The present column presents a complete picture of the manner, in which after the end of the Second Worldwar the public branch corporations (in Dutch publiekrechtelijke bedrijfsorganen, in short PBO) were established. They aim to order the economy, and are lead by the social economic council (in short SER). During this period the governments are dominated by the roman-red coalitions of social-democrats (PvdA) and catholics (KVP). In 1950 both the Law on the PBO and the Law on the OR (industrial councils) are published. A large part of the entrepreneurs dislikes the PBO, because they fear the dominance of the general interest. The discussion ends with an evaluation and a short outlook. The column is rather long due to the many amusing citations in the footnotes. If desired, these can naturally be skipped.
A preceding column describes that during the first part of the twentieth century politics has tried to order the economy. The capitalist conjuncture is insufferable, as long as there is no social insurance, which helps people in situations of financial urgency. This discontent was already present during the whole nineteenth century, but it can only erupt truly during the Great Depression of 1929, which threatens to destroy the global production. Everywhere in the world states search for measures, that restore the regularity in their national economy. Since the global free trade belongs to the first victims of the depression, the new order often has a typical national form. The idea of an economic order is obviously not new at all. But in the preceding centuries the rise of liberalism has discredited the intervention by the state.
In the ruling liberal morals the invisible hand of the free market realizes automatically and in a natural manner the best possible order. Only during the misery of the Manchester capitalism support for state interventions re-emerges. It has been described before that within the German Historical School a current develops, which advocates a state socialism. For lack of an alternative the workers begin to organize in private associations, which develop into trade unions. The entrepreneurs react by founding their own private associations. Sometimes they form a cartel, for economical reasons. These are merely examples of the multitude of social initiatives. A separate mention must be made concerning the changing mentality of the Roman-catholic church. H. de Liagre Böhl vividly describes this change in his article De confessionelen en het corporatisme in Nederland, and this column will often cite from it1.
Traditionally the church preaches a mental state of submission and charity, but during the nineteenth century the workers become alienated with regard to this picture. Since about 1870 more and more catholic scholars begin to study the social question. In 1891 the catholic view crystallizes, when pope Leo XIII writes the encyclical letter Rerum novarum. In this letter the pope states, that the miserable working conditions must be improved by means of a collaboration between the church, the entrepreneurs and the workers. According to the encyclical the state must intervene in situations, where the church and the other private initiatives can not lessen the distress. It mentions the social laws, such as Sunday rest, the working-hours, child- and women-labour, the establishment of minimum wages, various insurances, etcetera2.
Nevertheless, in practice the first order is established due to the then hypermodern ideologies of Leninism and fascism. In 1918, in Russia the Soviet Union is founded, and in 1922 in Italy the totalitarian fascist state is established. Both regimes construct a social structure, which rigorously restricts the private initiative. The Leninism in fact transfers all ownership of the means of production to the state. The fascism organizes the production on a corporatist basis, where the entrepreneurs and workers are forced to reconcile their interests (corpus is the Latin word for body). It is curious that the Italian development influences the views of the catholic church. For, in 1931 the pope Pius XI writes the encyclical Quadragesimo anno.
In this encyclical the pope states, that the social reconciliation must be organized deliberately. He recommends the corporatist social structure. Branch and product corporations (in Latin called ordines, in Dutch bedrijf- en beroepschappen) must be established, wherein the entrepreneurs and the workers are functionally integrated. The people must unite according to the product, that they create in collaboration, and not according to their social class.
A striking hallmark of the ordines is, that the state is absent. They are private bodies. The pope puts his faith in the entrepreneurs and workers for the protection of the general interest. On the other hand he understands, that the state does need to impose certain restrictions on the ordines, certainly in situations where these will also perform public tasks. Therefore he does not exclude all state intervention, as a compromise with the unruly reality. This view on the hierarchical order is called the principle of subsidiarity3. Thus the state is the highest organ of the community. In this respect the catholics differ from the protestants, who mainly view the state as the battlefield for the various social groups.
During the twenties of the twentieth century the presence of the state in the corporations is subject to debate, also among socialists. Thus for instance according to Troelstra that presence is superfluous, whereas Wibaut demands that the state leads the corporations. Finally the standpoint of Wibaut will prevail, as is apparent from among others the report Nieuwe organen. This causes a practical difference of opinion between the socialists and the catholics, besides their other ideological conflicts. During the thirties the social-democratic party SDAP tries convince the catholic voters to support her standpoint, by means of the campaign for the Plan van de arbeid. That turns out to fail. In the mean time, in 1932 the fascism has also conquered Germany, and in 1939 Spain follows suit. In 1939 the international threat of war has become so large, that all national differences are abandoned. For the first time in her existence the SDAP participates in a bourgeois government.
The Dutch régime during the period 1940-1945 is commonly ignored, because it was imposed by the German occupier. Yet some information about this period is useful, because several of the then established bodies are the foundation for the new organizations after the liberation. The book De organen der sociaal-economische ordening by J.F. de Jongh gives a clear survey, and is therefore consulted for the present paragraph4. When the economy is ordered, then a choice must be made between horizontal integration or vertical integration. In the horizontal integration all enterprises all those joined, which are engaged in roughly the same activities. Think about the retail trade, or agriculture. This has the advantage, that the enterprises can merge, and thus can realize economies of scale. In short, the production can be done cheaper and in a more rational manner. Such an association is called a corporation (bedrijfschap). She is actually a cartel.
In the vertical integration all enterprises from a single product column are joined. Such an association is called a product corporation (productschap), because the structure is based on a single product. The column contains the producers of the needed raw materials, of the industrial semi-manufactured articles, and of the endproduct, and the retail trade of the product. Within the column the various layers are each other's sellers (suppliers) and buyers (consumers). The vertical integration has the advantage, that the problems of sale and purchase can be reduced. The stability of delivery is increased, so that the product corporation stabilizes the economy.
During the war years the chosen order in the Netherlands is a peculiar mixture of the horizontal and vertical integration. The industry simply copies the order of the German fascism, and this is horizontal. Besides, the order is actually under private law. The corporations are united in the Raad voor het Bedrijfsleven (industrial council). They are called Woltersom-organizations, in honour of the chairman of the council. They are only engaged in economic affairs, but not in social affairs (matters of personnel such as labour conditions). The latter subject is left to the Arbeidsfront (labour front). Besides the horizontal structure an organization is established for the provision of food, and she is integrated vertically (so according to the product). The product corporations are united in the Raad voor de Voedselvoorziening (council for the provision of food). This latter organization is a continuation of the development, which had started in the Netherlands even before the war.
It is obviously interesting to study the experiences with this system. De Jongh states on p.46 that in Germany and Italy it already had become clear, that in the totalitarian state an autonomous organization of the industry is impossible. The corporations resist against the central commands. In fact a judgement with respect to the Netherlands is impossible, because the occupation is an abnormal situation. The contradictions are too large, and during conflicts the occupier does not hesitate to use violence. On the other hand, the entrepreneurs try to sabotage the policy of the central authority, and their collaboration is minimal. They simply retain information. The situation worsens, according as the war continues and the German regime suffers. This is also apparent from the description of De Jongh in his book. Nevertheless there is no free competition. In fact the production proceeds according to an ordered war-economy.
Even during the thirties the social-democratic SDAP still aspires after a revolution of the social relations, albeit by democratic means. This becomes clear among others from the column about the Plan van de Arbeid. However, the war period in Europe is so disgusting, that especially the social-democrats begin to reject politically forced regime changes. The development in the Leninist and fascist states confronts the SDAP-top with the enormous resistance, that is mobilized by liberal and confessional circles against the elimination of the free private production. The social-democrats are no longer willing, like Troelstra and Wibaut, to go this road. The price of human misery is too high.
The change in political mentality during the Second Worldwar is described excellently in the book Ordening en verdeling by F.J. ter Heide5. The Dutch society widely shares the view, that the hostile pre-war relations must not return. The verzuiling (existence of political columns) must be broken6. This also explains the strange merger in 1946 of the SDAP with the small parties VDB and CDU. The new party is called the Partij van de Arbeid (PvdA). Moreover, the need to rebuild the heavily damaged Dutch state compels to harmonize the policies. And finally, consensus is needed, because in the Dutch Indies the native nationalists start a guerrilla movement for independence.
Between 1945 and 1959 the core of the Dutch cabinets is formed by the PvdA and the Katholieke Volkspartij (KVP). Together they represent more than 60% of the votes. Due to the mentioned ambition for a broad parliamentary majority the successive cabinets are supplemented with the ARP, the CHU or the VVD, at choice. Thanks to the participation of the PvdA in the government there is finally a majority in the cabinets for the establishment of the public branch corporations (publiekrechtelijke bedrijfsorganen, in short PBO). The table 1 presents the successive cabinets, its junior partners, and the minister, responsible for the PBO7. The establishment of the PBO requires a choice between the catholic variant (based on the corporatism of Quadragesimo anno) and the social-democratic variant (based on a functional decentralization of the state towards the various branches).
The first cabinet Schermerhorn is a transitory cabinet, which must prepare the elections, and rules for just one year. A curiosity of this cabinet is that Hein Vos, the driving force behind the Plan van de Arbeid, is selected as the minister of commerce and industry (nowadays economic affairs). Thus Vos is in the position to design the law for the PBO, and he grabs this chance with both hands. He obviously bases his design on the social-democratic variant of the PBO. De Liagre Böhl tells that Vos wants to place a government commissioner at the head of each branch corporation. Incidentally, a similar idea is defended by the book of the mentioned J.F. de Jongh. It seems, that here Vos already abandons the tripartite PBO-structure, which had always been proposed by the social-democrats8. Furthermore, Vos chooses in favour of the vertical integration, in other words, for the product corporations. He believes that then the PBO can control and stabilize the market by means of plans9
|cabinet||junior partner||ministry of PBO||minister|
|1945-1946||Schermerhorn||ARP||commerce and industry||H. Vos (minister)|
|1946-1948||Beel||-||economic affairs||G.W.M. Huysmans (minister until 1948)|
J.R.M. van den Brink (minister in 1948)
|1948-1951||Drees||CHU, VVD||economic affairs||J.R.M. van den Brink (minister)|
|1951-1952||Drees||CHU, VVD||economic affairs||J.R.M. van den Brink (minister)|
|1952-1956||Drees||CHU, ARP||public branch corporations||AC de Bruijn (minister without budget)|
|1956-1958||Drees||CHU, ARP||home affairs||W.K.N. Schmelzer (minister of state)|
However, Vos limits his activities to the policy formulation, and has few contacts with the industry and commerce10. Therefore the bill lacks the wide support, that is needed for the approval in parliament. The enterpreneurs believe that such a PBO will impose too many restrictions. After 1946 the catholic ministers become responsible for the design of the law on the PBO. They install a state committee under the chair of professor J.J.M. van der Ven, which must advise about the law11. That committee sympathizes with the confessionals. For instance, the committee does not like the vertical integration. She fears, that due to the large conflicts of interest in a product column the PBO would mainly become a stage for quarrels. Besides, especially the liberals and protestants object to the cartel formation, which of course is similar to the PBO.
Finally, in 1950 the Law on the PBO is passed by the parliament. By then the law has been adapted considerably to the catholic spirit of the subsidiarity principle, and the protestants can also accept it due to their principle of sovereignty in private circles. All in all the law does look like a political compromise. The law allows for the establishment of corporations (horizontally organized) and product corporations (vertically organized). The boards are composed of entrepreneurs and trade unions, on the basis of parity, so that state representatives are absent. Since the product corporations control the whole product column, the state wants to maintain at least some right of say. Therefore he gets the legal right to appoint the chairman of the board, obviously after nomination by the PBO. It is striking that the law allows the PBO to determine the wages and other labour conditions. For, in the SDAP reports about the PBO this part was consciously left out of the PBO. Perhaps it was included after all, because in this law the state was kept out of the PBO.
The law arranges the establishment of the social-economic council (raad, in short SER), which unites all corporations. The SER does have a tripartite structure, because he discusses the macro-economic policies, where the input of the state can not be missed. There is actually no political disagreement about this body, all the more since an economic council already existed before the war, and a high council for labour as well. The law on the PBO simply combines these two councils. The SER is indeed established already in 1950, and began its work. It turns out that the council furthers the mutual understanding of the concerned parties, with as a result that its policy actions are concerted better. Then the 983 (no less! probably this is including the professional groups and subgroups) Woltersom-organizations can finally be abolished, because they can be replaced by the PBO.
Already before the Second Worldwar there were pleas for the introduction of works councils (ondernemings-raad, in short OR), and in 1950 the law on the OR is passed in the parliament. The OR is a council for participation of the workers, just like the PBO and the SER. However, according to Ter Heide on p.215 the OR does not become a body for workers, but a body for the enterprise. The entrepreneur is the chairman of the OR, and he keeps his powers of decision. The OR can merely advise, and only concerning social affairs.
De Jongh is still fairly optimistic in his book of 1946. He expects that the entrepreneurs will pay more attention to their long-term interests, which often coincides with the general interest. He foresees an integrated self-government of the PBO. He believes that the proposals in the old SDAP-reports are too coercive and focussed on centralism. He proposes to establism at most forty corporations. Various ideas of De Jongh have indeed been included in the law on the PBO. The KVP and PvdA are also of good heart. The table 1 shows, that the order by means of the PBO gets a prominent place in the cabinet policies12. But unfortunately the PBO develops less energetically than many had hoped.
The entrepreneurs are discontent, because legally the PBO is obliged to defend the general interest. They believe that the PBO must merely defend the interests of the concerned industrial branch. And since the establishment of the PBO is not compulsory, most branches waive their right. That is not really surprising, because in the past the voluntary Whitley councils in England had not become popular either. This experience had motivated the SDAP to propose a compulsory establishment. The confessional parties have rejected this option, because for ideological reasons they attach value to self-government and autonomy. The order must form in an organic manner, logically emerging from the practice. Indeed this makes sense. But without the PBO there is the danger, that the cartels will form without control by the state.
Ter Heide states on p.212 of Ordening en verdeling, that in several branches the PBO does form. There emerge 33 horizontal corporations and 15 vertical product corporations, mainly in agriculture, the agricultural industry, the retail trade, and the crafts and services. There is even established a Council for the shopkeepers and small entrepreneurs (midden- en kleinbedrijf), an intermediary for the corporations of the retail trade and crafts. The Agricultural Corporation (Landbouwschap) and the Forest- and Fishery Corporation are formed. In these branches many small entrepreneurs are active, and then the PBO is a convenient instrument for curbing the excessive competition and production. But in branches such as the industry, the transport- and insurance-companies, and banking the corporations do not emerge. These branches have merely a limited competition, and can themselves turn the attention of the state to their interests.
Comments of contemporaries with respect to the conflicts about the PBO are available. For instance, the KAB union man Herman Bode writes: "Halfway the fifties it became clear to us that notably the entrepreneurs were not at all willing to seriously discuss the values of the PBO, whereas for us those values were already very concrete"13. For the moment the labour movement sticks to the PBO proposals, although the pre-war enthousiasm fades. Both the PvdA-plan De weg naar vrijheid (1951) and the NVV-plan Welvaartsplan (1952) still advocate an ordered economy. Incidentally, the contents of the two plans are clearly mutually attuned14.
Ter Heide describes on p.197 that in the PvdA the main supporters of the PBO disappear, such as Vos and Van der Goes van Naters, whereas Nederhorst is desillusioned and changes his opinion. At the end of the fifties the PvdA has abandoned the plan socialism. Incidentally, the shedding of the ideological feathers is a European phenomenon, because in the same period the German social-democratic party abandons the socialization in her program of Bad Godesberg. During the war the socialists have observed the misery, that can result from the political polarization and rebellion. They no longer accept the forced social revolution as an acceptable political instrument. And the confessionals have evidently never considered the state coercion as a serious option15. So there is consensus. As far as your columnist can retrace, there was much less polemics against the plan De weg naar vrijheid than before against the various pre-war SDAP-reports.
According to Ter Heide on p.211 the proposed order is also forgone, because the Keynesian management of the macro-economy turns out to function well. A period of economic prosperity starts. The collective bargaining (about the collective labour agreement, the CAO) is commonly done outside of the PBO. Due to the weak popularity of the PBO the SER does not really become their association. Therefore, its most important task becomes advising the government about socio-economical problems. According to p.214 and further the OR was not satisfactory in practice either, because its establishment is voluntary, and because it becomes the service hatch for unpleasant messages from the direction to the personnel.
At first sight Willem Drees sr. has completed the ordered system of Troelstra thanks to the establishment of the SER and a number of corporations. However, on a closer inspection it is more its caricature. For, the state does not control the order in the manner, that Troelstra had envisaged, and the establishment of a PBO even becomes a voluntary matter. The reason for the half-hearted social-democratic actions is of course, that at that moment an ideological reorientation occurred within the PvdA itself. It is characteristic, that Van der Goes van Naters on p.157 in the excellent but undervalued volume Socialisme in de branding16 designates the order as a positive idea of the state. Here the socialism presents its own concrete form of the state. However, De weg naar vrijheid describes on p.35 the order precisely as a negative view, because it restricts the productive activities. Your columnist shares here the view of Van der Goes van Naters; for, the order does have mainly constructive purposes.
On p.168 and further Van der Goes van Naters advocates the ordered state, because it will liberate the democracy thanks to its functional decentralization. He calls this state concept a federation of bodies (organs). At that moment he still praises the solid regulations in the law on the PBO. But thirty years later he will write in his autobiography: "One of my largest disappointments was the derailment of the PBO. The inclusion of public law was essential for us [the socialists]"17. Then the party top has already abandoned this original ideology, and has become more pragmatic. The party-leaders dislike the imposition of a social structure by means of coercion. This ideological break is characteristic for each action party, which develops into a party of managers. On p.147 in Socialisme in de branding Vos sighs: "I do observe, that the daily work in government ties many, who probably before would have invested their energy in fierce propaganda"18.
It is instructive to analyze the factors, that have contributed to the change in ideas about the state. Two factors have already been mentioned: the horrible war experiences, and the inherent dynamics due to the participation in government. Besides, the nationalism during the Interbellum plays a role. During the thirties politics withdrew within the national borders, so that national views on the state emerge. After the war the aim is the international integration, and then the national peculiarities become an obstacle and an organizational limitation. A connected factor is the increasing influence of the Anglosaxon morals in Dutch politics. This is not just the result of the liberation by the British and North-American armies, but also of the Marshall aid during the period 1948-1952, and of the military cooperation in the NATO alliance.
In retrospect it must be concluded that the original socialist ideology of an ordered system and planning would have created an unviable situation. For, then there simply emerges a centrally planned economy, where the branch ministries are replaced by the PBO. The Leninist experiences with this system are discouraging. It does the socialists credit, that they timely have seen their error. The corporatism of the catholics offers a better perspective, although the Italian experiences during the Interbellum are also discouraging. The practical problem of the PBO is that inevitably politics will strongly influence the economy. And that turns out to be hurtful for the efficiency. But the complete renouncement of the corporations is not satisfactory for those, who value a conscious and planned control of society. Namely, when the general interest must be integrated in the industry and commerce, and a positive view on the state is desired, then the structure of the public corporations is the natural solution.
Therefore your columnist is determined to elaborate on this theme in future columns. In the library many books are waiting to be read. And there is a need for this, because the many citations of politicians and union leaders in the present column do not really express insight and pragmatism. De Liagre Böhl states on p.118 of his article, that corporatism excels due to efficient socio-economic consultations. At the same time it must be admitted, that the real world shows a different dynamics. Namely, the present cabinet plans to abolish the PBO. It is somewhat bitter, that now the PvdA supports this intention, although its predecessor the SDAP has fought hard to establish them. Incidentally, a moderate Dutch newspaper calls in a recent article also the SER already a dying organization.