ParEcon Questions & Answers

Next Entry: Authoritative Decisions?

Corporate Divisions of Labor and Parecon?

vvCorporations are just conglomerations of people doing work? What is the core thing so bad about them, once wew get rid of their being privately owned?

Corporations are centers of massive private power and in that regard are worthy of unstinting opposition. Thomas Jefferson had that part right when he wrote: “I hope we shall take warning from the example of England and crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our Government to trial and bid defiance to the laws of our country.”

But since we have already dealt with private ownership of productive assets, here let’s address another less discussed attribute of corporations.

Producing any particular product or service requires various tasks. A hierarchical division of labor, the division of labor that defines corporations, is one that apportions these various tasks into separate jobs graded hierarchically relative to one another. Some sets of tasks combine into jobs that have more quality of life and/or empowerment effects. Other sets of tasks combine together into jobs that have less of those same attributes. The jobs therefore form a hierarchy with respect to quality of life effects and the power that jobs accord to workers, as well as associated remuneration and status. This hierarchy marks the difference between being an all-purpose gopher, a custodian, an assembler, a foreman, a manager, an engineer, a vice president, or a CEO. 

In any workplace, we can examine the pleasure or pain a job entails, the tensions it imposes, its sociality or isolation, its danger or sense of accomplishment, the pay it warrants, and the implications it has for empowering people vis-à-vis their own situations or the situations of others. If we find that some jobs have many more of the preferred features and some many fewer, then the workplace has what we call a corporate division of labor. On the other hand, if we can’t line up an economy’s jobs in a pyramid of their desirability or empowerment implications, then the workplace doesn’t have a corporate division of labor. 

So how do we judge the corporate division of labor as a means to getting economic functions accomplished? As with all institutions, we must examine the implications of this choice for solidarity, diversity, equity, and self-management. 

We will start with the most obvious aspect: if you have a corporate division of labor in which a few workers have excellent conditions and empowering circumstances, many fall well below that, and most workers have essentially no power at all, you will obviously not see all actors influencing decisions in proportion to the degree they are affected by them. For one thing, a corporate division of labor nearly always entails that actors have differential voting say over outcomes. Those at the top generally have more “votes” than those at the bottom (in fact, those at the top most often have all the formal voting rights with none for those at the bottom). But even if everyone has one vote in every major decision regardless of their job, nonetheless, with a corporate division of labor, each person’s specific circumstances will empower her or him differently. This will in turn ensure that despite everyone having equal formal say, for want of information, time, skills, and disposition, those with less empowering work will be less able to arrive at or manifest their views and those enjoying jobs that convey more information, confidence, and decision-making skills will dominate debate and choice. Formal democracy doesn’t guarantee real democracy. The wills of empowered workers trump the wills of disempowered workers because the empowered workers set agendas and easily override uninformed preferences, and most likely monopolize votes as well. The wills of disempowered workers are unlikely even to be heard, much less implemented. 

To see how this follows from dividing labor as indicated, imagine that overnight it is decided to hold formally democratic votes on various policies in a typical corporate workplace. The jobs in that workplace, however, are to remain as we currently know them. The managers, CEOs, engineers, custodians, shipping clerks, and assembly workers are all going to vote on large policies that provide the overarching norms for their daily activities—but in their daily activity they are going to do just as they have done before, with the same autonomy or lack of it, the same empowering work or lack of it, and so on. Despite the one-person-one-vote majority rules approach to the biggest decisions, we can predict that in the process of developing options to vote on and then arguing on their behalf, only the views of the employees with access to knowledge of the workplace and with relevant decision-making skills will come to the fore. They will set agendas. They will pontificate ponderously or compellingly, alone. Their desires will overwhelmingly dominate proposals, discussion, debate, and choice. The hierarchical distribution of empowering circumstances conferring to only a few actors informed opinions and decision-making information, skills, and confidence, will obstruct participation of all actors in voting. Corporate divisions of labor will ensure that a few would give orders and most obey, and these are not conditions conducive to all participating equally. With corporate organization, that is, formal democracy becomes not just a facade on top of unequal conception and debate, but an annoyance that wastes time and energy. If you are low in the hierarchy, why should you attend meetings and vote when your attendance and vote have little to no impact since real decisions are largely made before you ever arrive on the scene? Why should those who do impact outcomes put up with the participation of the uninformed and risk having to waste time trying to convince them which options to pursue? Hierarchical work organization empowers a few and gives those few every incentive to replace formally democratic rules with their own explicit domination of every facet of decision-making. Corporate divisions of labor do not advance and in fact overwhelmingly obstruct self-management.  

What implications do corporate divisions of labor have for solidarity?

The differential division of circumstances and power between you and me is obviously not conducive to empathy between us. If we make these differences systematic, with, say, 20 percent monopolizing the best and most empowering conditions of work, and 80 percent largely or exclusively doing what they are told— solidarity between those who rule and those who are ruled dies a quick but painful death. Worse, suppose, as is generally the case, that once there is a corporate division of labor it is elaborated into a broad and pervasive class division. Those above a certain cut-off in the empowerment hierarchy are in one class, which largely defines and controls its own circumstances and the circumstances of others below, and those who are below that cut-off are in another class, which obeys orders and gets what its members can eke out. The manners, lifestyles, dress, habits, and even language of the two classes come into opposition. The one class monopolizes infor- mation, training, knowledge, and the associated status and perquisites of expression and performance, plus all the income it can grab for itself via its inflated bargaining power. The other class, excluded from training and saddled with deadening activity, drags along behind with marginal bargaining power and income, either bent in submission, or, if aroused to its plight, angry and rebellious. The coordinator class looks down on workers as instruments with which to get jobs done. It engages workers paternally, seeing them as needing guidance and oversight and as lacking the finer human qualities that justify both autonomous input and also the higher incomes needed to support more expensive tastes. Workers in reply look up at coordinators as well-educated and knowledgeable— which in fact they generally are—but also as arrogant, elitist snobs lacking human sentiment and solidarity. Workers may wrongly accept that the empowerment and capacity differentials between themselves and coordinators are due to innate differences, and may thus bemoan their own sad—though seemingly inevitable—lot, while hating, but succumbing to, the coordinators’ arrogance. Or they may realize that the differentials in talents, knowledge, and confidence derive mostly from widely different circumstances in home life and schooling and of course in the division of labor that literally imposes hierarchical outcomes regardless of people’s actual potentials and capacities. In any event, as they may realize, such differences in no way justify differentials in income and power. But in either case, or in any more conflicted and ambivalent mix of perceptions, solidarity is impeded by such a class division, and hostility and supervision grow in its place. 

What about equity?

If we have a hierarchy of empowerment, we can confidently predict that those above will use their differential power to skew income to their own material advantage. Why? Imagine that some folks have better conditions and more control because of a hierarchical division of labor. Will those folks then decide that they deserve more income for being more trained, more informed, and for having more responsibility, as well as to feed their more refined tastes and desires? Or will they decide that the exhausted and less educated workers enduring worse conditions deserve more income for their greater sacrifice? 

The reason hierarchical divisions of labor obstruct material equity is that the only way for those who are higher to see that those who are lower in the hierarchy deserve more pay would be to feel that those lower are sacrificing greatly due to their worse conditions and lesser empowerment. But if I am on top and actively agree that those below are suffering, then to retain self-respect I will have to wonder if I am unfair for being on top. The way for me to instead feel good about being above others is to tell myself that I belong above them and that they belong below. I arrive at the conclusion that those who are disempowered are suited only to obey. They are comfortable and properly utilized when they are being obedient. They would be fish out of water and make a mess of economic outcomes if they were forced to bear more responsibility. We who are on top are comfortable and properly utilized in our higher station despite our having to shoulder tremendous responsibilities. We belong here and society needs us here, and both to be com- fortable and to be able to act on all this responsibility as well as so we can better enjoy the finer things in life that our refined tastes desire, we need extra income. The others won’t miss it, so let’s give it to ourselves, of course. That’s the logic that translates predictably persisting differentials in power into parallel differentials in income. 

What about diversity?

On the one hand, by forcing people into classes and pressuring conformity within and confrontation between classes, hierarchical divisions of labor reduce diversity within classes and impose harmful differences between them, neither of which is a positive attribute. But if we go further and look at jobs themselves, the case is starker. If jobs are created by combining a set of tasks that are internally similar to one another in their quality of life and empowerment effects, we can reasonably predict that most jobs will be less diverse in their attributes than if jobs are created by combining a set of diverse (but compatible) tasks so that the overall quality of life and empowerment impact of the package is average. It therefore doesn’t take extensive analysis to figure out whether a hierarchical division of labor will yield greater workday diversity than a non-hierarchical one. For about 80 percent of the workforce, the difference is between having a job that has only rote tasks and having a job with some rote but some conceptual tasks, or between having a job that has only tedious tasks and having one that has some tedious but also some engaging tasks. 

Can we summarize this brief survey?

Are hierarchical production relations consistent with the goals of a participatory, equitable, economy? Clearly they are not, for reasons obvious to most workers but nonetheless obscure to many economists. If someone’s work is mechanical and mindless it will diminish her or his self-esteem, confidence, and self-management skills. On the other hand, if someone’s work is exciting and challenging, it will enhance her or his ability to analyze and evaluate economic alternatives. Hierarchical work leaves different imprints on personalities. For those at the top, it yields an inquisitive, expansive outlook. For those at the bottom, it leaves an aggrieved and self-deprecating outlook, or induces anger. People’s confidence or self-doubts and their intelligence or ignorance all derive, in part, from the kind of economic activities they daily undertake. Under hierarchical arrangements, many capable citizens enter industry only to exert little influence and do exclusively boring work. Those few who advance to more fulfilling and commanding jobs generally have freer workdays and greater “thinking” time than those who remain at the bottom. Each promotion increases immediate power and also the beneficiary’s skill and information advantages to bring to future competitions. Not only will this lead to disparate opportunities for participation, but corporate production relations will generate remuneration as well. People who occupy favored positions in production hierarchies will appropriate more pleasant work conditions and greater consumption opportunities than those afforded their subordinates. And this will be the case whether the hierarchy is based on differential ownership or on differential access to information and decision-making opportunities, or on both. 

Johnn Kenneth Galbriath says it far more succinctly and elegantly:

 “The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.”

Next Entry: Authoritative Decisions?


All the latest from Z, directly to your inbox.

Institute for Social and Cultural Communications, Inc. is a 501(c)3 non-profit.

Our EIN# is #22-2959506. Your donation is tax-deductible to the extent allowable by law.

We do not accept funding from advertising or corporate sponsors.  We rely on donors like you to do our work.

ZNetwork: Left News, Analysis, Vision & Strategy


All the latest from Z, directly to your inbox.