Workers Cooperatives and the Macroeconomy

[Robocommie]

Does anyone have any recommended reading on the subject of worker cooperatives and their relation to the macro-economy? In particular I'd be interested to see how such things tend to work out faced with capitalist competition, supply and demand, scarcity and all that.

My apologies if this would have been better suited for the Economics sub-forum, I wasn't sure.

[YadaRanger]

great question, sorry i dont have an answer but i hope somone does

[More Fire for the People]

http://www.amazon.com/gp/richpub/listmania/fullview/R79RYH7RKYN3C/ref=cm_pdp_lm_title_1
A list of books that explain how cooperatives are more productive but less competitive.

[Ben Seattle]

Hi Robbocommie,

This may be helpful -- Ben

Excerpt from the "Capital Rules" section of "The World for which We Fight"
(http, etc) struggle.net/ALDS/part_7.htm

Why is it that, under bourgeoisie rule, the material needs of the overwhelming majority of the working class will always be created by the capitalist economy?

This question is related to the laws of commodity production that Daniel has challenged me to explain. I will discuss the laws of commodity production in a separate section below--but for now will simply note that modern production techniques require capital, machinery, investment and, quite often, the economy of scale and division of labor associated with large-scale production.

Smaller, more marginal production can take place that is not dependent on capital or modern equipment--but will tend to always remain small and marginal. Why is this? Without modern equipment and techniques the nodes of the "shadow economy" on which Daniel pins his hopes will not have a high productivity of labor--and will not be able to compete with capitalist production on price, quality and service--and will for this reason never represent more than a marginal share of the goods and services created by the economy.

Over the course of the past two centuries there have been untold thousands of attempts to do exactly what Daniel describes. Most any mid-sized city in the U.S. contains food co-ops or similar companies that began with precisely this vision. What is the story here? Activists, believing in the possibility of a better world, work their hearts out to create an economic entity that serves the needs of the workers and stands separate from and independent of the capitalist economy. The end result is generally always the same: the project either: (a) is driven out of business and/or collapses when the original founders give up or die, or (b) remains small and marginal or (c) is absorbed into the capitalist economy and gradually sheds all living embodiments of the original vision. Sometimes the original "co-op" name sticks around for years after the original vision is lost from memory.

In part 1 of this debate (October 2002) I described a local food co-op created by the energy of dozens of core members and hundreds of supporters here in Seattle. The co-op has since become large and very successful--but treats its workers (who have no rights) like shit.

Probably the best-known co-op in Seattle is REI (which makes the fancy rain gear that might be found on hikers--or some Microsoft employees). In June 2003 the Seattle Weekly ran an article about what had happened to this co-op in the days since it was founded 65 years ago: "Who Owns REI? It can't be the members. They aren't even privy to what the co-op's executives earn". Here is how REI was founded:

Some of the first U.S. cooperatives were an agrarian response to the tyranny of industrial capitalism; in the Pacific Northwest, the co-op movement came into its own in the aftermath of the Seattle General Strike of 1919, which shut down the city for six days--helping earn the state its reputation as "the Soviet Republic of the state of Washington." Co-ops were in their heyday during the Great Depression; and when West Seattleite Lloyd Anderson was gouged by a local merchant on the purchase of a third-rate ice ax, it was only natural for the populist-minded mountaineer to seek an uncapitalistic solution. On June 23, 1938, Anderson, his wife, Mary, and four fellow progressives founded the Recreational Equipment Cooperative. Asked why he didn't just set up his own for-profit company, Anderson reportedly said, "I wouldn't want to make money off my friends." (Source: Seattle Weekly, June 18, 2003)
The author of the article asks why REI now carries chocolate-covered cherries but no inexpensive parkas--and quotes the new CEO:

"We are a retailer--first and foremost ... Co-ops that forget that are the ones that tend to get into trouble and ultimately drift off into oblivion. The competitive marketplace--the retail marketplace--will not allow any retailer to focus on their organization first and their business second. ... I've seen this happen over and over and over again"
And, as obnoxious as he sounds, we must recognize that the REI CEO is telling the simple truth. What happened at REI is not some kind of fluke.

Another well-known co-op in Seattle is Group Health Cooperative. It is now a major hospital with branches all over the region. A friend of mine was a nurse there and went on strike for better wages and conditions. Last I heard--some of the people who work there do not have medical insurance.

I know of other examples from personal experience--of attempts to create food and medical clinic cooperatives by activists who were friends of mine and who considered themselves to be very radical and very committed to changing the world. Hardly a trace remains of their efforts.

[syndicat]

I would recommend "Values at Work" by George Cheney and "The Myth of Mondragon" by Sharryn Kasmir.

Kasmir documents through an intensive sociological study and interviews the hierarchical structure of the Mondragon cooperatives. The managers and top professionals -- engineers, financial analysts, etc. -- are dominant and the workers are subordinate. It is a class system. Workers are not really in control.

George Cheney is an economist and his book "Values at Work" tries to explain, looking at capitalist economic forces, why (1) cooperatives have not tended to expand, and (2) have tended to evolve into hierarchical businesses, as at Mondragon.

Nonetheless, worker cooperatives are of some value. Because the employees collectively own the Mondragon cooperatives, the jobs won't ber moved out from under them to some other country. This is why the United Steel Workers bureaucracy has recently announced they are going to build Mondragon-style coops in the USA. They are not trying to empower workers to actually control them. Their idea is that the union would organize the workers and have a contract with management but the firm would be prevented from running away because all the employees own it and there is an annual general assembly to decide major issues (like shutdown or relocation).

Worker cooperatives can also be useful for providing needed services for working class communities, or to run services needed by the movement. For example, in the World War 1 era there were 3 worker coop film production companies that produced class struggle oriented films. These were socialist production coops. Or to take a more recent example, Mandela Foods was set up as a worker coop in West Oakland, but part of the mission is to provide fresh produce and better quality food for a poor neighborhood. Many poor neighborhoods in the USA are food deserts because the big supermarket chains have abandoned them.

Cooperatives can also be a means to self-manage some asset gained through struggle. Consider the Landless Workers Movement in Brazil. This is a million member organization that has seized thousands of acres of land and resettled 250,000 famiilies on the land. Their methods of land expropriation through collective action are certainly the sort of thing any syndicalist could applaud. Once they have control of the land, they set up a residents assembly and build a cooperative organization to run the land and the community, and they provide various services such as schools and radio stations.

But simply building cooperatives and other alternative institutions will never enable the masses to confront and defeat the power of the corporations and the state.

[Die Neue Zeit]

Ever considered a partial rehab of the slogan "producer coops with state aid"?

[Robocommie]

Interesting stuff. I'll have to look into these, thanks for the reccomendations guys. Syndicat, that work on Mondragon sounds very interesting, I've lately been looking at the US Federation of Worker Cooperatives. Can you tell me much about them?

I am curious, incidentally, since the theme so far seems to be that worker cooperatives are not a solution, but aren't they set up very much like how worker collectives would be organized in a socialist society? Or do you mean they simply can't muster the strength needed to break capitalism?

[Die Neue Zeit]

The point in my post is that cooperative sentiments are worth squat without immediate political considerations. For all its faults, this is one of the virtues Lassalleanism has over plain cooperativism.

[Robocommie]

The point in my post is that cooperative sentiments are worth squat without immediate political considerations. For all its faults, this is one of the virtues Lassalleanism has over plain cooperativism.

Interesting. What are the implications of this as far as political action goes? Does it necessite political organizing and agitation in conjunction with the formation of cooperatives, or a worker's victory prior to establishment, etc?

[Ben Seattle]

Interesting. What are the implications of this as far as political action goes? Does it necessite political organizing and agitation in conjunction with the formation of cooperatives, or a worker's victory prior to establishment, etc?

The latter. Very little is going to happen until the working class has political power. How do things change when this happens? (1) the rules of the economy will change to favor these kinds of experiments, (2) subsidies, (3) economies of scale, (4) increased consciousness of workers and consummers and society at large.

It is also important to understand that, when the working class rules, the worker owned coops will represent an experiment and a temporary fix--not the fundamental way forward. The fundamental way forward will be the gift economy: without money or wages, etc.

[Die Neue Zeit]

Interesting. What are the implications of this as far as political action goes? Does it necessite political organizing and agitation in conjunction with the formation of cooperatives, or a worker's victory prior to establishment, etc?

Yes, there has to be political education, agitation, and organization for such a Lassallean measure, but also for other political and economic measures:

http://www.revleft.com/vb/class-strugglist-democracy-t112390/index.html


The latter. Very little is going to happen until the working class has political power. How do things change when this happens? (1) the rules of the economy will change to favor these kinds of experiments, (2) subsidies, (3) economies of scale, (4) increased consciousness of workers and consummers and society at large.

It is also important to understand that, when the working class rules, the worker owned coops will represent an experiment and a temporary fix--not the fundamental way forward. The fundamental way forward will be the gift economy: without money or wages, etc.

Ben, Venezuela under Hugo Chavez has made great strides. Although there are clear cases of credit abuse, that country does have a "state aid" policy for cooperatives.

The link above is a suggested program for workers' power.

[syndicat]

Interesting stuff. I'll have to look into these, thanks for the reccomendations guys. Syndicat, that work on Mondragon sounds very interesting, I've lately been looking at the US Federation of Worker Cooperatives. Can you tell me much about them?

Not really. I know they were formed relatively recently.

I am curious, incidentally, since the theme so far seems to be that worker cooperatives are not a solution, but aren't they set up very much like how worker collectives would be organized in a socialist society? Or do you mean they simply can't muster the strength needed to break capitalism? [/QUOTE]

They won't have the strength, and they tend to lack a solidaristic consciousness due to being businesses competing in markets.

Whether they prefigure the type of worker self-management structure that would exist under socialism depends both on your conception of socialism and how the coop is formed. As I mentioned with Mondragon, it is dominated by the techno-managerial class...managers and high end professionals. Workers are subordinate. This is not how I would conceive of socialism.