MANAGEMENT COUNCILS. — Also known as factory councils, these are the technical bodies through which workers’ participation in the direction, administration, and profits of productive enterprises should be realized.
The goal is participation in the technical-organizational responsibility of the enterprise, with the corresponding participation in profits (v. PARTICIPATIONISM); management councils are the means to this end.
Understood in this way, management councils give rise to a collective enterprise, and thus stand in opposition to the individual enterprise, in which technical-organizational tasks are entrusted solely to the entrepreneur, who owns, administers, and freely directs the enterprise without having to answer for his actions except to himself. He is the sole beneficiary of the profits, from which workers are excluded and who are governed by a wage-based regime.
The enterprise is a small world in which the factors of production can be coordinated in various ways. Ordinarily today, the factors of production are divided among different hands: there is the one who organizes the enterprise (the entrepreneur), the one who offers personal services (the worker), the one who provides the use of savings (the capitalist), and, in agricultural enterprises, the one who disposes of natural agents (the landowner).
Moreover, in the modern economic world—created by liberalism and capitalism—the enterprise, especially the medium and large ones, is marked by a clear distinction between labor and entrepreneurs, between those who work in a dependent relationship and those who direct it by owning the capital and bearing its economic-legal responsibility. Between them, a wage-based regime almost always prevails. Since the end of the last war, however, once the defensive phase of the labor movement had been exhausted through collective labor agreements and various social legislations, workers, beginning a new defensive phase of their movement, claimed the right to participate in the management of enterprises alongside representatives of capital.
Experiments with factory councils took place in Germany and elsewhere, in addition to the Soviet experiment in Russia and the bolshevized countries, where, however, the political factor clearly prevailed over the economic phenomenon, resulting in a rather negative experience.
Fascism regulated in Italy the relations between capital and labor under the corporative system. The fall of the Fascist dictatorship and the reconquest of democratic freedoms have reopened, even in Italy, the question of full worker participation in the life of enterprises through management councils. Two slogans have become fashionable: “profit-sharing” and “management councils.”
Private control by current rulers would give way to collective control by the governed, through internal factory organizations or management councils.
The representatives of labor justify their demands with solid arguments.
I. To give workers a sense of their real participation in the human community that produces for all its members, it is not enough to improve their working and living conditions; it is necessary that they cease to see themselves as isolated elements and feel directly the beneficial reflection of the importance of their contribution.
The human personality of workers must have the place it deserves in the direction of the enterprise, just as it does in the production process. The enterprise is a society of persons more than of capital. Capital must not predominate. On the other hand, by uniting all the factors of production in the same hands, the contrast between production and labor is eliminated.
II. Production must be subject to national control by workers, who constitute the overwhelming majority of the people.
Industrialists, however, are decidedly opposed to management councils for other reasons that are undeniably weighty.
1) The right to manage, they argue, belongs to those who assume responsibility and bear the risk, namely, capital.
2) The very structure of the enterprise requires a unified, autonomous government, free in its actions.
3) The working class, at least today, lacks managerial capacity and moreover has a mentality and interests that conflict with the supreme interests of the enterprise, if not harboring outright revolutionary intentions.
The delicate state of the European economy, particularly in its phase of reconstruction, strengthens these arguments.
Before taking a firm stand in this clash of arguments, it will be useful to consider the different ways in which management councils can be integrated into the technical organization of the enterprise and lead to profit-sharing.
If management councils are granted only an advisory role, it is clear that one cannot speak of true and effective participation in management, since the entire and exclusive direction of the enterprise remains in the hands of the owner. For there to be even a minimal degree of participation, it is necessary that, beyond the agreements reached in collective bargaining, some of the competencies hitherto reserved solely for capital be shared with the category of labor.
On the other hand, if exclusive appropriation of the means of production were granted to management councils, following any socialization of property, it would be inaccurate to speak of worker participation in enterprise management. Rather, it would amount to exclusive assignment of directive power to the category of workers or to the community—a veritable economic dictatorship of the proletariat, which would soon become political and then transform into a dictatorship over the proletariat. Recent Russian history teaches us as much. Factory councils first limited themselves to controlling capitalist production, then became organs of absolute governance of enterprises, and finally were gradually dominated by central authorities responsible for national economy, reduced definitively to the proportions of mere internal committees (cf.: Soc. ital. per azioni, *La socializzazione delle imprese*, Rome 1945, pp. 42 ff.).
Worker participation in enterprise management would retain its meaning only if, in the production process, the two traditional elements—the free labor and the free private and social capital—acted as distinct categories that associate to govern the enterprise jointly, to which each contributes its personal or real resources within a division of directive powers. In this system, management councils would have, so to speak, the function of a small constitutional parliament, limiting the sovereign power of capital and its representatives by taking into account the deliberative power of workers.
The practical implementation of management councils, thus understood, in the new step forward that humanity intends to take toward a more perfect social justice, must be carried out with moderation, with an eye to the spiritual goals to be achieved, without losing touch with the stark reality of things and with the norms governing economic action.
The participation of labor in enterprise management is viewed with full favor by Christian social doctrine (cf. A. Vermeersch, *Quaestiones de iustitia*, Bruges 1904, p. 627).
Pius XI, considering wages an inadequate form of compensation for labor, in *Quadragesimo Anno*, expresses the hope that “workers may become co-interested in ownership or management, may share in some measure in the profits earned,” and deems it necessary that “in the future capital gains should not be accumulated disproportionately among the rich, but should be distributed more widely among workers.” The same concern is evident in Pius XII, who advocates a social order that “makes possible a secure, albeit modest, private property for all classes of the people” and a “new social order” to be built on democratic foundations even in economic life.
Yet, since it is not within the competence of the spiritual power to determine the juridical-organizational forms of participation, the Church does not prescribe technical solutions to such problems. Instead, it confines itself to preparing, promoting, and examining them in light of their coherence with the principles of justice and equity, and to recommending them within the limits and conditions of their applicability.
Even the Italian Constitution, after heated debates arising from differing ideas and political parties, settled for a statement of principle in this matter, to be implemented through various reforms that would be conditioned by the circumstances prevailing at the time of their realization.
Article 46 states: “With a view to the economic and social elevation of labor and in harmony with the exigencies of production, the Republic recognizes the right of workers, in the manner and within the limits established by law, to collaborate in the management of enterprises.”
Here it is clear that labor is to be elevated from being merely an instrument to becoming a collaborator in production.