The Theory of Codetermination

In this chapter we investigate the theory of Mitbestimmung. Much of our discussion will pertain to works councils or betriebliche Mitbestimmung, although on a number of occasions we will touch on themes subsequently encountered in our treatment of worker representation on company boards or Unternehmensmitbestimmung (see chapter 7). The case for works councils rests on much the same arguments as have been used to justify unions in Anglo-Saxon countries. Among other things, these include issues of governance (or contract enforcement) in circumstances where labor market contracts are incomplete (and ignore many contingencies) and, more encompassing, on notions of “collective voice.” The collective voice model was offered to balance if not counter the view of unions as combinations in restraint of trade, namely, as labor monopolies that adversely impact efficiency by distorting factor prices and usage, redirecting higher quality workers (and capital) from higher to lower marginal product uses, and also by engaging the polity. Interestingly, however, it soon became clear that the works council rather than the union might be the exemplar of collective voice. It was therefore no accident that one of the architects of collective voice proposed the first purpose-built model of the works council. In what follows, we offer a critical examination of these arguments while also addressing possible alternatives to works councils.