Consociational Democracy, Class Conflict, and the ...

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much log-rolling among government and the trade unions. While this corresponds more to the. “multilateral” model, the “bilateral” model too is of considerable ...
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Consociational Democracy, Class Conflict, and the New Corporatism

Gerhard Lehmbruch University of Konstanz, Germany

Paper presented at the Round Table on Political Integration, International Political Science Association (Jerusalem 1974).

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Consociational Democracy, Class Conflict, and the New Corporatism

“Consociational democracy” or “Konkordanzdemokratie” has been described as the response of political elites in certain countries to the challenge of strong sub-cultural segmentation (Lehmbruch 1967; also Lijphart 1968 and the articles compiled in McRae, 1974). Conflict within “fragmented political cultures” is settled by bargaining among the top leadership of rival groups. “Consociational” strategies, however, may not only serve to manage conflict of highly integrated and mutually incompatible value systems. The proposition of this paper is that they have also been employed for stabilizing and steering highly developed capitalist economies by promoting a new type of social integration. In this patterned arrangement, the relations between government and organized interest groups take the form of a new corporatism which we shall call “liberal corporatism”. While consociational democracies have moved strongly towards the corporatist model of policy-making, the question arises whether both - consociationalism as well as corporatism - will not disintegrate as a consequence of an increase in social mobilization by the rank and file and a revival of class conflict in advanced capitalism. By the term “liberal corporatism” we mean a special type of participation by large organized social groups in public, especially economic, policy-making. Consultation and cooperation among administrations and organized interests is, of course, common in all constitutional democracies with a highly developed capitalist economy. But the distinguishing trait of “liberal corporatism” is the high degree of cooperation among these groups themselves in the shaping of public policy. The decision-making process in some liberal corporatist systems is characterized by the existence of two levels of bargaining (more or less distinct from each other). First, bargaining occurs among the “autonomous groups” (this is the significant expression used by the West German Council of Economic Advisers). Then, bargaining shifts to exchanges between the government and the “cartel” of organized groups. An influential defender of liberal corporatism in Austria recently stressed the difference between this “bilateral bargaining”, and “multilateral” or separate consultation between the government and different interest

Fehler ! Textm arke nicht defini groups. In the multilateral model the government perceives its role as that of a ert.

“turnplate” in economic policy-making, while in the bilateral model its impact on economic policy is said to be much less (Kienzl 1974, 287). Liberal corporatism should be distinguished from the traditional corporatism of pre-industrial Europe, on the one hand, and from authoritarian corporatism of the fascist type, on the other. Its essential feature is the large measure of constitutional autonomy of the groups involved, hence the voluntary nature of the institutionalized integration of conflicting social groups. Among the developmental conditions for liberal corporatism are: (1) the replacement of classical liberal-competitive capitalism with “organized capitalism” (Hilferding) and a growing “politicization” of the market, by the transformation of competitive economies through the social power of oligopolistic firms and organized interest representatives; (2) the traumatic experience of the economic crisis of 1929 with its subsequent disastrous consequences for political stability in the liberal democracies. Due to this experience economic policy became subject to the political imperative that full employment, monetary stability, balance of payments, and, increasingly, economic growth (which is perceived as a precondition for social pacification through the distribution of increments in national product) should be guaranteed and maintained in a balanced condition. Such management of the business cycle and of economic growth is a high priority policy objective of liberal corporatism, but its scope may also involve decisions about the institutions of the economic system and related social policies, as we shall see below in the case of Austria. Liberal corporatism rests on the theoretical premise that there exists strong interdependence between the interests of conflicting social groups in a capitalist economy. This “interdependence of interests” image of society is clearly opposed to a “conflict of interests” image which (as in the Marxist concept of class conflict) stresses the ultimate incompatibility of antagonistic demands. One of the most elaborate versions of the “interdependence of interests” model can be found in modern versions of macroeconomic equilibrium analysis in the Keynesian tradition (known in German economics as Kreislauftheorie). The strong influence which economists of the Keynesian and post-Keynesian persuasion have gained in the formation of economic policy in a number of West European countries has doubtlessly contributed to the advance of liberal corporatism. This can be demonstrated, for example, by

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West Germany and Austria. 1 Macroeconomic analysis in these associations has become an important frame of reference for the strategy of elaborating and promoting wage demands.

Austria as an advanced case of liberal corporatism

“Social partnership” (Sozialpartnerschaft) in Austria can serve as a particularly conspicuous example of the above phenomenon. Its main elements are the following: 2 (1) The large interest groups are organized into “Chambers” which are statutory public corporations with compulsory membership. (Pütz, 1966; Secher, 1960). The most important are the Chambers of Business (gewerbliche Wirtschaft), of Agriculture, and of Labor; the latter is strongly tied to the Austrian Confederation of Trade Unions (ÖGB) which, though of a different legal status, is an equivalent partner in the bargaining processes. The Chambers and the ÖGB are strongly centralized bodies, both de jure (e.g. sectoral industrial unions, need the consent of the ÖGB for wage demands and strikes), and de facto (e.g. the Chambers of Agriculture of the provinces, or Länder, enjoy a considerable theoretical autonomy, but are in fact governed by the “Conference of the Presidents of the Chambers of Agriculture” and its rather influential bureaucracy). Centralized leadership is strengthened by the considerable influence which experts trained in economy or law enjoy within all these associations. It appears that a majority of university economists have strong ties to one or other of the organized interest groups. In Austria, it would be difficult to find economic expertise independent of the interest group system. (2) Cooperation among interest groups has been institutionalized since the 1950s by agreements between business and labor leaders. The most important body is called the Paritätische Kommission für Preis- und Lohnfragen (Paritary Commission for Questions of Price and Wage Regulation). The “Paritätische” consists of representatives of the four above mentioned associations plus two members of the government who, however, have only 1 On the growing role of experts in West German trade unions see the unpublished research report of the Institut für

Sozialforschung (1969, 204 ff.). 2 On “social partnership” in Austria, see Pütz (1966) and Klose (1970).

deliberative voice in the commission. 3 The sessions are preceded by

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Präsidentenbesprechung in which the presidents and staff of the four associations clarify their positions before meeting in the presence of government representatives. Decisions are prepared by sub-commissions consisting of experts from the associations' headquarters. There is one sub-commission on wages and another one on prices. Collective bargaining on wages is under the complete control of the “Paritätische”. In addition, it controls about one quarter to one third of the consumer prices - another quarter is governed by administrative controls. In practice, the price decisions of the Commission (which are based on calculation of costs and can serve only to slow down inflationary tendencies to some degree) have the same effect as price recommendations by a cartel. The result, therefore, is to restrain competition. A third sub-commission is the Beirat für Wirtschafts- und Sozialfragen (Advisory Council for Economic and Social Problems). This may be considered an Austrian counterpart of the American Council of Economic Advisors but it is, of course, exclusively composed of experts from the different groups on a “paritary” basis. The government is not represented in the Beirat although its function is precisely to advise the government on economic and social policy. Furthermore, the Beirat has no formal legal basis and the government is not entitled to demand its advice. This is a good illustration of the “bilateral” model through which “cartelized” interest groups may assume an initiative role in economic policy-making. Budgetary forecasts, for example, have been established by the government at the demand of the Beirat. The influence of the Beirat has somewhat declined since the formation of a Socialist government in 1970. The Socialist ministers of finance and economy (who had before been leading labor spokesmen in the “Paritätische”) prefer “multilateral” bargaining with different interest groups simultaneously present. Yet the influence of organized interests continues to be very strong. Economic forecasts are discussed every quarter of the year in the Verbändebesprechung (consultation of associations) with the minister of finance and the president of the Nationalbank. In this context we should also mention that the major organized groups are strongly represented in the governing council of the Nationalbank. Its

3 Representatives of the government had the right to vote until the breakup of coalition government in 1966. Since

then it has been abandoned in order not to endanger the political equilibrium within the commission

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headquarters, while his predecessors had been former officials of the Chamber of Business. (3) The Chambers and interest groups are entitled to give their opinion on all government bills before they are submitted to parliament (Begutachtungsrecht). In practice, of course, this amounts to a great deal of negotiation among government and interest groups. Changes in the income tax, for example, have been discussed and sometimes have been agreed upon after much log-rolling among government and the trade unions. While this corresponds more to the “multilateral” model, the “bilateral” model too is of considerable importance in law making. Legislation on restrictions to competition has been prepared by prior agreements between business and labor. The conservative government of Josef Klaus (1966 to 1970) tried to depart from this routine when submitting a bill changing the cartel law by having it drafted by the legal division of the Chancellor's Office with the aid of some experts of the Chamber of Business. This bill, however, met such vehement opposition by Socialist union representatives in parliament that the government preferred to withdraw it. A new bill was then negotiated, on the demand of the Chancellor, between the Chambers of Business and of Labor, and afterwards ratified without any change by the government and parliament. Another important example of such bargaining has been the Mitbestimmungsgesetz (Bill on Workers' Participation in the Management of Industrial Firms) which, too, was drafted in negotiations between the Chambers of Business and Labor. (4) The Sozialpartnerschaft rests upon the voluntary cooperation of interest groups. Each of them could denounce the agreement without risking sanctions other than the disapprobation of a large part of public opinion. Demands for statutory institutionalization (on the pattern of the Dutch or French Social Economic Councils) have been raised by a number of constitutional lawyers, but they have been rejected by the majority of interest group leaders as well as by party leaders. Support for social partnership has been strong in public opinion and within the organized groups themselves, in spite of criticism by étatiste or legalistically minded academics and civil servants. The predominance of certain economic doctrines and the strong influence of economic experts has contributed to this consensus to a degree which should not be underestimated. The experts in the staffs of business, agricultural and labor organizations often have been trained

Fehler ! Textm arke nicht defini within the same academic institutions (e.g. the Hochschule für Welthandel) and tend to ert.

share a common approach to the analysis of economic and social problems. Informal communication between business and labor headquarters is frequent and intense. On the basis of reciprocity, information is exchanged even if it may serve the other side and prejudice some members of one's own clientele.

Other examples of liberal corporatism

The Austrian system is one of the most elaborate examples of liberal corporatism; the most elaborate except perhaps for the case of the Netherlands from 1945 to 1963 (Busch-Lüty, 1964). In Switzerland, classical liberal and anti-etatiste traditions have hindered formal institutionalization of corporatism, but in fact here too the “bilateral” model seems to play an important role in legislation and policy-making. There are comparable phenomena in other West European countries as well: “Harpsund democracy” in Sweden and what Rokkan (1966) has described as the “two-tier system” of decision-making in Norway for example, the “Konzertierte Aktion” in West Germany (Hoppmann, 1971; Adam, l972) and the National Economic Development Council in the UK. However, the extreme examples of liberal corporatism are to be found in those countries which belong (or have belonged) to the type of Konkordanzdemokratie or “consociational democracy” which has been earlier analyzed by this author and by Arend Lijphart. There are obvious genetic relations between the one and the other: The Paritätische in Austria was established during the era of the coalition of conservatives and socialists, just as the West German Konzertierte Aktion has been instituted by the government of the “great coalition” (Lehmbruch 1968). Austrian Sozialpartnerschaft has survived the end of the coalition in 1966 but has since, significantly, been described as a sort of Bereichskoalition (sectoral coalition). It is true, on the other hand, that the Dutch system of income policies by agreement among the groups was discontinued not very long after the departure of the Labor Party from government in 1959. But it is, nevertheless, possible to insert these heterogeneous developments into a single explanatory context. On the one hand, as we have argued in earlier publications, bargaining strategies of the “consociational” and of the “liberal corporatist” type presuppose some learning from successful experience by the elites of the rival groups, so that the newly acquired strategic

Fehler ! Textm arke nicht defini approaches may be transferred to other spheres of conflict management (Lehmbruch ert.

1967). On the other hand, trade union leaders will be more inclined to participate in bargaining on income policies if they feel that their interests are adequately represented in government, that is, if the socialist party is governing or is a partner in the governing coalition. More important, however, is the structural isomorphy of the “consociational” and the “liberal corporatist” pattern. In both bargaining and log-rolling serve to reconcile the conflicting interests of highly cohesive groups which cannot be adjusted by electoral competition and/or by majoritarian devices. Bargaining power is concentrated in the hands of top level leadership, a sort of interlocking directorate of the competing groups. While pragmatic consensus among elites is rather highly developed, there is little communication among lower levels of the groups. An essential condition is strong vertical integration of each group. The resulting latitude of action by its top leadership is necessary for a smooth functioning of the bargaining process. This means, in the case of liberal corporatism, that trade unions as well as employer organizations must be strongly centralized. The anarchic mood of a large part of the French patronat, for example, would be almost as embarrassing for such a system as the autonomy of British shop stewards. On the other hand, if the top leadership has established a monopoly of bargaining power on the basis of reciprocity - as in the Austrian case - this may contribute further to strengthen the dependence of the membership.

Future trends

It has been pointed out that, since the last decade, “consociationalism” has been declining due to the attenuation of certain sub-cultural (especially religious) conflicts and the corresponding decrease in vertical integration within the segmented subcultures and due furthermore to the growing mobilization and politicization of grassroot members which has taken place since the mid-60s. “Ontzuiling” in the Netherlands (Lijphart, 1975) is, of course, not typical of all consociational democracies as can be seen in the case of linguistic conflicts in neighboring Belgium. However, Austria, Switzerland and West Germany are equally characterized by the

Fehler ! Textm arke nicht defini decline of sub-cultural conflicts and of vertical integration within the groups. This raises ert.

the question of eventual consequences for the system of liberal corporatism. “Ontzuiling”, the decrease of vertical integration, seems to result in a diminution of conflict. Yet, reality is more complex than that. The incompatibility of cultural value patterns may decrease but that does not mean that class conflict caused by inequality in the distribution of income and by alienation in work will decline equally. On the contrary, the decomposition of traditional (and rival) value systems may weaken vertical integration within the groups to such a degree that acquiescence of the rank and file and, consequently, the bargaining power of elites may be greatly diminished. This may lead to strains within the liberal corporatist system, especially if within organized labor members begin to perceive the results of the bargaining process as biased in favor of business. Available empirical evidence on the West German wildcat strikes of 1969, which dealt a decisive blow to the Konzertierte Aktion, indicates that among the motives of the strikers one of the foremost was that the expectation of a “fair share” in the distribution of income had been disappointed by the lag of wages behind rising profits (Schumann, 1971). Similar stresses led to the end of the Dutch system of wage controls in 1963. Growing mobilization of the grass roots union membership contributes further to the crisis of liberal corporatism. In order not to lose control over the rank and file, the union leadership of metal workers in West Germany, for example, had begun to establish a shop steward system which, of course, strengthens the power of the lower levels of the organization. Top leaders were forced, consequently, to take a more militant stand in wage conflicts and, thus, have had growing difficulty in accepting wage restraints. A conceivable alternative to save the liberal corporatist system might be to extend its reach beyond collective bargaining on wages, for example by negotiating structural changes in the economy which might serve as a compensation for wage restraints and thus might contribute to perceptions of greater “symmetry” in class relations. This, however, is a largely speculative alternative. It is quite probable that the “interdependence of interests” image of society may increasingly lose its persuasive power in favor of the “conflict of interests” image. The revival of radical and Marxist economics might play an important role in this respect, if, as we have argued, the rather broad consensus upon

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liberal corporatism, this consensus may vanish when young Socialist and Marxist intellectuals are increasingly recruited into trade union staffs. In the Austrian as well as in the German case this hypothesis seems to be quite realistic.

References

Adam, H. (1972) Die Konzertierte Aktion in der Bundesrepublik. Köln: Bund Verlag. Busch-Lüty. C. (1964) Gesamtwirtschaftliche Lohnpolitik. Tübingen: J.C.B. Mohr. Hoppmann, E., ed., (1971) Konzertierte Aktion. Frankfurt a.M.: Athenäum. Institut für Sozialforschung (1969), Zwischenbericht über den Stand der Arbeiten am Forschungsprojekt, “Die Funktion der Gewerkschaften im Prozess der gesellschaftlichen Entwicklung Westdeutschlands”, Frankfurt am Main (mimeographed), Kienzl, H. (1974) “Die Wirtschaftspartnerschaft”, Österreichische Zeitschrift für Politikwissenschaft, 3: 287-293. Klose, A. (1970) Ein Weg zur Sozialpartnerschaft: Das österreichische Modell. München: R. Oldenbourg. Lehmbruch, G. (1967) A non-competitive pattern of conflict management in liberal democracies, IPSA, 7 th World Congress at Brussels, reprinted in K. D. McRae (ed.) Consociational Democracy. Toronto: McClelland & Stewart. 1974, 90-97 Lehmbruch, G. (1968), “The ambiguous coalition in West Germany”,. Government and Opposition 3, 181-204. Lijphart, A. (1968), “Typologies of democratic systems”, Comparative Political Studies 1, 3-44. Lijphart, A. 1975: The politics of accommodation (2nd edition). Berkeley: University of California Press. McRae, K., ed. (1974), Consociational democracy: political accommodation in segmented societies (Toronto: McClelland and Stewart). Pütz, Th., ed., (1966) Verbande und Wirtschaftspolitik in Osterreich. Berlin: Duncker & Humblot. Rokkan, S (1966), “Norway: numerical democracy and corporate pluralism”, in: Robert Dahl, ed., Political oppositions in Western democracies (New Haven/London: Yale University Press), 70-115. Secher, H. (1960), “Representative democracy or ‘chamber state’: The ambiguous role of interest groups in Austrian politics“, in: Western Political Quarterly, 13.