PRODUCTIVE PRAGMATISM: Industrial democracy under neoliberal capitalist conditions1
Johan E. Ravn, Oier Imaz Alias, Igor Ortega, Trond Sanne Haga, Davydd J. Greenwood
IJAR – International Journal of Action Research, Issue 1-2023, pp. 7-48
Abstract: This essay presents two case examples of the context and practices of industrial democracy: Norwegian industrial democracy exemplified with the Aker case and the Mondragon Cooperative Experience (a term Mondragon often uses to describe its whole structure and history). The comparison illustrates the necessity of combining general systems theory, the distinction between political and socio-technical participation, and the role of ethos, worldview, and heedfulness in understanding how these enterprises operate and manage ongoing challenges. Our central motive is to promote the expansion of organizational democracy within the global industrial system as a superior and more humane alternative to global neoliberal capitalism. These are not simple comparisons because these systems have different histories, contexts, and dynamics. In making the comparison, we show that the constant process of balancing and rebalancing political and socio-technical participation is a key dynamic in keeping such democratic systems viable. We also show that enterprise ethos and worldview, far from being an add-on or a “soft” dimension, is the bedrock on which such systems rely. After making this general presentation, we put these systems in motion to show how they address the challenges of downsizing and strategic planning. Downsizing and strategic planning show both systems’ ability to face unexpected events and effectively cope with their potential consequences. We conclude that the differences between the cases show there is no one right way to create democratic organizations, but that paths exist and remain open for many different versions of these more humane and successful industrial organizations so necessary for creating sustainable societies.
Keywords: productive pragmatism, industrial democracy, worker cooperativism, Aker Solutions, Mondragon
Pragmatismo productivo: La democracía industrial frente a las condiciones del capitalismo neoliberal
Resumen: Este ensayo presenta dos estudios de caso sobre el contexto y las prácticas de la democracia industrial: la democracia industrial noruega ejemplificada con el caso Aker y la Experiencia Cooperativa de Mondragon (un término que Mondragon usa a menudo para describir toda su estructura e historia). La comparación ilustra la necesidad de combinar la teoría de sistemas, la distinción entre participación política y sociotécnica, y el papel del ethos, la visión del mundo (worldview) y la atención consciente (heedfulness) en la comprensión de cómo estas empresas operan y manejan los desafíos actuales. Nuestro motivo central es promover la expansión de la democracia organizacional dentro del sistema industrial global como una alternativa superior ymás humana al capitalismo neoliberal global. La comparación entre ambos casos no es sencilla; estos sistemas tienen diferentes historias, contextos y dinámicas. Al hacer la comparación, mostramos que el proceso constante para equilibrar y reequilibrar la participación política y sociotécnica es clave para mantener su viabilidad. También mostramos que el ethos empresarial y la visión del mundo (worldview), lejos de ser un complemento o una dimensión “suave”, son los pilares sobre los que se fundamentan dichos sistemas. Después de hacer esta presentación general, mostramos como ambos sistemas abordan los desafíos de la planificación estratégica y la reducción de personal. En ámbos casos queda en evidencia la capacidad de ambos sistemas para enfrentar eventos inesperados y hacer frente de manera efectiva a sus posibles consecuencias. Concluimos que las diferencias entre los casos muestran que no existe una forma correcta de crear organizaciones democráticas, pero que existen caminos que permanecen abiertos para el desarrollo de diversas formas de organizaciones industriales exitosas y más humanas, tan necesarias para crear sociedades sostenibles.
Palabras clave: pragmatismo productivo, democracia industrial, cooperativas de trabajo asociado, Aker Solutions, Mondragon
1 Introduction
Questions about power, participation and legitimacy are always key in organizations within global industrial capitalism. From an industrial democracy perspective, underlying conflicts of interest between capital and labor cannot be abolished or nullified. They are forces to cope with or even to utilize to promote better alternative systems. The economist J. K. Galbraith wrote about the way a balance of power between strong industry/capital, trade unions and the state prevented any one of the actors from accumulating too much power (Galbraith, 1952). Industrial democracy is built on this principle, both as amodel and as a practice. It is, however, based on more than the idea of curbing capital. A key premise is that the production process and economic outcomes benefit from working conditions that are sustainable and positively challenging for all employees, including participation in innovation and broader restructuring processes within an agreed-on framework.
This essay builds a comparison of industrial democracy as practiced in Norway and in the Mondragon cooperatives. These are dissimilar systems and operate on different scales, making the comparisons challenging. Despite the differences, these systems are similar in key ways when their underlying dynamics are examined. The Norwegian system is based on a long-standing national structure of laws and partnership agreements among unions, employers, and the government. The Mondragon system, despite its now extensive international reach, is based on a regional network of worker cooperatives located in the Spanish Basque Country and is an important but not dominant part of that regional economy. Both systems are based on democratic principles and provide significant openings for labor to adjust its relations to capital, but they are very differently anchored and structured. The following comparative analysis does not ignore these differences but seeks to analyze the overall system dynamics that enable both cases to function and sustain themselves. In this way, we want to promote the consideration of still other future contexts and designs for industrial democracies that can survive and even prosper in the current global system, without ignoring the diversity of situations and possibilities in which such systems can exist.
We affirm that key to the analysis is understanding the complex balancing act between political participation and socio-technical participation in both systems. Following Abrahamsson (1977), political participation refers to involvement in high-level goal setting and long-term planning within the company. Socio-technical participation, on the other hand, refers to ‘involvement in the organization’s production’ systems2. This balance between the social and the political is always at risk and yet must be maintained. To contextualize this, we argue there is no one ideal formula for creating industrial democratic systems. Rather there are a set of system conditions that must be met in any attempt to move in this direction.
The analysis matters because it underlines the relevance of a participatory/democratic approach to corporate governance in the face of contemporary global challenges. Like any other open system, enterprises and organizations are constantly having to deal with changes and heterogeneity in their environments, and must adapt successfully to survive or to flourish. The comparison between the Norwegian system and the Mondragon system reveals how their successful adaptations to a dynamic and variable environment have relied on ongoing and developmental processes in both realms of political participation and socio-technical participation. The comparison also reveals that adaptation and change critically depend on the capacity of organizations to (re-)interpret and deepen their own ethos and worldviews.
Through more than two years of dialogues and comparative analyses, we have developed this comparative perspective3. We are motivated by the aim both to understand and to improve the functioning of both cases and to draw lessons for other possible industrial democratic efforts elsewhere. We found that focusing comparatively, without ignoring the significant differences between the cases, has required considerable conceptual clarification, agreement on analytical frameworks, and then the actual work of laying out the comparisons and responding to the similarities and differences. In the end, our underlying goal is the improved functioning of both systems, assisted by learning broader lessons from the comparative analysis. Given the richness of our own learning experience in this collaboration, we aim for this analytical approach to encourage future developments of diverse industrial democratic systems and to foster productive comparative analyses of such systems.
In what follows, we introduce the basic concepts and analytical frames employed to structure the comparison. These include general systems theory, Clifford Geertz’s definitions of ethos and worldview in approaching organizational culture, Abrahamsson’s distinction between socio-technical and political participation, and Pavaʹs “discretionary coalition formation” (Geertz, 1957; Abrahamsson, 1977; Pava, 1983). This compound analysis of the evolution of structure and culture in each case helps us capture the differences between these approaches to the relationship between labor and capital, while still permitting a comparison of the cases from a broader general systems perspective.
2 Frameworks in use:
Systems analysis, the sine qua non: The dependence of contemporary physics, chemistry, molecular biology, systems ecology, and action research on a general systems conception of the world is clear. Despite this, a major proportion of academic social scientific inquiry and policymaking still relies on non-systems concepts organized Tayloristically. The Tayloristic organization of social inquiry makes systems approaches impossible because it treats knowledge and practices as a set of siloed territories to be owned and managed independently. The result of such an approach is analytical and practical failure to understand the dynamics of complex human systems.
Open and closed systems: Key to systems theory is distinguishing between “closed” and “open systems”4. Both types depend on adaptive interactions with their environments (including competitors) to survive. Closed systems adapt to changes by intensifying the processes within them in attempts to overcome their challenges. By contrast, open systems have more permeable boundaries, and adapt to challenges by changing their own parameters and internal processes to maintain a dynamic equilibrium and a manageable relationship to their environments. All life forms are open systems.
Evolutionary theory and evolutionary ecology are particular forms of open systems theory. From kin selection theory, we know that evolutionary selection operates on groups and not just on individuals. Sociability and solidarity have adaptive consequences. Within complex, multi-leveled interactions between environments and plant and animal species, sociability becomes part of the systems processes that give rise to successful adaptations5.
Cultural systems/social systems: Organizational structure and organizational culture, while analytically distinguishable, cannot be treated as separate. They constantly interact in human systems and must be understood together to analyze human situations. Engaged mutual awareness among members of any human group is always a central element in their operation.
Causal-functional and logico-meaningful integration: Clifford Geertz’s development of the ideas of Gilbert Ryle (1949) and reaching back to Pitrim Sorokin and Max Weber (Geertz, 1973, p. 142–169), is a development of systems theory applied to humans. In Geertz’s framing, social systems are held together by “causal-functional integration”. This understanding is familiar to anyone who has read most of the functionalist literature on social systems and social organization. A change in one part necessitates changes/adjustments in others to achieve a limited homeostasis.
Cultural systems also have systems properties but of a different causal type. They have “logico-meaningful integration” of the kind that involves sensemaking and constant efforts to bring different cultural ideas into to a degree of coherence and intelligibility. These cultural systems include ethos, worldview, symbols, myths, concepts of identity, groups, the individual, etc.
Key to the operation of human systems is that changes in the social system require changes in the cultural system and vice versa. When something unexpected or unwanted happens in an organization, it sets off processes of adjustment that include both social reorganization and new efforts at sensemaking. Humans cannot operate without constantly working on maintaining a tolerable balance among these dimensions. Without this effort, their lives become intolerable.
Path dependence: This perspective also means that all human systems are heavily affected by path dependence. No matter where a change comes from – internally or externally – the change works on an existing system and sets off processes that create new patterns of action. These in turn set parameters around future patterns of action when conditions change.
Political and sociotechnical participation: We follow Abrahamsson (1977)6 in distinguishing between political participation (representative co-determination) in decisions and socio-technical participation in organizational implementation at the operational level. Abrahamsson treats these two types of participation as independent of one another, very much in accordance with most analysts. We disagree that these types of participation are mutually independent. We contend that these are two participatory dimensions of a larger system, so that political participation and socio-technical participation necessarily flow into each other.
Moreover, these are key concepts for our analysis and they have both social and cultural dimensions. Participation is both an idea and a practice that can be found in many national constitutions and laws. A conventional meaning refers to participation in some kind of decision system, but it is a mistake to equate participation only with political participation. The way participation is organized and conceptualized is key to understanding how any organization operates. Following Geertz, we argue that socio-technical participation in organizational implementation has both social and cultural dimensions, and that any socio-technical system is a combination of these dimensions. We also argue that political participation is both a social organizational feature and a set of concepts and values that combine in participatory processes.
Firms and their environments – systems of systems: We consider it essential to see that socio-technical and political participation are two participatory dimensions of a larger system. In these cases, we are dealing with firms set within a larger dynamic systems environment. For these firms to persist, they must constantly work at balancing the relationship between the socio-technical dimensions and the political dimensions to retain the ability of the firms to adapt to constantly changing conditions without losing their democratic dimensions. These processes set off “organizational deliberations”, “discretionary coalition formation” (Pava, 1983) and operate in a context of what Gilbert Ryle called “heedfulness” (Weick & Roberts, 1993, p. 365). Heedfulness means that groups of actors’ awareness of the roles and abilities of the other actors enables them to manage the complicated collaborations that makes things work for the stakeholders.
This elaborate set of analytical frameworks has turned out to be the minimum frame of reference we needed to make meaningful comparisons between the Norwegian and Mondragon systems that are able to show both their similarities and differences. These frameworks are the way we have sought to avoid stereotypical or mechanistic comparisons of these related but not identical forms of industrial democracy. In addition to the value of the substantive comparisons we make below, we hope these frameworks will be of use to others in bringing additional cases and their lessons into this comparative perspective.
1 All authors contributed equally to this chapter. We have ordered authorship to reflect the professional interest of the co-authors. Johan Elvemo Ravn is the corresponding author: johan.ravn@sintef.no
2 Abrahamsson (1977) takes participation to mean involvement of employees in company decision-making. Political participation means involvement in high-level goal setting and long-term planning within the company. It means that employees, through some form of selection process, are represented in consultations and decisions about strategic path choices for the entire company or business. Political participation can as well give employees a right to hold organizational executives to account. Socio-technical participation, on the other side, means ‘involvement in the organization’s production’ systems. Socio-technical participation extends the employees’ involvement into the daily value-creation processes giving rise to the firmʹs products. While it may involve the implementation of decisions made at a higher level, it also involves improvements and changes in the production organization, the way to operate, job enhancements, safety, etc.
3 The authors of this chapter all practice action research and this is directly relevant to our perspective. One reason that Action Research is exiled from the conventional university social sciences and humanities is that it is based on general systems theory (GST) and does not respect the artificial disciplinary boundaries so abundant and actively defended in academia. Action Research affirms that nothing human can be understood outside of its systems context and that the only way to demonstrate understanding that systems context is by acting on it deliberately to try to produce a desired and socially solidary outcome. AR offends the siloed social sciences and humanities and demands that academic inquiry, driven by prosocial values, be directly developed in real world contexts with the diverse and relevant stakeholders as part of a complex process of gathering and integrating diverse understandings, knowledge, and experience into better functioning groups.
4 This is not the place to develop a detailed presentation of GST. Like any major conceptual breakthrough, systems theory is composed of a variety of streams that eventually led into the concept of “general systems theory”. Among the key streams are the attempts by Jakob Johann von Uexküll and Ludwig von Bertalanffy (1968) to explain how inorganic matter becomes organic matter. Their answer is that the matter is the same, but its organization is different, involving different kinds of relations among the parts and processes.
5 Thinkers like Gregory Bateson (1972) and Anna Tsing (2015) have taken these perspectives into the study of human groups and their adaptations.
6 This representative participation is what Piketty (2020) calls “co-management” and Arnstein (1969) refers to as “delegated participation”.
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