This post is part of a feature on “How Capitalists Think,” moderated and edited by Patrick Neveling (University of Bergen) and Tijo Salverda (University of Cologne).
This contribution looks at the implications of how capitalists think about corporate ethics and moral obligations in monoindustrial towns. I present the cases of two mining towns in Estonia and Kazakhstan that share the history of honoring labor dynasties. In both settings, during the Soviet period, labor dynasties had a special place in company histories and grandfather-father-son working together were celebrated through stories in newspapers, awards on miners’ professional holiday, and photos on the mine’s noticeboard. Ideologically, dynasties represented a “labor aristocracy” that was to replace the prerevolutionary hereditary aristocracy, and such workers were to serve as examples to others (Tkach 2003).
In the Estonian and Kazakhstani mining towns where I did my fieldwork, miners themselves took pride in working together with their kin. In both sites, mining was done predominantly by a Russian-speaking migrant population that enjoyed considerable privileges in the Soviet period but lost those as ethnic and class hierarchies were reshuffled in the post-Soviet context. The Russian-speaking miners continued to be a necessary labor force in mining, but their militancy in labor disputes, which stemmed from their privileged position in the Soviet era, was increasingly policed and controlled.
Despite these commonalities, corporate policies in Estonia and Kazakhstan have moved in two completely different directions: one banning family members working together as unethical nepotism, and the other encouraging it even more than in the Soviet period. Capitalists, in the cases discussed here, are the management who execute the corporate policies that deem a particular family-company combination moral or immoral. Workers, on the other hand, are not considered capitalists, because they do not own the means of production or control corporate policies that serve the interests of managers, not workers. Furthermore, workers take a different moral stand in relation to kin and company. Yet, to explain the latter would go beyond the scope of this post. Instead, my comparison of mining company policies in contemporary Estonia and Kazakhstan aims to highlight how in both cases the policies of well-meaning capitalists can have negative consequences for the workers and their families.
Estonia: No to nepotism
The office of the Mine Surveying Department in Estonia’s “Homeland” mine was quiet in the morning. While some mine surveyors were still working underground, others had left for an early lunch in the canteen, and the department head sat at his desk calculating production numbers. Suddenly, a young woman from the HR department arrived with a piece of paper that she attached to the noticeboard. “The company’s new code of ethics,” she explained to the department head, Sergey. “Make sure you and your department read it and that they sign off that they have read and understood it.”
The document, declaring general ethical values, was circulated among all departments. It contained points that employees should not, for example, work for a competing organization, consume alcohol in the workplace, or accept expensive gifts. One of the points read, “We will not work under the direct management of our relatives, family members, or friends, because this kind of relationship can lead to a situation of conflict of interests. As managers, we avoid such situations and shall not recruit our relatives or friends to our department.” “But I have been the manager of my wife for 10 years,” Sergey exclaimed. Suddenly, after the declaration of the new code of ethics, Sergey’s wife, Katya, was transferred to another mine.
This happened in 2010, when the global economic crisis hit Estonia and triggered a substantial restructuring of the mining company. That nationally owned company with a proud history had been merged with the nationally owned power company, Eesti Energia, in 2008. The Estonian-speaking new management in Tallinn, the capital of Estonia, now sought to streamline management principles across the company, including human relations policies, pay systems, and corporate culture and code of ethics. Official statements advertised Eesti Energia to future employees as a company endorsing family values and offering lots of free time with the family:
We believe the work and personal lives of our employees should be in balance. We give additional holidays and days off to our employees for family events. We pay a bonus when our employees have a child and when the child first goes to school. (Eesti Energia 2018)
Yet, that understanding differed from the expectations of the miners in eastern Estonia. The new management’s support for workers offered extra free time to spend with their families, but this was supposed to take place outside the framework of the workplace. Work and personal lives became two distinct and separate categories. What is more, the Estonian-speaking management was suspicious of the Russian-speaking area, which they associated with corruption and saw as the opposite of the transparent Scandinavia-like Tallinn. Corruption was seen as linked with nepotism, so nepotism was to be uprooted via the implementation of a new code of ethics.
This came on the heels of the opening the EU energy market, which introduced new regulations for transparency and required state-owned enterprises (SOEs) to adopt management practices similar to those of private companies. While the new EU-style of capitalist thinking regarded the implementation of a code of ethics as a way to enhance transparency in SOEs, the Tallinn-based management translated that thinking into the Estonian setting by worrying about transparency in the country’s Russian-speaking parts.
The new code of ethics, like other codes and standards that try to enforce the same rules everywhere, did not consider the legacy of mining as a family trade. By applying the idea of a company ethic, the management was able to override local family ethics of the Russian-speaking miners whom they saw as suspicious, corrupt, and unpredictable. Besides Sergey and Katya, many families that worked together were separated at work by an overly eager management that started seeing potential corruption everywhere.
Despite the capitalists’—that is, the management’s—good intentions, this separating of the company from the family had other implications. It atomized and individualized the workforce and marked the company’s withdrawal from a patronage based model where the company had moral obligations for reproducing labor. Breaking up strong units meant that every worker now related to the employer as an individual. There was no longer a unit of workers with strong ties of collegiality and kinship among themselves and with strong relations vis-a-vis the company.
Kazakhstan: Patronage and kinship
When Nazgul, a 25-year-old woman of Kazakh ethnicity and my host sister, lost her job as a chemist in a laboratory servicing the mines, she was very worried. It was difficult for women to find jobs in the Karaganda region in Kazakhstan. ArcelorMittal, the global mining and steel company, was the only major employer in the region. Using my privileged access, I took Nazgul to see the big boss, a middle-aged man whom I reported to regularly about my fieldwork. Even before looking at Nazgul’s CV, the big boss asked whether she had any relatives working in the mine. My host sister explained that her mother was working in the mine and her father had been a miner before he had died three years previously. The big boss tried to help and sent us to talk to the management of the factory where Nazgul could work. The first questions, again, were about Nazgul’s parents. Within two months, she received a job offer because she belonged to a mining dynasty.
This happened during my field research in 2013 when the company was operating at a loss because of poor sales and the drop in global coal and steel prices after the 2008 economic crisis. To cut costs, recruitment was limited. New people could only be hired if someone was fired for absenteeism or drunkenness, but not when workers retired or left voluntarily. If new workers were hired at all, family members were preferred.
Because of my experience in Estonia, I was surprised that the recruitment of relatives in Kazakhstan was officially encouraged. Moreover, recruiting the son or daughter to the same department in which a parent was working (making the parent the direct boss of the child) was considered positive. Talking to the top management of the company, they emphasized that recruiting family members was a good thing, guaranteeing the continuity of mining dynasties in the region. In some parts of the company, even a higher annual bonus was paid to those who had close relatives working in the same company.
Preferring kin was also reflected in the spreadsheet table that served as a recruitment tool. The table included columns with a candidate’s name, date of birth, contact details, education and work experience, and whether there was a family member already working in the mine. If there was a choice between an experienced applicant with no family connections and a less experienced applicant with a parent or a sibling in the mine, the latter was chosen. Furthermore, there was a policy that if a relative had died in work accidents, other family members could get jobs in the organization.
Even though it was possible to get a job by paying a bribe ranging from $1,000 to $4,000, family played a role here, as only miners could afford taking loans to pay for such high bribes. I once confronted the director of the coal washing plant about the rumors about such bribes. “Yes, I have also heard such stories, but this is not the case here, at least not since I became director. I recruit people strictly on the basis of kinship, so bribes are ruled out.” Local managers saw themselves as benevolent agents of working-class reproduction. The overall moral code of the company was straightforward: the company resembles a patron, all miners working for Mittal constitute a family, and therefore the company first takes care of their own, especially as there is a tradition of mining dynasties in the region. In return, the patron expects loyalty.
At the same time, in interviews with me, senior management was much more pragmatic considering the reasons for recruiting family. They admitted that it was conducive to political stability if local residents who had no other skills or other ways of making a living could be offered secure jobs. Managers openly admitted that such hiring policies came with the benefit of social control and reduced costs of formal training: if a parent introduces their working-age child to the shop floor, it is the parent’s responsibility to train that child. If the new recruit does not live up to expectations, it is the parent’s fault. Furthermore, if someone becomes too politically active, it is possible to threaten them not only with the loss of their own job but also with other family members losing their job. In an economic setting that allowed for limited recruitment only, this policy was not merely a continuation of Soviet labor dynasties but also a tool to control who is worthy of getting a job and, in consequence, suppress unrest.
Many would apply cultural essentialisms to explain this divergence of the treatment of family and kin in the two postsocialist nations. Undoubtedly, management practices often resonate with the hegemonic values in society. When, in the case of the Estonian mine, transparency and meritocracy came to be regarded as important corporate values from 2010, the role of kinship structures in the workplace remained a core value for the capitalists running the mine in Kazakhstan. Yet, the reasons for these divergences may have to do with the wider political settings in each case. Organizing the mine as a collective unit possibly works better in the authoritarian setting of Kazakhstan, where the biggest fear is the outbreak of widespread labor unrest, which would destabilize individual businesses as well as the state. Another important aspect may be that the Estonian state-owned enterprise was under different pressures to distance themselves from kinship relations than the private capital venture owning the mill in Kazakhstan.
At the root of the divergences discussed above is, for obvious reasons, the similarity of labor regimes established in the Soviet era. In the relevance given to kinship and labor dynasties in heavy industries such as mining, we see a state caring for the reproduction of the labor force on a broad scale. Neoliberal policies in postsocialist nations instead have unleashed capital from these constraints (Burawoy 2010) and recommodified labor (Standing 2007). Yet, my examples show that such labor commodification can work in two ways. In Estonia, the economic relations are disembedded from the sphere of the family. Labor is commodified and families remain responsible for labor reproduction. In Kazakhstan, family, and the workplace remain intimately tied to each other, which means, however, that the economic sphere reembeds itself into family relations and commodifies those. Capitalists in both locations have their own thinking about ethical and moral justifications of applying such policies on the ground.
Eeva Kesküla is a senior researcher in the School of Humanities at Tallinn University. She has done fieldwork in Estonia and Kazakhstan on work, industrial health and safety, gender, and class in mining communities. She has recently published in History and Anthropology and Work, Employment and Society.
Burawoy, Michael. 2010. “From Polanyi to Pollyanna: The false optimism of global labor studies.” Global Labour Journal 1 (2): 301–313.
Eesti Energia. 2018. “Come and work for us.” Accessed 29 March. https://www.energia.ee/en/karjaarikeskus/tule-toole.
Standing, Guy. 2007. “Labor recommodification in the global transformation.” In Reading Karl Polanyi for the twenty-first century: Market economy as a political project, ed. Ayşe Buğra and Kaan Ağartan, 67–93. New York: Palgrave Macmillan.
Tkach, Olga. 2003. “The phenomenon of the ‘soviet hereditary worker’: From asseveration of social class purity to workers’ dynasty.” In The Soviet Union—a Popular State? Studies on Popular Opinion in the USSR, ed. Timo Vihavainen, 162–179. Saint Petersburg: Europeyski Dom.
Cite as: Kesküla, Eeva. 2018. “How capitalists think about labor dynasties and corporate ethics .” FocaalBlog, 4 April. www.focaalblog.com/2018/04/03/eeva-keskula-how-capitalists-think-about-labor-dynasties-and-corporate-ethics.