Industrial Democracy in The Knowledge Society.

• Author: Nodoushani, Omid

INTRODUCTION

Management thinking is undergoing a profound transformation, a change caused by global thirst for democracy. The new world order is driving our civilization toward an even greater upheaval--a unified global order. The wave of change is the beginning of a transition to a remarkably different social order. This process carries an unprecedented move toward implementing democracy into the livelihood of humankind. The same forces, William Halal and Alexander Nikitin have noticed, are extending democracy into capitalism be it developing participative relations with workers, clients, other firms, and government (Halal & Nititin, 1990).

Nowadays, for the expansion of capitalism, it has been said that democracy is necessary because the only systems that can successfully cope with the changing demands of contemporary civilization in business as well as in government is the democratic system. Yet, despite universal acknowledgment of democracy, Philip Slater and Warrant Bennis argue that we have a long way to go to fully implement democracy into the corporate world because, as some cynical observers have always been fond of pointing out, business leaders who extol the virtues of democracy on ceremonial occasions would be the last to think of applying them to their own organizations (Slater & Bennis, 1990).

Indeed, to respond to such a challenge, we are faced with a trend which advocates the implementation of democracy into the working structure of corporations, since modern democracy and capitalism proceed from identical historical impulses (Novak, 1982). To do so, the thinking goes, corporate America needs to introduce internal markets, a phenomenon that is often called Perestroika in American corporations--a restructuring movement that should aim at a democratic organizational design for corporate America (Carrol, 1990). Often, the idea of Perestroika in many firms means reconsidering the implementation of internal markets through the concept of profit centers (Halal, 1994). The ultimate goal is to re-create within big corporations small entrepreneurial enterprises able to reap the advantages fostered by the market, while minimizing risk, conflict, and other disadvantages (Halal, 1990). Subject to minimal constraints, profit centers should have the freedom to buy any service or product they want at whatever price they want or are willing to accept (Ackoff, 1993).

On the other hand, we are left with an important discourse that we can call the industrial democracy discourse (Ackoff, 1994). This discourse aims at the social, political, environmental, and organizational challenges that corporate America has gone through since the 1960s, a phenomenon that Russell Ackoff has labeled as the role of business of business in a democratic society (Ackoff, 1990a). In fact, many advocates of industrial democracy argue that employee rights of participation in decision-making provides a profound challenge to traditional organizations of work (Hodson, 1996).

In this respect, the industrial democracy discourse begins with the role of management in contemporary society. The emergence of management in every advanced country is associated with the development of a society of organizations. A service-oriented knowledge society organizes every major task, whether it be concerned with economic development, health care issues, education, the protection of the environment, the pursuit of new knowledge, or defense through big organizations. Such an historical transformation, in the meantime, means an institutionalization of democracy through a society of organizations resulting in a different form of class structure, one in which the professional salaried middle class has gained the new majority (Drucker, 1992).

Today, management as a profession has become the pervasive universal institution of modern society and there is as much management outside business as there is in business and maybe more (Drucker 1987a). The universal institutionalization of management through the rise of the corporation is what Peter Drucker has called "a post-business, post-capitalist, knowledge society" (Drucker, 1993). Characteristic of such a society is dependence on the knowledge and skills of professional groups. This means that the professional middle class is rapidly becoming the representative and most important group in business and in society. According to Drucker, the "knowledge society" is a society of large organizations--government and business--that necessarily operate on the flow of information. In this sense, as Drucker asserts, all advanced societies of the West have become "post business or post-capitalist," with business no longer being the main avenue of advancement in society (Drucker, 1989). In a knowledge society, Drucker argued, knowledge is the primary resource for individuals and for the economy overall. Moreover, the traditional economic factors, such as land, labor, and capital have become secondary to the specialized knowledge which is organized through a blending of the corporation and democratic organizational structures (Drucker,1992).

THE RISE OF POSTMODERN CAPITALISM

To make a stronger case for the industrial democracy discourse, some management researchers are also pointing out the postmodern condition and its impact on capitalism. What is called postmodern capitalism still obeys the laws of classical capitalism, namely the primacy of industrial production and the omnipresence of class struggle. Moreover, postmodern capitalism manifests another stage in the evolution of capital--a pure stage highlighting a transition from market capitalism to monopoly capitalism and now towards a late or consumer capitalism (Jameson, 1984).

All that is a product of the capital accumulation process, embracing a sea of change in the development of capitalism after the 1972-75 recession. Entering a period of difficult readjustment, sparked by low growth rates, high unemployment and inflation, as well as the breakdown of U.S. hegemony, capitalist restructuring has resulted in technological change, reorganization of production techniques, financial shake-ups, product innovation, and massive expansion into cultural and image production (Harvey, 1991).

Amid all that, postmodern capitalism raises concern about a shift from an era of organized to disorganized capitalism (Lash & Urry, 1987). The contemporary social system has been transformed into a disorganized capitalism by three simultaneous processes: globalization of the economy, decentralization of managerial decision-making processes, and disintegration of the corporation, all of which have created a much broader set of changes that are taking place within Western Europe and North America (Urry, 1988). Consequently, disorganized capitalism has witnessed the beginning of an erosion of the cultural foundations of the...