Are Cooperatives Benign Enterprises?
“I contend that co-operation as now developed, must result in failure to the majority of those concerned, and that it is merely perpetuating the evils which it professes to remove… That the co-operative-system, as at present practised, carries within it the germs of dissolution, would inflict a renewed evil on the masses of the people, and is essentially destructive of the real principles of co-operation. Instead of abrogating profitmongering, it re-creates it. Instead of counteracting competition, it re-establishes it. Instead of preventing centralisation, it renews it—merely transferring the role from one set of actors to another. Your co-operative ranks are thinned, your firms find, one by one, they can no longer in make the returns equal the expenses, they cannot sell as cheap as the capitalist, they can therefore no more command the market, their co-operative fires die out in quick succession, stores and mills close over their deluded votaries—and the great ruin will stand bald, naked, and despairing in the streets.” - Ernest Jones, Chartist http://gerald-massey.org.uk/jones/c_misc_letters_etc_1.htm
Exploitation and alienation have always existed in class societies but reached new peaks under capitalism. To unravel the real nature of capitalism is, therefore, an important part of the struggle against it. That is what Marxist economics is all about. We have also had a couple of centuries of experience of cooperative experience so we are not criticising from any hypothetical position. According to the International Co-operative Association more than a billion people are now involved in co-operative ventures – as members, customers, employees or worker/owners. Co-operatives also provide over 100 million jobs – 20 per cent more than multinationals. So tens of thousands of cooperatives already exist; they are not imaginations of a possible future and they are proof that workers can do without capitalists to tell them what to do. Workers can take control, can make decisions and can be successful. We don't need to keep experimenting to confirm what we already know.
Self-management under capitalism is self-management of your own exploitation. The problem is that co-op workers are forced to think like capitalists in order to survive in a capitalist world. Look at what happened to all the co-ops that were set up in the past. They all went bust or were co-opted and utterly transformed from their ambitious beginnings. We shouldn't make the mistake of seeing cooperatives as providing a vehicle for social revolutionary change and that they are not immune from the capitalist society they exist within. Let’s not forget that it was only a few years ago that the Tories were praising cooperatives and using the coop model for privatisation in disguise (much the same as those on the free-marketeers use the Universal Benefit Incomes as a case for abolishing the welfare state.)
One hears arguments that capitalism is only an unjust economic system because it profits a handful of people to the detriment of the rest and so by achieving certain institutional and legislative changes that will lead to a more equitable division of the wealth that is produced by the vast majority, we have a solution to our social ills. The “revolutionary” version would want to overthrow the parasitic minority and organise, on that basis, the economy in a collective and egalitarian way. Both versions believe that the change is brought about by those who make the decisions and who decide how the economy is managed. Both versions are mistaken. Capitalism is not a very small group of rich people, this group exists and they are the ones with the most privileges in this social form, but they are only one part of the problem. We see that capitalism is a social relation that permeates all the aspects that affect us as human beings and which it falsely attempts to present as separate compartments: economics, politics, culture, etc. If we do not confront them in all their forms, capitalism will re-arise.
It is easy to understand the attraction of co-ops. You have no boss to struggle against, but, nevertheless, you have to comply with the outside force of capital all the same. Co-ops in capitalism are still subordinate to the logic of capital (constant self-expansion and the example is Mondragon's own growth and globalisation.) Co-ops are still totally subject to the whims of the market. Workers at a washing-machine company could strike against wage cuts or resist lay-offs if there is a dip in the market. Workers at a washing machine manufacturing co-op couldn't do this, they would just have to cut their own wages by some means, or make some of themselves redundant or go to a bank for a loan to tide them over the slump but who would then impose their own terms upon the coop.
The more left-wing reformers claim that one way to challenge capitalism is to build more democratic, egalitarian, participatory economic relations in the spaces and cracks within this complex system wherever possible, and to struggle to expand and defend those spaces. The idea of eroding capitalism imagines that these alternatives have the potential, in the long run, of expanding to the point where capitalism is displaced from this dominant role. This vision imagines introducing the most vigorous varieties of emancipatory species of non-capitalist economic activity into capitalism with the ultimate hope that eventually this alternative economy will spill out of their narrow niches and transform the character of the capitalist system as a whole. This way of thinking about the process of transcending capitalism is similar to the popular story told about the transition from pre-capitalist feudal societies in Europe to capitalism. Within feudal economies in the late Medieval period, proto-capitalist relations and practices emerged, especially in the cities. Initially this involved commercial activity, artisanal production under the regulation of guilds, and banking. These forms of economic activity filled niches and were often quite useful for feudal elites. As the scope of these market activities expanded, they gradually became more capitalist in character and, in some places, more corrosive of the established feudal domination of the economy as a whole. Through a long, meandering process over several centuries, feudal structures ceased to dominate the economic life of some corners of Europe; feudalism had eroded. This process may have been punctuated by political upheavals and even revolutions, but rather than constituting a rupture in economic structures, these political events served more to ratify and rationalise changes that had already taken place within the socioeconomic structure. The vision of eroding capitalism sees the process of displacing capitalism from its dominant role in the economy in a similar way: alternative, non-capitalist economic activities emerge in the niches where this is possible within an economy dominated by capitalism; these activities grow over time, both spontaneously and, crucially, as a result of deliberate strategy; struggles involving the state take place, sometimes to protect these spaces, other times to facilitate new possibilities; and eventually, these non-capitalist relations and activities become sufficiently prominent in the lives of individuals and communities that capitalism can no longer be said to dominate the system as a whole.
This vision is implicit in some currents of contemporary anti-capitalism. Cooperatives were a real utopia that emerged alongside the development of capitalism. If liberal social democrats argue that the capitalist state should be used to legislate tame capitalism and if traditional ‘socialists’ proposes that state power should be used to nationalise so that capitalism can be smashed, a few n the radical left now generally argue that the role of the state can be avoided and perhaps even ignored —as it can only serve as a machine of domination, not liberation. They see the only hope for an emancipatory alternative to capitalism — an alternative that embodies ideals of equality, democracy, and solidarity — is to build it on the ground and work to expand its scope. So this vision of eroding capitalism is captivating for those seeking change. It is enticing because it suggests there is still much that can be done in building a new world, not from the ashes of the old, but within the kernel of the old.
But when analysed deeper it can be seen as implausible that occupying so-called emancipatory economic spaces within an economy dominated by capitalism could ever really displace capitalism, given the immense power and wealth of large capitalist corporations and the dependency of most people’s livelihoods on the well-functioning of the capitalist market. And surely if non-capitalist emancipatory forms of economic activities and relations ever grew to the point of threatening the dominance of capitalism, they would simply be crushed. Eroding capitalism is as much a fantasy as the idea of taming capitalism.
Socialism is a non-property system, and systems which accept and reject property cannot co-exist. However, critics claim that “socialistic” relationships can invade the capitalist economy. The main example of such an invasion are the cooperatives. It is proposed that as socialist consciousness develops these coops will be gradually be gutted of their capitalist content. They will be run eventually upon the basis of “free production” and ultimately they will link together and evolve “towards a totally socialist society.” This projection of social change is incompatible with what capitalism can allow. Relationships are being envisaged as developing within capitalism which the system dooms to failure. Where is the financing of these co-ops to come from? Presumably not from workers’ savings. If capitalist banks are to provide loans to finance these co-ops is it not certain that they will make demands upon them which will undermine their “socialistic” nature? Existing within the cut-throat environment of the world market, is it not inevitable that the economic goodwill of the co-operators will be swamped by the iron laws of the profit system, with all of the exploitative demands which it places upon enterprises? Indeed, far from being able to “demonstrate a better life to workers trapped in the remaining units of capitalism”, the workers making an inevitable failure of running “free production” under capitalism would provide an ideal case study for the anti-socialist propagandists—even more so if such enterprises failed with the backing of the socialists.
We are workers, whether we like it or not. It is not a question of ethics, morality or politics, or because we want to cling to words that some have already abandoned. We are workers due to an objective issue: in the capitalist world, we are condemned to have to pass through the circuit of labour in order to survive. We are disinherited, and the fact that you may have a house or a car does not free us of this scourge. Whether we are looking for work or whether we are doing everything in our power to avoid it by taking from the state in the form of benefits, our condition is that of being exploited. And only the destruction of work and the relations that derive from it will be able to situate us in a new context. We say this it is because, at times we forget this and succumb to the widespread illusion that it is possible to escape from our class condition and transform ourselves into people who are free from capitalist relations without having to pass through the process of an open war against capital, once we have set up our business, once we are working for ourselves. And that is false.
Members of cooperatives necessarily live schizophrenic lives. On one hand, they must function as owners of small businesses and contend with all the insidious forces of capitalism. At the same time, they are members of an egalitarian corporate entity working together day-in-and-day-out dealing with all the tensions arising from individual personality quirks. The ability to collectively manage an enterprise in a democratic manner isn’t utopian to us. The problem is that while there would be no external bosses, the cooperative members have to be both bosses and workers themselves. They will still be existing within a capitalist marketplace, and so will still be subjected to competition and the whims of the market. So while their boss may not cut Joe's hours, if market forces dictate it they will have to cut their own hours themselves.
It is not our intention to disparage those involved in cooperatives who, like ourselves, must search for a way to eke out a living as best they can. We have nothing against working in a cooperative if it means better conditions at work under capitalism and not being disrespected every single day. We’d all rather work with someone who at least treats us like a human being rather than a boss who acts like a little Hitler and makes us miserable every day. However, seeing cooperatives as anything other than a temporary and partial solution of improving your working life is a big mistake. And if cooperatives were taken as something more than a palliative measure to problems at work, then those involved face failure and demoralisation. We do not think that the capitalist system can be gradually changed by the multiplication of cooperatives. The real interests of the working class are served only through the abolition of the wages system. What we want to point out is that these survival strategies within capitalism can only be ameliorations of present conditions and do not present themselves as a means to transform society without having to resort to the socialist revolution. Capitalism provides an opportunity to some workers to try to escape from their class position, provided that they prove that they can offer profits to the enterprise and competitiveness on the market on the basis of exploiting themselves, third persons or consumers. If we do not want to be exploiters or to push ourselves to the limit then, quite simply, our enterprise will not succeed because it will not be competitive. Since the beginning of the labour movement, workers have tried to escape from their condition as wage earners by setting up cooperatives. Some viewed cooperatives as an aim in and of itself, others considered it a means of defence against dictatorial management (closures and shut-downs.). But their evolution has been negative. If the very demand for workers’ self-management goes no further than seeking to change the form of management of the modern enterprise, they proved profoundly conservative.