Cooperatives in market economies?

[gorillafuck]

The other day I thought of something that I couldn't come up with an answer to. We know that capitalism is exploitative and because you have to work for capitalists, that makes exploitation in a capitalist society inescapable for those who don't own a means of production. So with everywhere where employment is possible being exploitative, the argument that capitalism is voluntary goes down the drain.

But what about co-ops within market economies?:confused:

If co-ops become prevalent in capitalism and there's an option to work in a worker run cooperative where surplus value is not extracted by an employer, would that make working for an employer and having value extracted by that employer be a voluntary thing, since there's the option to work in an environment that does not involve having surplus value extracted? I thought of what counter-arguments there are to this but I really can't think of any. Help?

[Lynx]

If a worker has a choice between wage labour and profit sharing, then it is voluntary - for that worker.

[syndicat]

Cooperatives are a very tiny part of the existing economy. They are so for a variety of reasons, including especially lack of capital, discrimination against them by banks, etc. If there are very few actual coop jobs, workers don't really have much choice, do they?

[Agnapostate]

If those conditions existed, you'd effectively have a system of market socialism (http://en.wikipedia.org/wiki/Market_socialism). However, although workers' ownership and management (http://en.wikipedia.org/wiki/Worker_self-management) has an empirically proven record of greater efficiency than the orthodox capitalist firm (http://www.jstor.org/stable/2524912), it won't spontaneously emerge as the dominant form of firm organization. Many anti-socialists are confused as to why that is, insisting that markets would be forced to introduce something if it was more efficient, since anyone could simply gain a competitive edge by using it. This is an indication of their economic utopianism and failure to consider the all-important factor of market concentration (http://en.wikipedia.org/wiki/Market_concentration). True libertarians understand the unjust, restrictive nature of such conditions. For example, the point is well illustrated in a letter of libertarian social theorist John Stuart Mill (http://en.wikipedia.org/wiki/John_Stuart_Mill) that attacked established sellers that created an unfair barrier to firm entry (http://en.wikipedia.org/wiki/Barriers_to_entry) through underselling (http://www.thefreedictionary.com/underselling):


Sir, I beg to enclose a subscription of [10 pounds] to aid, as far as such a sum can do it, in the struggle which the Co-operative Plate-Lock Makers of Wolverhampton are maintaining against unfair competition on the part of the masters in the trade. Against fair competition I have no desire to shield them. Co-operative production carried on by persons whose hearts are in the cause, and who are capable of the energy and self-denial always necessary in its early stages, ought to be able to hold its ground against private establishments and persons who have not those qualities had better not attempt it.

But to carry on business at a loss in order to ruin competitors is not fair competition. In such a contest, if prolonged, the competitors who have the smallest means, though they may have every other element of success, must necessarily be crushed through no fault of their own. Having the strongest sympathy with your vigorous attempt to make head against what in such a case may justly be called the tyranny of capital, I beg you to send me a dozen copies of your printed appeal, to assist me in making the case known to such persons as it may interest in your favour.

That illustrates market socialist economic theorist Jaroslav Vanek's point that "[t]he capitalist economy is not a true market economy because in western capitalism, as in Soviet state capitalism, there is a tendency towards monopoly. Economic democracy tends toward a competitive market." The consolidation of the private ownership of the means of production by the financial class prevents fair market competition and maximization of efficiency.

So yes, capitalism would be far less objectionable if it were characterized by workers' ownership and management, just as it would be less objectionable if it were characterized by free markets and equality of opportunity, as rightists naively believe it is or could be. The problem is that utopian speculation is nothing more than that, and we need to look to things with an application outside of the textbook.

[ZeroNowhere]

In those conditions, you would, as the above post points out, have a system of socialist capitalism. Of course, that is oxymoronic, and as such the apparent socialism shall have to die out and be replaced with the fall in the rate of profit and hence crises, the law of value (surplus-value shall be divided among the workers and used for expansion of production, whoever maximises the latter amount would probably end up being more successful. Of course, corresponding to this, workers' product and labour would still come to stand over them), production for profit (and all of the lovely things that come with it), unemployment, poverty, alienation (man's social relations still stand over him), and, naturally, separation of the workers from the means of production. Incidentally, the aforementioned falling rate of profit will also lead to the continuation of monopolies and such as smaller companies get eliminated. And a repeat of the Great Depression (either that or postponing the destruction of capital values that led to the post-war boom through excessive debt and bubbles, which, as can be seen presently, doesn't end particularly well) doesn't sound like a benefit to this, certainly.

Of course, competition with state-capitalist or private-capitalist nations will make things all the harder. Though, of course, higher productivity does mean a higher rate of exploitation, which may make things easier. Also, as there is no capitalist receiving the surplus-value as their income, it would be easier to simply invest it in more means of production and more workers, which could also mean that things become easier.

[gorillafuck]

In those conditions, you would, as the above post points out, have a system of socialist capitalism. Of course, that is oxymoronic, and as such the apparent socialism shall have to die out and be replaced with the fall in the rate of profit and hence crises
Why is that?

[RadioRaheem84]

Not to interrupt he discussion but is David Schweickart's book After Capitalism any good? Is Dr. Schweickart a Marxist or Anarchist or something else? Any thoughts? Doesn't he talk about this sort of thing in his book? Market Socialism?

[Thirsty Crow]

So yes, capitalism would be far less objectionable if it were characterized by workers' ownership and management, just as it would be less objectionable if it were characterized by free markets and equality of opportunity, as rightists naively believe it is or could be. The problem is that utopian speculation is nothing more than that, and we need to look to things with an application outside of the textbook.
Certainly I'm no expert in economics (that's a huge undestatement :(), but wouldn't workers' ownership and management function as a step outside the circle of capitalist production (a potential first step), one that could effectively crush the logic of capital and the profit motive (economic democracy being also a step towards political democracy, as well as a step towards the destruction of the before mentioned phenomena)?

Wouldn't then an alternative to a violent overthrow of the exploiting class be twofold (theoretically):
1) economic democratization, ensuring fair distribution of workers'/managers (the division between the two would, gradually or not, cease to exist; "workers/managers" meaning "workers) fruits of labour

2) destruction of markets based on the principle of competition and subsequent creation of "markets" based on cooperation/solidarity, alongside the establishment radical political democracy of a kind, which would in combination lead to a classless society/ies

And could one employ the concept of zero-growth economy here?

Just a few thoughts...I hope you could explain what my mistake is when reasoning so?

[ZeroNowhere]

Why is that?Just to clarify, what exactly are you asking about?

Though it's worth noting that my part about the socialism dying out is somewhat facetious, to express the fact that 'market socialism' is not socialism, but rather capitalism, and thus capitalism's laws of motion continue their operation (IMO 'Capital' is severely underrated as an attack on reformism). I would guess you were asking about the falling rate of profit, or why it leads to crises, but it's probably worth making sure.


Certainly I'm no expert in economics (that's a huge undestatement http://www.revleft.com/vb/../revleft/smilies/sad.gif), but wouldn't workers' ownership and management function as a step outside the circle of capitalist production (a potential first step), one that could effectively crush the logic of capital and the profit motiveI don't know that workers are benign enough as merit of being such that they would all just ignore the profit motive under capitalism. Even if most were, those that didn't, and focused on maximizing profit as collective capitalist, would grind the rest under their wheels.

[piet11111]

http://en.wikipedia.org/wiki/Mondragon_Corporation

maybe this is what you looked for ?

[gorillafuck]

http://en.wikipedia.org/wiki/Mondragon_Corporation

maybe this is what you looked for ?
I'm not looking for any specific cooperative, I was looking for an argument against what I laid out.

(And even if what I laid out is infact non-exploitative I still wouldn't think that it's better than actual socialism)

[the last donut of the night]

Well, I am not so sound on the subject, but I do know that even if workers reformed capitalism initially so that all firms were based on a co-operative model, exploitation -- inherent to capitalism -- would still exist and eventually destroy the benefits that come out of such a model of 'market socialism'.

Competition between firms, and the tendency of capital to concentrate, would destroy smaller firms. Eventually, monopolies would be built up and slowly workers would lose power as greater companies rise.

Some posters could explain it better than I can, surely.

[Lynx]

Not to interrupt he discussion but is David Schweickart's book After Capitalism any good? Is Dr. Schweickart a Marxist or Anarchist or something else? Any thoughts? Doesn't he talk about this sort of thing in his book? Market Socialism?
Yes, Economic democracy (http://en.wikipedia.org/wiki/Economic_democracy).

[Agnapostate]

Not to interrupt he discussion but is David Schweickart's book After Capitalism any good? Is Dr. Schweickart a Marxist or Anarchist or something else? Any thoughts? Doesn't he talk about this sort of thing in his book? Market Socialism?

I haven't read After Capitalism (only portions of Against Capitalism), but Schweickart is an advocate of market socialism, with his specific model called "Economic Democracy." He identifies as a Marxist, and even as a communist, actually, claiming that Marx and Engels never described communism in any elaborate detail (which is to some extent true), and that market socialism is an adapted version of communism, since the same results can be achieved without the elimination of money, markets, and the state. I think that Marx's attacks on Proudhon's mutualism clearly illustrated that he wasn't a fan of market socialism, but I don't know what Schweickart thinks or would say to that.


Certainly I'm no expert in economics (that's a huge undestatement :(), but wouldn't workers' ownership and management function as a step outside the circle of capitalist production (a potential first step), one that could effectively crush the logic of capital and the profit motive (economic democracy being also a step towards political democracy, as well as a step towards the destruction of the before mentioned phenomena)?

Wouldn't then an alternative to a violent overthrow of the exploiting class be twofold (theoretically):
1) economic democratization, ensuring fair distribution of workers'/managers (the division between the two would, gradually or not, cease to exist; "workers/managers" meaning "workers) fruits of labour

2) destruction of markets based on the principle of competition and subsequent creation of "markets" based on cooperation/solidarity, alongside the establishment radical political democracy of a kind, which would in combination lead to a classless society/ies

And could one employ the concept of zero-growth economy here?

Just a few thoughts...I hope you could explain what my mistake is when reasoning so?

It's not clear to me exactly what you mean. I've commented that socialism cannot be introduced through workers joining together and starting co-ops to compete with orthodox capitalist firms because concentration (monopoly/oligopoly/monopsony/oligopsony) would constitute a massive barrier to firm entry, even assuming that financial institutions were willing to provide start-up loans to workers' cooperatives (they often aren't). When we add to that the fact that many worker-owned enterprises are not actual worker-managed labor cooperatives so much as relatively normal firms employing an alternate financial scheme (such as those with employee stock ownership plans (http://en.wikipedia.org/wiki/Employee_ownership)), which will obviously fail to introduce socialism.

But it sounds to me as though you're advocating something somewhat different, such as explicit market socialism, which is distinct from attempts to introduce workers' ownership and management in the capitalist economy. I certainly approve of that as an acceptable transitory phase to communism, or even as an ultimate arrangement for those who desire it. In politically stable countries such as the first-world liberal democracies of the West, actually, nationalization of productive resources and establishment of workers' ownership and management united through municipal, regional, and national federation is the path forward that I see.


Well, I am not so sound on the subject, but I do know that even if workers reformed capitalism initially so that all firms were based on a co-operative model, exploitation -- inherent to capitalism -- would still exist and eventually destroy the benefits that come out of such a model of 'market socialism'.

Competition between firms, and the tendency of capital to concentrate, would destroy smaller firms. Eventually, monopolies would be built up and slowly workers would lose power as greater companies rise.

Some posters could explain it better than I can, surely.

I don't agree with that entirely, the reason being that if workers' ownership and management were established, it would be through socialist means, not through gradual development in capitalist markets, for the reasons that I outlined. And market socialism would most likely be established through nationalization or some other means of expropriation of productive resources, which means that market concentration and established capitalist firms would no longer be an impediment. I think that the sort of exploitation that you mention could potentially emerge in a ruthless capitalist economy even if all individuals and firms had a common starting point for market entry, since those driven out of business may be permanently ruined, but market socialism is characterized by market competition more akin to athletic competition than brutal warfare, as put by David Schweickart.

[RadioRaheem84]

http://en.wikipedia.org/wiki/Mondragon_Corporation

maybe this is what you looked for ?

What are the pros and cons of Mondragon? I've read that they're using cheap labor in Poland though?

[syndicat]

1. Schweickart is a left social democrat. he doesn't base his ideas on any conception of class struggle. he supposes that the Mondragon cooperatives are a good model of his market socialism. but in the Mondragon coops the workers are subordinate to a hierarchy of managers and engineers etc just like in capitalist firms. It is really a form of bureaucratic class exploitation, as in the old Yugoslav self-management.

2. Mondragon has capitalist subsidiaries in both Poland and Morocco to exploit workers there.

3. A market socialist economy is unlikely to come about through the market anyway. so the situation of workers having lots of coops to work for is not likely to emerge, unless there were a revolution of some sort.

[RadioRaheem84]

1. Schweickart is a left social democrat. he doesn't base his ideas on any conception of class struggle. he supposes that the Mondragon cooperatives are a good model of his market socialism. but in the Mondragon coops the workers are subordinate to a hierarchy of managers and engineers etc just like in capitalist firms. It is really a form of bureaucratic class exploitation, as in the old Yugoslav self-management.

How does this hierarchy work? I assumed supervisors and others at the top were elected by all the workers. I know its not worker managed but worker owned. Also what was the Yugoslav self management model like?

Why would a co-op like Mondragon exploit workers in Morrocco and Poland?

[Zanthorus]

Why would a co-op like Mondragon exploit workers in Morrocco and Poland?

Why does nearly everything bad happen in capitalism? Profit.

[RadioRaheem84]

Why does nearly everything bad happen in capitalism? Profit.

Is it less profitable for them to pay their workers the same as they pay the workers in the Basque region?

Also, while Mondragon is worker owned but not managed, how does this effect the function of a co-op?

[Agnapostate]

1. Schweickart is a left social democrat.

He's a market socialist. I understand that there's some affinity between social democrats and market socialists because the conception of a left-right political spectrum places them on opposite sides of the border but near each other in the sense that San Diego and Tijuana are near each other, but social democrats favor the preservation of the private ownership of the means of production. All forms of socialism are in conflict with that aim. While some market socialists may actually speak of private ownership of productive resources, they'll still hold that this ownership must be sufficiently equitable, so that it's effectively de facto public ownership even if de jure private ownership. Some also advocate legal provisions to ensure that the means of production remain in the hands of workers, though I don't know if Schweickart does.


he doesn't base his ideas on any conception of class struggle. he supposes that the Mondragon cooperatives are a good model of his market socialism. but in the Mondragon coops the workers are subordinate to a hierarchy of managers and engineers etc just like in capitalist firms. It is really a form of bureaucratic class exploitation, as in the old Yugoslav self-management.

2. Mondragon has capitalist subsidiaries in both Poland and Morocco to exploit workers there.

Are you sure that Schweickart holds that Mondragon is an example of the optimal firm organization in a market socialist economy? My experience has been that market socialists favor full-blown labor cooperatives, and I'm inclined to think that he merely focuses on Mondragon as an example of an organizational structure that contains some positive elements of workers' ownership rather than as an optimal socialist firm.


3. A market socialist economy is unlikely to come about through the market anyway. so the situation of workers having lots of coops to work for is not likely to emerge, unless there were a revolution of some sort.

I agree there.


How does this hierarchy work? I assumed supervisors and others at the top were elected by all the workers. I know its not worker managed but worker owned. Also what was the Yugoslav self management model like?

Exactly the opposite, actually; worker-managed but not worker-owned. I don't take the extreme libertarian position that the Yugoslavian model was merely another manifestation of state capitalism and simply a fraud that provides us with nothing, but it is true that there were some impediments to full workers' management due to the influence of the government and local Communist Party, and that model isn't ideal.


Why would a co-op like Mondragon exploit workers in Morrocco and Poland?

Because Mondragon is not actually a co-op; it's implemented workers' ownership, but not workers' management, and certainly not direct democratic autogestion. While even some labor cooperatives have developed ideological notions of elitism (such as the practice on the Israeli kibbutzim to hire Arabs or even non-Ashkenazi Jews as wage laborers that lacked equal rights and were clearly second-class citizens), some worker-owned enterprises without clear systems of workers' management have been characterized by share ownership schemes that allow some to acquire a high number of shares that renders their distribution vastly disproportionate, as well as a refusal to admit new members, which would bring individual share values down. Hence, sub-contractors of sorts are hired to perform duties: non-member wage laborers.

[RadioRaheem84]

Yikes. The problems of co-ops in a capitalist society are far greater than I thought. Is this true for them all, though? Are there any actual worker owned and managed cooperatives out there that haven't capitulated to capitalism?

[Robocommie]

Yikes. The problems of co-ops in a capitalist society are far greater than I thought. Is this true for them all, though? Are there any actual worker owned and managed cooperatives out there that haven't capitulated to capitalism?

This is no longer the case, but in Communist Yugoslavia, under Tito, worker's cooperatives were the norm and they actually caused the Yugoslavian economy to boom.

I'm not sure how truly democratic in organization they were though.