Cooperatives On the Path to Socialism?

Clarifying what Karl Marx thought of the role of cooperatives is useful, not to receive the “correct” answer to what that role will be, but to help think through what alternatives answers might be and how they might color today’s expectations of the cooperative movement. If one sees a non-capitalist or socialist organization of society as ultimately desirable, then how should we answer the following questions in the present day:

1. Are co-ops in production, worker-owned enterprises, desirable experimental improvements to the organization of production over standard capitalist practices, in the direction of immediate social welfare?
2. Are such co-ops in production also little islands of a different future, models of socialism within a capitalist society?
3. Are they beachheads of socialism, politically practical steps along the road to bringing forth such a possible alternative society?
4. Will they ultimately also be the foundations of such a society, if it develops?
5. All in all, what is their importance, their role, in daily struggles?

The answer suggested here to the first three questions is: Yes. Co-ops today are experiments whose potential is not yet exhausted, certainly improvements over most existing capitalist arrangements which have perhaps portents for the future, but which have limitations that must be recognized. The first four questions do not present mutually exclusive alternatives, in the sense that they could, but do not necessarily, provoke fundamental questions about the desirability of further change. They show that workers can run factories themselves, democracy in the workplace is possible, and capitalists are not necessary for the organization of production.

The answer to the fifth question, as to the net importance of co-ops today, of course depends on the strength of the answers to the first four questions, and on whether or not the goal is seen as a fundamental social transformation. Fundamental social transformation is used here to refer to a movement toward socialism, an alternative to the present capitalist social formation. Marx’s conception of socialism was of such an alternative, but one whose details could vary significantly as long as it was non-captialist.

Because Marx represents a clear starting point for a history of experience with the modern forms of worker co-ops, this article looks at some of his comments in this regard to set the context to a more contemporary evaluation.

Are Worker Co-ops Immediate Social Welfare?

Yes, worker co-ops are clearly superior to the conventional capital-owned and managed form of enterprise organization, for two reasons. First, they replace the capitalist with the democratic association of the workers—as Marx says, the workers become their own capitalists, they can thus arrange operations amongst themselves to the extent they wish. The workers’ welfare is materially enhanced, since the profits that the capitalist would have made as a result of ownership of the firm become incomes of the 99%, which are proportionately increased as that of the 1% is relatively decreased.

Further, the fact that workers control their own immediate work, in a cooperative fashion, is itself a contribution to enhancing their well-being. It decreases their alienation from their work, and permits them to flex their intellectual as well as their physical muscles.

Both of these advantages of course have their limits, because the pressures of competition and requirements of marketing in a private profit-driven market economy limit their options, but in general the net result should increase the equity of the production system. As Marx has it:

The co-operative factories run by workers themselves are, within the old form, the first examples of the emergence of a new form, even though they naturally reproduce in all cases, in their present organization, all the defects of the existing system, and must reproduce them. But the opposition between capital and labour is abolished there, even if at first only in the form that the workers in association become their own capitalists, i.e., they use the means of production to valorise their labour.1

Are Worker Co-ops Models of Socialism within Capitalism?

Yes, in some aspects. Specifically, worker co-ops can reveal the real potentials of cooperative forms of production in capitalism—including self-management, immediate material benefit, and empowering experience—and in raising questions as to real alternatives to existing modes of production. But, as Marx has pointed out, worker co-ops operating within a capitalist, profit-driven market economy cannot operate independently of that economy. They may come close in those sectors that are in fact already to some extent outside the market, e.g., education, health care, municipal services, artistic cooperatives, but these are exceptions, and relatively small ones given the scale of such competition-free activities—and they are exceptions constantly under threat today from the expansion of destructive privatization.

Are Worker Co-ops Beachheads of Socialism and Politically Practical Steps Towards It?

Again, Yes. However there is a strong “silo” effect, as co-ops age they easily tend to become insulated and small defensive towers in a landscape not changed by their presence. The contribution that the struggle for, and development of, worker co-ops could make is not so much as it affects non-participants, but rather in the effect on the participants themselves, in consciousness raising. The self-empowerment and motivation to participate in more wide-ranging changes that co-ops foster are likely to increase as their experience shows them that the limitations referenced above in development of their enterprises are unavoidable without much broader political and economic systemic changes, ultimately to a system closer to socialism than to capitalism.

At the same time, the pressures of day-to-day competition from the outside, pressure to cut costs, trim quality, and hold wages and the number of jobs down, is likely to be relentless. The temptation to focus on the defense of the silo is inherently great as long as they operate within a competitive market system and the relations of political power accompanying it.

Thus the efforts involved in the immediate struggles to run the business and compete successfully enough to at least stay afloat, particularly given most workers’ likely realistically limited business experience, are daunting. Running an enterprise is time consuming, energy consuming, and beset by commercial and technical problems. It can easily preempt the impetus to try to expand in directions having no immediate direct payoff.

The real life experience of workers in the formation and ongoing running worker co-ops weakens more than it strengthens political outreach for system change, extending beyond immediately necessary demands. Possibly a strong pre-existing radical ideological orientation may be enough to sustain a commitment to keep longer-term goals always on the table during day-to-day struggles. But if that commitment already exists, it is another question whether the initiation and support of worker co-ops is the most effective means to convert that commitment into practice.

Are Worker Co-ops Foundations of an Alternative, Non-Capitalist Society?

Marx at one point thought so:

If cooperative production is not to remain a sham and a snare; if it is to supersede the capitalist system; if the united co-operative societies are to regulate national production upon a common plan, thus taking it under their control, and putting an end to the constant anarchy and periodical convulsions which are the fatality of Capitalist production—what else, gentlemen, would it be but Communism, “possible” Communism?2

But things have changed since Marx wrote those words, in reference to the Paris Commune of 1871. Briefly:

• The technology of production has changed—including globalization, automation, information technology.
• The economic role and political power of the working class has changed, along with its organizational structure; and the power of capital has increased.
• Technological development has progressed substantially, creating a possibility of real abundance.3
• Consumerism and the media have changed and expanded their control functions.4
• The role of ideology and consciousness, as opposed to simple material concerns, has expanded—see, for example, the rise of social conservatism, the Tea Party, the New Left, and the Occupy Wall Street movement.5
• The role of the state in the implementation of the economic system is greater.6

Marx also thought the state should not play a role in setting up or managing co-ops. Otherwise, Marx argued, socialism would be established through state action—in stark contrast with the central idea of scientific socialism that workers will only achieve emancipation through their own efforts. If workers were to require the support of the state for their revolutionary movement, they would thereby only reveal “their full consciousness that they neither rule nor are ripe for rule! .… [A]s far as the present co-operative societies are concerned, they are of value only insofar as they are the independent creations of workers and not protégés either of the governments or of the bourgeoisie.”7

The comment seems to contradict the enthusiastic support Marx gave to co-operative societies, as the quote above shows. I take it that the first quote refers to conditions, such as at the Paris Commune in 1871, in which capitalism has essentially already been superseded and direct worker control of the economy established. Given the changed circumstances of 1875, that enthusiasm has been replaced by a skepticism, which we might call a belief in the ready co-optation of the cooperative form by a capitalist state.

Thus the answer to the question of whether workers co-ops are the basis of alternative society would seem to be: Yes, after an alternative, non-capitalist system has been put in place, but No before that.

What Is the Role of Co-ops in Daily Struggles Today?

We live in an overwhelmingly private, profit-driven, competitive market economy, in which the state is essentially dominated by the power of capital. Today worker cooperatives are useful and progressive steps that can be supportive of efforts to marshal opposition to the existing state, but cannot themselves be the instruments that bring it about. The situation may be different in the future; what their role then may be cannot yet be foretold. Their role today should be supported, but not exaggerated.

Some specific implications for worker-owned enterprises of all sorts, co-ops in economic and political and social affairs, could be drawn from the foregoing analysis. On the positive side, cooperatives should be encouraged, in any sphere of activity, as an alternative to market-bound profit-driven activities. Co-ops avoid exploitation by others in production, and can be lessons in the possibilities of self-management and immediate participatory democracy in action.

Cooperatives can illuminate the contradictory role of the state in collective activities. The state today is an institution dominated by capital but subject to significant pressure by the exploited. Their role in a post-capitalist society may be quite different; it cannot be assumed that present co-ops will continue and become a pillar of a new society—they may or may not. They will provide lessons useful in such a new society, but that is only a minor factor in their activities today.

But the role of cooperatives in the overall economy today is basically limited to those sectors of the economy in which non-competitive activities play a significant role: classically these are education, health care, police, fire prevention, small crafts, the arts, and certain public activities such as mass transit, environmental protection, and regulatory activities. But for co-ops, the state is always in some ways competition, and the private profit-motivated market sector is an aggressive threat, as with charter schools, private security, and social services. Further, the larger the unit of production, the more cumbersome is direct worker control, and the greater the reliance on the owners of capital for operations.

The depth of penetration of cooperatives in the work force is also limited. Their wage-paying ability is constrained by competition, so to reach workers in the lowest-paying sectors, paying a living wage, government support may well be necessary. To guarantee affordability in a housing co-op for low-income residents, for instance, the co-op must rely on sources of income other than residents’ payments from their limited incomes—forcing them to rely either on state aid or side ventures that are profit-producing and permit internal cross-subsidies.

Co-ops, inevitably bound by market pressures, are thus pushed to become their own capitalists and so self-exploit—better than being exploited by others, but still. It is as true in consumer co-ops as in producer co-ops; volunteers working without pay are, in economic terms, simply zero-paid workers.

The political and social role of producer co-ops is also limited by the role of workers generally in the economic and political structures that constitute capitalism (and might constitute socialism, given today’s technologies). In Marx’s day, it was central: class structure rested on the relation between capital and labor, the proletariat. Marx saw the proletariat as the future organizers of the political structure, dominating the state. Lenin interpreted in terms of a state transformed from an instrument of class rule to a form of technical management in the interests of efficiency, simply an administrative organ, not one responsive to a hierarchy of power.

A big question remains as to the role which co-ops, and the larger movement of that they are a part—a growing cluster under the heading of New Economy, Worker-Owned Enterprises, Solidarity Economy—could potentially play in fundamental social transformation, given the limitations discussed above.8 And the answer must be based in part on a careful examination and interpretation of the role they have thus far played. Here the evidence is not yet really available. There are indeed many case studies of individual examples, such as of the Mondragon cooperative in Spain and its emulators, and some good broader examinations, such as the work of Gar Alperovitz, the New Economics Institute, the Democracy Collaborative, as well as the writings of economists such as Richard Wolff.

What is needed, however, is a sharp focus on difficult-to-get-at aspects of the existing experiences among cooperatives: To what extent have they played a role outside of their own enterprise or organization? Has their experience led their members to broader political or social activity outside their own silo? Have they taken positions on critical public issues, provided solidarity for other efforts going in their general direction, mobilized others to follow their examples? In attempting to aggregate their influence, the definition used of what counts as a cooperative or a worker-owned enterprise—or indeed as part of an alternative solidarity-type formation—is critical. Credit unions, for instance, share some of the attributes of the category in question, but it is doubtful if in practice many credit unions can be found that play a significant external role in trying to modify the economy. There is some evidence that fresh food co-ops do attempt to influence public actions, but in all likelihood this occurs only in the limited sphere of their direct concern. Information on the quandaries faced by the representatives of worker stockholders in corporations with employee stock ownership plans—such as when they sit on the company’s board of directors and must vote on union demands for wage increases—could be very interesting.9 What more extensive research might show is as yet unclear. Indeed, the fact that the answer is still cloudy may itself be telling.

So, from the viewpoint of progressive concerns with social justice and social transformation, worker co-ops and the solidarity economy movement are good things; but their contribution to fundamental social transformation should not be exaggerated, and might even end up accepting immediate benefits at the cost of long-term acquiescence.

Thus far there is general agreement with Marx’s observations. But the basic class structure has evolved dramatically since Marx wrote. At its base is still the production of surplus value within the production process, the essential ingredient underling all profit, but hardly still the only place where profit is produced; finance and commerce are equally exploitation. The 1% extract profit from various parts of the 99% in quite different ways. When Marx writes of the “mode of production,” he has in mind a class system in which the essential struggle is between proletarians and the bourgeoisie, taking place at the workplace; consumption is secondary, and finance perhaps tertiary.

Marx’s view of cooperatives is within this framework. Co-ops are proletarian, their organization and power is a step on the road to full societal power, their importance based on the importance of the proletariat, and their class struggle against capital.

Thus, whether or not co-ops within a capitalist society are the motor of societal change, they suggest an alternative to the capitalist mode of production—even though they retain the form of wage labor—simply by distributing the surplus value produced to the laborers themselves. But the mode of production in a narrow sense is no longer itself simply determinative of the capitalist organization of society. Finance, real estate, and consumption arrangements are also vital components of contemporary capitalism. And here co-ops play a quite different role, leaving the mode of production largely untouched.

Co-ops may well be a model of how production is organized under socialism, but they are not the exclusive one.

Technological development also has complicated the picture. The state is required, in Lenin’s disappearing managerial sense, because of the intricacies of interrelationships. Workers’ co-ops cannot separately manage those relationships; they cannot, should not, determine what is socially necessary to be produced—the proportion, distribution, or use.

Their importance remains as models for what alternate modes of production might look like and for what aspects of a world without capitalists would look like; but they cannot go much beyond the increasingly limited, if still absolutely vital, role of the mode of production.

Their main importance, in a perspective looking towards basic social change in a non-capitalist direction, is thus perhaps more in what they may say about and teach about the potentials of self-management, and the capacities of the 99% to work and manage the society—rather than in the actual changes they themselves bring about in what they do.

Notes

1. ↩Karl Marx, Capital, vol. 3 (London: Penguin, 1981), 571. In discussing Marx here I have been influenced by an excellent paper by Bruno Jossa, “Marx, Marxism and the Cooperative Movement,” Cambridge Journal of Economics 29, no. 1 (2005): 3–18.
2. ↩Karl Marx, The Civil War in France, in Karl Marx and Frederick Engels, Collected Works (New York: International Publishers, 1975), vol. 22, 335.
3. ↩Herbert Marcuse, “The End of Utopia,” in Five Lectures (Boston: Beacon Press, 1970).
4. ↩Herbert Marcuse, One-Dimensional Man, second edition (Boston: Beacon Press, 1991), with a new introduction by Douglas Kellner.
5. ↩Martin Jay, The Dialectical Imagination (Berkeley: University of California Press, 1973, 1996).
6. ↩Karl Polanyi, The Great Transformation (New York: Farrar & Rinehart, 1944).
7. ↩Karl Marx, The Critique of the Gotha Programme, in Marx and Engels, Collected Works (New York: International Publishers, 1975), vol. 24, 93–94.
8. ↩“New Economy” is a term which, like the others, has various meanings, e.g., is also used to refer to a green economy, a solidarity economy. It is the term Gar Alperovitz and others use, and I use it in much his sense but sometimes in quotes, in the thought that detailed attempts to define what it might be are not today very productive. The general sense is that it would be a post-capitalist form of social and economic organization. Marx used the term “socialism” as sometimes as a similar shorthand, but specifically abjured and in fact criticized as utopian the effort to spell it out or picture it, confining himself to some general principles it would follow. See Marx, Critique of the Gotha Programme, and Friedrich Engels, Socialism: Utopian and Scientific (New York: International Publishers, 1935).
9. ↩For a discussion of the model as linked to organizing efforts at the U.S. Volkswagen plant in Tennessee, see Alexandra Bradbury, “‘Employee Engagement’ No Substitute for a Union at VW,” Labor Notes, December 17, 2014, http://labornotes.org.