Laborers As Directors With Bosses Possible

LABORERS AS DIRECTORS WITH BOSS POSSIBLE, SAYS LOUIS D. BRANDEIS WHO HEARD CARNEGIE AND ROCKEFELLER

Interview published in the February 14, 1915 Boston Post

"The question of introducing workers into the boards of directors of big corporations," said Mr. Brandeis to the Sunday Post reporter, "is one that must at present, be treated broadly.

"It cannot be effected merely by introducing a certain number of workingmen into the board of directors. It must come through creating a joint management of the business; that is, giving to its workers a substantial share in the responsibility of management.

"For this purpose the representatives of the workingmen in the management must be representatives selected not by the employer but by the men themselves. The employees must, through an organization, have the opportunity of knowing the facts concerning the management of the business and of selecting those whom they wish to have represent them in determining the problems which arise from time to time.

"In other words, we must have industrial democracy, and industrial democracy means the participation in the responsibilities of management as well as in the profits of the business.

"A first step, therefore, to participation of labor in the management of the business must be the recognition of the right of labor to organize, because in no other way than through organization can labor participate in management.

"The attainment of industrial democracy is not a matter which can be achieved over night.

"The workingmen must be trained by experience to bear their part in the management of business. That can only come through the gradual yielding to the employees of certain rights which in the past have been exercised only by employers.

"Ordinarily an employer exercises without any outside control the right of employment and of promotion and discharge. There are businesses in which employers, while reserving to the manager the right in the first instance either to discharge men or to deny or grant their promotion, have provided machinery by which the propriety of the exercise of that right may be reviewed.

"This is generally accomplished by means of a board called the board of arbitration to which any employee who feels himself aggrieved, because of discharge or because of a denial of promotion, can present himself, have his case heard, and, if the decision is in his favor, can either be reinstated, with wages for the period since the discharge, or can secure promotion with a compensation for the period in which promotion was denied him.

"In these instances the members of the board of arbitration are composed in part at least and sometimes wholly, of men who are in exactly the same position as the employee himself.

"Now, that is a large step toward industrial democracy, but of course only a step.

"Then there are other businesses in which there is a general board chosen by agreement between the employer and the unions. This board undertakes to decide the questions of whether the employer has exercised fairly and reasonably the legal rights which he had, not only of discharge, but of the joint administration of his business so far as it affects employees.

"Under these circumstances the employer by agreement with the union, creates a tribunal, a sort of court, also called the board of arbitration, which may pass upon the propriety of the employer’s acts. This tribunal is composed wholly or in part of employees.

"Again, in other businesses, you will find arrangements by which the employer has conferred upon associations of employees or some special board, the right to fix the general rules for the conduct of the employees in the business.

"These provisions are similar to those which obtain in many of the women’s colleges, where the students form a self-governing body and determine without the interference of the family the laws under which they shall live.

"All of these classes of participation by employees in the management of the business are steps toward the recognition of the fact that a business is no longer solely the employer’s business. It is the business in which employer and employee are both interested.

"And while these instances as suggested leave the employee, still in many respects, subject to the will of the employer, they present a great advance over the old system in which the business was recognized as the employer’s business, and the only liberty granted to the employee was either to stay under the rules made for him or to leave.

"This is, of course, a matter which requires preparation on the part both of employer and employee. On the employer’s part it requires rather a conversion. When he is once induced to recognize that safety lies in democracy, rather than autocracy, the long step for him has been taken. Then he is in position to get the advantage of the full benefit of the men’s work.

"The great advantage that will then come to business is that the liberation of the employee will add immensely to his efficiency. It will make the employee to a very much larger extent a thinker; it will make him realize that his work in his best field for development, and he will look to that as the employer generally looks to that–as a place for his greatest satisfaction in life.

"The employer constantly says now: "I am working much harder than any of my employees" – and it is true. But, while he is working harder, he is having the satisfaction which comes with work. The men who are denied participation in the business are denied that satisfaction, and therefore do not in many instances exert themselves to the utmost, although they may be working the full number of hours allotted, and maybe more.

"The problem is to get the most out of themselves, but however much they may wish to get the most out of themselves, they cannot possibly do so unless the conditions are such as to give them satisfaction in what they are doing; and they cannot get satisfaction except through freedom. A large part of the discontent of employees arises from the suppression of their own individuality.

"As a matter of fact, there are few things so interesting in life as work, under proper conditions; and the way that employers generally work establishes the truth of this. They complain because their employees do not work similarly, do not feel the responsibility of the business. Let them give the employees a chance to bear responsibility and the response will come.

"But unrest means ordinarily unused faculties, and there will be labor unrest until the faculties of the laboring man are fully utilized, and they cannot be without a share in the responsibility of the results of the business in which they are engaged.

"At present there is not enough property or enough profits produced to satisfy the reasonable demands of labor, that is the living to an American standard. The only way in which we can hope to attain the American ideals of citizenship for every American is to produce more.

"There ought not to be, therefore, any differences between labor and capital in the effort to produce more; they ought to co-operate fully. The only room for difference that exists is how to share the profits that are made, and unless they make more, labor cannot be satisfied.

"Unless more is made, therefore, there cannot be content on the part of labor, just as there cannot be content on the part of labor unless labor has something to say in the management of the business.

"Without content you cannot have full efficiency. No matter, therefore, how beneficent may be the purpose of the employer in the conduct of his business, he cannot get from the employee full efficiency without content and without the release of his faculties from restraint.

"It is, of course, difficult to effect the transition from an absolutist capitalistic system to a system of industrial democracy, but it must be worked out, and it is being worked out.

"One marked example of what has been and can be done is presented by the co-operative societies, which have attained such extraordinary success in England and Scotland and many parts of Europe, and which are now developing in America.

"The possible forms of co-operation are numerous, but in some form or other really high efficiency cannot be attained (at least in countries where men are accustomed to democratic ideas) until the workingman feels that he is working, not for somebody else, but for himself and others jointly.

"That is of the essence of industrial democracy. It is the contrast between political democracy and industrial autocracy which is the main cause of the present unrest, and which is a patent cause of the relative inefficiency of men.

"I would urge careful consideration by Americans of the advantages of co-operative enterprises, and bid them distinguish clearly between combinations of capital on the one hand and the co-operation of labor and of consumers on the other.

"In a democratic community we naturally long for that condition where labor will hire capital, instead of capital hiring labor. The community should be served either by laborers who hire capital or through those co-operative enterprises, private or public, by which the community undertakes to provide itself with necessaries.

"Of this nature are the retail co-operative stores with all of their adjuncts of wholesale business and manufacturing. Their purpose is to serve the consumer, not primarily to make money.

"Fifty years of growing success of the co-operative movement in England shows what can be accomplished on these lines. It shows also to what extent the ordinary working man may develop under democratic conditions to be manager of ‘Big Business.’

"England’s ‘Big Business’ is her cooperative Wholesale Society. Its annual turnover is now about $150,000,000, an amount exceeded by the sales of only a few American industries: an amount larger than the gross receipts of any American railroad except the Pennsylvania and the New York Central.

"Its business is very diversified. It includes that of wholesale dealer, of manufacturer, of grower, of miner, of banker, of insurer and of carrier. It operates the biggest flour mills and the biggest shoe factory in all Great Britain. It manufactures woolen clothes, all kinds of men’s, women’s and children’s clothing, a dozen kinds of prepared foods and as many household articles. It operates creameries. It carries on every branch of the printing business. It is now buying coal lands. It has a bacon factory in Denmark and a tallow and oil factory in Australia. It grows tea in Ceylon.

"And through all the purchasing done by the society runs this general principle: Go direct to the source of production whether at home or abroad, so as to save commission of middlemen and agents.

"Accordingly it has buyers and warehouses in the United States, Canada Australia, Spain, Denmark and Sweden. It owns steamers plying between continental and English ports; it has an important banking department; it insure[s] the property and person of its members. Every one of these departments is conducted in competition with the most efficient concerns in their respective lines in Great Britain.

"The Co-operative Wholesale Society makes its purchases and manufactures its products in order to supply 1399 local distributive co-operative societies scattered over all England, but each local society is at liberty to buy from the wholesale society or not, as it chooses, and they buy only if the Wholesale Co-operative Society sells at market prices. This the co-operative actually does, and it is able besides to return to the local a fair dividend on its purchase.

"Now, how are the directors of this great business chosen? Not by England’s leading bankers or other notables supposed to possess unusual wisdom, but democratically, by all the people interested in the operations of the society, and the number of such persons who have directly or indirectly a voice in the selection of the directors of the English Co-operative Wholesale Society is 2,750,000 for the directors of the wholesale society are elected by vote of the delegates of the 1399 retail societies, and the delegates of the retail societies are in turn selected by the members of the local societies, that is by the consumers, on the principle of one man, one vote, regardless of the amount of capital contributed.

"Note what kind of men these industrial democrats selected to exercise executive control of their vast organization—not all wise bankers or their dummies, but men who have risen from the ranks of co-operation, men who by conspicuous service in the local societies have won the respect and confidence of their fellows.

"The directors are elected for one year only, but a director is rarely unseated. J.T.W. Mitchell was president of the society continuously for 21 years.

"Thirty-two directors are selected in this manner; each gives to the business his whole time and attention, and the aggregate salaries of the 32 is less than that of many a single executive in American corporations, for these directors of England’s big business serve each for a salary of about $1500 a year. That shows what industrial democracy can do.

"We in American must come to the cooperative idea. All over this country today co-operative societies are springing up. They rise; naturally many of them fail; but out of the seeds of each failure new ones arise, and with experience comes ultimate success. Every man who is participating, whether as consumer or officer of a co-operative society, is aiding in the development of that industrial democracy, without which America cannot attain her ideals of manhood."

"Have you every heard of a division of industry into labor, efficiency and capital?" Mr. Brandeis was asked.

"Yes, there have been such suggestions, but it seems to me to be a false division. If there is to be any division, it should be a division between labor and capital. All labor should be made efficient, for there is no labor which is of necessity unskilled labor. If labor is unskilled it is because the greatest efficiency hasn’t been attained.

"Taylor showed the difference between the skilled and the unskilled loading of pig iron into a car.

"It was the simplest hand work to lift a pig of iron from the yard into a car; but by proper skill, that is by scientific management of that simple operation, it was possible to produce nearly four times the result with no greater labor.

"Taylor showed in the same way what has been called the unskilled occupation of shoveling coal, two or three times the amount could be shoveled by the resort to proper methods and the use of proper tools. Shoveling therefore ceased to be an unskilled occupation.

"And so in all lines of business activity rests this opportunity, through care, through planning and through instruction, as well as through invention, to discover methods by which the same result may be achieved with a less waste of effort or of material.

"There ought not to be any division strictly between labor and efficiency, that term I supposed was used to express the management. Management and labor should be one, because the principles of efficient management ought to penetrate every part of the field of labor.

"When that is recognized by all engaged in industry as the aim [to] be attained, productivity will be immensely increased and the remaining demands of all engaged in industry will be satisfied."