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LI E:ERAL DEMOCRACY AND INDUSTRIAL ORDER: AUTOWORKERS UNDER THE NEW DEAL by STEPHEN POTTER AMBERG SUDMITTED TO THE DEPARTMENT OF POLITICAL SCIENCE IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY at the MASSAICHUSETTS INSTITUTE OF TECHNOLOGY February 1987 ® Stephen Potter Amberg, 1987 The author hereby grants to M. I. T. permission to reprodu.Ce and to diisitribute copies of this dissertation in whole or in part. Sigqnature of A uthor Signature redacted . b S ignature redacted Certi-fied by... ,........... Walter Dean Burnham Tte, i s Super v i sor Accepted by. Signature redacted a... I ( Harv M. Sapol sky Chairman, Graduate Pro ram Committee VOL. L hiASSACHUSETTS INSTITUTE OF TECHNOLOGY MAR 1 6 1987 LIBRAfl1ES 1 Archives LIBERAL DEMOCRACY AND INDUSTRIAL ORDER: AUTOWORK:ERS UNDER THE NEW DEAL by STEPHEN POTTER AMBERG Submitted to the Department of Political Science in partial fulfillment of the requirements for the Degree of Doctor of Philosophy in Political Science. ABSTRACT The relationship of the industrial relations system to the state is a crucija. variable in the responses industrial nati. 1ons are making in the face of changing international markets and persistent Unemployment and inflation. No less in the United States the labor system created during the early New Deal era i.s Undergoing the most significant revisi on since its forratie years. The cr:is is in mass production is characterized by increased world competition, stagnation of market growth and shift.ing market demand for new products. The continued volzatility and uncertainty of markets has put a premium on f.e:<i b production processes. Flexibility is sought in product, ability to shift product and process technology with shifting market demand, and reorgainzed work to achieve productivit-y gains, better quality and competitive pri ces. Succei:;sfL.Il competition from nations with different polici es and work organizai.ton sUggests that there are various ways to shape industrial relations. In contrast, in the traditional American model of industrial relations worker-employer relations are shaped by technological developments and market opportunities. The latter are seen as given and continually expanding, feeding-back incentives for interorgani zational cooperaton betwen unions and managers within a self-regulating subsystem. The traditional labor literature assumed U.S. institutions which expressed and shaped the politics of work and the relationship of work to the larger society represented optimal so]Lutions to problems of work in modern society and, therefore, were likely to endure into the future. Hence the crisis has led to the realization that U.S. industrial relations institutions were much more contingent upon certain background conditions and were more the resUlt of a balanc:e of forces than a rational search for efficient solutions to problems. The research focused on the United Autoworkers Union and the relationship between worker-management relations in the American automobile industry and liberal Democracy. This study investigated the strategies of auto labor and management to gain advantages at work and the actions of government in shaping them under the New Deal. It reveals the emplacing of the pieces of the American system and the consequences for work organization in later decades. I argue that production rigidity resulted from interests created with the institutional rules and procedures established to settle previous forms of conflict. These rules accomodated the existing balance of political forces among labor, management and government and ratified current thinking about production, the role of labor and the state. Thesis Supervisors: Walter Dean Burnham, Professor of Political Science, M.I.T. Charles F. Sabel., Professor of Political Science, M. IT. Nelson Lichtenstei n., Frofessor of History, The Catholic University of America CONTENTS INTRODUCTION Chapter One The New Deal As System and Project ...... 5 Notes PART ONE Chapter Two Continuity and Innovation in Labor Politics .................................. 31 Notes Chapter Thr ee ALutoworkers in the Postwar Settlement .... 71 Not. es PART TWO Chapter Four Creating a Special Interest Group: The Skilled Auto Workers................. 144 Notes Chapter Five Restructur i ng Labor-Management Relations: The FailLure of Studebaker.....194 Not es PART THREE Chapter Cix The Liberal Democratic Reform Cycle...... 23.7 Notes Chapter Seven Dilemmas of a Social-Democratic Union... .299 Notes 4 Chapter One The New Deal As System and Project There is near universal recognition that the New Deal system of politics has broken down. The coalition of unions, re-form organizations and Democratic Party leaders, and the institutions to which they were once linked, no 1onger del i ver the goods of economic growth and pol i ti cal consensus. Unemployment has been stuck at historically high levels for almost ten years and -the official rate of poverty has been climbing for five years. Collectively bargained wages are stagnant and the extent Of union membership has shrunk to 18% of the labor force. The balance of trade is chronically negative and major manufacturing industries have broadly lost markets to foreign firms. At the same time, Democrats have not been able to capture the Presidency in four of the last five elections. BUt if there is broad agreement regarding the defining facts of current political life, there are only the vaguest of theories to explain the breakdown of the performance of New Deal politics. Mostly these theories root the demise of the old system either in the peculiarities of American pluralism or in the general operation of capitalist democracy. Typically they tend to combine abstract 5 characteristics of American politics with extremely detailed but fragmentary accounts of the shifts in the balance of power and operations of political institutions. Some have argued that the high value which American culture places on equality led to a hyperpluralism in which special interest group demands became expressed in inflation and uncontrolled government spending, underwritten by the Constituti onal weaknesses which encourage political entrepreneurs to go into business for themselves. Others have pointed to inherent conflicts between democratic politics and free market economies: new economic pressures from low--wage countries require state actions to enhance American competitiveness which undermine the resource base Of the welfare state. (1) Yet, if these explanations share a common theme, it is the centrality of labor. Although it seems almost incredible that trade unions were a major force for much of the postwar period in Ame'rican politics, all agree that organiZed labor once played a crucial role in the system of politics which emerged from the New Deal. The AFL-CIO was directly able to influence the outcome of Presidential elections and powerful enough to command broad attention in the Congress. Unions negotiated with employers for twenty-- five years for steady increases in wages and benefits. But the world which labor inhabited is clearly in ruins. The AFL-CIO even was unable to win labor law reform from a Democratic administration and Democratic majorities in Congress in the late 1970' s. Yet there is nothing like 6 general agreement as to the causes of labor's success and the reasons for its fall. Indeed there is now even debate over whether labor had the power it in.dubitably seemed to have a generation ago. At -the same time labor unions are commonly criticized for blocking American adjustment to new international conditions. The idea of this thesis is two-fold: first, to look clearly at what labor's role really was and close the gap between near unanimity regarding 1abor's centrality to politics from the 1930's until the 1980's and the complete disagreement regarding labor's exact role in the American political systemr and secondly, through examination of one core element within the system, to illuminate the transformations of the broader system of politics. The thesis is a study of the United Auto Workers Union and the relationship of worker-management relations in the American aLUtomobile industry to liberal Democracy since the 19C7--. Auto labor and management have been at the forefront of political and economic life throughout the 20th century. In the 1930's and 1940's, the UAW became a champion of a social-democratic welfare state and was a strong Democratic constituency in the 1950's and 1960's. Moreover, the "Fordist" system of manufacturing in automobiles was once the paradigm of modern economic efficiency and auto industrial relations were the epitome of mature labor-capital relations. (2) But, whereas for 70 years the U.S. auto industry was a model for other 7 industries in the U.S. and around the world, by the late 1970's they came to be seen as rigid and lumbering bureaucracies. And, in the last decade, the UAW has experienced some of the greatest losses of membership among Unions and has made substantial wage and job security concessions to employers. Not only has the UAW lost about a third of its 1.5 million members, but the U.S. automakers have lost 25" of their domestic markets and fallen behind the Japanese in total production. Both the union and American companies have been challenged by foreign firms with different business strategies, labor-management relations and roles in national political systems. The unifying theme of this study is a dialectic of flexibility and rigidity. What begins to explain auto labor's and management's apparent economic fates are the ways in which they shaped and were shaped by an on-going system of regulation associated with the New Deal. I wil1 argue that U.S. institutions and thinki ng about labor became frozen in patterns promoting rigidity. The American form of conflict resolution brought social peace at the price of blockage of institutional change. The crisis of the automobile industry has revealed the fragility of the American system for organizing work and forced people to think of replacing it with a flexible system of work rules and political negotiations.