Democracy Under Attack: Top-level Leadership and Decision-takingby Manfred DavidmannCONTENTS
Relevant Current and Associated Works Relevant Subject Index Pages and Site Overview SUMMARYDiscusses and illustrates the internal struggles taking place in companies (corporations), political parties and other organisations, for achieving greater democracy and against those wishing to overpower democratic processes of decision-taking. Describes participative organisation (democracy), the basic criteria by which it can be judged and the processes by which leaderships attempt to take over the decision-taking processes. Also discusses how recently negotiated top-level trading agreements (GATT and the proposed MAI) appear to be taking control over key aspects of the internal affairs of participating countries away from their elected governments, giving the control to multinational corporations. INTRODUCTIONThis is one of a series of four studies which were undertaken to obtain a better understanding of why people have to struggle throughout their adult lives, in all countries and organisations, at all levels, to maintain and improve their standard of living and quality of life. We know what people are struggling to achieve {3, 34} and so these studies explore why people have to struggle by looking at what they are struggling against. The main report 'What People are Struggling Against' brings together the work reported in the four component studies by extracting and rearranging key findings from them. To get an overview, it would be best to read the main report first. If you want more information on particular aspects of interest, you could then go to the component studies (See Relevant Current and Associated Works). PARTICIPATIVE ORGANISATION: THE MEANING OF 'DEMOCRACY'Words like 'democracy' and 'democratic' can be used to imply that a system of government or management is socially fair and caring, and 'of, by and for the people', when this is not the case. Hence the need to look at the meaning of 'democracy'. Participative (democratic) organisation rests on the population electing representatives, on the basis of each person having one vote, for putting into effect policies decided by the population. Representatives are responsible to, and accountable to, the population for what they do or omit to do, and for the way in which they do this. What underlies participative organisation (democracy) is decision-taking by the people at the level of the people. A representative is selected by those whom he will represent so that his authority stems from those who elected him. The source of his authority is the consent of the managed to be managed or of the ruled to be ruled. They hold him accountable by withdrawing their consent, by in the end electing someone else. In the management area by the withdrawal of labour. In the area of government, by withdrawing co-operation from the political party or government by protesting, demonstrating, withdrawing support, replacing the party hierarchy or the government. {4} And representatives, governments or government officials do not have the authority or right to change or sign away the participative (democratic) rights of the electors, of the population. Policies state what has to be done and by when it has to be done. What needs to be stressed is that in a participative (democratic) organisation policies are decided by a well-informed population at the level of the population and that policies then become binding on management or government. <2> In an authoritarian organisation the policy decisions are taken at the top or near the top by the hierarchy (establishment) and are binding on the organisation's members. Decision-taking at the top is sometimes referred to as 'deciding centrally'. Authoritarian organisation is the opposite of democracy and underlies dictatorship. {4} And what we see is conflict between authoritarian minds wishing to dominate, control and exploit on the one hand and, on the other hand, citizens wishing to maintain and improve the standard of living and quality of life for the population as a whole by democratic (grassroots level) decision-taking. So the real struggle is not between political left and right, but is a struggle for participation (the right to take decisions). We can see the struggle in all organisations and at all levels. It is a struggle against authoritarian management or government for the right to take decisions. And in all democratic organisations it is a struggle against the authoritarian mind taking over the decision-taking. {3} A continuous battle is taking place between on the one hand policy-deciding by the many through elected assemblies, and on the other hand policy-deciding at the top, by a few. This is clearly shown by the way in which full-time officials and executives attempt to take power away from their policy-setting assemblies, after which they attempt to impose their will on the membership or population. The confrontation between on the one hand elected policy-making bodies, and on the other hand those who are supposed to put their policies into effect, can be seen in many areas. We are here looking at decision-taking in the management and control of companies, corporations, enterprises and all types of community organisations. Looking at the ways in which authoritarian minds attempt to take over and place democratically controlled organisations under authoritarian control. This is an age-old problem we need to be aware of so as to counter it effectively, and the following sections look at how this struggle manifests itself. TOP-LEVEL LEADERSHIP TAKING OVER DECISION-TAKING IN BUSINESS, SERVICE AND COMMUNITY ORGANISATIONSMAJORITY SHAREHOLDER TAKING OVER DECISION-TAKING FROM OTHER SHAREHOLDERSA majority shareholder can decide who, apart from himself, is appointed to the board of directors. In this way he determines the policy of the enterprise and thus top-level decisions. To that extent he takes possession of the ownership rights of the other shareholders and can use the company's assets for his own ends. Other shareholders may then have little say or interest in deciding policy or in the running of the company. What is left for them to decide is whether to sell the shares they hold or whether to buy more. {5, 14} TRADE UNION GENERAL SECRETARY OR LEADER OF POLITICAL PARTY CHANGING THE RULES TO INCREASE PERSONAL POWERAnother example is that of the trade union General Secretary or of the leader of a political party who after being elected attempts to change the rules so as to make his appointment more secure or permanent. {3} Doing so to stay in power regardless of how ineffectively he may be serving the members who elected him, doing so to avoid offering himself for re-election at regular short intervals. Attempting to take away from the membership, who in effect employ him, the right of any employer to appraise and evaluate performance. Preventing them from expressing support or disapproval by the extent to which they support or wish to replace him. REORGANISING THE NATIONAL HEALTH SERVICE: REPLACING GRASSROOTS DECISION-TAKING WITH TOP-LEVEL DIRECTION AND CONTROL OF SPENDINGHealth service policies were decided by a process of consultation and participation at all levels. This process worked well and provided the kind of effective treatments and services needed by patients and the community, whose needs were expressed by and through various Community Health Councils, Joint Staff Consultative Committees and community organisations. {1} A conservative government began to reorganise the British National Health Service (NHS) in 1984. The planned changes appeared to run counter to good management practice and were likely to greatly reduce the effectiveness of the NHS {1}. However, the government went ahead and the changes were made. The making of policy decisions at local levels by local management teams was replaced by what appeared to be a rigid system of direction from, and accountability to, the top. It became apparent that direction and budgetary control from the top was taking precedence over and replacing local policy setting by teamwork, that higher authority was to decide what and how much was to be done for patients and community. CONTROLLING THE USE OF CAPITAL: USER-OWNED USER-BENEFITING BANK CONVERTED TO PROFIT-MOTIVATED SHAREHOLDER-BENEFITING OWNERSHIPThe Trustee Savings Bank (TSB) was run for the benefit of its depositors. Massive funds were serving the working population and the community, were a source of strength and support. Trustees held the Bank 'upon Trust' for the depositors who in turn could appoint and remove trustees. The use of these funds was in effect being controlled by depositors, by the working population.
The funds were thus placed under the control of people who would be more likely to maximise profits for the new owners than to consider the money-needs of the working population. SENIOR EXECUTIVES TAKING OVER FROM OWNERS: CO-OPERATIVESCo-operatives belong to their members and operate for the benefit of their members. Policies are decided by members at general meetings held at regular intervals. Agreed policies are mandatory, have to be put into effect. Directors are elected from the membership and their role is to have these policies put into effect by the Chief Executive and managers. {2} In the Mondragon co-operatives the policy setting and control of management activities have apparently moved away from owners (producers, workers) towards an upper level of senior executives. {11} More information on the internal confrontations within co-operatives and mutual societies can be found in {2} and in associated case-studies on Building Societies {8}, Kibbutzim {12} and the John Lewis Partnership {15}. SENIOR EXECUTIVES TAKING OVER FROM OWNERS: COMPANIES (CORPORATIONS)Owners (Shareholders) balance the power of the Chief Executive and of executive directors by appointing part-time directors which correspond to community-representatives on decision-taking bodies. Consider the Chief Executive or Managing Director of a company who, with the other executive company directors, controls the company's day-to-day activities and whose job it is to put into effect the policy of the Board of Directors. Executive directors, generally being heads of departments, are responsible for their day-to-day work to the Managing Director. They are thus unlikely to contradict him in the Boardroom, and are unlikely to criticise their own results and their own efficiency. So shareholders balance the decision-taking power of the executive (full-time) directors by appointing outside (part-time) directors to the Board. Part-time directors, when completely independent of the chief executive (managing director), can be relied on to represent shareholders' interests, to criticise on behalf of the shareholders what the executives are doing. {3 <1>} EMPLOYEE PARTICIPATION IN DECISION-TAKINGThe policy-making body of the Histadrut, Israel's general federation of trade unions, decided some time ago that worker participation in decision taking was to be introduced in the Histadrut's own enterprises. Twenty years later the workers in Histadrut-owned enterprises still had a long way to go before achieving this. {3} TOP-LEVEL LEADERSHIP TAKING OVER DECISION-TAKING FROM THE POPULATION: BRITAIN'S LABOUR PARTY 1997/98What follows is based on newspaper reports <4> and articles which seemed relevant to this discussion of the ongoing struggle to maintain and improve democratic rights within the democracies. We are looking at recent and ongoing events and it is difficult to separate facts from opinions. However, an overall pattern emerges which appears to reinforce and strengthen what is said here about top-level leadership attempting to take over decision-taking from the grassroots population, about the consequent struggle in all organisations and at all levels. What is surprising is that these attempts to take over and control decision-taking processes appear more one-sided than would be the case if we were looking at unrelated chance events, at unrelated local struggles. What is disturbing is that the pattern seems progressive as if it were planned. DECIDING WHAT IS TO BE DONETaking Over from the People: Labour Party's Annual ConferenceIn 1979 the UKs oil wells started to produce and the UK became a net exporter of oil, as far as I know the only one of the industrialised countries to be producing more oil than it consumed, extremely well off as a result. A conservative (Tory) government was elected in the same year, harvesting the benefits and staying in power for 18 years. But by 1997 poverty and wealth differentials had increased by so much, and the rights and social security of the working population had been reduced to such an extent, that it was clear that this time the Labour party would be elected. Before the general election (May 1997) the Labour party's leadership changed and under the new leadership some fundamental changes were introduced. The Annual Conference of the Labour party consisted of delegates from local branches and was policy setting. Resolutions, proposed policies, were submitted by local Labour party branches, debated by delegates at the conference. If passed then it was up to the party's executive (its leadership) to implement the policy, to put it into effect. The decisions were mandatory, had to be put into effect. So the Labour party's annual conference took binding decisions on policy proposals brought up by grassroots membership. They decided policy which the executive had to follow and put into effect. In the autumn of 1997 the conference voted for a system which transferred the choice of what could be debated from grassroots membership to a policy commission chaired by the party leader {16}. This in effect took away a vital aspect of decision-taking from the working population and placed it in the hands of leader and leadership. In January 1998 it was announced that forty-five policy forums were to be set up in which members would be invited to express their views on policies, from social issues to local government and that such views should eventually work through to the annual party conference. Although members would be able to discuss policy, it seems the leadership can either take note or else ignore the proceedings. {17} The annual conference ceased to decide policies, ceased to decide what had to be done. Instead of deciding mandatory policies based on direct policy proposals from local branches, the annual conference became a talking-shop, discussing and expressing views on subjects selected and approved by the leadership. So a continuing process appears to be taking place which seems to be aimed at concentrating decision-taking in the hands of the top-level party leadership. Serving Big Business: New Labour
In a hard-hitting and relevant article, Paul Foot points to the differences between social-democratic pro-people policies and those of a market system in which irresponsible corporations have economic power. {19}
In September 1998 an opinion poll reported that the majority of people felt that the leader of the Labour government was closer to big business than to ordinary people. {20} TELLING ELECTED REPRESENTATIVES HOW TO VOTE AND HOW TO BEHAVE: MEMBERS OF PARLIAMENT (MPs)
So in effect the local parties are to be informed of the extent to which their MP follows policies determined by the party leadership. CENSORING AND SILENCING ALTERNATIVE ('OPPOSING') POINTS OF VIEW: THE LABOUR PARTY'S NATIONAL EXECUTIVE COUNCIL (NEC)The Labour government's proposals for changing the UKs system for electing its MEPs (Members of European Parliament) led to the temporary suspension of four Labour MEPs, apparently because they discussed in public the merits of different systems of proportional representation, favouring as more democratic a system disliked by their party. {22}
It was also unprecedented when in May 1998 the Labour party's MPs were told by their party whips <5> to tell their local parties who to nominate for the next elections to the Party's National Executive Council. {25}
It seems that the Labour Party leadership had been campaigning against 'leftwing' candidates. However, four 'Grassroots Alliance' members were elected to Labour's NEC.
So the new NEC contains at least four members likely to be speaking for matters of concerns to grassroots members and who may be publicising their points of view so as to inform and consult party members.
It seems to me that breaches of these guidance rules would be noticed and tell against the individual with party leadership. And it looks as if NEC members should not argue with each other or with other party members in public. I do not see how Labour party members could find out about alternative proposals or viewpoints except by them being discussed openly in the media.
SELECTING AND ELECTING REPRESENTATIVES: UK MEMBERS OF EUROPEAN PARLIAMENT (MEPs)Proportional Representation: 'Closed-list' and 'Open-list' SystemsVoting by proportional representation (PR) decides how many candidates of a party are elected. If 300 seats are available and the party gets one-third of the votes, then it gets one-third of the seats, that is it gets 100 seats. If the party put forward a list of 300 candidates, only 100 can become representatives. With a "closed list" system of PR, the electors vote for the party and not for a local candidate. They thus vote for the party's list. In the above example, it is the first-named 100 names on the list which become representatives. With an "open list" system the electors have the chance of voting for candidates of their choice from the party's list. Closed-list SystemWhether or not one is placed on the list, and one's position on the list, determines whether one is elected or not. With this system it is not really the electorate which decides whether one is elected as a local representative. Whether one is elected depends on whether one is placed on the list and on one's top-to-bottom position on the list. So whether one is elected depends on the party leader or leadership. So one's chance of being elected depends on doing as told by leader or leadership, on supporting their policies, instead of depending on serving one's constituents (local electors), instead of being responsible and accountable to the electors, to the community one is supposed to represent and act for. The higher up one's name appears on the list, the more likely is one to be elected, the more likely is it that one benefits from the high salary, excellent allowances, good working conditions and good pension rights which go with the job. Loyalty to leader or leadership replaces loyalty to electors. It is the grassroots membership which should select and decide who is to represent them. The party leadership seems to be close to taking over both functions. What we see taking place with a closed-list system is far removed from being responsible and accountable to one's local electors, to the local community, for the way in which one represents them and looks after their interests both at local and national level. Democratic decision-taking is reversed by a system of closed-list proportional representation as decision-taking by representatives is replaced with obedience to dictates from the top. UK Members of European Parliament (MEPs)
In Israel the democratic system of proportional representation has been defeated by the way in which prospective members of the Knesset (government) are selected by party hierarchies and also by the way in which, after an election, minority parties can combine to replace the majority party. {3} Reason would suggest that the largest parties should get together and compromise. AGREEMENTS BETWEEN TOP-LEVEL LEADERSHIPSTHE 'GENERAL AGREEMENT ON TARIFFS AND TRADE' (GATT)GATT is a treaty between many countries in which they agreed that changed and new life-forms can be owned by multinational corporations, generation after generation. {7} The GATT agreement apparently gives exclusive protection to patent holders for 20 years and imposes strict enforcement criteria. Huge royalty payments will have to be made to multinational corporations. 'Astonishingly, the rules place the onus of proof in case of dispute on the farmers, a provision going against normal rules of justice' {31}. The resulting costs could prevent the vast mass of small farmers from disputing the source of the seeds they are using. {7} So multinational corporations have been given ownership over new life-forms and the power to force farmers world-wide to pay the multinational each year for seeds even when these seeds were grown by the farmer the previous year. {7} It appears that GATT serves the interests of multinationals, that is of those who own and control them, at the expense of the economic and social interests and welfare of individual countries, of their people, of their citizens. {7} And that a situation has been created in which the nature of profit-motivated and profit-orientated multinationals threatens human independence and freedom. {7} In 1998 a US multinational 'announced plans to unravel the entire human genetic code by 2001', saying it intended to patent 'the most valuable gene sequences', and to sell the information to scientific institutions and drug companies. {32} Combining this information with recent developments concerning the cloning of animals and human beings raises disturbing and even fearful prospects. 'Ownership' has been defined as 'the right to possess an item of property' and so one has to look closely at where the right comes from and how it is exercised. Ownership rights are the property of a country's citizens and communities {14}. As far as I know, no elected representative, government or government employee has the authority to hand over to multinational corporations (that is to those who own and control them), or to anyone else, such ownership rights. So it would seem that the patent provisions of the GATT agreement are big-business-serving and arbitrary. {14, 7} THE 'MULTILATERAL AGREEMENT ON INVESTMENT' (MAI)MAI stands for 'Multilateral Agreement on Investment'. But its name does not reflect those aspects which are of deep concern. What is disturbing are not only the provisions of this proposed treaty but also that the provisions were debated in almost complete secrecy. It appears that representatives of multinationals and governments representing the 29 richest industrialised countries, all OECD members, had been developing the MAI's provisions at the OECD (Organisation for Economic Co-operation and Development) since 1995. This seems to have been done in complete secrecy till a leaked copy became available on the Internet in 1997. It seems that the agreement was to have been finalised in February 1998. Apparently it was adverse publicity relating to its restrictive provisions which delayed completion as concerned groups of citizens publicised their concerns. And some governments have now withdrawn their support. So let us look at the kind of provisions this almost-agreed agreement on 'Multilateral Agreement on Investment' contained {9, 10}: Democratically elected governments
Multinationals would have had the right to
We saw that multinationals can legally avoid paying corporation tax by transfer pricing {6} and that unitary taxation <6> {6, 33} can overcome this tax avoidance by assessing the actual profits being generated by a multinational in a particular country. Multinationals could, under MAI, have refused to be taxed by a system of unitary taxation. Socially responsible and caring governmental legislation has to take precedence over the profit-motivated activities of corporations. But it appears that under MAI the national governments would have handed over control, that is authority to act, over much of the economic and social welfare of their citizens to multinational corporations (that is to those who own and direct these corporations), if they had agreed to this treaty. In other words, multinationals would have been given overriding authority over democratically elected governments. As far as I know, no elected representative, government or government employee has the authority
NOTES AND REFERENCESNOTES
REFERENCES
Relevant Current and Associated Works
Relevant Subject Index Pages and Site Overview
The Site Overview page has links to all individual Subject Index Pages which between them list the works by Manfred Davidmann which are available on the Internet, with short descriptions and links for downloading. To see the Site Overview page, click Overview Copyright © 1998 Manfred Davidmann
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