industrial relations theory-a critical review

INDUSTRIAL RELATIONS THEORY-A CRITICAL REVIEW*

A. N. J. BLAIN? AND JOHN GENNARD~

THE aim of this article is to examine the state of industrial relations theory. This involves, firstly, tracing the developments from Marx’s exposition of the evolution of trade unions to the present-day theories of industrial relations. Secondly, an assessment of three contemporary approaches will be given. Finally, the article will suggest modifications to the theory which the writers consider provides the best scope for the future development of the subject. The theoretical refinements are offered as a first step in the direction of a more rigorous methodology for industrial relations.

HISTORICAL BACKGROUND Although the academic study of industrial relations is a relatively

modern development, the origins of industrial relations theory can be traced back to before the beginning of the century. At the end of the 1860s Karl Marx linked the rise of trade unions with the development of industry and the increasing miseration of the pro1etarians.l Combination against the bourgeoisie was seen as a means of keeping up wages. Union development was helped by the improved means of communications created by modern industry such that workers of different localities were brought into contact with one another and the local struggles against the bourgeoisie became centralized. Just before the turn of the century, the Webbs published A History of Trade Unionism,2 which traced the development of the British trade union movement and Industrial Demo~racy,~ which attempted to give a scientific analysis of trade unionism in the United Kingdom. In the latter work, after analysing trade union structure, they discussed the trade union function which was seen as the en- forcement of the ‘common rule’ for a trade in the shop and described three alternative processes by which this could be enforced-the method of mutual insurance, the method of collective bargaining and the method of legal enactment.

This article owes its conception to the L.S.E. Industrial Relations Department’s Labour Problcms Seminar, Michaelmas Session 1969/70. Thanks for helpful comments are due to Professor B. C. Roberts, Professor H. Levinson, R. J. Love.ridgc, E. Owen-Smith and N. F. G. Bosanqua.

t Research Fellow, Industrial Relations Department, London School of Economics and Political Science.

2 Lecturer in Industrial Relations, London School of Economics and Political Science. lKarl Marx, Sclcctcd Works, prepared by h-Ehgels-Lenin Institute, Moacow, under

editorship of V. Adoratsky. Sidney and Beatrice Webb, A History of Trcrdc Unionism, Longmans, 1896 Sidney and Beatrice Webb, Industrial Bmomq, Longmans, 1902

389

390 BRITISH JOURNAL OF INDUSTRIAL RELATIONS

In the United States a theoretical approach to the labour union and movement was adopted by John Commons and Selig Perlman. Contrary to the prevailing view at the time, CommonsY4 writing in 1925, regarded the labour union not as a bearer of tyranny and monopoly, but as a liberating force which helped establish constitutional government in industry and delineate the power of one of the parties over the other. Perlman’s5 approach was different. The union was seen as being primarily concerned with workers’ job interests and the sharing of job opportunities among its members. He argued that workers were conscious of a scarcity of jobs and that the union was designed to give them protection against this situation.

Trade unions continued to be the centre of theory at the end of the Second World War. At first an economic bias prevailed in the approach. In 1944 John Dunlops published Wage Determination under Trade Unions, in which he attempted to apply the economist’s theory of the firm to the trade union. He developed a model viewing the union as an economic institution attempting to maximize some wage or employment dimension of its members or some combination of these. This approach to the study of trade unions was challenged in 1948 by Arthur ROSS,’ who in turn laid himself open to the charge of a restrictive approach, by concentrating on the union purely as a political institution. He advanced a political theory of trade union wage policy, based on the view that the union must be seen as a political institution working in an economic context. ROSS argued that the political struggles within a union would mean that if the present leadership wished to maintain its position, it would have to obtain for its members wage increases similar to those obtained by other union leaders. Consequently, ‘orbits of coercive comparison’ would become important in determining union wage policy. In 1948 Clark Kerr,* in an article entitled ‘The Model of the Trade Union,’ drew attention to the narrowness of approach to the analysis of trade unions, arguing that a combination of politics and economics would provide a more realistic understanding. His view was stated as follows :

. . . it should help to illuminate the pursuit of wealth and power (and their interactions) by the economic interest group of labour and capital. It should help reduce the area of presumed irrationality and conflict between theory and practice. It should broaden the area subject to explanation and reduce the area outside the system of analysis. It should help make something systematic out of what theory has disregarded.g

In the 1950s there was a movement away from concentration on the John R. Commons, Th.e Economics of Collective Action, Macmillan, New York, 1925 S. Perlman, A The0r-y of the Labour Movement, Macmillan, New York, 1928 J. T. Dunlop, Wage Determination undcr Trade Unions, Macmillan, New York, 1925 ’ A. M. Ross, Trade Union Wage Policy, University of California Press, Berkeley, 1948 Clark Kerr, ‘The Model of a Trade Union’, in E. Wight Bakke and Clark Kerr (Eds.),

Unions, Management and thc Public, Brace & Co., New York, 1948. This interesting book contains the seeds of much of the later development in industrial relations theory.

Clark Kerr, op. cit., p. 675

INDUSTRIAL RELATIONS THEORY-A CRITICAL REVIEW 39 1

trade union towards collective bargaining and industrial relations theory. In 1951 Neil Chamberlain proposed that theories concerning the nature of collective bargaining could be reduced to three. ‘They are that collective bargaining is (1) a means of contracting for the sale of labour, (2) a form of industrial government and (3) a method of management.’1° He called these the marketing, governmental and managerial theories, and con- sidered that they reflected stages in the historical development of collective bargaining.

There were also important developments in the United Kingdom. The British Universities Industrial Relations Association discussed a theoretical approach to industrial relations at a number of its annual conferences,’l and in 1954 Flanders and Clegg12 published The $stem of Industrial Relations in Great Britain. In the preface to the book they pointed out that the growth of the United Kingdom system of industrial relations has been inextricably intertwined with the growth of our entire social system. In 1956 Michael Fogarty13 took the development a stage further in his book Personality and Group Relations in Industry, in which he discussed the contribution of social science to industrial relations. He stressed the need to use all the social sciences :

Management studies in that sense are concerned with whole areas or stages of decision and with all the factors which enter into them, economic, sociological, technical, or whatever they may be. They link on directly, therefore, to the ultimate level of integration, that of ethics and religion. . . .

Fogarty drew attention to the ease with which an essential variable in the study of industrial relations could be omitted by too much reliance on one or two branches of the social sciences.

A major development in industrial relations theory occurred in 1958 with the publication of J. T. Dunlop’s14 Industrial Relations Systems, in which he argued that industrial relations was a discipline in its own right, being the study of the establishment and administration of rules. In 1959 K. F. Walker15 suggested some modifications to Dunlop’s work. These were designed to take industrial relations nearer to an integrated theory.

Important developments in theories of industrial relations were made in the 1960s. In 1961 the field was broadened to encompass the influence of the process of industrialization on the behaviour of men and societies. Clark Kerr, John Dunlop, Frederick Harbison and Charles A. Myers16 attempted to use comparative studies to analyse the inter-relationships

lo N. W. Chamberlain, Colbctive Bargaining, McGraw-Hill, New York, 1951 l1 We are indebted to Professor B. C. Roberts for this information. la A. Flanders and H. A. Clegg, Thc System of Industrial Relahns in Great Britain, Basil Blackwell

l3 M. P. Fogarty, Parsonality and Group Relatwns in Zndusw, Longmans, Green & Go., 1956 14 J. T. Dunlop, Zndubial Rekations S y s h , Holt, 1958 l5 K. W. Walker, Research Needs in Zndustrial Relatwns, 1st edition, Cheshire, 1959 l6 Clark Kerr, John T. Dunlop, Frederick Harbison and Charles A. Meyers, ‘Industrialism

and World Society’, Hanmard Business R&, No. 1, January-February 1961 pp. 113-120

Oxford, 1954


of management, labour and government as countries passed through various stages of economic development. As a result, industrial relations has moved closer to a total conceptual framework within which to examine the industrialization of an increasingly integrated world society. In 1963 Hilde Behrend17 attempted to delineate the field of industrial relations and to show how different schools of thought had approached the subject from different angles but had arrived at similar statements of problems that arise; for example, the need to study motivation (psychology), the tactics of the power struggle between management and union (politics) and the importance of the institutional and economic background. In 1965 Allan FlanderP produced Industrial Relations: What is Wrong with the System?, describing industrial relations as a study of the institutions of job regulation. An extension of his work has appeared in articles in the British Journal of Industrial Re1ati0ns.l~ In the United States, Walton and McKersieZ0 developed a behavioural theory of labour negotiations based on the rule-making mechanism, while SomersZf postulated a bargaining power and industrial relations theory based on the division of labour and its counterpart exchange.

THREE CURRENT APPROACHES

relations will be discussed :

i) the ‘Systems model’ ii) the ‘Oxford approach‘

iii) an industrial sociology view.

In this section three present-day theoretical approaches to industrial

i) The ‘Systems model’ This is the work of John T. Dunlop, published in his book Industrial

Relations Systems. It was a pioneering volume in which he proposed an analytical framework intended to release industrial relations from ‘the preoccupation, if not the obsession, with labour peace and The body of ideas was designed to broaden the industrial relations horizon from collective bargaining, as originally conceived by the W e b b ~ ~ ~ and developed subsequently in Great Britain and the United States, to the full spectrum of present-day industrial relations.

Dunlop’s method can be viewed as a radical departure from previous

1’ H. Behrend, ‘The Field of Industrial Relations’, British30urnal of Industrial Relations, Vol. 1, No. 3, October 1963

l8 A. Flanders, Industrial Relations: What is Wrong with the System?, Faber & Faber, 1965 Is See note 3 1 20 R. E. Walton and R. B. hIcKersie, A Behavioral Theory of Labor Negotiations, McGraw-Hill,

1965

Journal of Zndustrial Relations, Vol. V, No. 2, July 1967 11 See S. M. A. Hameed, ‘Theory and Research in the Field of Industrial Relations’, British

Za Dunlop, op. cit., 1958, p. 380 s3 Webb, op. cit., 1902

INDUSTRIAL RELATIONS THEORY-A CRITICAL REVIEW 393

approaches, which had tended to regard the subject as a specialized applica- tion of other disciplines such as economics, law, psychology, sociology, history and organization theory. Furthermore, academic writings had adopted a largely historical and descriptive, rather than theoretical and analytical method. The ‘systems model’ was offered as both the theoretical core of a genuine discipline of industrial relations, and as a set of analytical tools which could be used to interpret and gain understanding of the widest possible range of industrial relations facts.24

As a starting-point, Dunlop was concerned to take the concept of ‘system’, which had been loosely used both by Britisha5 and American writers, and to give it an explicit analytical meaning in the context of an industrial relations system. Dunlop saw the economy as a special type of social system. In arguing that an industrial relations system could be regarded as a sub-system of industrial society on the same logical plane as an economic sub-system, he was influenced by the work of Parsons and SmelserYz6 who saw the economy as a special type of social system. The

FIGURE 1

Relationship of the Industrial Relations System to Wider Society

S.S.

Where S.S. = total social system or wider society I.R.S. = industrial relations system

E.S. = economic system P.S. = political system

= an exogenous influence

+----c = an inter-relationship

a4 Dunlop, oh. cit., p. viii as For example, Flanders and Clegg (eds.), oh. cit. a8 T. Parsons and N. J. Smelser, Ecomy and Society, A Stu& of thc Integration of Economicand

Social l l~~ory, Routledge and Kegan Paul, London, 1956


relationship of an industrial relations system to industrial society can be seen more clearly from Figure 1. The wider society or total social system can be viewed as comprising distinctive sub-systems of which an industrial relations system, an economic system, and a political system are examples. Although it is largely autonomous, an industrial relations system overlaps with these other sub-systems.

An industrial relations system is viewed logically as a n abstraction and is not designed simply to describe in factual terms the real world of time and space. Its purpose is that of focusing attention on critical variables and suggesting propositions for testing. The structure of a system has been described as follows :

In brief outline the theoretical framework is concerned with analysing the workings of industrial relations systems which vary in scope from an enterprise to a sector or to a country as a whole. Regardless of its scope, an industrial relations system is regarded as having certain common properties and structure and as responding to specified influences. . . Every industrial relations system involves three groups of actors: (1) workers and their organizations, (2) managers and their organizations, and (3) governmental agencies concerned with the workplace and the work community. Every industrial relations system creates a complex of rules to govern the workplace and work community. These rules may take a variety of forms in different systems: agreements, statutes, orders, decrees, regulations, awards, policies and practices and customs. . . . The actors in an industrial relations system are regarded as confronting an environmental context at any one time. The environment is comprised of three interrelated contexts; the technology, the market or budgetary constraints and the power relations and status of the actors. . . . The system is bound together by an ideology or understandings shared by all the actors. The central task of a theory of industrial relations is to explain why particular rules are established in particular industrial relations systems and how and why they change in response to changes affecting the system.a7

The major components of the ‘systems model’ can be stated in alge-

1) where

braic form.

r = f(a, t, e, s, i) r = the rules of the industrial relations system a = the actors t = the technical context of the workplace e = the market context or budgetary constraints s = the power context and the status of the parties i = the ideology of the system

From the equation, the rules can be viewed as the dependent variables being determined by the interaction of the five independent variables.

Dunlop, oh. cit., pp. viii-ix


The function of the industrial relations system is to establish a set of rules for the workplace and work community, just as the function of the economic system is to create goods and services. The network of rules comprises a vast universe of substantive rules which govern the following: remuneration in all its forms; standards of job performance and discipline for failure to achieve such standards ; and rights and duties of employees to particular positions and jobs. I t also encompasses the wide range of procedures used for setting and administering the substantive rules. The actors who set the rules interact in the context of the system as a whole, but some of the rules will be more closely related to the technical and market contexts, while others will be mainly influenced by the power and status contexts. In a dynamic society, the rules will frequently alter as a consequence of changes in the contexts.28

The main significance of the ‘systems model’ for the study of industrial relations as an academic discipline, has been its attempt to change the central focus of the subject from industrial conflict and collective bargaining towards rule determination. In this respect, it has led to a broaden- ing of the perspective of industrial relations. In Australia, K. F. Walker has argued that the ‘systems model is sufficiently comprehensive to provide a usable approach for the extensive comparative work which is necessary to test its usefulne~s.’~~ He has developed an elaborate conceptual framework for industry studies, which incorporates the systems approach.30 In the United Kingdom, the view that rule-making is the core of industrial relations has gained a great deal of acceptance. In Indutriai Relations: What is Wrong with the System?, Allan Flanders has adopted this argument as the starting-point for a theoretical anaIysis of the British industrial relations system.

ii) The ‘Oxford Approach‘ The ‘Oxford Approach’31 has had a great deal of influence on

industrial relations thinking in the United Kingdom, and provided the theoretical basis of the policy recommendations of the Donovan

In his review of the Commission’s Research Papers,

rr- -- - - a@ K. F. Walker, op. cit., 1959, pp: 7-8

K. F. Walker, ‘The Comparatlve Study of Industrial Relations’, Zntrmnrimal znstitukfor Labour Studies. Bulletin 3. November. 1967. DD. 103-132: K. F. Walker. ‘Stratepic Factors in Industrial Relations Sysiems. A Programme‘ bf International Comparative Ind&ry Studies’, Inkrnational Instihtk for Lubour Studies, Bulletin 6, June 1969, pp. 187-209

31 probably the best known exponent of this view is Allan Flanders. The main sources of the theoretical approach are: A. Flanders, Industrial Relations: What is Wrong with the Syskm? Faber & Faber, 1965; A. Flanders, ‘Collective Bargaining: A Theoretical Analysis’, British J o u r ~ l of Industrial Relations, Vol. VI, No. 1, March 1968; A. Fox and A. Flanders, ‘The Reform of Collective Bargaining: From Donovan to Durkheim’, British Journal of Indurtrial &hztwns, Vol. VII, No. 2, July 1969

32 Report of the Royal Commission on Trade Unions and Employers’ Associationr, 1965-68, Cmnd 3623, H.M.S.O., 1968


H. A. Turner has referred to the method of approach in the following terms :

The ‘Oxford Line’ might be described as combining an industrious extension of established avenues of inquiry and particularly a meticulous pursuit of institutional detail, a preference for the short-term rule of thumb over the broader generalization, a rather low awareness of those disciplines-in ascending order, of sociology, statistics and economics- which may illuminate the field with normative observations, and a variety of propagandist mini-reformism which insists partly in leading people boldly in the direction they appear to be going anyway. This approach was clearly influential on the Commission. It dominated the research papers. In large measure, both their many merits and their deficiency thus derive from a specific academic view.33

The ‘Oxford View’ is that industrial relations is the study of the institutions of job regulation. Following Dunlop, the rules of any industrial relations system are seen as either procedural or substantive. A distinc- tion is made between internal and external job regulation, the essence of the difference being whether the rules can be changed autonomously by the firm and its employees without the consent of an outside authority. The rules of the system are viewed as being determined through the rule- making process of collective bargaining, which is regarded as a political institution involving a power relationship between employers and employees.

The ‘Oxford approach’ can be expressed in the form of the equation34 :

r = f(b)

or r = f(c)

where r = the rules governing industrial relations b = collective bargaining c = conflict resolved through collective bargaining.

When this equation is compared with Equation (1) it can be seen that the difference between the ‘systems model’ and the ‘Oxford approach‘ lies in the right-hand side of the equation. These equations have the same output, but a different input. The ‘Oxford approach‘ has stressed the process of rule-making through collective bargaining, while the ‘systems model’ emphasizes the role of wider influences on rule determination. For the former, political variables are seen as of paramount importance,

33 H. A. Turner, ‘The Royal Commission’s Research Papers’, British Journal of Zndustrkl Relatiom, Vol. VI, No. 3, November 1968. B. C. Roberts in ‘Reforming Industrial Relations’ in Lloyds Bunk Review, October 1968, pp. 23-24, uses the term ’Oxford Group’ to describe those members of the Royal Commission who were responsible for its analytical approach. The two academic members of the Commission were Professors H. A. Clegg and Otto Kahn-Freund.

34 See Fox and Flanders, op. cit., 1969, p. 160


but for the latter economic, sociological and ideological variables are thought to be significant. In this respect the ‘Oxford approach‘ can be criticized on the grounds that it is too narrow to provide a comprehensive framework for analysing industrial relations problems. I t over-emphasizes the significance of the political process of collective bargaining and gives insufficient weight to the role of the deeper influences in the determination of rules. Institutional and power factors are viewed as of paramount importance, while variables such as technology, the market, status and ideology are not given any prominence. This narrowness of approach con- stitutes a severe limitation.

iii) An Industrial Sociology Approach Although in the United Kingdom, there has been growing acceptance

of the rule determination approach, one industrial sociologi~t~~ holds the view that the core of industrial relations is the nature and development of conflict itself. Margerison has argued :

It would appear, therefore, that industrial relations as it is at present construed is more concerned with studying the resolution of industrial conflict than its generation. The emphasis tends, therefore, to be put more on the consequences of industrial dispute than on its causes. It would seem from Flanders’ view that industrial relations problems do not arise until they are within the formal orbit of the rules of the industrial relations system. To counter this I would suggest conflict is the basic concept that should form the basis of the study of industrial relations.

The view is advanced that there are two major conceptual levels of industrial relations. One is the intra-plant level where situational factors, such as, job content, work task and technology, and inter-action factors produce three types of conflict-distributive, structural and human relations ; these are seen as being resolved through collective bargaining) structural analysis of socio-technical systems and man management analysis respectively. The second level of industrial relations is outside the firm and in the main concerns conflict not resolved at the intra-organizational level.

This approach rejects the special emphasis given to rule determination by the ‘systems and Oxford models’. In its place it suggests a method of inquiry which attempts to develop sociological models of conflict. How- ever) the emphasis on the significance of conflict in industrial relations is not a new one. The nature and importance of industrial conflict was extensively studied in the 1950s and 1960s by a number of writers.36

asC. Margerison, ‘What do we mean by Industrial Relations? A Behavioural Science Approach’, British 3 d of Industrial Relations, Vol. VII, No. 2, July 1969

36 See, for example, Clark Kerr, Labour and Management in Industrial Society, New York, Doubleday, 1964, pp. 148-200; D. W. Oxnam, ‘Costs and Benefits of Industrial Conflicts’, Economic Activity, Vol. 11, No. 4, October 1968; A. E. C. Hare, The First Principles of Indutrial RclotionS, London, 1958, and A. E. C. Hare, ‘Industrial Relations and Economic Theory’, EconomiG Record, June 1943

7


ASSESSMENT OF THE THEORETICAL APPROACHES In this section we propose five major areas of criticism. Three of these

relate solely to the ‘systems approach’, whilst the other two are of a more general nature.

The wider significance of the ‘systems model’ lies in its attempt to present a classificatory scheme which would serve as a starting-point for a new approach to industrial relations. In this respect there is some analogy with J. M. Keynes’ attempt to construct a general theory of employment, interest and money. R. F. Harrod has argued that Keynes’ major theoretical contribution was the provision of a new conceptual framework for classifying the forces determining the level of output as a whole. Similarly, the ‘systems model’ has provided a conceptual apparatus for classifying the factors determining the rules of the industrial relations system at three levels, national, industrial and plant. Although the ‘systems model’ was less revolutionary, its interest in creating a new taxonomy was similar.3’

Perhaps the most fundamental criticism associated with the use of a ‘systems model’ approach to industrial relations is the difficulty in de- fining a ‘system’. The ‘systems model’ may have inherited certain faults fi-om the Parsonsian analysis of social systems. Parsons was concerned to build upon Pareto’s earlier attempt to delineate the social system as a separate system. In essence, his method was to adopt the concept of a ‘system’ in a scientific sense and to subject it to the same type of theoretical analysis as had been used successfully in other sciences ; in so doing, the objective was to develop a conceptual scheme for the study of social systems of action.38

It can be argued, therefore, that by creating a special meaning for the concept of a ‘system’ when applied specifically to social action, the Parsonsian approach appears to introduce a certain analytical ambiguity. This may largely originate from the simultaneous use of the concept of ‘system’ as a research tool in scientific method and as an empirical phenomenon requiring investigation and explanation. I t would appear that this definitional problem has been carried over into the ‘systems analysis’ of industrial relations. Dunlop seems to have unquestionably accepted that the Parsonsian concept of a ‘social system’ can be meaningfully applied to industrial relations without causing theoretical confusion. Furthermore, he did not provide any clear definition of what was meant by the concept of a ‘system’ itself. This failure may have caused some writers to misrepresent the theory of industrial relations systems. Thus, in referring to Dunlop’s attempt to provide an integrating theory Allan Flanders has made the following comment :

37 The analogy with Keynes is not complete: Keynes was contrasting his own general theory with that of the prevailing general theory of the neo-classical economists, for example, Pigou. For Dunlop there was no general theory of industrial relations with which to contrast his own.

38 Talcott Parsons, The Social @stem, The Yale Pras, New York, 1951, pp. 1-6

INDUSTRIAL RELATIONS THEORY-A CRITICAL REVIEW 399 Economics deals with a system of markets, politics with a system of government. What is the substance of a system of industrial relations? Nothing could be more revealing of the past neglect of the subject’s theory than one simple fact. Not until recently has it been explicitly stated that a system of industrial relations is a system of rules. . . .

It should be stressed, however, that a system of industrial relations as expounded by Dunlop is not a system of rules. I t is a conceptual framework in which one component element is the rules. This theoretical dis- tinction can be clearly seen from Equation ( l ) , which has set out the variables in an industrial relations system. The importance of this methodological inference in Flanders’ thinking becomes more apparent when it emerges as a major step in the chain of reasoning which led him to con- clude that industrial relations is the study of the institutions of job r eg~ la t ion .~~

The ‘systems approach’ has been misrepresented by a sociologist, J. E. T. Eldridge. He has conceptualized the model as being comprised of only three of its elements (the actors, rules and ideology), while the contextual factors are portrayed as external characteristics which are related to these three components of the industrial relations system. Fur- thermore, Eldridge has interpreted the ‘systems approach’ in such a way that special analytical treatment is given to the concept of ‘power and

Although he was simply attempting to portray the model his misrepresentation may have largely arisen from theoretical omissions in Dunlop’s treatment of the ‘systems’ concept.

The confusion surrounding the concept of a system has important implications for the usefulness of the ‘systems approach’ as an operational methodology. This definitional problem could be at least partly clarified through a new approach. If a ‘system’ is defined as a set of concepts which are, in any given respect, more closely related to each other than to external variables,41 then a ‘system’ of industrial relations can be viewed as being made up by variables that are linked together through their common concern with industrial relations, rather than other forms of behaviour. In this context a ‘system’ is conceptual rather than empirical, and its interest is in human rather than mechanical behaviour.

I t is sometimes argued that the notion of a ‘system’ is inappropriate in industrial relations because it is a purely structural concept that merely shows the relationship between the parts of a given entity, and does not explain the dynamics of its behaviour. If a ‘system’ is seen as a set of variables which are related to each other in a special way, then it is of direct relevance in the analysis of both the attitudinal and behavioural aspects of industrial relations problems. I t is dynamic because it implies

ag Flanders, oh. tit., 1965 40 J. E. T. Eldridge, Industrial Dis~putcs, Routledge & Kegan Paul, London, 1968, pp. 19-21 41 parsons and S m k , op. d., 1956, p. 8, define a social system as any system generated by

any process of interaction on the socio-cultural level between one or more actors. The definition proposed hen k much stricter.


an interaction among the component variables. A ‘system’ defined in this sense is consistent with the ‘systems approach’ of industrial relations. Dunlop’s error was largely one of omission-a failure to make abundantly clear the precise analytical meaning imparted to the concept of ‘system’.

The ‘systems approach’ can be further criticized in that its treatment of rules is somewhat obscure. Although rules may be classified as either substantive or procedural, it is apparent that they subsume behavioural characteristics of the actors, such as customs and practices. The ‘systems approach‘ could be extended by dividing rules into two categories- codified and uncodified. Codified rules are those which are expressed in a written form and they comprise the greater part of the total web of rules. Uncodified rules are those special behavioural characteristics of the parties that arise from the workings of an industrial relations system itself, and usually they are not set out in written form. They encompass characteristics such as whether the parties see themselves as having a moral obliga- tion to observe an Agreement, and whether there are tacit understandings that an Agreement is to be applied in a particular way, notwithstanding the existence of formal clauses to the contrary. Uncodified rules can be distinguished conceptually from the ideology of a system in that they are a dependent variable rather than a determining influence in an industrial relations system.

The treatment of ideology as a determining factor in rule making is obscure in the ‘systems model’. Clearly, the concept of ideology is meant to apply both to individual actors and to the industrial relations system as a whole. I t is also apparent that ideology refers to sets of ideas that are not necessarily precise and ordered, and that these include attitudinal charac- t e r i s t i c~ .~~ However, the model does not show how these sets of ideas determine the rules. The relevance of ideology to rule-making at the macro- level can be shown. In the United Kingdom there has been a questioning of the voluntary system of industrial relations and a decision by both the major political parties to work towards a more legally regulated system. If this demand is conceded there may be changes in some of the procedural rules, thus strikes may only be allowed after certain procedures have been satisfied, for example after a ballot of the membership. Failure to adhere to these conditions may result in the imposition of penal sanctions. At a lower level the ideology of the actors is reflected in attitudinal characteristics and it is not clear how ‘attitudes’ fit into the ‘systems approach‘. These attitudinal characteristics which are dependent upon a number of factors can be explained as the outcome of the determining variables. They may be outward expressions rather than determinants of conflicts.

A criticism which can be levelled against the ‘systems approach’ and the other two approaches is that they do not constitute models in the strict sense. They all enable the researcher to classify important factors

4a Dunlop, op. cit., pp. 17-18


in industrial relations, but do not provide him with a sufficiently rigorous approach. There has been confusion among social scientists as to what comprises a model and in industrial relations the problem has been further complicated by the multi-disciplinary character of the subject.

Students of industrial relations have often tended to regard industrial relations models as specialized applications of those used in other dis- c ip l ine~ .~~ A model should attempt to explain why certain events happen ; industrial relations models should explain how and why the rules of the system change. They should enable the prediction of certain results following a change in some or all of the variables. Specific criteria can be adopted in deciding whether a particular approach to industrial relations con- stitutes a model. These tests can be listed as follows :

a) It should consist of a set of variables that are related in such a way that an input and an output can be identified. The input and output can be viewed as independent and dependent variables respectively.

b) It needs to trace out the important inter-relationships between the component variables, both individually and collectively.

c) It should generate testable hypotheses. d) I t should have predictive quality.

A strong case can be argued that the ‘systems model’ satisfies some of these guidelines. From Equation (1) the ‘systems approach’ can be seen to have a clear input and output. Although there is no systematic attempt to show how the independent variables interact among each other, it enables certain important inter-relationships between component elements to be distinguished. Consider the following simple equations :

a = f(t, e, s)

t = the technology of the workplace e = the economic context s = the status of the parties

3) where a = the actors

4) s = f(t, e)

These illustrate two relationships that are of significance in the analysis of industrial relations systems. Equation (3) hypothesizes that the actors will be influenced by the three contextual variables in the system, whereas Equation (4) gives the hypothesis that the status of the actors is related to the economic and technological contexts of any industrial relations system.

43 An account of the present state of industrial relations methodology can be found in S. M. A. Hameed, ‘Theory and Research in the Field of Industrial Relations’, British Joumul of Industrial Relations, Vol. V, No. 2, July 1967


These types of theoretical relationships can be tested through empirical research. The ‘systems approach’ would appear to be capable of generat- ing testable propositions and once it is adopted, the student can develop a method of inquiry by attempting to test propositions such as the following :

r = f(t) r = f(e)

5) 6)

Equations (5) and (6) require the researcher to test the hypothesis that technical and economic factors are determinants of the rules in a given industrial relations system.

The ‘systems approach’ has some crude predictive value which can be illustrated by an example. I t could be hypothesized that technological change is a major determinant of the level of pay. If Equation (5) is adopted, it could be forecast that the introduction of more technically advanced methods of production would be accompanied by substantial changes in pay. A drawback to the ‘systems approach’ is that it does not enable the behaviour of the actors in the system to be predicted. I t does not indicate whether there will be more strikes, lockouts or arbitration in an economy, industry or plant. This limitation stems from a further weakness, namely, the failure to provide an analysis of the processes from which the rules are derived.

The ‘Oxford approach‘ has a crude input and output, see Equation (2), but has made an empirical observation rather than developed a method of approach which provides a number of testable propositions. I t hypothesizes that the rules are made by the collective bargaining process- a political phenomenon. At best the approach could be said to predict that a change in the balance of power between employee and employer, transmitted through the collective bargaining process, would lead to a change in the rules. There is no attempt to analyse how the political balance may change or to derive relationships between power and other variables, for example, economic, legal and sociological. Although the ‘Oxford approach’ satisfies some of the criteria of a model, it is very crude and is at best viewed as a simple model.

Some of the sociological models are not sufficiently rigorous in methodology, and sometimes are diagrammatic expositions rather than scientific attempts at establishing cause and effect relationships. The approach of Margerison provides an example of this. Although sociological models do make a useful contribution to industrial relations, some of the claims made on their behalf have been excessive. Because they concentrate on sociological aspects of industrial relations, they appear too limited in their treatment of the factors that lead to conflict and its resolution.

The ‘systems model’ does not give an analysis of the processes whereby the rules of the system are made. The focus is on the structure of an industrial relations system and ignores the ‘processes7 which are the


behavioural dynamics of the system. In the model, the actors are viewed in a structural rather than a dynamic sense. Although they are the ‘doers or reagents’ll they are presented as formal or informal organizational hierarchies, rather than behavioural mechanisms that are themselves in a continuous state of change. Because the actors in any industrial relations system are seen mainly as organizational phenomena, the model does not explain how they determine the processes of the system.

As early as 1902 the Webbs distinguished the following processes in industrial relations-individual bargaining, collective bargaining, arbitration, conciliation, legal enactment and open warfare. Individual bargaining was seen as the method whereby an individual contract was made between the individual workman and the employer. Collective bargaining was the method used in reaching a single Agreement made by the rep- resentatives of a group of workmen and the employer, laying down the principles upon which workmen of that group could be engaged.46 Arbitration was distinguished from collective bargaining because the result was not arrived at by bargaining at all, the ‘haggling’ between the parties being expressly superseded by the fiat of an arbitrator. The real value of arbitration was seen to lie in the patient work of conciliation but the main function of an arbitrator or conciliator was not to supersede the process of collective bargaining, but to forward it. On the other hand, arbitration was differentiated from legal enactment in that the award was not obligatory on either of the parties.l6

The process of collective bargaining was also distinguished from open warfare. The former was seen to involve the fullest possible play of the ‘arts of d ip l~macy’ ,~~ while the latter was thought to be costly and even disastrous to both sides; while not desiring war, the parties always had the alternative to fight out the issue. In a contingency such as the failure to come to agreement, the bargaining simply came to an end and a strike or lock-out could occur. However, the perpetual possibility that collective bargaining might end in open warfare, was thought by the Webbs to be a grave drawback to the method.

Despite the fact that their theory has been subjected to criticism,l* the Webbs have analysed many of the important processes in industrial relations. The ‘Oxford model’ also provides a theoretical account 03 processes. Although collective bargaininglS is viewed as the major process, five other methods of external job regulation are distinguished on the basis of authorship or substantive rules. These are as follows: unilateral action by trade unions, unilateral action by employers’ associations,

44 Dunlop, OF. cif., p. 8 46 Webb, op. cit., 1902, p. 173 4e Zbid., pp. 222,239-40

4a Flanders, op. cif., 1968 47 Ibid, p. 184

Flanders considers the term ‘collective bargaining’ to be misleading and has suggested it could be more appropriately called joint regulation, since its distinctive feature is that trade unions and employers act as joint authors of rules.


tripartite regulation, state regulation and social regulation by custom and convention.

The ‘Oxford model’ does not clearly distinguish open warfare as a separate industrial relations process. Nevertheless, bargaining is seen to differ fundamentally from the strike; the former is regarded as a market process, whereas both negotiation and the strike are viewed as political forms of social behaviour. The approach does not accept that individual bargaining, in contrast with collective bargaining, is a rule- making process. In Flanders’ view individual bargaining is a market or economic process, whereas collective bargaining, involving as it does the use of power as well as the making of rules, is really a political process. However, collective bargaining regulates, rather than replaces, individual bargaining.50 The present writers would argue the Oxford approach is confused and individual bargaining is also a rule-making process in the sense that the rules of a contract between an individual employee and employer may be settled through negotiation. The approach makes the mistake of seeing collective bargaining in terms of political power and fails to recognize that for the trade union or the employee the basis of such power is economic51 and thus the Webbs were correct in seeing collective bargaining as an economic phenomenon. Examples can be given which show that individual bargaining is a rule-making process involving economic power. In February 1968 all British United Airways pilots were instructed by their employer to sign individual Agreements. A number of pilots refused to accept the terms of the personal contract and, through a process of individual bargaining, were able to exert influence in determining the rules governing their conditions of employment. Professional footballers, with unique skills that are in short supply, have a market power which they can exercise in negotiations over individual contracts of service with their clubs.

To summarize, it can be said that despite the analytical provision for rule-making processes generally, the ‘Oxford model’ depicts the rules as being collated almost wholly by collective bargaining. In this regard, the treatment of processes appears restricted, and in the case of individual bargaining, confused. The model provides no explanation of the causes of industrial action. The ‘systems model’, on the other hand, has a gap in its theoretical apparatus because it does not show the important link between the forces which determine industrial relations processes and the processes themselves. This was probably a major reason for Dunlop’s de-emphasis on industrial conflict as a dependent variable.

6o Flanders, op. cit., 1965, p. 21 and Flanders, op. cit., 1968 61 The economic power of a trade union (whether an ‘open’ or a ‘closed’ union) lies in its

ability to influence the shape and position of the supply curve of labour. Flanders denies this, arguing that it is the individual employee who makes the decision to supply his labour and the individual employer the decision to purchase it. This may be true, but the union determines the minimum price, since if the individual negotiates a rate below that of the union he will move from this lower wage to the higher wage rate in the unionized sector.


THEORETICAL REFINEMENTS The ‘Oxford approach’ fails to analyse the economic, sociological

and technical factors that influence the determination of the rules. Moreover difficult problems arise in trying to accommodate additional variables into the framework. The industrial sociology approach has a limitation in that it emphasizes sociological factors, taking economic and other variables as given. The ‘systems approach’, however, offers possibilities for extension into a model showing a diverse range of variables that impinge on an industrial relations system.

The ‘process’ variable can easily be incorporated into the model. Since the ‘systems approach’ is one of comparative statics it is possible to compare the industrial relations system at two points in time. In Table 1, Equations (7) and (8) show how the industrial relations system looks

TABLE 1

Theoretical Refinement to the ‘Systems Model’

Equation Tim period Outflut Input 7) Situation 1 rl = fh, t1, el, 31, id 8) Situation 2 ra = f(am ta, ~9 ~ a , id 9) Changefrom ra-rl = f(h-ax, ta-tl, q-el, %-s,, ia-Q

Situation 1 10) proc*ls by which change

from Situation 1 is accomplished P = f h , al, ti, el, 81, i 3

at any two points of time, irrespective of whether or not it is in a highly unstable condition, Nevertheless it is simpler to regard the situations as two equilibrium positions. The movement from one equilibrium to another is triggered off by some major shock. Although the assumption is made that there will have been significant changes in all component factors in the model, in practice there might be major changes in only some of the variables. The change in the system as a result of movement from equilibrium Equation (7) to Equation (8) is shown in Equation (9).

In order to reach the situation shown in Equation (8), the system must be shifted by some dynamic force. This force may be one or more industrial relations processes. For example, it could be the result of an upsurge of industrial action or the introduction of compulsory arbitration. To simplifl the analysis, we have assumed that only one process will be necessary. This can be seen from Equation (10). The process selected will be determined by the total system itself as it existed in Equation (7). Changes in the independent variables will influence the actors in their choice. If the economic and technological variables change in such a direction that they favour the workers, then strike action may become a feasible process, whereas previously it may have been of little help to the union. The rules are important in determining the process because they may specifically


exclude types of behaviour, for example strikes, or may only allow such action in certain circumstances.

Equation (10) can be viewed as a bridge which joins the theory of rule determination with the study of processes as dependent variables. The introduction of the process variable makes the model dynamic. Although the model can be refined to explain how industrial relations processes are important in rule determination, it is not capable of showing which particular process will be adopted by the actors. Thus the revised model is unable to predict the extent to which militant action may occur.

The analytical framework can be improved by introducing another theoretical refinement. The ‘systems model’ makes no special provision for the role of individual personalities in industrial relations, and fails to provide an explanation of the way in which goals and objectives of the actors are determined. The ‘actors’ are viewed in a ‘structural’ rather than a ‘dynamic’ sense and the role of the attitudes and behaviour of the parties in the system is not clear. There are many industries where personalities of both workers and managements are the main determining influence on the process selected to settle particular issues. Dominant personalities, with attributes like authoritarianism and dogmatism may have an important influence in rule determination. In one of the private airline companies a forceful personality has attempted to rescind collective bargaining by withdrawing recognition of the union and substituting unilateral rule-making by management. In the printing industry, where there are two major unions, one representing craftsmen and the other the non-skilled workers, the clash of personality between the respective union leaders has led to the adoption of militant action. In the port transport industry, personalities of leaders of the work group have caused industrial warfare to be used as a rule-making method. The process by which the rules are derived is therefore affected by personality as well as economic, technological and status factors. This means that Equation (10) needs to be broadened to include personality factors. Hence we have the following equation :

P = f(r1, el, tl, a19 S1Y il, x1> where x1 = personality factors

Personality influences rules through its effect on the processes by which they are derived.

11)

CONCLUSION This article has traced the development of industrial relations theory

from Marx’s exposition of the rise of trade unions to the present day. Of the modern theories, the ‘systems model’, the ‘Oxford approach’ and an industrial sociology view have been assessed. Although all three have deficiencies, the ‘systems approach‘ offers the most satisfactory

INDUSTRIAL RELATIONS THEORY-A CRITICAL REVIEW 407 methodology. However, it suffers a handicap in that it does not take into account the processes by which the rules of the system are determined. This article suggests refinements that help to overcome the problem.

A second modification arises from the need to give explicit recognition to psychological influences. This led to the introduction of personality factors into the amended model. Personality attributes of the actors can be important determinants of the processes adopted.

Both these refinements enhance the value of the ‘systems approach’ as a research methodology, but more work remains to be done if the approach is to be further improved. For example, even with the proposed modifications the predictive value of the model still remains limited. One cannot forecast whether the system will experience more or less conflict as a result of a given change in one or more of the environmental contexts. There is a need for the nature and significance of the determining variables to be more clearly shown. The modifications are offered in the hope that they will be taken up by others and that additional refinements will be made in the light of further research. The methodological approach developed in this paper allows the use of theoretical tools fiom a variety of specialist disciplines. Thus, it permits the use of a sociological concept, such as status, a psychological concept, such as personality, and economic factors, such as the product and factor markets. As these theoretical tools are applied within the area of industrial relations they will probably take on similarities which distinguish them from those used in the fields in which they originated. In this way industrial relations may gradually arrive at a comprehensive integrated theory.

industrial relations theory-a critical review

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