Thursday, December 01, 2016


None are more hopelessly enslaved than those who falsely believe they are free” - Goethe

Are co-ops stepping stones?

99% of the world is angry. Harder work, longer work and still not getting anywhere. The gap between rich and poor is widening and we still have unequal opportunities. We are ll under pressure from changes in the labour market, insecurity of employment, wage cuts and job losses. It is commonsense that we must focus on the real causes of this misery, the great injustices to our communities, and that is to focus on the capitalist system which beats us all down. Instead, we are incited by our elite rulers to blame the scapegoats. Our masters sow division and hatred for others, often minorities, including migrants and refugees. Nationalism, racism and xenophobia grow, exhorted by demagogues and charlatans. Humanity, dignity and fairness no longer possesses a priority. But we are all united, and are we are connected to each other. When people have a secure future, when individuals get enough opportunities to develop themselves and when jobs, homes and food are accessible to everyone, there can be peace and prosperity for everyone. Let us come together. For many people this means forming cooperatives to escape the ravages of employment and unemployment. 

Many on the radical Left are full of passion, and truly believe cooperatives are the way forward for the people.  The advocates of cooperatives envisage them as oases in the desert of capitalism and anticipated that the movement will grow until eventually out-competing capitalist industries in the marketplace and thus the workers have achieved their emancipation. Essentially society each community would own its own means and instruments of production and each member of a community would work to produce what had been agreed was needed. With co-operatives workers would own and run everything. It would be the end of capitalism. But imagine if tomorrow every place was a co-op, we'd still all be competing with each other, just without bosses. There is the continuation of finance, prices and incomes. We know what happens. It only takes a brief look through the history of the labour movement. Even with bosses eliminated from the equation the logic of capitalism remains. It would be left to us, the workers, to enact the conclusions of capital on ourselves. In unprofitable years, if things got bad, we would be forced to fire ourselves, reduce health benefits, or cut our own wages or hours. Certainly we would have more say making those tough calls than if a manager were deciding those things for us and about us. But an increased voice in the operations of capitalism is all that workers cooperatives can offer the working-class. Worker co-operatives are a re-arranging the roles that capitalism casts us in, and short-circuits the building of working-class confidence that comes when we confront capital together. Cooperatives in no way challenge capitalist markets, the drive for valorisation, or the need to work for wages. Proponents of worker cooperatives who believe they can end capitalism, have never satisfactorily explained how acting as a boss and a worker will challenge capitalist relations, except in the most superficial and rhetorical of ways (i.e. coops end hierarchies in the workplace and demonstrate that workers can run things, too). The union cannot strive to turn workplaces into worker cooperatives and also maintain its function as protector of the worker.

When cooperatives operate within capitalism, they must compete with capitalist firms. Sooner or later they will either be integrated into the market processes or they will just disappear. The cooperative movement was easily integrated into the capitalist system and, in fact, was to a large extent an element of capitalist development. Even in bourgeois economic theory it was considered an instrument of social conservatism by fostering the savings propensities of the lower layers of society, by increasing economic activities through building societies, credit unions, and also by improving agriculture through cooperative production and marketing organisations, and by shifting working class attention from the sphere of production to that of consumption. As a capitalistically-oriented institution the cooperative movement flourished, finally to become one form of capitalist enterprise among others, bent on the exploitation of the workers in its employ, and facing the latter as their opponents in strikes for higher wages and better working conditions. The general support of consumers’ cooperatives by the official labour movement – in sharp distinction to an earlier scepticism and even outright rejection – was merely an additional sign of the increasing ‘capitalisation’ of the reformist labour movement. The widespread network of consumers’ cooperatives in Russia, however, provided the Bolsheviks with a ready-made distributive system which was soon turned into an agency of the state.

To set up a business and expect it to profitable is inscribed within the logic of competition. This applies whether you set up your business by yourself or if you do so with four friends, that is, whether you do so independently or you create a cooperative. If a business is not competitive, it dies. Co-ops have to compete with ordinary capitalist businesses on the same terms as them and so were subject to the same competitive pressures, to keep costs down and to maximise the difference between sales revenue and costs. It was the co-operative movement which was outcompeted and those surviving are on the margin as a niche leaving the great bulk of production, distribution and banking in the hands of ordinary profit-seeking businesses. Where co-ops proved a success it was merely the success of essentially capitalist undertakings. Co-operatives did not provide a real solution to the workers' situation. The more they are integrated into the capitalist economy and its profit- seeking, the more their members will have to discipline and pressurise themselves in the way the old bosses did - what is known as "self-managed exploitation". The fact is that there is no way out for workers within the capitalist system. At most co-operatives can only make their situation a little less unbearable. At no time do the proponents of co-ops question the capitalist production relationships, but limit their criticsms to only its superficial features (like monopolies)

Once again, we should focus on the real world of today. Goods and services are socially produced and result from a world-wide technical division of labour. Production today is a complex social process. Even the simplest item like a pencil requires the direct and indirect labour of thousands of workers. Production today is a tremendously complicated social process: the production of any one item is intricately bound up with the production of all other items. Autonomous production unit is impossible. Together with the working-up of materials and final products throughout the world-wide network of productive links, given capitalism, what also takes place throughout this structure is the circulation of capital, its expansion through the exploitation of workers and the realisation of surplus value in the markets. The structure of useful production can only be activated by the deployment of capital with the object of its accumulation. This accumulation depends on each and every part of production and distribution being regulated by buying and selling and it is impossible for any unit to be exempted from this economic process. This means that the mining of raw materials cannot take place unless in the final sequence of production and distribution goods are being sold at a profit. The sale price of any final product must include the profits made in every sequence of production, and without this production and distribution breaks down throughout the structure. In combination these factors operate as a constant pressure of economic selection through which the structure of production is maintained as an exclusively capitalist structure.

Whether or not a production unit or distribution unit or service takes the form of a workers’ co-operative can have no bearing whatsoever on the pressures which compel it to meet the economic conditions for its existence. Nor do the details of how a unit runs its affairs matter. It can be a kibbutz or a co-operative taking decisions collectively; it can be a monastery producing pottery, honey or herbs; it can be a conventional business; in whatever way they are internally structured, authoritarian or democratic, and in whatever scale they may operate, as a part of social production they are a link in the economic circuits of capitalism and can only operate within the pattern of buying and selling.

In buying in its machinery, equipment, materials, premises, transport etc., and in paying its rates etc, any unit, including any workers’ co-operative, must pay all these costs. How could any imagined “socialistic” unit operate without power supplies? In its application of socialist principles in production and consumption, is it going to persuade the utility company to provide electricity free? It is on this point alone—the question of how these units will get their electricity, without which it is impossible to switch on a light, let alone run an autonomous socialistic enterprise.

It should be emphasised that the running costs of any unit include the profits made by all the other units previously involved in the production of the materials, machinery, power supplies, etc, which are being bought in. If it fails to meet these costs, which include these profits, then the unit will not be supplied, and the funds for these costs must be derived from its own sales income. In addition to this income, the individuals working in the unit must have income to cover personal living costs such as rent or mortgage repayments, food, clothes, leisure activities, and so on and on. This is inescapable.

The opportunities for the viable existence of any production or service unit are uniquely determined under capitalism by the sales opportunities presented by the market. This was outlined by Marx in Chapter 51, Volume 3 of Capital, under the heading “Distribution Relations and Production Relations”, and in other places. “They [distribution relations] determine the entire character and the entire movement of production.” This involves the fact that sales in the market determine the distribution of necessary income in the form of profits, rent, wages, etc, and thereby the conditions of production. The idea that a production unit can be set up in accordance with “socialistic” principles, as an act of free choice against the economic forces of what Marx called distribution relations, is pure nonsense.

The pressure of economic selection determining the existence and operation of all production units exerts itself as this matter of daily book-keeping. Regardless of their make-up, production or service units can only continue their existence whilst they are economically viable; that is, where income exceeds expenditure. If expenditure exceeds income, then inevitably they disappear, as the constant number of bankruptcies well attests. This is how the structure of production is maintained as an exclusively capitalist structure. These pressures of economic selection cannot be set aside within the capitalist framework, even if circumstances where there may be a substantial growth of the socialist movement.

In cooperatives we still remain fragmented and sectionalised.

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