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From The Socialist newspaper, 14 April 2010

Emperor's new clothes: bosses' pet management theories

Bosses are always searching for the Holy Grail of how to run their production systems. They were even envious of the growth the former Stalinist states in Eastern Europe managed for a limited time. One business guru after another has claimed to have cracked the code.

Steve Glennon, Six Sigma Black Belt

The latest magic answer has been the Toyota Production System (TPS) known as "Lean Sigma" or Continuous Improvement. This is like the emperor's new clothes; it must be right because Toyota had grown to be the largest car manufacturer in the world, overtaking not only its Japanese rivals but the giants of Ford and GM.

Just as reformists on the left sang the praises of Stalinism and its economic growth, with no time for the Marxists who pointed out that the lack of democracy would starve a planned economy of sustainability, the bosses and the accountants look at Toyota with awe.

Toyota's "Lean" system has been copied by almost every global manufacturer, and most financial institutions. To give it some scientific credibility to finish off the fine threads of the new robes, they called it "Lean Sigma".

A whole industry has been created around Lean Sigma, with company after company having managers trained as "Green Belts" or "Black Belts" in Lean Sigma, the terms reflecting roots in Japan.

Consultancies have sprung up over the past ten years to provide the training. Japanese words such as Kaizen, Poke Yoke, Kanban, and Gemba have entered the vocabulary of hundreds of thousands of workers.

Toyota's Lean system

The basic principle of Lean is to reduce all non-value adding activities and processes. Loved by accountants everywhere the method reduces expensive stocks of components and finished goods.

That is why when you go to buy a three-piece suite you will be told it will be 13 weeks before it can be delivered. It won't be started until an order has been placed, in fact only then will the raw materials be ordered. There are no warehouses full of stock as this is no longer acceptable, but the raw materials will be supplied just in time for your suite to be made.

Learning from the discredited Just In Time (JIT) of the past there are now small "Kanbans" of components and part finished goods which are tightly controlled using past data, which are there to overcome the failure of the JIT system or as it was mockingly known by most workers the "Just Too Late" system.

But Lean has failure built in. Not all fat is bad, companies Lean themselves into anorexia. They leave themselves with no extra resources for 'continuous improvement'. They create the very conditions that damaged Toyota.

Millions of cars have been recalled to fix dangerous faults which have lead to fatal crashes. Customers are shouting: "Toyota you are naked!" The BBC's Money Programme special "Toyota - Total Recall" blamed the dash for growth, as it led to Toyota's management taking their eye off quality.

A shiver went through world capitalism when Toyota's problems were revealed. Stock markets wobbled. Whilst many workers were pointing out the Emperor was naked, companies continued to use TPS. In fact it is being stepped up, with the public service being next in line. It will be coming to a hospital or council near you soon.

Lean for the public sector is fast-growing, with consultants providing new training programmes to apply Lean Sigma to public bodies.

Inherent problems

Compounding the inherent problems of Lean is the culture of management around the world. One of the cornerstones of Lean is 'empowerment' - an attempt at getting benefits from the real experts, the workers. But most managers can't live with 'empowerment' beyond a minimal level; they can't live with losing control.

The Japanese culture may allow for morning exercise before work and the relentless imposed pursuit of perfection. There are numerous sweetheart deals between Unite and other unions with Japanese car firms in the UK. But morning workouts have not caught on, only the increased exploitation of workers. The cost of growth has been quality.

So what is different about socialism, would quality still be sacrificed for growth? A socialist planned economy would not run to the same rules as capitalism - chasing profits and always cutting the bottom line. Socialism can provide what is needed - society will democratically determine the priorities, not the market.

Expertise of the working class

If the expertise of the working class were to be unleashed through workers' control and management, the increase in productivity would outstrip any capitalist economy, and that of the Stalinist economies at the height of their growth.

Replacing the market with public ownership and democracy would end the anarchic system of capitalism and provide enough food, fuel and all the necessities for the human race.

Workers all over the world are pointing to the naked Emperor of Toyota, but the strategists of capitalism have no other answers. As the capitalist system bounces along the bottom of the recession, the cuts in public expenditure could still throw the whole system into depression.

Misery for workers lasted a long time in the 1930s. The height of unemployment was seven years after the Wall Street Crash in 1929, and the banks didn't collapse until three years after in 1932. There may be a lot to come for workers striving to maintain living standards in the next few years.

Trade unionists must understand the bosses and their systems so we can fight against them. We must all point the finger and say: "You and your system are naked, so don't try to make us pay."

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