File 19: production organization reconsidered

Question 1

What do Marglin and Braverman argue about the organizaton of production?

Answer 1

they argue that production was reorganized for distributional purposes: extract more effort from employees (supervision) and effectively reducing pay (reducing raw material and skill levels) and to appropriate benefits of innovation (Marglin)

Question 2

Did changes in production organization lead to productivity increase or come at the expense of productivity increases (following Marglin and Braverman)? Give examples (4)

Answer 2

1. Craft Labour: Declines in the use of craft labour in assembly industries in the 19th century replaced by machinery which increased productivity. The almost continuous decline in prices over the 19th century is a good indicator of this.
2. Steel industry: rising wages after the Homestead strike suggest that by the end of the 19th century craft labour had become an obstacle to productivity growth.
3. Taylorism: produced enormous efficiency gains.
4. The shift from chain saws to mechanized cutting probably increased average skill levels while increasing productivity.
   CONC: changes have contributed to productivity growth

Question 3

Give 2 counter example of Marglin/Braverman’s argument.

Answer 3

spread of the use of computers: increases average skill levels
Brynjolfsson and Hitt’s (medical product firm) case study suggests that the productivity gains tend to require a production organization that allows more skilled workers to exercise discretion.

Question 4

What provides a rationale for employee resistance? Give two examples.

Answer 4

negative effects of changes in organization that are distributionally motivated such as deskill can lead to incentive of resistance of employees (expressed through trade unions) because because the benefits of the productivity increase, including rising wages, often come with a lag:

1. the resistance of the Amalgamated Iron Workers union to attempts by US steel producers to reorganize work that culminated in the Homestead strike
2. the bargaining by the union of Quebec logging employees to limit management discretion and protect its existing membership (through aggressive application of seniority).

Question 5

How do collective agreements (unions) limit management rights? (5)

Answer 5

i) the right to discharge; ii) the right to discipline; iii) the right to ignore seniority in a range of employment-related issues; iv) the right to change job classifications; v) the right to change hours of work.

Question 6

If unions sucessfully oppose management initiative, what is the management’s response?

Answer 6

i) defer investment (e.g., British steel plant owners in the early 20th century, many modern paper mill owners)
ii) move investment to more business-friendly environments (from the Northern US and Canada to the Southern US, from North America to Mexico and other low wage countries)
iii) as far as possible, to replace labour with capital ( ports)

Question 7

How is the broad ‘management rights’ provision reconciled with these contractual limitations(collective agreements of unions)?

Answer 7

Juriprudence reflects tensions between union and management: There is the ‘reserve rights doctrine’ which says that if something isn’t specified in the contract, management has the right to act. But there is also the assumption that the collective agreement puts management and labour on an equal footing, so unilateral major changes are not allowed.

Question 8

How do Freeman and Medoff summarize research on union effects on productivity growth? (6)

Answer 8

1. Unions don’t oppose the introduction of productivity-increasing new technology.
   Sometimes they urge it
2. Union wage increases may speed up technological change (ports)
3. no evidence of a temporal association between growth in productivity and unionization (positive or negative). ( US there was strong productivity growth in the non union environment of the 1900s and again in the 1950s and 1960s when unions were relatively strong )
4. Unions do reduce flexibility (logging) But they do not prevent the substitution of capital for labour. So the magnitude of the effect on flexibility and productivity is small.
5. Unions contribute to productivity growth by: i) They provide a way of expressing discontent. In other words they make possible ‘voice’ rather than ‘exit’ as a way of responding to poor management =>reduces the costs of turnover. ii) Unionization and strikes may be responses to poor management. This means that unions may provide signals to owners that they should consider the replacement of the existing management. iii) Unions provide a structure through which management can discuss with employees ways to improve work practices and productivity.
   conc=> Unions do not have a negative effect on productivity where there is product market competition.

Question 9

Where were Marglin and Braverman’s analysis wrong and right?

Answer 9

right: plausible interpretations of the replacement of the putting-out system by the
factory system in the textile industry and of the demise of ‘ordinary management
wrong:
-Mechanization in the 19th century and the moving assembly line deskilled; mechanization in the ports and in the logging division of the forest products firm raised average skill levels but cut employment. The spread of the computer seems to raise skill levels.
-In the ports and the logging division, while average skill levels rose, industry or firm employment fell.
-The trends in living standards suggest that, whatever happened in the particular historical episodes studied by Marglin and Braverman, in aggregate, engineering and economic efficiency coincided.
=> CONC: But, in the short term they can diverge. Managers may seek to reorganize work for distributional purposes - deskilling to put pressure on wages, reorganizing to increase control and limit worker autonomy and to extract more effort. That short term is likely to matter greatly to the workers involved. It would have done to the members of the Amalgamated Iron Workers Union after the Bethlehem Steel Strike. Such divergencies are likely to affect labour relations.