EACH MODE OF PRODUCTION PRODUCES THE SEEDS OF ITS OWN DESTRUCTION (MARX)
With the increasing globalization of the world, we worry about how we will be able to fight the domination of a global capitalist economic system. Some even worry if it will be possible to end capitalist hegemony at all. Yet it is the very domination of the neoliberal capitalist system that may have created the conditions for a new anti-capitalist movement based on the cooperative model. The advance of communications technology has led to increased mobility of capital. Under the auspices of the neoliberal agenda, capital moves quickly from one underdeveloped area to another seeking ever lower wages and leaving destruction and large numbers of unemployed in its wake. Multinationals are routinely broken down into specialized modules and scattered around the world. The parts of one GM car are manufactured in many different countries.
In many of the countries that have been ravaged by the multinationals' capital flight, workers struggles have increasingly taken the form of developing worker-owned and managed cooperatives as part of the larger social movement toward economic justice and democracy. When the Argentinian economy collapsed in 1991 and a quarter of the workforce was unemployed, workers took over their abandoned or bankrupt workplaces, restarted production and democratically decided how they would organize their work. “Occupy, Resist, Produce” became the movement’s cry. As the mode of production continues to change from a centralized industrial economy centered in the United States, to a decentralized global economy based on outsourcing and the social gains that labor has won in the past hundred years are being eroded, even traditional industrial unions are willing to look to alternative models of organizing workers, including the formation of worker cooperatives and other worker ownership programs.
Following a long drawn-out collapse of the U.S. steel industry during which several shops represented by the Steelworkers converted to cooperatives, U.S. Steelworkers have decided to open several pilot cooperatives in the U.S. which, with a nod to the internationalization of labor, will be part of the Mondragon Corporacion Cooperativa (MCC) in Spain. Formed in 1956 Mondragon is the oldest and most successful of the cooperative networks with over 100,000 cooperative workers and assets and sales in the tens of billions in euros.
A cautionary note: Worker-owned and managed cooperatives have always be used to help stabilize depressed economies with high rates of unemployment. This can be shown as far back as the depressions of 1883 and the depression of the 1930s, as well as the recessions of the 1980 and 1990s. Once the economy improves, however, cooperatives, as a form of business enterprise, are once again relegated to the sidelines. Whether or not the cooperative movement has revolutionary potential or is simply a stabilizing element under a faltering capitalist economy remains to be seen. The number of new worker/producer coops formed in France and Spain continue to steadily grow, in part due to the development and support of worker cooperative networks and NGOs as well as inclusion in government programs that support social economy networks. In England, the current resurgence in the cooperative movement tapered off, however, when economic conditions improved after 1988 (this might also be due to a change from a conservative government to a labor government that prefers a fully publicly-owned social welfare state to privately owned cooperative enterprises). In Argentina, ten years after the collapse of the economy, there are 205 active cooperatives in 2011. Twenty-two cooperatives have closed or made deals with their previous owners. One cooperative, a clinic, nationalized. This is a 90% retention rate, and even though unemployment has dropped to 7%, workers still prefer to stay in the cooperatives rather than get another job. The number of people working under some kind of worker ownership plan in the U.S. has, at this point, surpassed the number of workers in traditional union plans. Over 10% of the U.S workforce is currently working, if not in cooperatives, in some kind of worker-ownership arrangement. Only 8% of today’s workforce is organized in a traditional union. Many of these “worker-owner forms,” however, may benefit traditional capitalist owners more than the workers. While the record is uneven, the current world wide global crisis may provide the tipping point where the cooperative movement finally becomes, not just a Utopian alternative or an alternative in hard times, but a mainstream approach to making social change.
WORKER-OWNED AND MANAGED COOPERATIVES AS AGENTS FOR TRANSFORMATIVE CHANGE: AN ANARCHIST-SYNDICALIST ANALYSIS
Anarcho-syndicalists put forward the concept of democratically run cooperatives and worker-owned and managed enterprises as a transformative economic form that could replace the rapacious capitalist system which has so brutalized and exploited workers. Based on the ideas of economic democracy and voluntary cooperation without class conflict or labor exploitation, anarchists focused on organizing from the ground up, establishing locally managed cooperatives, linked through confederations of unions, cooperatives and communities.
Cooperatives are defined by the International Cooperative Alliance’s Statement on Cooperative Identity as autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly owned and democratically controlled enterprises.
In order to evaluate the inherent transformative nature of the cooperative movement, it is necessary to look at the underlying structure of worker-owned and managed enterprises and how they differ from traditional capitalist enterprises. There are many types of cooperatives: People band together for their mutual aid in housing coops, daycare coops, credit unions, health insurance coops, etc. Many of us buy our groceries from food coops, a form of consumer coop. Consumer coops still form the bulk of the coop movement. The worker/ producer coop, however, is the basic building block of a cooperative economy. A "pure" workers' cooperative is owned and democratically controlled by its "worker-owners". There are no outside owners, Only the workers own shares in the business. Each worker has one share and one vote and the money made by the coop is equally distributed to all members, giving the worker/producers total control over their labor. Unlike volunteer cooperatives, consumer coops or cooperatives developed to fulfill a specific social ideal (I want to promote organic foods),the worker/ producer coop is the only cooperative form that requires the production of the goods and services necessary to society and insures the worker a non-exploitive means of survival. By the very structure of the cooperative, the workers as a group can only be successful by creating a successful product or service in the real economy. It is only in a cooperative where the producer is both the worker and the decision-maker, that we can see what distinguishes a capitalist from a cooperative economy.
As capitalist corporations as have grown into multinationals, creation of maximum profit is based on financial aspects only. Buying and trading of corporations and stock become further and further removed from the production of actual commodities. Profit becomes abstracted from the underlying real economy. In corporations, decisions are based, legally, on the interests of shareholders. Usually, however, they are shareholders only in the most indirect sense, investing in a company primarily to seek a financial profit. The number of shares is not based on any actual relationship with the company or the workers but on the monetary value of the share. Most shares are usually owned by a small number of wealthy investors so even if smaller shareholders do want to influence the policies of the company (as in the TIACREF campaign to get the insurance company to divest from Israel) the shareholder management operates in the interests of a few wealthy investors, regardless of what the minority of small shareholders want.
Management increasingly ties wealth and profit to “money wealth” at expense of the wealth creation based on producing a better product more efficiently. Considerations for a safe commodity of value, for retaining an experienced workforce do not apply. With the increased domination of financial capital, CEOs go for immediate, short-term maximization of profit by cutting workers at plants to increase the cost benefit ratio. GM or Chrysler can declare a 15 million dollar profit by cutting 10,000 workers instead of producing a better car or worrying about whether or not there are actual consumer markets for their commodities. With a better short term financial bottom line, the shareholders will still get their dividends – and vote large salaries, bonuses and golden parachutes to the CEOs.
The culture of capitalism also invades the unions and workers. As unions negotiate with multinationals for a piece of the financial pie, they put financial considerations of their individual members over the general well-being of workers as a class. The New York City DOE pension plans are invested in companies that produce the maximum financial profit, even as those companies are paying other workers sweatshop wages or eliminating workers altogether, because it has been more profitable to the workers in the pension plan. Workers have become investor/consumers, wanting maximum financial value from the investment of their money. If a CEO cuts a bunch of companies in California and my pension stock goes up, I, as a consumer have made a $10,0000 profit so I’m not as concerned about where that money is coming from (unless I’m concerned about my company cutting me next). Under this “business union” model prevalent in the U.S. and increasingly in other industrialized countries, the union, when negotiating with a company, is protecting the rights of the individual workers and not protecting the class of workers as a whole. This attitude becomes part of the worker ethos. I want to get maximum wages so I can get my RV and retire. When new workers come in, let them get lower wages. Short-term, individualistic perspectives are part and parcel of the alienation in the traditional capitalist workplace.
The cooperatives offer a much more grounded way of encouraging democratization in the work place and stabilizing the workforce by emphasizing the group ethos over the individual.. Since the “stakeholders” are the workers, it is in their interests to make the actual product they produce successful. This stabilizes the economy from the productive end. It is not based on maximizing money profit, but maximizing “labor value” of the goods produced—that is, the workers are rewarded by improving goods, keeping the enterprise solvent. E.g., One company saved $18 million on employee innovation not previously allowed. Another had parts sitting in a storeroom for 2 years not used because management kept reselling the company. Management was maximizing stock value , financial profit, not producing goods. Although some cooperatives have hired some outside expertise or management, most worker-owned enterprises have saved substantially by cutting down administrative costs (getting rid of the bosses). The most interesting statistics come from some of the worker-owned and managed cooperatives in Argentina where it was discovered that the major expenditure that was driving the company into bankruptcy was the administrative costs of the foreign owners. Without the bosses, the companies were financially sound. While any Marxist would assume that once we got rid of the bosses, the profits and the money laundering that this might be true, it is nice to have this verified.
In worker-owned cooperative the orientation is toward building profitability of the cooperative based on use value for the group rather than exchange value for the individual. Instead of chasing around the globe looking for bigger monetary profits, cooperatives tend to focus on their local economy, where their life is. The workers’ goals often include a sense of how their work fits into the community. They buy from other local producers, they are concerned about the education their kids will get in local schools, they are concerned about how their workplace effects the environment and the health of their neighbors. The shift in direction is from the primary goal being financial profit for a few to the use value of the enterprise to all the workers.
THE MARXIST CRITIQUE:
Traditional Marxists, (who as socialists also worked for the goal of democratizing economic relationships) would argue that you can’t just “grow” another economic form within capitalism. According to the Marxist critique, privately owned enterprises in capitalist states, however democratic and egalitarian coops are internally, are at best Utopian alternatives. They will eventually be co-opted by the system, especially since they lack the economies of scale and sufficient capital to produce the necessary goods for society.
Moreover, if a cooperative movement did start to overtake the capitalist mode of production, the capitalist owning class would bring all its political, military and cultural might to crush such a movement so that it could retain its control over wage workers. According to Marxists, before a new, more egalitarian system can be implemented, workers will have to expropriate from the capitalist owners their collective political control of the state, either through electoral democratic socialism or a revolutionary dismantling of the state.
In the past, Marxists saw the wage workers in the large industrial plants as the core which would form a revolutionary proletariat to overthrow capitalism. However, with globalization and decentralization unions can no longer organize large numbers of workers in multinationals under centralized contracts. In situations with an unorganized workforce fragmented by subcontractors, where employers can pick up and disappear at the drop of a hat, where workers are spread out in small decentralized shops or where there are few or no employers at all, the traditional model of trade union organizing is no longer viable.
One can fault some Marxists for getting stuck in dogmatic orthodoxies and failing to follow Marx’s own dialectic perspective that the paradigms of the modes of production are in constant flux that might require changes in tactics. However, the Marxist critique that the cooperative model may, at times be viewed through a Utopian lens that does not take into account the immense pressures brought to bear in a capitalist environment have some merit.
Most worker-owned and managed cooperatives vary to a greater or lesser degree from the “pure” model, depending on the needs and wishes of the worker-owners, the type of enterprise, the regulations/laws of the particular state or country and the economic environment in which the cooperative has to operate. While some of these variations can be explained by the particular situation of a particular cooperative and do not threaten the democratic or equitable nature of the cooperative, most of the deviations are determined by having to exist within a competitive capitalist economy. For example, worker/producer coops breakdown into those that produce commodities which are capital intensive, and those that produce services, which are generally labor intensive. Obtaining the capital and economies of scale necessary for capital intensive projects is one of the major problems the cooperative movement has faced
Even in Argentina, where laws provide some support for recovered factories, economic pressures of a failing economy suggest that some enterprises have become nothing more than exploited subcontractors. Several workers themselves mentioned that in some cases, it would have been impossible to recover the factory successfully if they had not had the capital goods and machines that the owners had left behind.
In a high tech cooperative such as Isthmus, which appeared in the Michael Moore movie Capitalism: A Love Story, although workers shared the company’s dividends equally among all members, each worker was also paid a differential wage depending on their training. The workers felt this was necessary to attract certain skills in a competitive capitalist market. Another frequent variation from the “pure’ cooperative is the hiring of outside workers as part of the cooperative. This is potentially a dangerous deviation since the coop members might end up in a boss relationship to the hired workers. This, in fact, in recent years has become an issue when Mondragon, the “model” cooperative network, opened a number of groceries in Europe where employees were not cooperative members so that the mother cooperative network could avoid certain tariffs. At this time, approximately half the businesses in the Mondragon cooperative network do not have cooperative structures. In another case, a Steelworker cooperative in Baltimore admitted that they purchase some of their raw materials from China instead of a local distributor because of “cost efficiencies.”
Another factor which can either help or undermine cooperative enterprises is its relationship to the Nation/State or government. In countries with a long history of cooperatives and social democratic states, such as France and Spain, the cooperative networks continue to grow. In Venezuela, with a very activist socialist government, the cooperative sector is being used as a transitional form to socialism and is growing by leaps and bounds.
While Mondragon was able to develop internal methods for raising capital, many manufacturing cooperatives have had to resort to borrowing from the State (when the loans are available) or other large capitalist institutions. Usually certain restrictions and top down requirements influence the structure of the cooperative. In countries that favor the capitalist “business model” over the more “socialist” cooperative model, laws governing coops can undermine the egalitarian nature of cooperative enterprises. This is particularly true of the Employee Stock Option Plans (ESOPS),the most common form of worker ownership in the United States. The number of ESOPs have grown dramatically in the last ten years . The worker-owned and managed cooperatives are less prevalent due to federal laws which actively restrict cooperative formations while giving tax breaks and other advantages to the ESOP form of ownership. Under this plan, workers own shares in the company, the profits of which are added to their retirement pension under the ERISA law. In ESOPs, there is no guarantee of democratic control of the management by the workers. This form is most favored by management as a way to provide incentives to increase production, raise cheap capital, and woo workers away from organized unions which protect worker rights. The transformation into ESOPS was one of the owner’s bargaining tools in the GM restructuring which workers wisely turned down. In most cases, the workers do not own a majority of the stock and share stock ownership with outside (non-worker) shareholders. Even as owners, they have no control over the hiring and firing of workers .
It is interesting to note that socialist leaning parties in the Argentinean worker movement encouraged the workers to demand that the expropriated enterprises be nationalized as public state entities under worker control so that they would have the financial support of the state and all profits would go to the public sector. It is also important to note that in states where a public government owned form of worker-management is available, there has been criticism that these worker-managed enterprises (which are often large and taken over by the State directly from the owners), tend to use less “real” (not just “formal”) democratic processes and tend to be run from the top down. This critique also appears in countries with a more socialist leaning project. As one Argentinean worker noted, “I don’t want to trade one boss (the corporation) for another boss (the State).
Even if you do not see the cooperative model as a transitional for or do not believe that it will overthrow capitalism, it is clearly a player in the organizing of workers to a progressive agenda and can no longer be ignored..
NEXT MONTH: PART 11. POSITIVE AND NEGATIVE ASPECTS OF THE RELATIONSHIP BETWEEN WORKER-OWNED COOPERATIVES, COOPERATIVE NETWORKS, UNIONS AND THE NATION STATE.