Marikana and the boxer.

How a former prize fighter and trade unionist could potentially have averted a tragedy.

I’ve written about Joe Scanlon before, and have been reminded of him again as the Marikana events unfold in the Commission of Inquiry at Rustenburg. When I think of Scanlon, a caricature comes to mind of a stocky, powerfully built man with Popeye type forearms.

He also reminds me of Tom Murray. There are probably only a few of us left that will remember that irascible, firebrand boilermaker and six times president of the then Trade Union Council of South Africa. One of the ironies that I remember well after listening to his impassioned plea in the early 70’s for the inclusion of blacks into the union movement, was the debate that followed in the Cape Town City hall that job reservation should be maintained to protect union member jobs.

There is something very familiar with the hypocrisy of that debate and the behaviour of the Union movement in South Africa today: the protection of incumbent benefits to the exclusion of those outside the employment ranks. But there was also a major difference: Unions then were run by salt-of-the-earth workers, with little material self-benefit apart from a passion to serve their members.

But back to Scanlon. The caricature may not be all that ill-fitting. He was an ex-prize fighting steel-worker, and a Trade Unionist who rescued the American steel plant where he worked from going under. It was a simple formula of cooperation with management in cost cutting implying worker sacrifices. But it was a plan that would outlive Scanlon by decades and is still the basis of various bonus schemes today.

Scanlon was a product of the depressed 30’s, and a subsequent war period which gelled management and labour into a common purpose of the war effort. It also saw the birth of the Rucker plan by academic and author Allen W. Rucker which differed from Scanlon in focussing not on profit as much as on value-added or wealth created. But both were from an age where cutting costs and saving companies from bankruptcy were the primary concern, often leading to a reduction in employment to the benefit of those still employed. It’s a highly unpalatable yet commonly used formula in South Africa today, where the number of unemployed should be of far greater concern than the rights and benefits of those employed.

By all accounts, South African companies need little help in cost containment mostly at the expense of employment. According to the latest Labour Market Navigator the real risk-adjusted return on capital of South African listed businesses is currently 10% – the highest in the world. There seems to be sufficient encouragement for both labour and capital to continue working on an out-dated 20^th century model based on the supremacy of capital and the commodity expression of labour.

A strong union movement finds its succour in the assumption of an intrinsic adversarial relationship between labour and capital. And owners can cope with troublesome and costly labour as long as the final solution, cutting heads, is in their hands. It’s only when dramatic events such as Marikana take place that the vested interests of both owners and trade Union structures are shaken to the core.

It is doubtful then that a Scanlon plan would have prevented Marikana. A Rucker plan may have been more appropriate, but then individual pay, and not the payroll exclusively should have been linked to value-added – a model that I have championed over many years.

But Scanlon, and Rucker for that matter should not only be seen as a system. It is the philosophy itself, more than the “plan” that still today gives these efforts their true value. Both were convinced of the power of cooperation between management and workers and Scanlon in particular believed that much distrust existed between labour and management because there was a lack of information sharing. He believed given information about the company and a chance to participate in helping solve problems the average worker would contribute to the success of the company.

That could have prevented Marikana.

I am convinced that given the opportunity, means and ability especially at individual company level and without coercion or malevolent seduction from outside, there is still a substantial reservoir of goodwill and enthusiasm on the part of labour to be involved. Labour can and should play much more than a subservient role.

We have seen this in many other instances apart from flexible pay systems that permeate the East. The world’s biggest labour co-operative, the Spanish Mondragon Corporation was founded on the efforts of a Catholic priest and some students. From making paraffin heaters, the co-op has developed into one of the largest multi-national business organisations in Spain with nearly 85 000 employees worldwide and an annual revenue exceeding €15bn. Labour receives 75% of wealth created. Mondragon has 10 basic cooperative principles that would have die hard profit maximisation capitalists shaking in their libertarian boots: Open Admission, Democratic Organisation, the Sovereignty of Labour, Instrumental and Subordinate Nature of Capital, Participatory Management, Payment Solidarity, Inter-cooperation, Social Transformation, Universality and Education.

In Ohio, in the U.S., what began with the efforts in 1977 of a young steelworker Gerald Dickey, has developed into what Maryland academic Gar Alperovitz describes as “many, many worker-owned businesses in the state, and the support system for building them is one of the best in the nation. There is also a very energetic organization, the Ohio Employee Ownership Center at Kent State University that provides assistance to workers and others who want to establish such firms.” Mondragon itself got involved in Ohio in 2009.

Consider the efforts by a handful of employees at Aurora who bravely but vainly fought against a scavenging group of shareholders, then the power inherent in a committed group of workers becomes nothing short of inspiring. Or Albert Koopman who in the early 80’s handed over much of the destiny of his newly founded Cashbuild to a rebellious workforce.

We’ve had some highly questionable attempts in South Africa at involving employees in ownership through this curious delusion of the “worker-capitalist” and ESOP’s. Best known, is the much vaunted KUMBA scheme, where workers went on strike within weeks of becoming semi-millionaires through the scheme. Why the DA still insists on making this a key feature of their economic policy is baffling.

The difference between my earlier examples and the misguided efforts we are witnessing at home is patently obvious: the initiative in the former came from workers themselves. They were not “seduced to think like owners” by a mistrusted shareholder body and their mostly overpaid executives – a group that, driven by shareholder value and short term profit maximisation, has earned the misgivings of a large body of the informed public globally. Even more puzzling is that shareholders themselves are prepared to pay a high cost for this folly.

Another bit of hypocrisy in South Africa is the reluctance of Cosatu to invest their own or Union controlled pension funds in taking over control of companies. Labour correspondent, Terry Bell says “the rule was obviously applied to avoid the potential for embarrassment, should union members end up striking or otherwise protesting about the actions of a business owned by their own investment company.” In the same article Bell sees NUMSA potentially breaking this rule by its proposed takeover of Scaw after its sale by Anglo to the IDC.

But that objection hides a much deeper truth: more than any other country in the world we are locked in an early 20^th century expression of the relationship between labour and capital, despite all the motivational bells and whistles that have spawned a huge empire of “human capital consultants”. These, and the main actors involved have a powerful vested interest in keeping it that way.

The real truth is that employees in worker owned companies see themselves as workers first, and owners second. There is sufficient proof that they can do so without sending companies to the wall and inhibiting their ability to raise capital.

We can only hope that along with 44 others, the voices of Scanlon. Rucker, Dickey and a Spanish priest will echo among the commissioners of the Marikana enquiry and those involved in the current wage bargaining sessions.