Abstract Self-governance, one of the hallmarks of worker co-operatives, is often referred to as "workplace democracy." T...

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Abstract Self-governance, one of the hallmarks of worker co-operatives, is often referred to as "workplace democracy." The four worker co-operatives examined here differ among the mechanisms through which their worker-owners express and realize views on what ought to be done in their businesses. These organizations differ as well in origin, size, organization and authority structure, and external affiliations; and their members interpret the traditions and potentials of "workplace democracy" differently. Yet all four also exhibit patterns of work with implicit practices of negative feedback that allows members to feel confident that their effort and expectations are not being exploited by other members' free riding. This organizational pattern is informed by a specifiable “logic of participation” which has homologues in other Japanese organizations. However, in worker co-operatives such implicit direct participation in governance fails to sufficiently address decisions on reproduction: how to decide how much and in what to invest. A workable practice which integrates the domains of expertise, experience and equality remains elusive enough that moments of hard-to-resolve disagreement arise.


Outline of an Argument: “Worker Participation in the Japanese Democratic Workplace” I. Five Views on How to Run a Business 1.

Capitalist: Centralized authority and private ownership


Old Left: Centralized authority and public ownership


New Left/Participatory Democracy: participation in governance transfers directly to productivity at work


New Right/Rational Choice: paradoxically, more democracy leads to less participation


Japanese co-operatives: the logic of mutual investment and self-management

II. A generation beyond the emergence of New Left and New Right, some results are becoming available: 1.

combining democracy and ownership in the workplace is better than either separately, which are typically worse than neither;


connections between democratic management and productivity are indirect;


in fact, paradox raises its ugly head here too:

III. While decentralized solutions are more fundamental than centralized solutions, more democracy increases the risk of “free riding.” Why? 1 . Governance has two aspects: a. authorization b. monitoring/enforcement 2. Democratic authorization, whether direct or indirect, will not authorize direct monitoring. VI. Can this problem be solved? Yes: because the relationship among workers in a worker cooperative is 1. based on mutual investment in a process of production rather than an exchange relation, 2. a solution to shirking in work participation can be linked to authorization procedures.


VII. Such a solution has two parts 1. monitoring can be built into the work procedure in ways that a. both allow monitors to plausibly deny they are monitoring each other as they work and b. contribute to productivity; 2. the logic of participation in relations of production based on mutual investment differs from that of exchange relations: a. by assuming participation rather than abstract choice b. by protecting the relationship from exploitation by authorization with limited, specific grounds for veto/non-participation within the relationship.

Introduction As well as any single slogan can, “participatory democracy” identifies the distinction of New Left from Old in the late 1960s. Even as the forces of reaction gathered in Bohemian Grove to raise Ronald Reagan as their standard bearer, progressive activists interpreted this slogan through the 1970s and into the 1980s as a call to reorganize, reinvent and revivify both workplace and political life. Watershed works such as Carole Pateman’s “Participation and Democratic Theory,” June Nash’s “Popular Participation in Social Change: Cooperatives, Collectives and Nationalized Industry,” and Alasdair Clayre’s “The Political Economy of Co-operation and Participation” documented, theorized and encouraged a “democracy in the workplace” movement. The Yugoslav industrial experience became a “third way;” knowledge of the Mondragon co-operative complex spread beyond the fastnesses of Basque Spain.


In the face of the well-known paradox arising from rational choice theories that more democracy leads to less participation all around (Jensen and Mechling 1976, Hauptmann 1996), evidence continues to mount that the aspirations of this movement were not misplaced, that firms which couple employee ownership to participatory decision-making enjoy a synergy leading to superior performance (Dow 1993:115; Vanek 1992:185-86; Winther and Marens 1997). Here I ask Japanese data from my 1993-94 participant observation fieldwork at four worker cooperatives in business today in the Tokyo area why this should be the case. These data answer back that there are two distinct and only indirectly linked aspects to governance: 1) how will the work be performed and 2) what will be done with the earnings from it. They point up a relationship missed by both rational exchange and participatory democracy theorists: as democracy spreads, it is not that participation decreases directly and for that reason, but that the danger of free riding rises, and, unchecked, reduces workers' willingness to work and to participate in self-governance. In a democratic workplace, opportunism most easily takes the form of free riding. But free riding can be mitigated. Worker co-operatives don’t lack incentives to reduce free riding, but knowledge of effective structures through which to do so. The worker co-operatives examined here all have governance structures which give workers confidence that their co-workers too are working effectively and enthusiastically built into the work itself. But they are not the product of explicit democratic processes. They are the results of the evolution of work practice in a strategic context. Workers do not, and do not have to, explicitly identify these governance structures to each other as mechanisms for effective peer monitoring of work performance or to themselves as transfers of resources from helper to the worker who gets helped. Acting through these structures workers may even inspire themselves and one another to work more effectively.


In the three workplaces where the workers all do more or less the same tasks, these structures takes the form of regular opportunities to monitor each other's work through offers of help with work and related strategies. In the fourth, in which workers are almost all doing different tasks often out of sight of the other workers and even away from their workplace, workers meet one or two evenings weekly for three to four hours to report on, evaluate, and plan their work. The details of my analysis of governance and work patterns at these co-operatives are at On the other hand, matters of the distribution of earnings and investment planning are handled much more differently in all four co-operatives: Azusawa A crew of nine women and two men, all between the ages of 55 and 75, from the North Tokyo Jigyödan cleans Azusawa Hospital's floors and toilets. Jigyodan (Japan Worker Co-operative Union) has over 10,000 members spread among ten to fifty person groups engaged in a wide range of different businesses around the country. The Azusawa crew has no direct control over its earnings from the hospital contract. This money goes directly to Jigyodan, which keeps 25% of all earnings. Jigyodan handles investment issues and business decisions with staff work authorized through indirect, representative democracy of its members. Meetings of member representatives involve hundreds of people and are typical of Japanese meetings of this type: even the details of proposals are worked out beforehand, and the delegates authorize staff proposals without objection and usually without extensive discussion. Jigyodan procedures in this aspect of workplace democracy have drawn explicit criticism from supporters of direct member democracy but not yet from members.


There is substantial local autonomy at the work group level. When the owner of a large apartment building across the street from the hospital asked this crew if they could do janitorial work he required there, they talked the matter over with their "counselor." The job of counselor is much like that of the business agent of a conventional union, and out of which the job actually developed. With his advice they decided among themselves to take the job on when they finished their hospital work. They carried out the negotiations for the contract themselves with the close advice and participation of their "counselor." Twenty-five percent of this job too goes to North Tokyo Jigyodan. Shun Fourteen housewives from 40 to 60 years old form the wäkäzu korekuteibu (“workers collective”) which operates the lunch catering restaurant Shun (“In Season”) as part-time workers. I have posted an analysis of the origins and growth of this Women’s Workers Collective movement at In its fourth year when I went to work there, Shun was already finding its space on the ground floor of the Saitama Prefecture Seikatsu Club Consumer Co-operative Building cramped.. Japan's tax and equal employment opportunity policies are designed to bolster a “breadwinner plus housewife” family system. These policies have given rise to a phenomenon known in Japan as "The Million Yen Wall:" in general, any money a woman earns between about $10,000 and $20,000 is lost to taxes. Consequently, and as a deliberate effect of policy, at the wages married women are paid, it does not make sense for them to work more than about 25 hours per week. Shun is a worker co-operative: its owners pay themselves an hourly wage and because they are successful, they could also pay themselves a substantial dividend as profit sharing. But they cannot take this money, it would simply be taxed away. As a result, the decision to reinvest their


earnings beyond their annual wages of about $10,000 each is an easy one for them. Where or how to invest is not as clear. While I was at Shun they made two substantial investments. They bought a new compact car with which to deliver lunches. Before this, they used members' own cars. The idea was an obvious one and they took it in stride. When they build up enough savings, they will buy a second car. The second investment was more complex in many ways: they were invited by a regular customer to bid on the catering for a large party of several hundred guests at the dedication of a new building. They had never undertaken a job like this and it represented a major challenge, both to their budget and to their capacities. The decision was made almost informally: four women were openly enthusiastic about the possibilities such a coup might lead to. If any members were opposed, they remained silent. Everyone pitched in, four women slept over the night before, they closed the restaurant the day of the party, and only two women did not participate in the preparations, one with the flu and one to travel with her family on a skiing holiday planned months before. Tsubasa The structures of age and authority in this transport company makes it look much more like a typical small Japanese business than most other worker co-operatives in Japan. They have a president and vice-president. Vice-president Kitajima, 45, works with the younger workers on the trucks. They work by the task and not by the hour, and monitor themselves as they work, moving peoples’ stuff by means of a "bucket brigade"-like practice. They work hard fast and well, and go play when the work is done.


But what does their 60 year old president do? Tsubasa's public face, President Konishi schmoozes with other businessmen, and thinks how the business might best proceed. Uniquely, he has loaned the business a good deal of money mortgaging his inherited house. So he thinks he should call the shots on grounds of 1) age 2) experience, 3) office, 3) investment. Several of our conversations focused on his dissatisfaction at the members' role in making investment decisions, rather than leaving the running of the business to him. As far as it applies to investment decisions at Tsubasa, he would dispense with workplace democracy entirely. This divergence of how to reinvestment earnings came to a climax at the 1994 annual meeting. President Konishi wanted to invest in something that would make money quickly, electric vehicles in particular. The rest of the membership wants to invest in trucks, their particular means of production. The vice-president took the side of the workers, isolating the president. The membership would not authorize any investment in the electric vehicle business for that year, even though President Konishi threatened to resign. They bought a new truck that year, he did not resign. He vows to try again next year. Ecotech At EcoTech too the president is even more a dynamic visionary; he has great natural authority within a consensual decision making process and his co-workers admire him a great deal. I watched plans to expand the business into Kyoto and to incorporate two new product lines develop with no formal authorization apparatus exercised. Ecotech’s engineers and technicians had been a part of a larger group that had struggled for eight years by means of self-management of their workplace facilities. Originally a branch of Toshiba, they won a landmark court case when Toshiba tried to divest that branch illegally.


President Suzuku and the small number of others who make up Ecotech now were expelled from the larger settlement group after two years because of the visionary direction in which he wanted the business to go. He wanted the business to become the design hub of a social movement for engineered environmentally friendly technology, while most of his co-workers wanted to continue their business as they had been running it during their labor dispute. The split was not amicable, and left recriminations over the rights to manufacture some popular products. I have placed an analysis of EcoTech's network structure at Conclusion These brief glimpses into decisions to reinvestment retained earnings in these four worker cooperatives are certainly not conclusive, but they do at least conform to expectations arising from the general logic of participation in groups based on mutual investment rather than exchange. Participation in groups based on mutual investment differs in two significant ways from the logic of buying or voting. First, participation by all members is assumed as a protection against a minority's ability to block collective action rather than abstract choice to participate or not. Second, participation is protected from tyranny of the majority by the provision of definite grounds for non-participation or veto, that either 1) an individual's participation costs will be unreasonably high, or 2) that a member will not be able to benefit from the opportunity created despite his investment. Under such a set of operating assumptions, proposals do not simply get a “fair hearing.” Participants expect to act on all proposals that do not violate these above conditions. I have found these patter in Japanese hamlets where it occurs by homology as a kind of group based on


mutual investment, and it appears by analogy in large Japanese organizations in the characteristic institutions of ringi, consultation and unanimity.