PRODUCTIVE OWNERSHIP

AN INTERVIEW WITH STAUGHTON LYND

Staughton Lynd, historian, lawyer and labor activist, spoke with Multinational Monitor recently about the steel industry and worker and state ownership of industry. Lynd is the author of numerous books and articles, induding The Fight Against Shutdowns: Youngstown's Steel Mill Closings, and Labor Law for the Rank and Filer. Lynd currently practices labor law in Youngstown, Ohio.

MULTINATIONAL MONITOR: What are the political prospects for public ownership of the steel industry?
STAUGHTON LYND: According to the Wall Street Journal, Bethlehem Steel has proposed a nationalized American steel industry. It would be known as America Steel. Its function ... would be to assume all the costs of the shutdown of steel facilities by private corporations and the industry .... The steel industry is in desperate shape. It cannot deal with the benefit commitments that it has assumed. If it is not permitted in one form or another to dump those commitments on the general public, it is not going to be able to survive.

MM: Do the steel companies have to disinvest to survive, taking capital out of steel?
LYND: They don't have to disinvest to survive. They do it to maximize profits. I don't at all think they have to disinvest to survive.

MM: What are the long term possibilities of a steel industry that is owned by the companies remaining in the United States?
LYND: They are headed in a direction which very broadly could be characterized as an American industry made up of finishing mills for electric furnace production which of course requires that somebody somewhere has made steel to begin with and with integrated steel-making more and more outside the United States. That is the trend, so that Brazil, Korea, or Scotland, whoever would make the steel, sends it in semi-finished slabs to the United States. U.S. mills would finish the steel, and then a certain number of mini-mills with electric furnaces would reheat the scrap and do something with it.

MM: Are we likely to see steel plants moving continuously toward lower labor costs?
LYND: It is difficult to move a steel mill, and the percentage of investment represented by current, lower labor costs is much lower in steel. The textiles industry is different in both respects, and so is the electronics industry. But the overall result is not so terribly different. That is, production tends to move to other countries.

MM: Companies argue that the main motivation in moving overseas is not so much labor costs as access to markets and being closer to markets. Is there any validity to that claim?
LYND: In the case of steel, it is not primarily a question of United States Steel itself investing in Korea, Brazil and other overseas nations. Steelworkers forever allege that. It is true that some of the banks that finance American steelmaking have invested in steelmaking overseas .... But it is rather that the steel companies get out of steel altogether and do something else, such as buying an oil company, or buying a savings and loan institution. And while no doubt the American market as a percentage of the world market is gradually declining, I don't think that market is the principal reason for these trends in the steel industry. To say it another way, the amount of steel consumed in the United States has not declined all that much over the last several decades, but a lot of semi-finished steel is being imported and finished here.

MM: What is the role of the strike now as a tool for labor?
LYND: The labor movement has its head in the sand even when it talks about innovative international strategies. The thing to be done with these corporations is to take them out of the hands of their present owners. Until that is done, nothing on this earth is going to effectively regulate them. The problem of striking against a conglomerate, which can transfer its capital at a moment's notice, is one aspect of that problem but by no means the only aspect.

MM: What steps will both move toward that end and also address the immediate problems of workers in a given plant?
LYND: Tactic-wise, workers should be thinking about factory occupations rather than about strikes. And when I say factory occupations, that is meant to encompass a host of in-plant tactics, not merely the ultimate weapon of occupying the plant. But the factory occupation is a tactic that we have seen in shipyards in Scotland and in a Coca-Cola plant in Guatemala. It is something that has worked effectively in the most varied conditions around the world in recent years. Tactically, that is the direction the labor movement should be moving in as opposed to the traditional out-of-plant strike. But strategically, we are talking about acquiring sufficient political influence so that in our country, national and state governments will be prepared to think about radical measures of eminent domain, nationalization and other forms of community stewardship over these facilities.

MM: How do you deal with the problem of a state government or a municipal government taking over enterprises that are weak to begin with?
LYND: We have to learn to think on a broader scale because we know that, for example with Conrail, if you think about a whole branch of industry and are putting together those pieces of it which are most viable and can most effectively be combined, you can essentially turn two losing private railroads into a profitable public railroad in a few years. Once you get beyond the sort of rescue operation for the individual plants and you start thinking about a branch of industry taken as a whole, that economic viability is probably much more within your grasp. Then the problems that arise are more management problems. The Tennessee Valley Authority (TVA) is the vintage prototype of this approach. It is one of the most undemocratic institutions in American life. Three commissioners are appointed by Congress and run the economy of a region with very little formal structured input from the grassroots.

MM: Is this option available because you are dealing with part of an industry that is already in trouble?
LYND: You can say that the industry as a whole is a lemon, that may be true. LTV, however, has three profitable steel mills and if public ownership were being proposed, obviously it would make a great deal of difference if you were taking the steel assets in their entirety, including the three profitable mills, or if you were taking just the unprofitable facilities. I am not disagreeing with the general proposition that one has to be very careful in becoming a receiver in bankruptcy for all of the junk in the American economy, but I am also saying, and LTV illustrates this as well, there is a whole conglomerate that has gone into bankruptcy. It has one sector in energy and aerospace that is very profitable. It has a steel sector which is profitable at the moment and in other years has been quite unprofitable. The amount of money by which LTV Steel's pension plans were underfunded was significantly greater than the total value of all the assets of LTV's steel division. If there had been a different kind of political will in the Pension Benefit Guarantee Corporation (PBGC) or the federal government, they could have gone to the bankruptcy court and said, 'We are LTV Steel's largest creditor. We will write off the debt and you give us the steel division,' and there would have been nationalization of the second largest steel company in the country by an entirely conventional financial transaction without the government coughing up a single penny. When a particular branch of the economy reaches the state of crisis that steel is in, all of a sudden, very radical solutions become quite commonplace.

MM: What is the approach that the union movement and political movements generally should take to the fundamental conflicts that arise with worker ownership and government ownership?
LYND: First, I have never encountered a shutdown situation where it could not have been done humanely had the company cared about doing it that way. Take the whole situation in steel. If it could have been said in an economy-wide way 15 years ago, 'We are going to have to cut employment in the American steel industry in half,' it might not have happened quite so quickly, but you could have had a steady, dramatic decrease in employment as older workers retired and were not replaced ... A humane society which was taking responsibility for the situation as a whole would have done it that way. Secondly, ... a great deal of the American economy is over- specialized in the sense that we grow lettuce in California and ship it to Boston. People who are concerned about democracy and companies staying in communities and about the stability of community life ought to think in the direction of a kind of economy where regions of the country would be self-sufficient in as many things as possible. If you do move in that direction, you begin to have an economy which is not quite so traumatically vulnerable to the closing of huge economic enterprises that are manufacturing or producing for the country as a whole. But you are going to tend to have smaller, democratically managed, regional institutions that might be prepared to take a lower rate of profit for a time in order not to tear up a plant by its roots.

MM: How would that kind of organization be consistent with some form of state ownership?
LYND: We have to be talking about a very decentralized kind of state ownership where only those things are done nationally that have to be done nationally. The presumption should always be in favor of local or regional decision-making, just as within a factory the presumption should always be in favor of decision- making on the shop floor whenever possible.

MM: So the state that owns it could be a municipal government or a state government or some kind of regional authority?
LYND: Right, or even if it were technically owned nationally, the administration could be far more decentralized than in your typical European nationalized industry. Some decisions, like the decisions about where to have those half-dozen big, integrated steel mills that are going to produce all the steel in the United States, may have to be made nationally.

MM: Even if you attempted to bring as much management authority as possible to the lowest feasible level, wouldn't the people who actually work in those plants still be facing an authority that was farther away, in Washington or in the state capitol, than if the workers owned their own plants?
LYND: One model that has been suggested [comes from] the Labor Party government in greater London. The London county council had contractual relationships with various subsidiary enterprises which, on a day to day basis, were very autonomous in their functioning, but still, because the technical ownership was reserved to the London county council, matters such as affirmative action, hiring policies and so on could be kept under some kind of control.

MM: But if there is a dispute between labor and management over wages or work rules, wouldn't workers still be dealing with the technical owner?
LYND: If the workers get sufficiently fed up, they are just going to occupy the plant or take some form of direct action, even if there is a no-strike law in effect and even if the [company] is publicly owned. In a situation where the government may have serious disagreements with workers but isn't going to bring out the National Guard to shoot them down, workers are going to have a whole lot more power than in U.S. society today. In saying that, I don't mean to minimize that there would be a kind of ongoing, creative conflict between decision-makers at different levels and [with] different kinds of vested interests. But it could be a non-violent conflict and a conflict productive for the society as a whole in a way that would be quite different than what we are familiar with in the United States.

MM: What is your view of the Mondragon model in Spain and how that has worked? (See MM, May 1984.)
LYND: The value of Mondragon is not necessarily in trying to transfer the model mechanically to the United States, but it may be an interesting point of departure, because I have a sense that a major dynamic in Mondragon is Basque nationalism. And there is certain feeling that yes, you are building it up for yourself, but you are also, at the same time, building it up for the community and the region, and it is OK just to be doing it for the region because we are not quite sure about what we think of those Spaniards anyway. That happens a fortiori in the kind of situation ... where the workers of a particular plant become, in some degree, part owners, with profit-sharing, an Employee Stock Ownership Plan (ESOP), whatever, and they become kind of enterprise capitalists whose goal in life becomes doing in the workers who produce the same product in a unionized plant in the middle West, let's say. I thought I heard that from the union president of Seymour Speciality Wire, which is one of the more democratic worker- owned plants in the United States.

MM: Do the workers elect the board?
LYND: The workers elect the majority of the board. But, when you hear them talk about their economic survival and how their principal competitor is another unionized plant in Minnesota, it makes you wonder. I don't have a magic formula for resolving that problem. Clearly, some of it has to do not with the particular structure adopted at Seymour Specialty Wire, but with the fact the company is a little island of worker ownership trying to function within a sea of ordinary market competition. And if you had a national economic administration which in effect said to both Connecticut and Minnesota, 'Look, we need you both, and we would like to help both of you to survive and to work out marketing arrangements or whatever so that you are not doing each other in,' it would make a lot of difference. But until that happens I have very mixed feelings when we give workers intense ownership incentives in the life or death of their particular firm at the expense of others.

MM: If you are comparing that model of worker ownership not to the existing capitalist model but to the one of state ownership, you could argue that it gives real benefits of democracy and that any state bureaucracy, no matter what the politics and the ideology behind it, is going to be fundamentally undemocratic and certainly less democratic than worker ownership.
LYND: When this country began, there was a dominant school of thought that said unless people owned property, you couldn't trust them to vote because they wouldn't have a stake in the country. It seems to me the ESOP ideology is rather similar. Unless workers own stock in the company, they are not going to feel really involved. There are dozens of other ways to give workers a sense of long term involvement in a company and the one I am pushing at the moment is some form of job security a la Japan, where, as I understand it, workers are not stock owners, but they feel very involved indeed in the fortunes of their particular firms, perhaps to excess, because of the assurance of long term job security.

MM: Wouldn't there be more control over the firm if workers owned it as opposed to the state owning it, regardless of the politics of that state?
LYND: Stock ownership is not intended to give the owners of stock control of companies. If you study corporate law, companies are intended to be run by their boards of directors, not by their stockholders. Stockholders elect the boards of directors from time to time and they are called upon to vote directly only on very rare, fundamental decisions. I just don't think stock ownership is a very happy paradigm for giving workers a sense of democratic control. Why not skip the stock ownership aspect and just say that the directors of the firm shall be elected in the following manner, and give workers a dominant voice in that election without requiring stock ownership to qualify one as a voter?

MM: Why not do that without having national ownership?
LYND: It can be any form of public ownership, but you can't do that as long as firms are privately owned. Public ownership is a necessary but not sufficient condition. As long as corporations are owned by stockholders or banks, whose legal purpose is the maximization of profit, you are not going to find a way to create truly democratic structures.

MM: So your conclusion is that worker ownership doesn't work and state ownership can?
LYND: Let's say public ownership ...I don't for a moment minimize the importance or the gravity of the struggle to make [public ownership] democratic. But I would rather go in that direction than in the direction of creating thousands of little capitalists counting their dividends every Christmas Eve .... My fundamental objection to worker ownership is on the grounds of social values. It creates attitudes that are not in fact new, but are simply a projection of the existing scheme of things. I liken it to [British Prime Minister] Margaret Thatcher denationalizing industries and selling their stock to their owners, after which the workers all vote Tory and think of themselves as suburban property owners. I agree that if you decide there are economic reasons for going ESOP, then there is a very important struggle to make the ESOP as democratic as possible. That involves, first of all, allocating votes not in proportion to the amount of stock owned, but on a one person, one vote basis, providing mechanisms whereby the workers can instruct the ESOP trustee. But, I am still doubtful about the necessity, other than the tax advantages, of moving toward democracy through that medium because it seems to me it has so many other aspects that from my point of view are counterproductive.

MM: Do you think there has been a relative decline of manufacturing in the U.S.?
LYND: I agree with Bennett Harrison and with my friend Charles McCalister in Tri-State that you can't have a service industry without an underlying heavy industry. I suppose you could have a country which was a financial and administrative center for the rest of the world and made hamburgers for the people who have to live there, but that is not really an economy. Those are just certain functions of an economy. It is all very well to talk about a relatively greater role for tertiary or service industries, but it is nonsense to talk about an economy that would have no steel making or no durable goods manufacturers.

MM: But even if the changes are relative, haven't they changed the class structure of the society?
LYND: I don't see why. Secretaries are just as exploited as steel workers and in some ways more so.

MM: But aren't they inherently harder to organize?
LYND: I don't think so. They are easier to organize because women, like blacks, are oppressed in more than economic ways. Women are the frontier of the labor movement in this country, the cutting edge, for all kinds of reasons. Both because there is the dimension of sexual harassment and male arrogance, but also because women are less caught up in the macho attitudes of American males and more capable of creating a movement that depends on solidarity.