Socialism, Marxism and the Question of ‘Worker Cooperatives’ - Wilberg on Wednesday

A Brief Introduction

Peter Wilberg, June 2018

Why is the question so important?

1. Because worker coops and cooperative federations are not a marginal or fringe phenomenon: “More than 1,2 billion cooperative members, one in every six people on the planet, are part of any of the 3 million co-operatives in the world! The Top 300 cooperatives and mutuals report a total turnover of 2,1 trillion USD, according to the World Co-operative Monitor (2017).”
2. Because the question has, for centuries, been at the centre of many intense and still ongoing debates around what does or does not constitute ‘socialism’ and/or ‘communism’.
3. Because the question is referred to many times in Marx’s writings, for example in his writings on the Paris Commune, in Capital and in his Critique of the Gotha Programme.
4. Because the question is central to understanding the essence of Marx’s critique of capitalism, as well as to different historical understandings of Leninism, the “Economic Problems of Socialism in the USSR” under Stalin, the Chinese economy before and after Mao, the problems of Cuba, Venezuela etc. - and their relevance to all nations and regions of the planet.
5. Because it also offers a key to understanding the key commonalities and key differences between Marxist socialism on the one hand and, for example, movements such as syndicalism, anarcho-syndicalism and also ‘national-syndicalism’ (the latter represented by National Socialism, Italian Fascism and Spanish Falangism).
6. Because it allows socialists and communists to apply Marxism to critically evaluate both past and present forms of worker coops (whether on a local, municipal, regional, national or international level) as well as the historical evolution, status - and future - of both national and international cooperative federations across the globe.
7. Because, for all these reasons, the question itself cannot - in principle - be a merely marginal one for socialist and communists. Indeed it is only through the analysis of the question of worker coops (and the considerable literature around them) that socialist and communist parties and movements can come to state clearly what ‘socialism’ and ‘communism’ actually mean in practice, how they can (or cannot) be achieved - and therefore offer working people a clearly thought out and practical ‘road’ to the realisation of socialist and communist ideals, not just in the future but in the immediate context of their economic, social, family and community lives.

Current entry points into the question

For comrades unfamiliar or not fully up to date with the history of the question, and not in a position to study all the literature on it, I recommend the following videos on present-day cooperatives as both a stimulus to inquiry and as a starting point for the historical and critical issues I will discuss. The first two videos are just a few minutes in length. The second are 50 minutes or less - but time well spent.

'Reimagine work' with Leeds Bread Co-op | The Hive

The Mondragon Cooperatives in the Basque Country

Mondragon, A Basque Cooperative

TOGETHER - How cooperatives show resilience to the crisis



Critical questions

Here I list just a few of the many questions raised in the scholarly and Marxist literature regarding worker coops, particularly in relation to the Mondragon example:


What did Marx and his contemporaries think about worker cooperatives?

What were their chief disagreements about socialism and worker coops?

Do cooperatives serve a valuable function in overcoming the alienation of labour?

What is the role, if any, of socialist political thinking in the cooperative movement?

What are the chief criticisms levelled against the Mondragon cooperative corporation?

What is the relationship between capital, management and labour in such large scale intercooperatives?

What is the main difference between worker cooperatives and nationalised or ‘state owned enterprises’?

How can coops and intercooperative groups maintain their principles within a global capitalist economy?

Can they replace the capitalist law of production for profit and exchange with simple production for use?

What sort of relationship is needed between coops and economic planning in a fully socialist economy?

What would the role of the state be in this relationship - or would it be wholly subsumed by civil society?

Would a complete dominance of cooperative enterprises over capitalist ones constitute socialism itself?


What did Marx have to say?

“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. These factories show how, at a certain stage of development of the material forces of production, and of the social forms of production corresponding to them, a new mode of production develops and is formed naturally out of the old...”

“Capitalist production has itself brought it about that the work of supervision is readily available quite independent of the ownership of capital. It has therefore become superfluous for this work of supervision to be performed by the capitalist. A musical conductor need in no way be the owner of the instruments in his orchestra, nor does it form part of his function as a conductor that he should have any part in paying the ‘wages’ of the other musicians. Cooperative factories provide the proof that the capitalist has become just as superfluous as a functionary in production as he himself, from his superior vantage-point, finds the large landlord.”
Capital, Vol. 3

“But there was in store a still greater victory of the political economy of labour over the political economy of property. We speak of the co-operative movement, especially of the co-operative factories raised by the unassisted efforts of a few bold ‘hands’. The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labor need not be monopolized as a means of dominion over, and of extortion against, the laboring man himself; and that, like slave labor, like serf labor, hired labor is but a transitory and inferior form, destined to disappear before associated labor plying its toil with a willing hand, a ready mind, and a joyous heart. In England, the seeds of the co-operative system were sown by Robert Owen; the workingmen’s experiments tried on the Continent were, in fact, the practical upshot of the theories, not invented, but loudly proclaimed, in 1848.

At the same time the experience of the period from 1848 to 1864 has proved beyond doubt that, however, excellent in principle and however useful in practice, co-operative labor, if kept within the narrow circle of the casual efforts of private workmen, will never be able to arrest the growth in geometrical progression of monopoly … It is perhaps for this very reason that plausible noblemen, philanthropic middle-class spouters, and even keep political economists have all at once turned nauseously complementary to the very co-operative labor system they had vainly tried to nip in the bud by deriding it as the utopia of the dreamer, or stigmatizing it as the sacrilege of the socialist. To save the industrious masses, co-operative labor ought to be developed to national dimensions, and, consequently, to be fostered by national means. Yet the lords of the land and the lords of capital will always use their political privileges for the defense and perpetuation of their economic monopolies.”
Inaugural Address to the International Working Men’s Association, 1864

“Yes, gentlemen, the Commune intended to abolish that class property which makes the labor of the many the wealth of the few. It aimed at the expropriation of the expropriators. It wanted to make individual property a truth by transforming the means of production, land, and capital, now chiefly the means of enslaving and exploiting labor, into mere instruments of free and associated labor.”
“...if united co-operative societies are to regulate national production upon a common plan, thus taking it under their own 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...?”

“In a rough sketch of national organization, which the Commune had no time to develop, it states clearly that the Commune was to be the political form of even the smallest country hamlet, and that in the rural districts the standing army was to be replaced by a national militia, with an extremely short term of service. The rural communities of every district were to administer their common affairs by an assembly of delegates in the central town, and these district assemblies were again to send deputies to the National Delegation in Paris, each delegate to be at any time revocable and bound by the mandat imperatif (formal instructions) of his constituents … The unity of the nation was not to be broken, but, on the contrary, to be organized by Communal Constitution, and to become a reality by the destruction of the state power which claimed to be the embodiment of that unity independent of, and superior to, the nation itself, from which it was but a parasitic excrescence.”
On the Paris Commune

“There can therefore be nothing more erroneous and absurd than to postulate the control by the united individuals of their total production, on the basis of exchange value, of money ... The private exchange of all products of labour, all activities and all wealth stands in antithesis ... to free exchange among individuals who are associated on the basis of common appropriation and control of the means of production.”
Grundrisse

"The German Workers' party, in order to pave the way to the solution of the social question, demands the establishment of producers' co-operative societies with state aid under the democratic control of the toiling people. The producers' co-operative societies are to be called into being for industry and agriculture on such a scale that the socialist organization of the total labor will arise from them."
Gotha Programme

Marx’s critique:

"... what does "control by the rule of the people of the toiling people" mean? And particularly in the case of a toiling people which, through these demands that it puts to the state, expresses its full consciousness that it neither rules nor is ripe for ruling!”

“That the workers desire to establish the conditions for co-operative production on a social scale, and first of all on a national scale, in their own country, only means that they are working to revolutionize the present conditions of production, and it has nothing in common with the foundation of co-operative societies with state aid. But as far as the present co-operative societies are concerned, they are of value only insofar as they are the independent creations of the workers and not proteges either of the governments or of the bourgeoisie.”

“Freedom consists in converting the state from an organ superimposed upon society into one completely subordinate to it; and today, too, the forms of state are more free or less free to the extent that they restrict the "freedom of the state". The German Workers' party — at least if it adopts the program — shows that its socialist ideas are not even skin-deep; in that, instead of treating existing society (and this holds good for any future one) as the basis of the existing state (or of the future state in the case of future society), it treats the state rather as an independent entity…”


Commentary on Marx

“On several occasions Marx declared himself strongly in favour of cooperative firms, maintaining that their generalised introduction would result in a new production mode. At different times in his life, he even seems to have been confident that cooperatives would eventually supplant capitalistic firms altogether. Lenin also endorsed the cooperative movement and, in a 1923 work (entirely devoted to this subject), he went so far as to equate cooperation with socialism at large. More precisely, besides describing cooperation as an important organisational step in the transition to socialism, he explicitly argued that ‘cooperation is socialism’ (Lenin, 1923). All the same, ever since the time of the Paris Commune the cooperative movement has received little attention from Marxists.” Bruno Jossi

To which one might add that contemporary cooperatives and their federations appear to give little or no political attention to Marxism or even to the very idea of socialism as an economic system actually based on worker coops - and not just a new ‘business model’. This was not true of Father Arizmendi, the Catholic priest who founded Mondragon, and whose ideas on cooperatives came not only from Catholic social theory but also from the works of Karl Marx and the English cooperativist Robert Owen - whom Marx clearly approved. Yet as we have already seen in his Inaugural Address, Marx himself was not also without reservations as to limits of cooperative labour operating within capitalism:

“... however, excellent in principle and however useful in practice, co-operative labor, if kept within the narrow circle of the casual efforts of private workmen, will never be able to arrest the growth in geometrical progression of monopoly … To save the industrious masses, co-operative labor ought to be developed to national dimensions, and, consequently, to be fostered by national means.”


This in turn raises two further questions:

1. What does it mean to foster cooperative labour by “national means” and develop it to “national dimensions” in a global economy almost universally dependent on international supply chains?
2. What is the role of the state in developing cooperative labour to national dimensions? More specifically, Is the “Dictatorship of the Proletariat” referred to in The Communist Manifesto a new form of national state apparatus or a form of national economic planning and governance, that needs to evolves directly and democratically from the economic base of civil society - for example using the political power of ever larger communal federations of cooperatives themselves to overcome bourgeois opposition, and involving also a process of progressive seizure of hitherto capitalist-owned means of production?

“In Marx’s view, the Paris Commune ‘supplied the Republic with the basis of really democratic institutions’ and could therefore be looked upon as ‘the political form, at last discovered, under which to work out the economical emancipation of Labour’” (Marx, 1871, p. 334). It brought about ‘the expropriation of expropriators’.” Jossi

Marx also seemed adamant that freely associated labour organised in the form of worker cooperatives cannot, by definition, be something forcefully imposed on labour using any form of coercive state apparatus. This is not surprising, since forced labour of any form goes directly against the essentially democratic principle of socialism - that of freely associated labour, i.e. liberated and emancipated labour. Yet in both The Communist Manifesto and its two preceding drafts - both written by Engels - reference is made to the state - to nationalised state banking and credit, nationalised state enterprises, state funded housing, education and healthcare etc. In the end however, the issue of the state is inseparable from that of the planned national organisation of production. This is also where the contradictions faced by cooperative-based corporations such as Mondragon come to the fore.


Marxism and Mondragon

No objection can be raised about cooperative workers training in the skills necessary to become experienced enterprise managers and/or simply hiring managers and technical experts - managers who can be fired at will.In the case of Mondragon the use of trained or experienced managers has also not led to or been accompanied by huge pay differentials between manager or technical experts and workers - the maximum ration being 7-1 (nothing compared to the 350-1 or more differential between top managers and workers in capitalist enterprises). There is not a situation in which a few capitalist amass money at the expense of the many. And yet there are inherent contradictions to the operation of Mondragon, the key to which lie elsewhere:

1. Class differences and surplus value extraction

This occurs through the division between ‘members’ with participative ownership and voting rights in a Mondragon coop and employees of that coop. There is large variation in the proportion of members to employees, but the question still remains as to why Mondragon’s employees are not encouraged to become members - instead of remaining a type of reserve labour with lesser rights and benefits. So long as this division remains, surplus value which goes principally to members is still extracted from the employees - not least the expanding number of outsourced foreign employees of Mondragon. In this way the coop members become collective capitalists (coopitalists’).

2. Surplus value extraction from national and international supply chains

It is an established business rule of Mondragon that all its manufacturing cooperatives seek to obtain the machines and component parts they require at the cheapest price and best quality available in the global capitalist marketplace. In this way the Mondragon cooperatives benefit also from surplus value extraction from workers in the capitalist plants manufacturing those machines and parts. This is also a key issue when it comes to envisaging any form of broader level or national planning in a cooperative socialist economy. Here the socialist principle must be the abolition of commodity production and exchange. This does not mean a return to ‘barter’, but rather the establishment of cooperatives which freely produce the raw materials, machines and parts required by other cooperatives. This means placing the principle emphasis on developing cooperative production of the means of production, rather than simply its products.

“ ... The private exchange of all products of labour, all activities and all wealth stands in antithesis ... to free exchange among individuals who are associated on the basis of common appropriation and control of the means of production.” Marx

In a planned socialist cooperative economy, each coop would be freely provided with the ‘inputs’ its requires from other coops - thus abolishing the intermediation of barter, commodity production - and money. It may take a lot of time to establish cooperative networks and federations which enable this Marxist and socialist principle to be applied in practice, but to rule it out in principle is already and de facto a surrender to capitalism - in contrast to a socialist planning which would determine how many coops require a specific raw material or ‘widget’ for the production process - and establishing sufficient coops, both industrial and agricultural, to provide it. In this way also the vagaries of capitalist competition, pricing, supply and demand would cease to affect coops in the way that they have already done to the detriment of Mondragon - leading to the bankruptcy of its flagship enterprise, along with increased dependence on employee labour paid only according to (globally) average socially necessary labour time.


3. Value and Values

Mondragon was founded not only on a set of economic principles but also on values transcending purely economic value. These spiritual values - such as working class solidarity - were part and parcel of Basque ethnic culture - but they have declined in a new generation of student-managers and cooperative entrepreneurs being trained the Mondragon university - principally through a failure to teach them not only managerial skills but also the history, principles and values of Marxism, socialism and communism. To be sure, Mondragon has its own cooperative rhetoric and instruction manuals in the principles and values of worker coops, but these lack any broader socialist political perspective or ideology. At the same time the image that Mondragon seeks to projects to the corporate capitalist world is based on a purely managerial rhetoric and jargon of exactly the same sort that every capitalist corporation employs to promote itself in the global marketplace.

4. Depoliticisation and the Alienation of Labour

The depoliticisation of Mondragon is one reason I believe, that many researcher have found no difference in the day-to-day experience of many of its members as well as their employees. For though some may mimic the rhetoric of cooperative ‘values’ and ‘principles’ based on its perceived benefits, interview-based research has shown that many experience their work as no less alienating and no more fulfilling or ‘empowering’ than in capitalist enterprises. How can it be otherwise, with the decline of working class solidarity and values and the lack of anything more than a diluted rhetoric of ‘humanity at work’ - one lacking any national, let alone international political conception or vision of socialist transformation.


Socialism and the End of Money

There is no reason in principle, why, if a communal or national socialist federations of cooperatives includes (as it must do) retail cooperatives, workers should not be paid by labour-time vouchers instead of money. These are vouchers which lose their value as soon as they are exchanged for food and other retail products. “Unlike money, vouchers cannot circulate and are not transferable between people. They are also not exchangeable for any means of production hence they are not transmutable into Capital. Once a purchase is made the labour vouchers are either destroyed or must be re-earned through labour.

Such a system is proposed by many as a replacement for traditional money while retaining a system of remuneration for work done. It is also a way of ensuring that there is no way to 'make money out of money' as in a capitalist market economy.” Wiki

Through vouchers labour time is directly exchanged for products without the intermediation of money, which thus loses its status as a commodity in itself. This would put a final end to commodity exchange even on the most basic level of M-C (Money>Commodity), not to mention C-M-C and M-C-M.

Then again, the voucher system reflects the Marxist principle that, in a socialist economy, labour and production is not only based on freely associated labour but also on free production - with products distributed solely for use or need and not for money or value exchange. Because of this the question of how the retail enterprise itself will ‘pay’ for the products it gives to other workers for their labour vouchers is not a real question at all - for the socialist retail cooperative too, would receive its products freely from all the other cooperatives that produce them.

Robert Owen and Marx both advocated the use of labour ‘Vouchers’ or ‘Certificates’.

“...the individual producer receives back from society—after the deductions have been made—exactly what he gives to it. What he has given to it is his individual quantum of labor. For example, the social working day consists of the sum of the individual hours of work; the individual labor time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labor (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labor cost. The same amount of labor which he has given to society in one form, he receives back in another.”


On the Funding of Worker Coops

Marx was sceptical about the willingness of capitalist governments to sponsor worker coops - a scepticism no longer entirely justified in Europe. In addition, there are already a considerable number of advisory organisations, cooperative banks and loan funds and credit unions across Britain, Europe and other parts of the world set up to help and finance worker cooperatives (see here for examples in the U.S.). For more information on setting up and financing coops in the U.K. go to www.uk.coop see https://twitter.com/CooperativesUK Community and municipal shareholding can also play an important part in financing coops. Direct worker funding of coops is both alternative or complementary way of financing them. Worker coops are essentially ‘member owned’ as well as member controlled. A ‘member’ as opposed to an employee of a Mondragon coop, for example, is a worker who has contributed a fixed amount of funding - either right from the start or, if they lack the means, by accepting deduction from wages to make up his or her contribution to funding the coop. In this way the members do, as Marx pointed out, become their own ‘capitalists’, operating in competition with capitalist enterprises set up through capitalists in the essential sense, i.e. owners of capital who invest in labour-employing companies.

In this context it is important to distinguish financing organisations purely for coops from the type of bank which serves and forms part of the Mondragon Corporation. For this bank also operates nationwide across Spain - and according to the usual principles of capitalist banking. It has the ultimate power to withhold capital from the Mondragon cooperatives, thus once again giving capital the upper hand over labour. It is also important to distinguish worker coops from nationalised or State Owned Enterprises of the traditional ‘socialist’ sort, such as those created in the USSR by abolishing worker councils in 1920. But there is no reason why, in principle, a socialist government should not directly support the setting up and financing of worker coops, partly through the buyout or nationalisation of capitalist enterprises - but only if these coops are not forced to use their labour to pay the costs of any buyout to former or foreign capitalists. It could also be argued that state promotion of small or medium sized industrial cooperatives - and not only agricultural ones - could perhaps have helped the Soviet Union to make up for the emphasis of State Owned Enterprises on heavy industry at the expense of consumer goods.

In general then, it is important to distinguish ‘nationalisation’, which passes ownership from capitalist to the state, from the use of state and government to establish planned national and international federations of coops - all of which remain under the democratic control of the workers in each coop. This is not to say that nationalisation cannot or should not play a key role in terms of financing the basic social and economic infrastructure of a socialist economy - for example through the nationalisation of transport, existing water and energy supplies etc. But by far the most significant role the state can play is the nationalisation of banking and money creation itself - thus ceasing to make it dependent on borrowing from the current capitalist finance and private banking sector - which currently issues and controls the entire money supply of nations in the form of ever accumulating and ultimately unpayable debt. In the end, however, all socialist state or government measures should be seen as transitional to a fully ‘communist’ economy - in one in which income from labour time (“...to each according to his work”) ceases to play any role at all and is replaced by the principle of “from each according to his ability and to each according to his need”. In such an economy the in-built necessity, under capitalism, for the continuous expansion of production and accumulation of capital - something which goes together with the ever-increasing production of ‘use values’ for which there is actually no meaningful use or need at all - will also cease. In contrast, as Marx states in Capital, “...the methods of production employed by capital..drive towards unlimited expansion of production, towards production as an end in itself…” Finally, as regards methods of ‘planning’ of a socialist cooperative economy, one might paraphrase Lenin and say that rather than communism being “soviet power plus electrification” it is “soviet power plus computing” - for the internet now offers many ways of coordinating cooperative production which do not require a large vertical bureaucracy of the sort on which planning in the Soviet economy was reliant.


Links

www.uk.coop

https://www.uk.coop/the-hive/

https://en.wikipedia.org/wiki/British_co-operative_movement

http://www.europeansharedtreasure.eu/detail.php?id_project_base=2013-1-IT2-GRU06-51896


Further critical Marxist analysis of worker coops

https://www.jacobinmag.com/2016/03/workers-control-coops-wright-wolff-alperovitz/

https://systemicdisorder.wordpress.com/2013/11/13/capitalism-limits-cooperation/

https://louisproyect.org/2009/12/06/the-myth-of-mondragon/