Labor Corporatism Fails In Volkswagen Union Vote

The curious conservatism of a left-wing cause

Leading up to the recent election conducted by the National Labor Relations Board at the Volkswagen automobile plant in Chattanooga, Tennessee, in which workers voted 712 to 626 against joining the United Automobile Workers (UAW), left-wing supporters of the union drive demonstrated a curious lack of understanding of the conservatism of their cause.

The fact that Volkswagen tacitly supported the UAW signaled to only a stalwart few on the hard left of the labor movement that unionization in this case might have favored something other than the interests of the workers. Last year the UAW distributed cards to employees in the plant which, when signed, authorized the union to represent them in collective bargaining but also declared that "We commend and embrace the Volkswagen philosophy of co-determination and … believe that the best way to actively participate in our company and to contribute to VW's continued success is to achieve representation as our colleagues have at the other 61 Volkswagen facilities across the globe."

This signaled the UAW's commitment to institute what in Europe is known as a "works council," a committee of workers that co-manages a facility with the employer and is legally or contractually obligated to work in the interests of both workers and company. Works councils are common in major industries in Europe, especially in Germany, and operate in every VW plant except in China and Chattanooga. Typically, works councils are forbidden from supporting a strike, and have been criticized by some on the left for serving to constrain workers' demands for better wages, hours, and working conditions and for enmeshing labor with the state. Many of the companies co-managed by works councils, including Volkswagen, are also co-managed by their respective state or national governments.

The conservative effect of works councils and the UAW's acquiescence to it most likely account for Volkswagen's support for the union. It was also the intention of the creators of the doctrine—known as corporatism—that gave rise to works councils.

Corporatism was first developed as a coherent ideology by Pope Leo XIII in his 1891 encyclical Rerum Novarum. Responding to mass labor unrest and the spread of revolutionary fervor in a rapidly industrializing Europe, Leo called for employers and workers to treat each other as members of a loving family, subsuming their self-interest to the interests of the company, the Church, and "the commonwealth." It is "ordained by nature," he declared, "that these two classes should dwell in harmony and agreement, so as to maintain the balance of the body politic."

The Pope endorsed unions that were cooperative with employers and introduced a concept that was later realized in the creation of works councils: "Should it happen that either a master or a workman believes himself injured, nothing would be more desirable than that a committee should be appointed, composed of reliable and capable members of the association, whose duty would be, conformably with the rules of the association, to settle the dispute." This system of industrial harmony would bring national harmony as well: "men would cling to the country in which they were born, for no one would exchange his country for a foreign land if his own afforded him the means of living a decent and happy life." Following the publication of the Pope's encyclical, the Church supported a number of trade unions in Europe that eschewed anarchism and socialism, collaborated with employers, and declared their loyalty to God and country.

In the 20th century corporatism split into several variants. In Italy and Germany, it formed the basis of fascist economic policy. Workers and employers were expected and when necessary forced to renounce their self-interest and cooperate—through "corporatives" in Fascist Italy and "industrial cartels" in Nazi Germany—in building stronger industries for the health of the nation-state. Because German works councils had been infiltrated by communists and other radicals who sought to subvert them, the early Nazi regime replaced them with more compliant "councils of trust," which served the original, intended function of works councils.

In the United States, corporatism guided the formation of the National Industrial Recovery Act of 1933 (NIRA), the defining legislation of the so-called "First New Deal." Very similar to the national economies established in Italy and Germany, the NIRA and the National Recovery Administration, which put the law into practice, suspended all federal anti-trust laws and created "code authorities" made up of businessmen and representatives from compliant unions that — instead of market forces or worker demands — determined how much products would cost, how much workers would make, and how much companies would produce.

During World War II, corporatist leaders of unions affiliated with the Congress of Industrial Organizations, notably Walter Reuther of the UAW, enforced a no-strike pledge and helped employers discipline workers who rebelled against production speedups and government-imposed wage caps.

This less than glowing history has long been known by labor activists and intellectuals associated with anarchist, syndicalist, and certain Marxist tendencies that have been critical of state intrusions into industrial relations. It may also explain why so few who supported the union campaign in Chattanooga identified the objective of the UAW and VW as corporatism. A notable exception to this was Demos co-founder David Callahan, who acknowledged the favorability of corporatism to employers and nonetheless (or therefore?) endorsed it. "Capitalism needn't feature nonstop conflict between workers and owners, and can actually work better if these two sides cooperate," he wrote on the eve of the Chattanooga election. "That's the basic idea behind corporatism, and decades ago, it had pretty wide traction among America CEOs and elites generally."

The crowning irony of all this came in the days before the election, when the left roared in defense of nothing less than corporate welfare. Following a threat issued by Republicans in the Tennessee legislature to stop "any additional incentives from the citizens of the state of Tennessee" going to Volkswagen "for expansion or otherwise" should the UAW be voted in, left-of-center media outlets from MSNBC on down angrily aligned themselves with the right of the corporation to receive government subsidies.

It was a perfect corporatist moment for the American left. But one might be forgiven for wondering what exactly was left about it.