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Workers' self-management, also referred to as labor management and organizational self-management, is a form of organizational
management Management (or managing) is the administration of organizations, whether businesses, nonprofit organizations, or a Government agency, government bodies through business administration, Nonprofit studies, nonprofit management, or the political s ...
based on self-directed work processes on the part of an organization's
workforce In macroeconomics, the workforce or labour force is the sum of people either working (i.e., the employed) or looking for work (i.e., the unemployed): \text = \text + \text Those neither working in the marketplace nor looking for work are out ...
. Self-management is a defining characteristic of
socialism Socialism is an economic ideology, economic and political philosophy encompassing diverse Economic system, economic and social systems characterised by social ownership of the means of production, as opposed to private ownership. It describes ...
, with proposals for self-management having appeared many times throughout the history of the socialist movement, advocated variously by democratic, libertarian and market socialists as well as anarchists and communists. There are many variations of self-management. In some variants, all the worker-members manage the enterprise directly through assemblies while in other forms workers exercise management functions indirectly through the election of specialist managers. Self-management may include worker supervision and oversight of an organization by elected bodies, the election of specialized managers, or self-directed management without any specialized managers as such. The goals of self-management are to improve performance by granting workers greater autonomy in their day-to-day operations, boosting morale, reducing alienation and eliminating exploitation when paired with employee ownership. An enterprise that is self-managed is referred to as a labour-managed firm. Self-management refers to control rights within a productive organization, being distinct from the questions of ownership and what
economic system An economic system, or economic order, is a system of production, resource allocation and distribution of goods and services within an economy. It includes the combination of the various institutions, agencies, entities, decision-making proces ...
the organization operates under. Self-management of an organization may coincide with employee ownership of that organization, but self-management can also exist in the context of organizations under public ownership and to a limited extent within private companies in the form of co-determination and worker representation on the board of directors.


Economic theory

An
economic system An economic system, or economic order, is a system of production, resource allocation and distribution of goods and services within an economy. It includes the combination of the various institutions, agencies, entities, decision-making proces ...
consisting of self-managed enterprises is sometimes referred to as a participatory economy, self-managed economy, or cooperative economy. This economic model is a major version of market socialism and decentralized planned economy, stemming from the notion that people should be able to participate in making the decisions that affect their well-being. The major proponents of self-managed market socialism in the 20th century include the economists Benjamin N. Ward, Jaroslav Vanek and
Branko Horvat Branko Horvat (24 July 1928 – 18 December 2003) was a Croatian economist and politician. Horvat was born in Petrinja on 24 July 1928. In 1944 during World War II, Horvat and his father Artur Horvat joined the Partisan movement in Croatia. He ...
. Horvat says that participation is not simply more desirable, but also more economically viable than traditional hierarchical and authoritarian management as demonstrated by econometric measurements which indicate an increase in efficiency with greater participation in decision-making. Writing from the perspective of socialist Yugoslavia in the early 1980s, Horvat suggested that the larger world was moving toward a self-governing socialistic mode of organization as well.


Labor managed firm

The theory of the labor managed firm explains the behavior, performance and nature of self-managed organizational forms. Although self-managed (or labor-managed) firms can coincide with worker ownership (employee ownership), the two are distinct concepts and one need not imply the other.


Neoclassical economics

According to traditional neoclassical economic theory, in a competitive market economy ownership of capital assets by labor (the workforce of a given firm) should have no significant impact on firm performance. Much of the research on labor-managed firms in the neoclassical tradition revolved around the question of the presumed maximand (
objective function In mathematical optimization and decision theory, a loss function or cost function (sometimes also called an error function) is a function that maps an event or values of one or more variables onto a real number intuitively representing some "cost ...
) of such firms (i.e. the answer to the question "what do labor-managed firms maximize?", e.g. income per worker or profits) and its implications. The first model of a labor-managed firm in this tradition has been suggested by American economist Benjamin Ward in 1958 who was interested in the analysis of Yugoslav firms. According to Ward, the labor-managed firm strives to maximize income per worker as contrasted with the traditional capitalist firms' objective function of maximizing profit for external owners. Based on this assumption, Ward presented an analysis that was critical of labor-managed firms. In particular, he argued that a supply curve of a labor-managed firm has a negative slope: an increase in the market price of the product produced by a labor-managed firm will not make it increase production and hire new members. It followed that an economy consisting of labor-managed firms would have a tendency to underutilize labor and tend toward higher rates of unemployment. Ward's model was developed further by Evsey Domar and generalized by
Jaroslav Vaněk Jaroslav Vaněk (20 April 1930 – 15 November 2017) was a Czech American economist and professor emeritus of Cornell University known for his research on economics of participation (labour-managed firms, worker cooperatives) and, in his earlier ...
. These purely theoretical analyses were criticized by Yugoslav economist
Branko Horvat Branko Horvat (24 July 1928 – 18 December 2003) was a Croatian economist and politician. Horvat was born in Petrinja on 24 July 1928. In 1944 during World War II, Horvat and his father Artur Horvat joined the Partisan movement in Croatia. He ...
in 1971 who argued for empirical analysis of actually existing labor-managed Yugoslav firms and practices utilized by their members. In particular, he noted that workers fix wages at the beginning of a year and then adjust them based on the earnings of the enterprise. He noted that this behavioral rule, if made a part of the theoretical model, implies that the market behavior of a labor-managed firm is, contrary to theses by Ward and his followers, much more similar to the hypothetical behavior of a "traditional", profit-maximizing firm. Building on a larger body of empirical studies, contemporary Canadian economist Gregory Dow has carried out extensive theoretical research on labor-managed firms from the neoclassical perspective, focusing on explaining the rarity of labor-managed firms relative to capital-managed ones.


Classical economics

In the 19th century, the idea of a self-managed economy was first fully articulated by the anarchist philosopher and economist Pierre-Joseph Proudhon. This economic model was called mutualism to highlight the mutual relationship among individuals in this system and involved cooperatives operating in a free-market economy. The classical liberal philosopher and economist
John Stuart Mill John Stuart Mill (20 May 1806 – 7 May 1873) was an English philosopher, political economist, politician and civil servant. One of the most influential thinkers in the history of liberalism and social liberalism, he contributed widely to s ...
believed that worker-run and owned cooperatives would eventually displace traditional capitalist (capital-managed) firms in the competitive market economy due to their superior efficiency and stronger incentive structure. While both Mill and
Karl Marx Karl Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, political theorist, economist, journalist, and revolutionary socialist. He is best-known for the 1848 pamphlet '' The Communist Manifesto'' (written with Friedrich Engels) ...
thought that democratic worker management would be more efficient in the long run compared with hierarchical management, Marx was not hopeful about the prospects of labor-managed and owned firms as a means to displace traditional capitalist firms in the market economy.''Where Did Mill Go Wrong?: Why the Capital-Managed Firm Rather than the Labor–Managed Enterprise Is the Predominant Organizational Form in Market Economies'', by Schwartz, Justin. 2011. ''Ohio State Law Journal'', vol. 73, no. 2, 2012: "Why, then, is the predominant form of industrial organization in market societies the traditional capital-owned and managed firm (the capitalist firm) rather than the labor-managed enterprise owned and managed by the workers (the cooperative)? This is exactly the opposite of the result predicted by John Stuart Mill over 150 years ago. He thought that such worker-run cooperative associations would eventually crowd capitalist firms out of the market because of their superior efficiency and other advantages for workers." Despite their advantages in efficiency, in Western market economies the labor-managed firm is comparatively rare.
Karl Marx Karl Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, political theorist, economist, journalist, and revolutionary socialist. He is best-known for the 1848 pamphlet '' The Communist Manifesto'' (written with Friedrich Engels) ...
championed the idea of a free association of producers as a characteristic of communist society, where self-management processes replaced the traditional notion of the centralized state. This concept is related to the
Marxist Marxism is a political philosophy and method of socioeconomic analysis. It uses a dialectical and materialist interpretation of historical development, better known as historical materialism, to analyse class relations, social conflic ...
idea of transcending alienation.


Soviet-type economic planning

The Soviet-type economic model as practiced in the former
USSR The Union of Soviet Socialist Republics. (USSR), commonly known as the Soviet Union, was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 until Dissolution of the Soviet ...
and
Eastern Bloc The Eastern Bloc, also known as the Communist Bloc (Combloc), the Socialist Bloc, the Workers Bloc, and the Soviet Bloc, was an unofficial coalition of communist states of Central and Eastern Europe, Asia, Africa, and Latin America that were a ...
(; ) was introduced in the state-owned enterprises in the 1980s. It is criticized by socialists for its lack of widespread self-management and management input on the part of workers in enterprises.


Management science

In his book '' Drive: The Surprising Truth About What Motivates Us'', Daniel H. Pink argues on the basis of empirical evidence that self-management/self-directed processes, mastery, worker autonomy and purpose (defined as intrinsic rewards) are much more effective incentives than monetary gain (extrinsic rewards). According to Pink, for the vast majority of work in the 21st century self-management and related intrinsic incentives are far more crucial than outdated notions of hierarchical management and an overreliance on monetary compensation as reward. More recent research suggests that incentives and bonuses can have positive effects on performance and autonomous motivation. According to this research, the key is aligning bonuses and incentives to reinforce, rather than hamper, a sense of autonomy, competence and relatedness (the three needs that self determination theory identifies for autonomous motivation).


Political movements


Europe

Guild socialism is a political movement advocating workers' control of industry through the medium of trade-related guilds "in an implied contractual relationship with the public". It originated in the United Kingdom and was at its most influential in the first quarter of the 20th century. It was strongly associated with G. D. H. Cole and influenced by the ideas of William Morris. One significant experiment with workers' self-management took place during the Spanish Revolution (1936–1939). In his book ''
Anarcho-Syndicalism Anarcho-syndicalism is an anarchism, anarchist organisational model that centres trade unions as a vehicle for class conflict. Drawing from the theory of libertarian socialism and the practice of syndicalism, anarcho-syndicalism sees trade uni ...
'' (1938), Rudolf Rocker stated:
But by taking the land and the industrial plants under their own management they have taken the first and most important step on the road to Socialism. Above all, they (the Workers' and peasants self-management) have proved that the workers, even without the capitalists, are able to carry on production and to do it better than a lot of profit-hungry
entrepreneurs Entrepreneurship is the creation or extraction of economic value in ways that generally entail beyond the minimal amount of risk (assumed by a traditional business), and potentially involving values besides simply economic ones. An entreprene ...
.
After May 1968 in France, LIP factory, a clockwork factory based in
Besançon Besançon (, ; , ; archaic ; ) is the capital of the Departments of France, department of Doubs in the region of Bourgogne-Franche-Comté. The city is located in Eastern France, close to the Jura Mountains and the border with Switzerland. Capi ...
, became self-managed starting in 1973 after the management's decision to liquidate it. The LIP experience was an emblematic social conflict of post-1968 in France. CFDT (the CCT as it was referred to in Northern Spain), trade-unionist Charles Piaget led the strike in which workers claimed the means of production. The Unified Socialist Party (PSU) which included former Radical Pierre Mendès-France was in favour of autogestión or self-management.LIP, l'imagination au pouvoir
, article by Serge Halimi in '' Le Monde diplomatique'', 20 March 2007 .
In the Basque Country of Spain, the Mondragon Cooperative Corporation represents perhaps the longest lasting and most successful example of workers' self-management in the world. It has been touted by a diverse group of people such as the Marxian economist Richard D. Wolff and the research book '' Capital and the Debt Trap'' by Claudia Sanchez Bajo and Bruno Roelants as an example of how the economy can be organized on an alternative to the capitalist mode of production. Following the
2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...
, many factories were occupied and became self-managed in Greece, France, Italy, Germany and Turkey. In Greece, solidarity-based distribution is partially the result of austerity policies' privatization of public services, which exacerbates on-the-ground solidarity activities. These have mostly emerged as a consequence of ambitious politicized thinking and mobilization, as well as a practical formulation that ensures degrees of living by transforming informal solidarity networks into remunerative distribution cooperatives. This dialectic, echoes the idea of formally managing the crisis, which reproduces itself not in spite of, but because of, official policy initiatives to combat it. Workers' collectives and cooperatives, Self-Help Groups, Local Exchange Trade Systems (LETS), Freecycle networks and Timebanks, and the first worker-occupied factory are examples of non-capitalist social experiments and innovations that have emerged in Greece since 2012.


Yugoslavia

At the height of the
Cold War The Cold War was a period of global Geopolitics, geopolitical rivalry between the United States (US) and the Soviet Union (USSR) and their respective allies, the capitalist Western Bloc and communist Eastern Bloc, which lasted from 1947 unt ...
, Yugoslavia, as a consequence of the Tito-Stalin split, pursued and advocated for, what was officially called, socialist self-management in distinction from the
Eastern Bloc The Eastern Bloc, also known as the Communist Bloc (Combloc), the Socialist Bloc, the Workers Bloc, and the Soviet Bloc, was an unofficial coalition of communist states of Central and Eastern Europe, Asia, Africa, and Latin America that were a ...
countries, all of which practiced central planning and centralized management of their economies. It replaced central planning with ''planning basic proportions'' that was supposed to stop "the chaos of social production and distribution that is innate to capitalism". It was organized according to the theories of
Josip Broz Tito Josip Broz ( sh-Cyrl, Јосип Броз, ; 7 May 1892 – 4 May 1980), commonly known as Tito ( ; , ), was a Yugoslavia, Yugoslav communist revolutionary and politician who served in various positions of national leadership from 1943 unti ...
and more directly Edvard Kardelj. Yugoslav economist
Branko Horvat Branko Horvat (24 July 1928 – 18 December 2003) was a Croatian economist and politician. Horvat was born in Petrinja on 24 July 1928. In 1944 during World War II, Horvat and his father Artur Horvat joined the Partisan movement in Croatia. He ...
also made a significant contribution to the theory of workers' self-management (''radničko samoupravljanje'') as practiced in Yugoslavia. Due to Yugoslavia's neutrality and its leading role in the
Non-Aligned Movement The Non-Aligned Movement (NAM) is a forum of 121 countries that Non-belligerent, are not formally aligned with or against any major power bloc. It was founded with the view to advancing interests of developing countries in the context of Cold W ...
, Yugoslav companies exported to both Western and Eastern markets. Yugoslav companies carried out construction of numerous major infrastructural and industrial projects in Africa, Europe and Asia. In 1950, the Law on self-management introduced worker's councils. The "beginning of the end of bureaucracy" was declared along the pretenses of the
Marxist Marxism is a political philosophy and method of socioeconomic analysis. It uses a dialectical and materialist interpretation of historical development, better known as historical materialism, to analyse class relations, social conflic ...
concept of
withering away of the state The withering away of the state is a Marxist concept coined by Friedrich Engels referring to the expectation that, with the realization of socialism, the state will eventually become obsolete and cease to exist as society will be able to gover ...
under the "Factories to the workers!" parole. According to Boris Kanzleiter, the inspiration for workers' councils came from the People's councils – the revolutionary governing bodies of the
People's Liberation Army The People's Liberation Army (PLA) is the military of the Chinese Communist Party (CCP) and the People's Republic of China (PRC). It consists of four Military branch, services—People's Liberation Army Ground Force, Ground Force, People's ...
and the
Paris Commune The Paris Commune (, ) was a French revolutionary government that seized power in Paris on 18 March 1871 and controlled parts of the city until 28 May 1871. During the Franco-Prussian War of 1870–71, the French National Guard (France), Nation ...
. The 1953 Yugoslav Constitutional Law introduced self-management in the constitutional matter and transformed state property into social property. The 1963 Yugoslav Constitution, also called the Charter of Self-management, defined self-management and social property as supreme values and it defined Yugoslavia as a "socialist self-managed democratic community". The Law of Associated Labor of 1976 represented the last stage of the development of Yugoslav self-management. On the grounds of the 1974 Yugoslav constitution, it created a completely autonomous system grounded in direct sovereignty of the worker and citizen. It foresaw the formation of Basic Organizations of Associated Labor (BOAL) as the basic economic units that every worker had to be a part of based on the precise role played by that worker in the production process. It associated with other BOALs to form an Organization of Associated Labour (OAL) that could, with other OALs form Complex Organizations of Associated Labor. The assembly that consisted of all the workers' of a BOAL elected a delegate, which was bound with an imperative mandate, into the workers' council of the OAL that decided on all matters: from electing the director, to decisions on salaries, investments, association, development and specific production goals. Another feature of Yugoslav self-management were Self-management agreements and Social compacts, these replaced classical contracts. The goal of OALs was not for-profit but a social goal – it was supposed to facilitate education, healthcare, employment and resolving the housing issue. Macro-economic reforms and structural adjustment programs that were imposed by the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...
(IMF) and the
World Bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...
brought an end to workers' self-management in Yugoslavia.


''Empresas recuperadas'' movement

English-language discussions of this phenomenon may employ several different translations of the original Spanish expression other than recovered factory. For example, worker-recuperated enterprise, recuperated/recovered factory/business/company, worker-recovered factory/business, worker-recuperated/recovered company, worker-reclaimed factory, and worker-run factory have been noted.Vieta, Marcelo, 2020
Workers' Self-Management in Argentina: Contesting Neo-Liberalism by Occupying Companies, Creating Cooperatives, and Recuperating Autogestión
, Brill, Leiden.
The phenomenon is also known as autogestión. Argentina's ''empresas recuperadas'' movement emerged in response to the run up and aftershocks of Argentina's 2001 economic crisis. ''Empresas recuperadas'' means "reclaimed/recovered/recuperated enterprises/factories/companies". The Spanish verb ''recuperar'' means not only "to get back", "to take back" or "to reclaim", but also "to put back into good condition".Vieta, Marcelo, 2020
Workers' Self-Management in Argentina: Contesting Neo-Liberalism by Occupying Companies, Creating Cooperatives, and Recuperating Autogestión
, Brill, Leiden, pp. 517–519.
The movement emerged as a response to the years of crisis leading up to and including Argentina's 2001 economic crisis.Guido Galafassi, Paula Lenguita, Robinson Salazar Perez (2004
''Nuevas Practicas Politicas Insumisas En Argentina''
pp. 222, 238.
By 2001–2002, around 200 Argentine companies were recuperated by their workers and turned into worker co-operatives. Prominent examples include the Brukman factory, the Hotel Bauen and FaSinPat (formerly known as Zanon). As of 2020, around 16,000 Argentine workers run close to 400 recuperated factories. The phenomenon of ''empresas recuperadas'' ("recovered enterprises") is not new in Argentina. Rather, such
social movement A social movement is either a loosely or carefully organized effort by a large group of people to achieve a particular goal, typically a Social issue, social or Political movement, political one. This may be to carry out a social change, or to re ...
s were completely dismantled during the so-called
Dirty War The Dirty War () is the name used by the military junta or National Reorganization Process, civic-military dictatorship of Argentina () for its period of state terrorism in Argentina from 1974 to 1983. During this campaign, military and secu ...
in the 1970s. Thus, during Héctor Cámpora's first months of government (May–July 1973), a rather moderate and left-wing Peronist, approximately 600 social conflicts, strikes and factory occupations had taken place. The proliferation of these "recuperations" has led to the formation of a recuperated factory movement which has ties to a diverse political network including socialists, Peronists, anarchists and communists. Organizationally, this includes two major federations of recovered factories, the larger Movimiento Nacional de Empresas Recuperadas (National Movement of Recuperated Businesses, or MNER) on the left and the smaller National Movement of Recuperated Factories (MNFR) on the right. The movement led in 2011 to a new
bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...
law that facilitates take over by the workers.Pagina12
''Nueva Ley de Quiebras''
(April 2011)

(June 2nd 2011)
The legislation was signed into law by President Cristina Kirchner on June 29, 2011.''CFK promulgó la reforma de la Ley de Quiebras''
in '' Página/12'', June 29, 2011


See also

*
Agile software development Agile software development is an umbrella term for approaches to software development, developing software that reflect the values and principles agreed upon by ''The Agile Alliance'', a group of 17 software practitioners, in 2001. As documented ...
* Collectivist anarchism * Consensus decision-making *
Council communism Council communism or councilism is a current of communism, communist thought that emerged in the 1920s. Inspired by the German Revolution of 1918–1919, November Revolution, council communism was opposed to state socialism and advocated wor ...
* Industrial democracy * Lean manufacturing * Open allocation * Participatory economics * Socialization (economics) * Titoism * Workplace democracy * Works council


Self-managed organizations

* 1971 Harco work-in, a four-week work-in by Australian steelworkers * Carlist Party * Confederación Empresarial de Sociedades Laborales de España * Haier Group Corporation, the world's largest self-managed company * Mondragón Corporation, the world's largest group of industrial cooperative companies * The Morning Star Company, a fully self-managed private company * The Lucas Plan * Orpheus Chamber Orchestra *
Paris Commune The Paris Commune (, ) was a French revolutionary government that seized power in Paris on 18 March 1871 and controlled parts of the city until 28 May 1871. During the Franco-Prussian War of 1870–71, the French National Guard (France), Nation ...
* Springfield ReManufacturing * Unified Socialist Party (France) * United States Federation of Worker Cooperatives * W. L. Gore and Associates, one of the oldest, largest and most innovative self-managed companies worldwide


Notes


References

* *


Further reading

* Curl, John. ''For All The People: Uncovering the Hidden History of Cooperation, Cooperative Movements, and Communalism in America'', PM Press, 2009, . * Széll, György. "Workers' Participation in Yugoslavia." in ''The Palgrave Handbook of Workers' Participation at Plant Level'' (Palgrave Macmillan, New York, 2019) pp. 167–186. * Vieta, Marcelo. ''Workers' Self-Management in Argentina: Contesting Neo-Liberalism by Occupying Companies, Creating Cooperatives, and Recuperating Autogestión '', Brill, 2020, . * An Anarchist FAQ, Vol. 2, (2012, AK Press), see section: I.3.2 What is workers' self-management

* Anarcho-Syndicalism (book), Anarcho-syndicalism, Rudolf Rocker (1938), AK Press Oakland/Edinburgh. . * ''Reinventing Organizations'', Frederic Laloux. Nelson Parker, 2014, 378 pp. .


Filmography

* '' Living Utopia'' (1997) is a documentary film by Juan Gamero. It consists of 30 interviews with activists of the
Spanish Revolution of 1936 The Spanish Revolution was a social revolution that began at the outbreak of the Spanish Civil War in 1936, following the Spanish coup of July 1936, attempted coup to overthrow the Second Spanish Republic and arming of the worker movements an ...
and one of the biggest examples of workers' and peasants self-management during the social revolution


External links


The New Resistance in Argentina
by Yeidy Rosa
Self-management and Requirements for Social Property: Lessons from Yugoslavia by Diane Flaherty

Worker self-management in historical perspective by James Petras and Henry Veltmeyer

Yugoslavia's Self-Management by Daniel Jakopovich


Andrés Ruggeri, University of Buenos Aires, Argentina
The Social Innovations of Autogestión in Argentina's Worker-Recuperated Enterprises: Cooperatively Reorganizing Productive Life in Hard Times (Labor Studies Journal, 2010)
by Marcelo Vieta
Democracy at Work
A social movement for a new economy founded by economist Richard D. Wolff
The End of Illth: In search of an economy that won't kill us
''
Harper's Magazine ''Harper's Magazine'' is a monthly magazine of literature, politics, culture, finance, and the arts. Launched in New York City in June 1850, it is the oldest continuously published monthly magazine in the United States. ''Harper's Magazine'' has ...
'', October 4, 2013 {{co-operatives, types Anarchist theory Communism Cooperatives Economic systems Self-management Labour economics Management by type Market socialism Marxian economics Marxism Political philosophy Political theories Recovered factories Socialism Syndicalism Anarchist terminology