Vvratusa isa 2008

Unreflected «blind spots” of the empirical studies of privatisation and participation

Here presented review of the researches of privatization and participation in Serbia and other countries from the end of the XX and the beginning of the XXI century, suggests just at the first sight that the main obstacle to comparative and longitudinal research of attitudes toward privatization and participation and experiences of their implementation presents the fact that technical conditions are missing – first of all, the common research instrument. Such instrument is doubtlessly indispensable for provision of comparable data during successive, regularly and sufficiently frequently organized data gathering activities. From this absence ensue also numerous methodological problems of comparability, reliability and validity of the research findings that many authors point out to, like the high dependence of results from the indicators and model equation specification chosen, performance estimating techniques used, as well as from the successfulness in the isolation of the effects of employee financial participation from other organizational factors and from the causality direction interpretation (PEPPER III, 55). There exist some additional theoretical and methodological problems specific to research of privatisation and participation in Central, Eastern and South-eastern European countries (64-65): unrepresentative samples of firms surveyed, incomparability due to different methodologies employed, misreported or miss measured data, short and differing periods of observation, different institutional settings (Blaszczyk et al., 2003, p.12), and selectivity bias whereas the first privatized firms and newly set up private firms have the most absorbed assets and managerial skills of previous state-owned or social firms at the beginning of the transition, so that workers had no interest to buy shares of loss-making firms (Svejnar, 2002, p.15). The conscience about these problems should warn us to take all the research evidence “cum grano salis”.

The results of the existing researches of privatization and participation so far suggest the conclusion that there is the need for additional effort to formulate the common core of questionnaire items that would enable gathering of comparable, valid and reliable data on relevant issues that are formulated in a theoretically consistent and unequivocal way. At this place it should be underlined that having in mind that each research presents dialectical social relationship and process, the conditions for estimation of the degree of reliability or consistency of our measurement, namely repetition of the use of an instrument under the same conditions with the same subjects, are practically impossible to obtain. The accent therefore must be on the internal consistency of instrument items measuring the same variable. In the similar way it must be born in mind that the estimation of validity, or the degree to which we are accurately measuring what we suppose and claim to be measuring, or accuracy of our measurement or observation, is constantly subjected to reinterpretation of all involved in research interaction and transformation. Necessary common core should contain questions concerning the social and demographic determinants of often opposed attitudes and experiences of different social groups toward at the least three aspects of their relationship towards privatization and participation: 1) the relation toward the basic value and normative-institutional principles of various types of ownership and decision-making participation of producers and consumers at the workplace, in local community, nation state, regional and worldwide organizations; 2) advantages and disadvantages, positive and negative experiences of the effects of existence or absence of such participation and 3) one’s own readiness to take part in ownership and decision-making from local to global levels of social existence. Most of the econometric quantitative studies do not contain at all questions on attitudes, while the informal qualitative studies often contain just one of the mentioned three aspects of the desirable multidimensional and multidisciplinary approach to the research of the complex participation field.
It is nonetheless just at the first glance that the absence of common research instrument presents marely technical obstacle on the way of the comparative and longitudinal research of privatization and participation. Just a little less superficial observation reveals that this absence presents the expression of eminently sociology of knowledge problem of social power relations between actors who participate in the research process and have opposed social interests concerning maintenance, reform or radical transformation of the established social relations due to playing of opposed roles within the class division of labor into commanding and executing one. These actors because of this have as well contradictory answers concerning the question of perspective from which the research of privatization and participation should be conducted, as well as concerning the application of research findings. The formulation of questions and answer modalities therefore is not and can never be value neutral technical problem. The formulations of questions namely intervene precisely through their very content in the research situation understood as a social relationship, by orienting the attention of the respondents on certain aspects of the researched problem and averting their attention from other aspects. Operationalization of measuring instruments and ensuing analysis of the obtainned results consequently expresses more the opposed attitudes of the financing orderers of research and researchers themselves about the desirability of capitalist or socialist strategy of transformation of dominant social relations on the world level after 1989 (compare for instance Bolčić, Silvano, 1994; Michael Albert, 2000; Lazić, Cvejić, 2007) than they stimulate respondents to critically think through different aspects of the posed question and choose those answer modalities which correspond the best to their beliefs. It must be always kept in mind that these beliefs at the least in one part are forming themselves dynamically also during the very research process. Formulations in the questionaire are themselves in fact simultaneously the product and the means of reproduction of all three forms of social power – the attempt at imposing one’s own will in the process of decision making, the attempt at prevention of decision making about specific themes, as well as the attempt to mold the will of potential participants in decision making (Lukes, S., 1974).
Among different possible orderers of research, transnational financial and corporate capital has at its disposal the greatest degree of all three forms of social power and is interested to regain access to and overtake the control under the most advantageos conditions for itself over huge state and other forms of collective property that were developed since the October revolution, the Great depression, post Second World War reconstruction and decolonization in all parts of the world, with as little opposition and difficulties as possible. Anotherwords, big bourgeoisie is not interested in realization of international researches which would be critically oriented towards norms and values of capitalist private ownership. Conscious that the force of arms can just in the short run crash or contain the uprising, big capital is also interested in researches which examine the possibilities of reforming capitalist relations in such a way to diminish the costs of controle of the disinherited majority of the population.

Among the most frequent objects of researches financed by big capital, the most subjected to all three forms of social power are unskilled direct producers and wage workers of all qualifications who lost or could not find gainful employment during realization of the process and project o privatization. If they would succeed to self-organize themselves, they could become alternative orderers of research oriented on overcoming of capitalist relations that reproduce exploitation and repression and realize conditions for autonomous and active instead of dependent and passive participation in life reproduction decision-making.

In such social and historical context of social power relations, research subjects have to pose to themselves theoretically, methodologically and practically necessary and in the last resort self-reflexive question: what is the social standpoint from which they and other research actors are defining research questions and are recommending in the conclusions the “positive” and “negative” aspects of researched problem, in our case the process and project of ownership relations’ transformation and participation in decision-making?
As it was done already on the example of analyses of questions’ and conclusions’ formulations in researches conducted in Serbia, in the following pages will be analysed the discourse practice of PEPPER III report from the same sociology of knowledge angle. The main aim of such analysis is to draw the lessons about the unreflected “blind spots” of value positions of all participants in the research relations, hoping to achieve greater control of their influence in future research actions and processes and projects of realization of the preferred form of social relations’ transformation.

The authors of PEPPER III report do not tackle directly the problem of their own possible research bias and preferences. They just state the fact that several governments of the “old” and “advanced” EU member states, as well as the organs of the EU have been actively promoting since 1992 employee financial participation through fiscal incentives and through new relevant legislation. They are implicitely or explicitely supposing that the reason for this support was and remained contained precisely in the positive effects expected from this participation (42, 65-9, 317) and do not problematise the fact that the authors of EU directives require creation of “works councils” (COUNCIL DIRECTIVE 1994; DIRECTIVE 2002). This usage of a broad all encompassing adjective expression “works” instead of specificaly defining adjective “worker’s” which came into use in revolutionary situations of self organization of direct producers and citizens from the time of the Paris commune, suggests that the authors of the EU directives concerning councils have chosen the theoretical and methodological research and policy measures framework which is focused on social integration and conflict blurring effects. This impression corroborates the fact that EU directives concerning works’ councils limit themselves mostly to the domain of information and consultation of workers (what constitutes “pseudo-participation” according to the typology of different forms of participation of R. Supek, 1974) and does not extend to actual participation in decision making, from which would follow the participation in enterprise results as a consequence of the strategic decisions taken. Because of this we can conclude that the main reason for support of western governments, EU politicians and employers’ associations to financial participation of the employees, is to secure social integration of direct producers and of wage workers in general through different forms of employee financial and consultative involvement in enterprise functioning and thus diminish risks of sharp confrontations of social actors having contradictory interests.

Similar social integrative intentions present the common thread pervading the PEPPER reports whenever the potential advantages of employee participation schemes’ implementation are being pointed out to, like their contribution to increased employee commitment, identification with the firm’s goals and motivation, higher productivity and competitiveness, reduction of the costs of monitoring individual workers, introduction of greater wage flexibility through lowering of basic wages supplemented by financial participation in enterprise results and sharing risks of the firms success or failure (see for example pp. 9, 38-9, 42, 47, 51-3, 55-6, 58, 66-67, .72, 75, 80, 82, 85, 87, 93, 306…). Judging on the basis of the use of terminology of cooptation of potential opponents to dominant social relations, it can be concluded as well that authors of these reports do not sympathize with radical “leftist” critique of capitalism and that they limit themselves to promotion of the employee workplace participation and involvement as the principal institutional reform that might succeed where state control has failed in equalizing power and wealth and reducing alienation. Sometimes it is hard to distinguish some formulations of the authors of PEPPER III reports from the formulations of the “rightists” who mostly abandoned crude support to increasingly inefficient traditional hierarchical and authoritarian relations between workers and capitalists, who therefore became partisans of a new wave of innovative managerial strategies, and began to search in the peoples’ capitalism an alternative form of labor-management relations that increases motivation of workers and their productivity (Hansmann (1990, 1751, 1761-2). One of the founders of the British critical management studies compares this idea of “lowering monitoring costs” with “the crypto catholic anticipation” that employees will «discipline themselves with feelings of anxiety, shame and guilt that are aroused when they sense or judge themselves to impugn or fall short of the hallowed values of the corporation” and states that “it is disingenuous to use the terms ‘participation’ and ‘involvement’, let alone ‘democracy’ to describe processes for facilitating employee consent to values and practices favored by executives hired to do the bidding of employers” (Willmott, Hugh C.1993 p. 523; 2003 p.84).
The most illustrative for this kind of “convergence” in the selection of key characteristics and advantages of employee participation between its “left” and “right” advocates presents the statement “that possible inefficiencies of labor managed firms are caused not by insiders’ ownership per se, but by insiders’ full control of enterprise activities” (67-68). It is undoubtedly true that as long as capitalist social relations are dominant, there simultaneously exist the contradiction between the interests of the employees in their role of commodities’ and services’ production, on the one hand, and of their interests in their role of owners and consumers, on the other hand (Korsch, Karl, 1974; Vratuša, V, 2000). The author of the just cited statement, however, obviously accepts the view that labor managed firms in which insiders have controlling interest have always been and will always remain systemically inefficient. The author of this statement therefore confines herself to recommendation of government stimulated reforms of existing capitalist firms in the sense of the minority employee shareholding. Such confinement to reforms of dominant capitalist relations implies as well rejection of the radical leftist program of emancipation through socialization of ownership and realization of integral self-management in the sense of overcoming of class division of labor into commending and executing work functions as well as of relations of economic exploitation, political repression and social inequality and discrimination that ensue from this class division (Vratuša, V., 2006).

Value assumptions of the authors of the PEPPER III report are best resumed in the chapter “Workers’ Financial Participation: What Future Place within the European Social Model?” In this chapter Daniel Vaughan-Whitehead criticizes EU commissionaires who show little concern for social issues and economic democracy, arguing that in the conditions of high unemployment and low living standards, especially in the new and candidate EU member states, economic performance and employment present the priority which, when attained, will only than afford and enhance social protection as a consequence (EC, 2005). Such economic policy orientation Vaughan-Whitehead warns will lead to more extreme forms of capitalism, and progressively will put into question the European Social Model (90). It is easy to discern from these formulations that Vaughan-Whitehead is criticizing neo-liberal approach to social policy advocated by one part of the ideological representatives of the controlling packages’ owners of the biggest transnational corporations that are interested to maximize their profits by minimizing labor costs through dismantling of the social protection and wealth redistributive remains of the so called welfare state in the “old” EU member states and of the so called real socialism in the “new” and candidate ones. Vaughan-Whitehead therefore attempts to convince his readers that active social policy including different forms of legally supported participation of employees in enterprise results not only would not undermine economic performance but would on the contrary generate economic growth (70).

The standpoint, from which Vaughan-Whitehead criticizes neo-liberals, emerges from his summary of the core common values, legal elements and policies concerning fundamental working and social rights and diversity of intervention systems of national governments and other “responsible” concerned actors involved in social dialogue and coordinated employment policy (employers associations, trade unions), aspiring to increase the quality of industrial relations and democracy at the work place, culture, environment, education and ways of living in general and promote equality of opportunity and non-discrimination in knowledge based societies. On the first place among these common core elements that constitute the European Social Model Vaughan-Whitehead mentions “economic competition” in the meaning of “clear recognition of the adoption and development of market economy”. Recognition of market economy the most often means espousal of dominant capitalist social relations and institutions. On the second place among common core elements Daniel places “social cohesion and solidarity” in the meaning of a specific concern to reduce inequalities, promote redistribution and social protection (71).
It is well known from the history of workers’ movement that social democracy has always attempted to reconcile the core values of economic competitiveness and social equity, in fact the opposed interests of capitalists and workers. Most of the time, social democracy partisans are losing from the sight the fact that there is a systemic limit to which it is possible to attempt to attenuate poverty and inequality, these systemic products of capitalist enlarged reproduction of exchange value for profit, through redistributive measures – they forget namely profit itself (Vratuša, V., 1991). From the social democratic perspective it is not visible for example that the lack of investment capital which is in all mentioned country studies of PEPPER report underlined as the main problem of the enterprises in the employee ownership, can not be resolved in the circumstances of the privatization of the financial flaws and their controle by the transnational finantial oligarchy.
Transnational capital is not much interested to diminish these wage level differences by increasing low wages in new EU member states, but on the contrary to impose lowering of higher wage levels in the “old” EU member states through outsourcing and investing of capital in regions were the wages are lower than in EU and protection of workers’ rights weaker or non-existent. The neo-liberally oriented authorities in the state organs of the most transition countries are also not interested enough in financial participation schemes and are on the contrary developing extreme forms of primitive accumulation of capital in the attempt to boost competitiveness of enterprises in their countries and attract direct foreign investment through low wage and tax levels. Another words, EU member national state governments and their representatives in the organs of the EU itself, are implementing policies that are in accordance with the interests of transnational capital and not against them. It is therefore not “paradoxical” (87) at all that adverse developments of financial participation in new and candidate EU member states did not induce the European Commission to move towards more binding provisions and framework directives in the aria of employee participation, but on the contrary induced it to move towards less legislative action and regulation (Verheugen, G. 2005) and away from the European Social Model.
In contrast to national governments and EU Commission at the moment, some international organizations are becoming more active in the issue of employee participation. European Bank for Reconstruction and Development in Hungary improved access of small employee owned firms to money needed for restructuring, and International Labor Organization is providing systematic empirical evidence on the effects of employee ownership (Vaughan -Whitehead et al., 1995.; Uvalić and Vaughan-Whitehead, eds., 1997…) and of the cooperatives, as well as training of employees and managers in employee owned firms. Vaughan-Whitehead calls upon ILO and other organizations on the international level to engage in “more voluntaristic initiative on financial participation” and a “more coherent and comprehensive framework on financial participation at international level” to complement at the time of the report writing the insufficient initiatives at other policy levels concerning the European Social Model (90).
European Federation of Employee Share Ownership (EFES) acts as if it reacted to this call of Vaughan-Whitehead. Confronted with the situation in which the majority of new member states were not interested or were even hostile toward employee participation and in which the political interest for employee ownership fell dramatically also in Brussels itself, undertook the initiative to request from all new member states to adopt a legislation allowing employee shareownership plans based on internationally established minimal standards: formulation of annual employee share purchase plans; 20% discount price of shares free of tax; the possibility of additional income on the basis of shares up to 5.000 Euro or 10% annual wage; 3 years blockage of transactions with shares bought at discount prices. EFES has by July 2007 already received answers from Slovenia (whose Parliament after two refusals in previous years voted a new legislation on February 29 2008), Estonia, Latvia and the Czech Republic (EFES, 2007). The same organization published the table presentation of the chronology of the increase of the percentage of the 2500 biggest European firms in 29 European countries with 32 millions employed which had adopted the employee share ownership plans from on the average 2% in 1944, to 17% in 1989, to 40% in 1998, to 60% in 2001 and to 80% in 2007. In the last year covered with this review, could be noticed big differences between several groups of countries: while in UK 99% of the of the biggest firms in 2007 had plans of employee financial participation, in France 93% and in Nordic countries around 85%, in South European “old countries” there were between 40% and 50% of such firms, and in the former socialist Poland after the devolution of all forms of collective property up to 1990’s, this percentage has again risen to 33% in 2007 (EFFES, 2008).
It must be said at this place in defense of PEPPER reports and organizations like EFES that it is undoubtedly true that uniting of trade unions, other citizens’ associations and researches in “old” and “new” EU member states, as well as in the countries of the so called Third World, around the priorities in the common interest of employees and absolute majority of all citizens, including the fight for increased participation in ownership, profit and decision-making, would contribute to both slowing down of the negative tendencies of the rising deindustrialization and neocolonial dependence, unemployment, powerty and rightlessness and to improvement of living standard of direct producers in the “new” EU member states and in former and present colonies and neocolonies, on the one hand, as well as to more successful opposition to the tendencies of the deterioration of the previously attained living standard in the “old” EU countries, USA and Japan, on the other. Trade unions can and should influence the creation of legal and strategic assumptions to block „tranzition reforms“ decided by minority in the interest of minority. The similar action of united trade unions and associations of citizens in Halland and Urugway enabled passing of the laws that forbid privatization of water for example (Hall, David, Lobina, Emanuele, de la Motte, Robin, 2004). Forbidding or at the least restricting foreign and domestic private ownership of strategic sectors of economy, natural resources, communal systems and social services is essential in order to make these resources and services accessible to all social strata and to the future generations. Legal norms should also oblige foreign investors to continue the production in plants taken over and to reinvest at the least 50% of the profit into local work places. On the basis of proceeds of the sold enterprises for which the good price was attained, the funds should be provided for the social protection and retraining of unemployed workers and formation of innovation oriented cadres, as well as for cheap credits for small and medium enterprises producing ecologically safe and energy saving products of the information era, including the organic production of healthy food.
Оrganization of the permanent paritipatory action research of the scope as wide as possible and directed toward the resolution of social relations’ transformation problems through collective cooperative dialogue that transforms the objects of research into its subjects regaining control of their life reproduction (Vratuša Vera, 1999a; Greenwood, Davyd, Morten, Levin, 2007), would contribute the most to the elimination of the clash between preferences of the majority of citizens and actual envelopment of social relations’ transformation. Such research would stimulate social dialogue concerning strategic development alternatives and self-reflexive interactive social creativity from the local and national to the regional and transnational level, overcoming of apathy and lack of information, of the feeling of fear and helplessness in trade unions as well as among citizens in general. Research of the experiences of the reorganisation of national and transnational companies and public services in „old“ and „new“ members of EU and on other continents, as well as of the experiences and attitudes of unionised emploees and those not organised and of the unemployed citizens on cooperatives and participation in ownership and management in all firms and especially those in strategic sectors of the economy, comunal systems and social services, would provide necessary empirical basis of data for the orientation of the action of trade unions and all citizens in direction of self reorganization within emancipatory self-manageing structures as well as conceptualization and realization of the innovative alternative strategy of economically, socially and ecologically sustainable and more just social development.
Common participatory research is the most adequate tool for the attainement of the goal of increasing the wellbeing of the great majority of present and future citizens instead of profits of the few financial oligarchs and their ideological representatives. Under the veil of expert objectivity, they tirelessly keep on repeating that complete privatisation does not have alternative¹³ They remain blind and deaf for the fact that even the experts of the WB and IMF have in recent years admited the mistake of their former policy of ultimative promotion of the public sector’s privatization, when they realized that instead of the promissed cheaper service and greater investments in the infrastructure, on the contrary, has led to their becoming more costly, sparce and with increased risk of accidents (Hoefle, John, 2001; Stiglitz Joseph, 2003; Estache, Antonio, 2006).
Disunity between different trade unions, between leadership and common members and not members of trade union, as well as between researchers and citizens of different theoretical and methodological and practical political orientations and interests in various parts of the world that was noticed in this paper as well, makes the harmonization of interests and united action permanent, complex and difficult task, some would maybe say also impossible task. Even in the case that it happened that the majority of researches who would participate in the proposed international comparative and longitudinal action research of privatization and participation fawored “leftist” strategy of radical intervention into the actual process and project of social relations’ transformation, this research as long as it would not overgrow into the revolutionary political action, would necessarily remain within limits of the tool and the way pointer for the reform action by trade unions and citizens oriented on the adoption of relevant legislation that would define norms for the redistribution of the actually extremely unequal relations of ownership and strategic decision making to the benefit of dispossessed and oppressed social groups. In order to achieve this redistribution, there exist attempts to persuade owners and top managers of transnational corporation that profit and socially responsible behaviour are compatible with each other and that corporations which incorporate social audit and accountability in management into their operation improve their profitability and the creation of shareholder value (Crowther 2004). Somewhat more radical way to achieve the redistribution of power is to force owners and top managers of transnational corporations to make compromise and relinquish one part of their material power through united action of trade unions and other associations of stakeholding citizens in cooperation with researches interested in promotion of real democracy and self-management,
The history of the worker’s movement however teaches that it is obliged to go beyond social democratic attempt at reconciliation of opposed class interests in situations when the systemic crisis of capital accumulation at the world level endangers the very survival of the planet earth through reproduction of wars or recolonization and deapening of natural disasters because of the environment pollution and insaciable destruction of natural resources (V Vratusa, 2001b)

Constructing of the theoretically, methodologically and practically consistent, unequivocal, valid and reliable common research instrument for the research of the reasons for the failure of the Yugoslav self-management experience in the second part of the XX century as well as the systematic comparative and longitudinal research of attitudes toward and experiences of all forms of ownership transformation, financial and controlling participation of employees worldwide, are the prerequisite for the new attempts at realization of integral emancipation and simultaneous realization of political, social and economic democracy through self-governing that simultaneously overcomes the social source of private property and environmentally unsustainable production for the profit instead for the satisfaction of human needs.