'Worker-ownership' no solution


'Worker-ownership' no solution

from The People, November 26, 1983, Page 2

On Nov. 1, the Rath Packing Company filed for protection from its creditors and for reorganization under Chapter 11 of the federal bankruptcy laws. Lots of companies are doing that these days, but there is something unusual about the Rath case. The company is an "employee-owned" enterprise.

There are several hundred such "employee-owned" companies in operation today. The number has been growing sharply during the past decade. For capitalism's economic crises have pushed many companies toward bankruptcy, leaving many workers with little choice except to watch their jobs disappear or to "buy" their company and try to make a go of it.

One of the latest of these efforts is the Weirton Steel Company. The plant was formerly owned by National Steel, which decided the operation wasn't sufficiently profitable and planned to phase it out.

In September, after months of negotiations, Weirton workers approved a buyout proposal by an 8-to-1 margin. In addition to the $194 million purchase price, workers will assume from National Steel $192 million in existing liabilities.

To help finance the purchase and to keep the plant going, Weirton workers agreed to a 20 percent cut in wages and benefits and a six-year wage freeze.

Similarly, workers at the Rath Packing Company made concessions when they agreed to acquire the company in 1980 in an effort to keep the near bankrupt firm from going under. Since then, Rath's new management has laid off 1,000 of the "worker-owners" as several smaller plants were closed. If the company is to escape liquidation, further cutbacks will have to be made.

Lessons of 'worker ownership'

Rath's filing for bankruptcy may be an extreme case, but the lesson from Rath and hundreds of other "employee-owned" firms is clear: "worker-ownership" schemes resolve none of the basic problems facing workers under capitalism. All the basic relations of capitalist production, exploitation of wage labor, production for sale and profit, and the like remain in effect.

In addition, in most "worker-owned" companies, rank-and-file workers were never organized to collectively assert their "ownership" rights and have no real voice in running the company, much less control of it. In many cases, the company's creditors in effect become the new owners and exploiters.

Control generally resides in the hands of a board of directors composed of company officials, outside experts like bankers and professors, and an occasional labor union official. The board makes all the policy and investment decisions and hires a management team responsible for running the company on a day-to-day basis.

"This is worker capitalism, not worker management," said one investment firm official who helped put together the Weirton deal. "If this thing is going to work, no matter who owns it, it's going to have to be run like a business."

To make sure Weirton Steel Company is run like a business, the bankers who financed the deal selected the head of another steel company to run Weirton. While workers have taken wage cuts, the new president will be paid $300,000 a year.


However, even if an individual "worker-owned" company were to be run collectively and democratically by its workers, it would still function within the overall context of a capitalist economy. "Worker ownership" does not miraculously free a company from the anarchy of the marketplace, competition, and the effects of capitalism's recurrent economic crises.

In order to compete in such a climate, "worker-owned" enterprises have little choice but to intensify exploitation just as much as their capitalist-owned competitors do. They must, as the Rath Packing Company did, cut wages, close old factories, modernize outmoded equipment and lay off workers made superfluous by automation.

Even then, as Rath testifies, there is no guarantee that any of those measures will ensure the 'company's survival. Rath President Lyle Taylor, who formerly headed the local union, noted, "On the basis of lower-than-expected sales and our current production costs, we simply can't compete."

It is understandable that, in times such as these, some workers will be attracted to the idea of "worker-ownership." They are desperately seeking ways to assure a livelihood for themselves and their families.


But the experience of "worker-ownership" schemes demonstrates that they do not attack the cause of workers' misery. In fact, to make such schemes "succeed" in a capitalist context, workers must make more sacrifices and intensify their own exploitation.

Yet, "worker ownership" does demonstrate that production in no way depends on a capitalist class whose sole function is to drain off the social wealth produced by workers' labor. But, if the concept of worker ownership is to truly benefit workers, it must be effected on a society-wide basis.

To do that, a socialist revolution is needed to abolish the entire system based on private ownership and control of the means of production by a parasitic capitalist class. The potential of worker ownership can be fully realized only by replacing an economic system based on exploitation, competition, the market and the profit motive with one based on social co-operation for the common good.

What workers must gain is not nominal ownership of individual plants, but real control of the entire economy.