Where a single Guild has a quarrel with Parliament, as I conceive it may well have, surely the final decision of such a quarrel ought to rest with a body representative of all the organized consumers and all the organized producers. The ultimate sovereignty in matters industrial would seem properly to belong to some joint body representative equally of Parliament and of the Guild Congress. Otherwise, the scales must be weighted unfairly in favour of either consumers or producers” (Self Government in Industry, pp.87-88).

It is of course quite erroneous to assume that an association of various guilds would merely represent producers’ interests. There would be scarcely a guild which would not stand to other guilds in the relation of consumer.

As against the coal-miners’ guild, practically all the other guilds would have consumers’ interests. On the other hand, in a socialist society every able-bodied person is not merely a consumer, but also a producer, and no person can be so bisected that he would adopt a different attitude in a Parliament from what he would in a guild association, both assemblies being elected by the same people.

As both bodies would be elected by different electoral systems, temporary difficulties might well arise between them, but these would rarely coincide with the line of demarcation between the interests of consumers and those of producers.

But let us assume that the union of guilds represent an interest common to all branches of production. And let us further assume that the distinctions between parties in the parliaments would not be determined by any motives other than consumers’ interests ostensibly common to all parliamentarians. What would be the use of a “joint body representative equally of Parliament and of the Guild Congress?” Its composition would have to be based on the principle that neither the Guild Congress nor Parliament would have a majority over its opponent. Now if the two sections could not arrive at an agreement, how would the body which is above them be in any better case? It would require, like all arbitrators, an impartial third party, who in this case would have to be neither worker nor consumer.

It is quite conceivable that Cole would relegate the creation of this supramundane being to a new theory which has yet to be formulated, the problem of which might be compared with that of squaring the circle.

If, despite these difficulties, the efforts to constitute this supreme sovereign body, which would be above the sovereign union of guilds and the not less sovereign Parliament, should be successful, the gain would not be very great. Just reflect how awkward it would be if the guild and the parliament were obliged to appeal to the highest judge whenever they had a dispute, and with what faction and impediments the whole process of production would then revolve. Each guild would have full liberty to organize production as it chooses, perhaps to the great detriment of consumers. The latter would only intervene when such injury had actually occurred, in order to demonstrate that they had been actually injured.

It would be far more fitting and effectual if, instead of producers and consumers always quarrelling and only coming together before the supreme court of appeal, institutions were set up, by virtue of which consumers and producers would be brought together in every branch of production at the very commencement of production, when the details of its organization and its management were being settled, in order to reach unanimous decisions upon these matters. This would involve not two, but three factors: first the producers, then the consumers, who would be directly interested in the products, as for example the farmers in the matter of agricultural machinery, and finally the community, which would represent alike the whole of the producers and the whole of the consumers, that is to say, the State.

Such a State, organized on scientific lines, would, under a Labour regime, be the impartial and supreme judge of the separate interests of the individual producers as well as of the productive consumers, who would be nothing else but other producers. In this way a harmonious and systematic organization of production to meet social requirements would be rendered possible.

Productive co-operation or the guild system would be appropriate in the case of handicrafts, and of the production of products where delay would not involve serious harm to those concerned. The higher the level of technical development to which a branch of industry has attained, or the more its uninterrupted and intensive continuance signifies a vital necessity, the more we shall require a form of organization in which all the interested parties, not merely the workers, should have something to say about the details of organization and management. This form has received the name of joint-control. While the idea of Guild Socialism has come from England, the idea of the jointly-controlled undertaking comes from Germany, to which Austria intellectually belongs. The most important spokesmen of the idea in Germany are natives of Austria, so that it may be described as a product of Austrian Marxism.

The best exposition of this idea is to be found in Otto Bauer’s Der Weg zum Sozialismus (1919). In his tracks followed W. Ellenbogen, whose booklet entitled Sozialisierung in Oesterreich, not only contains an outline of socialization theories, but also gives a description of the practical attempts that have been made in this sphere in Austria.

Alike in Austria and in Germany, jointly-controlled undertakings have been successfully organized, being for the most part State services which produced war material during the war and- are now being diverted to more pacific branches of production.

In Germany the idea of joint-control found expression in the proposals of the socialist members of the first and second Socialization Commissions, in which Hilferding and Professor Lederer played an important part: I reported upon the idea of socialization to the second congress of the Workers’ Councils of Germany, which was held in 1919, and this report was published in Vienna in pamphlet form, with the title What is Socialization? I venture to quote the following passages:

“With each branch of production that is transferred from capitalist to State or municipal ownership, a new organization should be created, which would enable the workers and the consumers, as well as science, to exercise the necessary influence upon the adaptation of the processes of production. Such an organization would be quite different from State bureaucracy as we have hitherto understood it. The details of the new organization would vary with the different branches of production. It can be made elastic and adaptable.

“Yet it might not prove possible to fit all the branches of production into the new organization immediately. Many of them would have to pass through a number of preliminary stages, but whenever they became ripe for socialization, it would be necessary, in spite of all variations in point of detail, to manage production through the cooperation of the three great factors: the workers, the consumers, and science.

“The co-operation of these three factors would produce the happiest results. If every branch of industry were abandoned to its workers alone, there would be a danger that the workers would raise wages, reduce hours of labour, diminish the volume of production, and increase the prices of their products, without troubling about the community. The essential workers would be in a position to do this the soonest. The dispensable workers would soon find there was a limit to forcing up the prices of their products. The whole process would culminate in the domination of the essential workers over those who were at least temporarily dispensable, such as a domination of coalminers over textile workers, tailors, shoemakers, joiners, etc., a state of affairs which would be as intolerable as capitalist exploitation.

“But if the decisions respecting any branch of industry rested with the consumers alone, we should run the risk of their striving to force down prices at all costs, even at the expense of the workers.

“If workers and consumers were combined in an association in such wise that neither section could dominate the other, they would have to endeavour to overcome their antagonism by means which would be beneficial to both.

“To discover these means is the task of the men of science, whose services would be enlisted as the third party in the organization of economy. Their duty would be to ensure that the most perfect technical appliances and organization were adopted in the undertaking, so that the greatest possible result would be obtained with the smallest expenditure of energy.

“Under capitalism the incentive to these efforts is profit. Under Socialism profit will cease to exist, but this incentive will be replaced by another at least equally strong, if the antagonism between the consumers and the workers can be overcome through the intervention of science.

“Now science will be able to do many more things under socialist production than it can do under capitalism. It will be entrusted with the task of organizing consumption as well as production on rational lines. It will be possible to do this when organizations of consumers as well as organizations of workers participate in the process of production. If, on the one hand, the technical experts ensure that more wealth is produced with an equal expenditure of energy; on the other hand, economists and statisticians will provide indications for the disposal of the products in a manner that will avoid waste and give a greater degree of satisfaction to the consumers.”

The details of organization may assume various forms. It will vary from industry to industry, from country to country, and from one stage of development to another.

As an example, I will quote the proposal which Otto Bauer made in his Weg zum Sozialismus:

“Now who is to manage the socialized industry? The Government? Assuredly not. If the Government controls as many undertakings as possible, it would be too powerful as against the people and the popular assembly; such an augmentation of governmental power would be dangerous to democracy. At the same time, the Government would be a bad administrator of the socialized industry; nobody manages industrial undertakings worse than the State. For this reason we have never advocated the nationalization of industry, but always its socialization. Then who is to manage the socialized industry, if it is not to be the Government?

“To-day, the big industrial concerns are controlled by a board of directors which is elected by the shareholders. In the future also every branch of socialized industry will be managed by a board of directors; but this administrative body will no longer be chosen by the capitalists, but by the representatives of those social sections whose needs the socialized industry is henceforth to satisfy. Now who has an interest in the management of the socialized industry? First of all the workers, the employees, and the officials who are engaged in this branch of industry; secondly, the consumers who need the products of this branch of industry; and thirdly, the State as the representative of the community. Consequently, the directorate of each socialized industry will be constituted somewhat in the manner following: a third of the members of the directorate will be elected by the trade unions of the workers and by the organizations of the employees employed in the branch of industry. Another third will be formed by the representatives of the consumers. For example, in the directorate of the mining industry there will be representatives of consumers partly selected by the organizations of consumers of domestic coal, and partly by the organizations of consumers of industrial coal. The last third of the members of the directorate will be constituted by the representatives of the State. They will be appointed, partly by the Chancellor of the Exchequer, so that the treasury interests are represented, and partly by the National Assembly or Parliament, so that the general economic interests of the nation are represented. The representatives of the workers and employees on the one side, and those of the consumers on the other, will have antagonistic interests to champion; for the one side will desire high wages, and the other low prices. The representatives of the State will function as mediators and arbitrators between the two parties.

“To a directorate constituted in this manner will be entrusted the supreme control of the branch of industry the appointment of the managing officials, the fixing of the prices of commodities, the conclusion of collective labour agreements with the trade unions and the employees’ organizations, the disposal of the net profits, etc. Special arrangements would be necessary to prevent the appointment of managing officials on personal or political grounds, and to ensure that the most efficient experts, engineers, and chemists were chosen. Perhaps the most appropriate means to this end would be as follows. The teaching staff of the technical high schools and the managing technical officials of the entire industry would form a committee, and this committee would be asked to submit proposals for each appointment of a managing official in a socialized branch of industry. The directorate of the branch of industry would then appoint one of the persons proposed.”

This differs very little from the proposal which the, majority of the first German Socialization Commission made in its report of February 15, 1919, dealing with the administration of a socialized mining industry. There it stated:

“It is recommended that the whole of the German mining industry should be placed under a coal council, which would consist of a hundred members, and meet about four times a year. The management of the undertakings, the workers, and the consumers would each choose twenty-five of these members, and the remaining twenty-five would be appointed by the State. Of these at least one-third are to be officials, while the remainder should be drawn from scientific, economic, and public circles.”

We have to reckon with the possibility that experience and theoretical investigations will bring many other proposals for socialization to light.

However such proposals may be devised, if they are to give satisfactory results, they will have to provide that no branch of industry and no undertaking shall be handed over to the workers employed in it, but that the consumers interested, as well as the community and science, shall have a right of participation. This participation should apply not merely to the disposal of the finished product, but also to the process of production itself.

Guild Socialism is perfectly correct in its contention that the worker demands freedom as well as good conditions of labour. He desires democracy to be introduced into industry.

But democracy signifies not anarchy, but submission of the individual to the decisions of the majority and to those of the managers which the majority appoints.

Although Cole recognizes this, he expresses the opinion:

“Similarly, while the workman has his foremen and his managers set over him by an external authority, then, however kindly they use him, he has not freedom. He must claim, as a necessary step on the road to industrial emancipation, the right to choose his own leaders “ (Self Government in Industry, 4th Edition, p.183).

Even under a system of extreme industrial democracy, the individual worker will always have his overseers, foremen, and managers imposed on him by an external power, that is, by the majority.

In this respect Guild Socialism draws a remarkable distinction. It does not regard the majority of the comrades in the same trade as a power external to the individual worker, but such an external power would be constituted by the majority of the members of his class, the workers in all other trades, who in a socialist society would be synonymous with the mass of consumers. For Guild Socialism the regulations of the guild are freedom, but the laws of the community are intolerable slavery. It has not emerged from the shell of syndicalism, although it does not share the latter’s repugnance towards State ownership of the means of production.