Fire the Boss!

In my last post, I discussed the Acton Institute film, The Call of the Entrepreneur. This compelling but intellectually shallow film converted entrepreneurship from a call to a cult, in my opinion; it treated the entrepreneur as a rarefied and special class of individuals crucial for the success of any economy. In this post, I review a film that takes the opposite tack, that bosses are not really necessary, and the ordinary workers possess the entrepreneurial skills necessary to run the most complex operations. Of course, this is not a new theme. The success of such enterprises as the Mondragón Cooperative Corporation in Spain, or the entire economy of Emila-Romagna, have long proven the success of the worker-manager to produce and manage complex products at a rate of return higher than the so-called “free market” enterprises, and to do so with fair wages and high social services.

The film is called The Take and is shot in Argentina, where, in the 90's, the United States and the IMF forced a program of economic “liberalization” on the country. Government enterprises were sold off, budgets reduced, social spending cut to bone, taxes on wealth reduced or eliminated, etc. The results, in Argentina as in so many other places, was a disaster. After some initial successes, the economy collapsed, which idled thousands of factories and businesses. The rich were allowed to ship all of their money out of the country, while bank accounts for ordinary Argentinians were frozen, so that people could not get at their own funds.

As the factories were being idled, and the workers laid off, usually with millions of pesos in unpaid wages, one group of workers at a suit factory refused to leave. They took over the factory and kept on producing and marketing their products. They made the bankrupt company a successful enterprise. Of course, there was one little problem: they didn't own the place legally. But they got so much support from the public, that the politicians deemed in inadvisable to evict them, at first, and later attempts to do so resulted in riots. Laws were then written to which could make expropriation possible under certain circumstances.

What is crucial here is that the workers here are not the vanguard of some ideology; they are not socialists, or communists, or libertarians, or even distributists. Rather, they are just workers, whose desperation forced them into desperate measures. But their actions did found a movement, and 180 closed factories and businesses have been taken over by the workers. Many of these enterprises exist in legal limbo and face a hostile government and court system. Nevertheless, they have made a success of it, and made it without bosses. The workers manage the companies democratically and set their own wages, policies, and decisions. They seem to be doing just fine without either bosses or government subsidies.

Many socialists have backed the movement, but in fact this seems to be the opposite of socialism, or at least of state-socialism (Marxism); it is not the government taking over the means of production, but the workers themselves. In fact, it seems to be a return to the libertarian and distributist ideal of self-organizing communities, able to manage their own affairs without help from either government or corporate bureaucracies.

But does that still leave a moral problem? Is expropriation just a fancy word for stealing? In the particular cases involved here, likely not. In the first place, the old owners left millions owed to the workers, as well as to the government, and on these grounds alone the workers have a valid claim on the properties. Further, the special treatment given to the rich by the Menem government, treatment that was nothing less than the transfer of funds from the public purse to private fortunes gives the public in general and the workers in particular another claim on these factories. But in the more general case, we must consider the purpose of property. Private property is meant to serve the common good by making the productive capacity of the earth more plentiful and more available to all. The words of John Paul II in Laborem Exercans are useful here:

The above principle, as it was then stated and as it is still taught by the Church, diverges radically from the programme of collectivism as proclaimed by Marxism and put into pratice in various countries in the decades following the time of Leo XIII's Encyclical. At the same time it differs from the programme of capitalism practiced by liberalism and by the political systems inspired by it. In the latter case, the difference consists in the way the right to ownership or property is understood. Christian tradition has never upheld this right as absolute and untouchable. On the contrary, it has always understood this right within the broader context of the right common to all to use the goods of the whole of creation: the right to private property is subordinated to the right to common use, to the fact that goods are meant for everyone.
They cannot be possessed against labour, they cannot even be possessed for possession's sake, because the only legitimate title to their possession- whether in the form of private ownership or in the form of public or collective ownership-is that they should serve labour, and thus, by serving labour, that they should make possible the achievement of the first principle of this order, namely, the universal destination of goods and the right to common use of them. From this point of view, therefore, in consideration of human labour and of common access to the goods meant for man, one cannot exclude the socialization, in suitable conditions, of certain means of production. In the course of the decades since the publication of the Encyclical Rerum Novarum, the Church's teaching has always recalled all these principles, going back to the arguments formulated in a much older tradition, for example, the well-known arguments of the Summa Theologiae of Saint Thomas Aquinas (Summa Th., II-II, q. 66, arts. 2 and 6; De Regimine Principum, book 1, chapters 15 and 17. On the social function of property see Summa Th., II-II, q. 134, art. 1, ad 3.).
In the light of the above, the many proposals put forward by experts in Catholic social teaching and by the highest Magisterium of the Church take on special significance: proposals for joint ownership of the means of work, sharing by the workers in the management and/or profits of businesses, so-called shareholding by labour, etc.

And his words from Centesimus Annus would seem to provide a clear warrant for the actions of the workers:

Ownership of the means of production, whether in industry or agriculture, is just and legitimate if it serves useful work. It becomes illegitimate, however, when it is not utilized or when it serves to impede the work of others, in an effort to gain a profit which is not the result of the overall expansion of work and the wealth of society, but rather is the result of curbing them or of illicit exploitation, speculation or the breaking of solidarity among working people. Ownership of this kind has no justification, and represents an abuse in the sight of God and man.

In any case, the film raises the question of whether we really need bosses as much as we have been led to believe. Contrary to the cultic view of the Acton Institute, all men seem to have the spark of the entrepreneur within them, and it does not take the cut-throat world of competition to bring it out. Rather the opposite seems to be true: in a spirit of cooperation, companies flourish even when the “bosses” drive them to bankruptcy. As on of the workers in the film says, “We don't know why accounting was such a problem for the bosses; we are able to do it easily enough.”


Kevin Carson Monday, November 5, 2007 at 12:50:00 AM CST  

The Austrians are big on the theory of the "entrepreneurial corporation": i.e., the separation of ownership from control is a myth, and the "entrepreneur" rides herd on management through the threat of capital flight.

The more I read on the subject, the more I believe the alleged power of capital flight and hostile takeover to control management are greatly exaggerated. Hostile takeovers tend to occur in significant numbers only in waves that come decades apart, in response to specific changes in conditions, and quickly run their course as management alters the internal governance rules of corporations to insulate them from the threat of hostile takeover. The wave of takeovers in the 80s was a sort of one-shot wonder, brought about by specific innovations like junk bonds. By the late '80s, management had responded with innovations like the poison pill to deflect the threat.

In the normal, in-between times, the majority of investment comes from retained earnings, some from debt, and very little from new issues of stock. And management, as insiders, can alter the rules to minimize any genuine stockholder control over the corporation.

Mises' picture of the "entrepreneur" using double-entry bookkeeping to track the performance of management, and sacking managers who didn't perform adequately, is a naive fairy tale.

cs Tuesday, June 9, 2009 at 8:18:00 AM CDT  

I first viewed "The Take" in Kansas City nearly five years ago, maybe? It had a profound effect on me, as I was able to see knuckleheads, like me, take over a factory and make a living.

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