THE ECONOMIC WEEKLY December 19, 1959

Towards a General Theory of Industrial Relations

IN his new book, Industrial Rela­tions Systems, Professor John T

D u n l o p has attempted to develop a general theory of indus t r ia l rela­t i o n s ' . The concept of an indus t r i a l relat ions system is for D u n l o p in many ways s imi l a r to that of an eco­nomic system. Just as prices arc the central p rob lem in economics to be 'explained ' in terms of demand and supply , ' rules of the work place' are to D u n l o p the central p r o b l e m in indus t r ia l relations. "The cen­t r a l task of a theory of indus t r ia l relat ions is to exp la in why part icu­la r rules are established in pa r t i ­cular indus t r i a l relat ions systems and how and why they change in response' to changes affecting the system (pxi)."

SHARED IDEOLOGY

The necessity fo r rules to govern the status of the workers and the managers and their interrelat ions arises in every indus t r ia l communi ty . The nat ional state cannot leave alone this process of rule-making and therefore it also becomes an actor in the indus t r ia l relations sys­tem. An industr ia l relations system is in this view to be regarded as con­sisting of three p r inc ipa l sets of actors namely, workers, managers, and the state, and of a body of rules created to govern the relations bet­ween these actors at the workplace — the whole system being held to­gether by an ideology shared by the actors. The rules themselves are determined by three main factors, namely the technological character­istics of the w o r k place mid work communi ty , the market or economic context facing the actors, and the power context in the society.

Technologica l characteristics such as the f i x i b i l i t y or va r i ab i l i t y of w o r k place, re la t ion of work place to residence, s t ab i l i ty of work force and w o r k operations, the size of the w o r k g roup , the j o b content, and hours of opera t ion of the work place affect the nature of the rules. In chapter 2 of the book D u n l o p dis­cusses the effect of these factors on rules of the work place.

The effect of condi t ions in the p roduc t market and the labour mar­ket on ru le -making is discussed in

H e n r y H o l t & Co New Y o r k , 1958, P p x i i + 3 9 9 .

chapter 3 of the book. The compe­t i t ive posi t ion in the product mar­ket of a firm or industry determines the degree of freedom the actors have in setting the rules of the work place. "The character of compet i t ion is a measure of the de­gree of control over product pr ice or other aspects of sale wh ich in t u rn is decisive to the contro l or the elbow room and discretion wh ich the actors have in setting the rules of the work place, i n c l u d i n g com­pensation (p 6 4 ) . " T h i s par t o f the book may very w e l l be consider­ed an essay in appl ied economics.

'POWER CONTEXT'

In chapter 4, the effect of the "locus and d i s t r i bu t i on o f power in the larger society" on the indust r ia l relations system is examined. Ac­cord ing to D u n l o p , "This facet of the context is decisive fo r defining the status of the actors: workers and their organizations, managerial hier­archies, and governmental agencies. The complex of rules established for the work place, pa r t i cu l a r ly those defining forma) interrelat ions among the actors and those p rov id­i n g arrangements for setting new rules and procedures for adminis­ter ing o l d ones, are often substan­t i a l l y shaped by this feature of the total context ( p 9 4 ) . " A n d " i t i s i n the rules most direct ly derived f rom the power context that there exist the greatest differences among countries (p 97) ."

This part of the book, seems to be the least satisfactory. Dunlop has not explained in clear terms the meaning of the concept 'power context/ but he seems to iden t i fy it w i t h the 'status of the actors' a l ­though there are repeated references to the statuses and relations as being governed by the power context. The status of the actors means the pres­cribed functions of the various actors and their relations w i t h each other. This feature of the indus­t r i a l relations system is "pecu l i a r l y the product of pub l i c po l icy , i n ­c lud ing the his tory and tradi t ions of a country . . . . The status* of the ac­tors in a nat ional indust r ia l rela­tions system is largely w i t h i n the expl ic i t decision of the larger society by po l i t i c a l processes, a l ­though a l l alternative forms are not to be regarded as equa l ly congenial

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in the l ight of the t r ad i t i on of a country (p 9 8 ) . "

TECHNOLOGICAL AND M A R K E T CONDITIONS

Chapters 5 and 6 attempt to app ly the new analyt ica l f ramework for s tudying the indus t r ia l relations systems in the Bituminous-coal in­dustry and the B u i l d i n g industry respectively. For example, in the case of Bituminous-coal technologi­cal and market conditions such as the hazardous nature of the work , tile isolated nature of min ing com­munities, the variat ions in the dis­tance of the place of operation f rom the por ta l to the mine, the need for special tools and protective c lothing and the sensitiveness of the demand for coal are shown to cal l for spe­cial rules. Dun lop shows the s imi­l a r i t y between different countries such as the United States. Great B r i t a in , France, German} , Austra­l ia , and Poland in the rules framed to deal wi th the problems arising f rom the technological and market contexts, in the Bituminous-coal in­dustry. On the oil ier hand rules relat ing to the status of actors such as the r ights of unions, the scope of the rules, and the settlement of disputes, show considerable varia­tions between countries.

Thus in a comparison of the in­dustr ia l relations system in the b u i l d i n g trade in different coun­tries the U S system is said to have three d is t inguishing features . name­ly ( I ) emphasis on ju r i sd ic t ion and j u r i sd i c t i ona l disputes. (2 ) emphasis on union security, and (3) the pro­h ib i t ion of piecework, Dun lop attempts to "explain' the causes of these leatures of the national system in terms of the status of the actors in the b u i l d i n g indus t r ia l relations system in the United States. The strength of the local union in the Uni ted States bu i ld ing industry as compared to other countries is one explanat ion for these dist inguishing features. Thus in the United Slates "Na t iona l and local union rivalries are expressed at the work place because the machinery and man­power to express them on the job is available. In other coun­tries the l ine of command may extend f rom the national to a local or regional branch but the connection to the job site is much

Philip Thomas

December THE ECONOMIC WEEKLY

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THE ECONOMIC WEEKLY December 19, 1959

ale are avai lable to police the rules. Th i s factor impl ies that some ju r i s ­d ic t iona l disputes in the Un i t ed States arise out of the activit ies of the loca l business agent, on his own or ac t ing under na t ional instruc­t ions. Lef t to themselves on the j o b site, the workers w o u l d engage in fewer and less severe disputes ( p p 252-253) . " The s t rength of the local u n i o n also leads to greater concern w i t h h i r i n g and hence u n i o n securi-t y ( p 2 5 5 ) .

F i n a l l y , strong locals in the U S have been able to prevent the use of piece work , wh ich is d is l iked by b u i l d i n g workers generally (p 2 6 0 ) . Other explanations are ma in ly eco­nomic in nature. Fo r example, the

"greater degree of compet i t ion leads to j u r i s d i c t i o n a l disputes because "some contractors and their a l l i e d uniorfe complete w i t h other contract tors and thei r a l l i ed unions, (p 2 5 3 ) . " I t also leads to the problem of un ion security because the unions have to preserve un ion standards f r o m non-union compet i t ion.

IMPRESS OF POLITICAL HISTORY The question now arises as to

what determines the "power con­text" of the "status of the actors" in an indus t r i a l relations system. Accord ing to D u n l o p the chronolo­g ica l per iod of fo rma t ion of the system, the sequence of social changes and the nature and decisions of the indus t r i a l i z ing el i te are the major factors w h i c h m o u l d nat ional indus t r i a l relations systems. For instance, indus t r i a l relations systems developed after the Soviet revolu­t i on may differ in cer ta in respects f r o m those developed p r i o r to the r evo lu t ion . The need to prevent communis t subversion, has, in non-communist countries, led to increas­ed governmental surveil lance of l abour organizat ions. In communist countries the tendency is to use l abour organizations as an instru­ment of the pa r ty . The increasing role of Governments as employers in newly developing countries is also said to influence the nature of the indus t r i a l relations system. Aga in the sequence of social changes such as na t ional independence, the grant­i n g o f p o l i t i c a l r ights to workers , and the g r o w t h of l abour organiza­tions, is said to influence the nature of the system. For example, in countries where the labour move­ment was a pa r t of the nationalist movement, " the experience of suc-

cessful l s truggle f o r independence or m i l i t a r y v ic to ry (refer to the Y u g o . slav experience) is l i k e l y to estab-l i sh a close and strong t ie between a Government or r u l i n g par ty and a labour movement (p 3 1 3 ) . ' '

The v a l i d i t y of these factors in ' exp l a in ing ' the nature of an indus­t r ia l - re la t ions system is, however, doub t fu l . Thus in the ear ly days of trade unionism in Great B r i t a i n . Government 's fear of subversion led to the enactment of Combinat ion Acts and Government surveil lance and suppression of the infan t unions. This phase of development has not left any last ing impress on Br i t i sh trade unionism s imi la r to the i m ­press al leged to have been given by the Russian revolu t ion to the post-Soviet systems. Is the difference to be accounted for by greater efficiency on the par t of modern governments as compared w i t h the Br i t i sh gov­ernment of the 19th century? Has the impress of the Soviet revolut ion on indus t r ia l relations systems wh ich had already developed before the r evo lu t ion been different f r o m the impress of p o l i t i c a l changes on newly-developing systems? Unless we have detai led comparisons of different systems in different periods, we can on ly be in the rea lm of con­jecture.

S i m i l a r l y to what extent can the close association between the po l i ­t ica l leaders and the labour move­ment in a country l ike I n d i a be ' expla ined ' in terms of the fact that in such countries the labour move­ment was a par t of the nat ional movement for independence? Are there not other unde r ly ing reasons such as ignorance and pover ty on the par t of workers wh ich may ex­p l a i n the persistence of outside po­l i t i ca l leadership in the movement? In Ind i a , for example, unions o f whi le -co l la r workers such as insur­ance and postal employees seem to be much less dependent on outside leadership than unions of o rd ina ry manual workers.

DYNASTIC-FEUDAL E L I T E IN INDIA?

The concept of an indus t r i a l i z ing el i te wh ich influences the indus t r i a l relations system seems to be the most unsatisfactory par t of Dun lop ' s f rame-work. Acco rd ing to D u n l o p we may dis t inguish three ' ideal types' of indus t r i a l i z ing elites, name­l y , the dynast ic feudal el i te , the middle-class eli te, and the revolu­t iona ry in te l lectual eli te. The eli te

d i rec t ing the indus t r i a l i za t ion p r o -cess in every country has to con­front and resolve certain major questions, such as: 'What are to be the relat ions of managers to workers and of workers to managers?' 'Wha t is the func t ion of workers ' organi ­zations? ' 'How shall labour orga­nizations secure their funds? ' 'Wha t is to be the source of labour leader­ship?1 'Wha t at t i tude shal l be adopted toward indust r ia l conf l ic t? ' ' H o w are disputes resolved and who holds the balance of power? ' 'What are to be the fields of interest of universi ty specialists?' A national industr ia l - re la t ions system develops as the d i rec t ing elite of the larger society confront these common ques­tions and g radua l ly formulate a body of more or less consistent answers i n practice (p 3 1 7 ) . Fo r each of these issues D u n l o p gives the characteristic responses of the three types of elites.

A l t h o u g h D u n l o p admits that these classifications do not refer to any par t icu lar country, i t is interest­i n g to note that the responses given in Ind ia to most of the questions indicated above are responses which D u n l o p characterises as typ ica l of the dynastic-feudal el i te. For ex­ample, r i va l unionism, weak union finances, outside leadership in unions, aversion to indus t r ia l con­flict, emphasis on legislation and governmental machinery for the settlement of disputes and the in ­terest of universi ty specialists in l aw and decree rather than in facts or analyt ica l concepts are a l l res­ponses which Dunlop considers tvp ica l of the dynastic-feudal el i te . Now students of I n d i a n indus t r ia l relations w i l l readi ly agree that these precisely have been the d o m i -nant responses in Ind i a . A r e we then to conclude that we have a dynastic-feudal el i te d i rec t ing our indus t r ia l iza t ion process? Such a conclusion w o u l d of course be far f r o m correct and qui te unwarranted because each one of the above 'responses' could very we l l be ex­pla ined in terms of reasons other than the ideology of an elite. Thus r i v a l un ionism, weak f inances, and outside leadership may be more due to lack of education, and general poverty than to any other reason. The emphasis on legislat ion and governmental machinery is perhaps the result of an urge to industr ia l ize fast w h i l e preserving democratic forms and procedures-

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power and few profession

December 19, 1959 T H E E C O N O M I C W E E K L Y

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THE ECONOMIC WEEKLY December 19, 1959

W A N T E D : THEORY OF POWER

A more f r u i t f u l way o f , l o o k i n g at the 'power context -or the 'status of actors'- aspect of an indus t r i a l -relat ions system is to consider it as an answer to the p r o b l e m of power created by indus t r i a l i za t ion . Indus­t r i a l i za t ion necessarily leads to the creation of economic power. In the absence of strong trade unionism or governmental in tervent ion , the em­ployers w i l l w i e l d this power. For­mat ion of trade unions, enactment of legis lat ion and creation of state

D A L A L S T R E E T continued t o present a remarkably firm ap­

pearand* last week. Gains were widespread and quite spectacular in many cases. I n d i a n Dyesluff shot up f rom Rs :390 to Rs 500. Colour-Chem f r o m Rs 245 to Rs 277, Gwa-l ior Rayon from Rs 25.50 to Rs 28.50. Hindustan Moto r f rom Rs 15.40 to Rs 17.32, A n i l Hardboard from Rs ;340 to Rs 360, Guest. Keen. Wi l l i ams from Rs 42 to Rs 40.50. Alenek Ashdown from Rs 247 lo Rs 279. M u k a n d I r o n f rom Rs 19 to Rs 20,50. Standard Mi l l s f rom Rs 74-9 lo Rs 868. Tata Locomotive f rom Rs 201.50 to Rs 210.50 and Century f rom Rs 639 cum-r ight to Rs 165 ex-right (the r ight is valued at Rs 2 1 0 ) . This makes a f o r m i ­dable list, and it could he m u l t i ­p l ied .

But su rpr i s ing as it might seem, n o t w i t h s t a n d i n g large widespread gains the stock market exhibi ted very l i t t l e of the buoyancy which normal ly accompanies such a rise in prices. This is because of the vir­tual absence of outside part icipa­t ion in the speculative market . A few prominent professional operators continue to dominate the scene. The steep rise in most cash shares re­flects ma in ly the scarcity of offer­ings. There has not been any mar­ked revival in investment i n q u i r y recently.

Equit ies recorded gains on a wide front . But the popular speculative-counters w h i c h d i d not par t ic ipa te in the up t rend and were actually-down over the week were not a few. These inc luded, Ta ta S t e e l I n d i a n I r o n , Bombay Dye ing , Svadeshi, Belapur Sugar, Tata Chemicals and A C C. Bank, Insurance and Elec-

machinery may be looked upon as attempts to con t ro l and share this power. The f inal result w i l l be determined by the nature of the in ­st i tut ions and ideas p reva i l i ng in the i ndus t r i a l i z ing society. These inst i tut ions and ideas w i l l determine at a given t ime, an e q u i l i b r i u m posi t ion regarding the control and sharing of power. A n y change in them w i l l lead to a change in the indus t r ia l relations system. What we need then is a theory of power. For the rest t r ad i t iona l economic

the shares continued to be out ot favour as usual. S h i p p i n g shares attracted some attention fo l lowing t in1 hopeful note struck by the chair­man of Great Eastern Sh ipp ing at the shareholders' annual meeting. The industry might not have taken a distinct tu rn but Shr i Bh iwand i -walla d i d throw a hint that the worst had perhaps been seen.

LEAVE IT TO PROFESSIONALS

That the outside publ ic should continue to keep off the market is understandable and perhaps wel­come. It is welcome because the cur­rent levels for equities seem very much on the h igh side. A n d with S ino-Indian relations cont inuing to worsen and reports of g r o w i n g Com­munist interest in Bhutan and Tibet on the increase, ONE can never tel l when the stock market might take f r i gh t . The recent overall t rading pattern of the market holds out a hope that, the market might st i l l scale new peaks. But it might be advisable to leave professional spe­culators alone to try their s k i l l at the game.

Most observers suspect that the market is h igh ly manipulated and the current h igh prices hear no relation to the current or prospective earn-ings and dividends. Imagine the staggering rise in the price of I n ­dian Dyestuff shares. Ear l ie r in the year the shares could be had at around Rs 150 and the current quotat ion of Rs 500 works out to around Rs 4.100. (The capital of the company was increased through the issue of Right shares in the ra t io of nine shares at par Rs 100 each—for each one held). H i n ­dustan Motors which are now being

analysis w i l l expla in most of the rules and features of indus t r ia l re lations systems.

To say this, however, is not to detract f r o m the valuable cont r ibu­t ion which Professor Dunlop 's new book has made to the study of in­dustr ia l relations. The book has broken new ground and indicated a r ich f ie ld for f r u i t f u l study, namely comparat ive indus t r ia l relations sys­tems.

eagerly sought at Rs 17.32 could be had below Rs 7 in January. Only a fews months ago they were quoted below par.

A word about .Bombay Burmah would also seem necessary. These shares rose f rom Rs 577 to Rs 50K" but lost all the gain in a day. The sharp decline reelected specu­lators' disappointment over the Chairman's statement at the annual meeting of the shareholders that the company had no plans for expan­sion in the country at the moment. The Chairman explained that expansion in foreign countries was merely out of compuls ion because the money invested there was locked up and could not be brought back to I n d i a . The pic­ture that Shr i Pratapsingh Mathura das painted of the company's cur rent work ing was not uneneoura g ing . He made no commitments in respect of the future d iv idend but he assured the shareholders that the management would always stand by them.

Oilseeds

FURTHER ADVANCE

Only linseeds were subdued last week. Cottonseeds, groundnuts and castor scaled new peaks. Cotton­seed February were b i d up to Rs 1 19.25, groundnut February to Rs J9H.12 and castor May to Rs 174.87 all per candy. These rates were recorded on December 15. Corrective prof i t - tak ing produced a moderate setback on the fo l lowing day, w i t h cottonseed easing to Rs 147. groundnut to Rs 190.12 and castor to Rs 172.37. They com­pared w i t h Rs 144.50, Rs 189.37 and Rs 172.12 respectively a week

Spectacular Gains Thursday, Morning.

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Around Bombay Markets