Wednesday 18 March 2009

Can Co-operatives Work - Part 4

Explanation of the Attitude of “Marxists” to Co-operatives – statism

The real reason for “Marxists” opposition to Co-operatives is the statist nature of the Marxism that developed after Marx’s death. As Draper has set out in his “The Two Souls of Socialism” the origins of this statism reside with the influence of Lassalleanism in the main Workers party, the German SPD.

“That very model of a modern social-democracy, the German Social-Democratic Party, is often represented as having arisen on a Marxist basis. This is a myth, like so much else in extant histories of socialism. The impact of Marx was strong, including on some of the top leaders for a while, but the politics which permeated and finally pervaded the party came mainly from two other sources. One was Lassalle, who founded German socialism as an organized movement (1863); and the other was the British Fabians, who inspired Eduard Bernstein’s “revisionism.””

See:Lasalle and State Socialism

And although, Marxism has come to mean more and more over the last 100 years that variant represented by the revolutionary split from the Second International that statist root within the old International remained as much for the revolutionary stem that shot up alongside the withering Social Democratic one.

“These two self-styled socialisms are very different, but they have more in common than they think. The social democracy has typically dreamed of “socializing” capitalism from above. Its principle has always been that increased state intervention in society and economy is per se socialistic. It bears a fatal family resemblance to the Stalinist conception of imposing something called socialism from the top down, and of equating statification with socialism. Both have their roots in the ambiguous history of the socialist idea.”


Of course, Draper, fights shy as do all who have their roots in the Trotskyist lineage, of admitting that this Stalinist top down Socialism was in fact, implicit in the top down conception of socialist construction developed by Lenin. Its true, as the quotes above from Lenin himself on Co-operatives demonstrate, that he had a far more hospitable attitude to them, both before and after the Capitalist overturn, than do today’s Marxists, but his vision, at least for Russia, remained one, of first a Political Revolution, then a social transformation from above by the State, with the Co-operatives simply being a mechanism within that process, a means by which the workers are socialised, facilitated by the State. Its not, of course, that Lenin acted out of bad faith, which is the case with Stalin, who increasingly acts to defend the interests of the elite, but that the model he developed was flawed, and could not achieve the results he wanted. But, it is that flawed model that today’s Marxists continue to advocate – just as they continue to mindlessly advocate many of Lenin’s other ideas without any questioning of their relevance to the world of today, something Lenin himself would never have been guilty of.

It is that statism that determines the attitude of the Marxists to the development of Co-operatives. Only, the big bang Political Revolution that seizes state power will do, everything else as Luxemburg argued above is Reformism. And to prove that the same arguments used by Luxemburg and others are marshalled to demonstrate why it is pointless workers engaging in such ventures. But, in reality these arguments when they base themselves on Marx either misrepresent him, or else as Luxemburg does, they apply his ideas mechanically. They rely on arguments based on a high level of abstraction rather than a concrete analysis of reality, and a conscious application of dialectical thought. Again, something Lenin, himself, would not have been guilty of, and nor to would Luxemburg were she not writing in conditions of an intense factional debate against people who were trying to present a case for a gradual growing over Capitalist society into socialism by such means.

The Arguments Against Co-operatives

The arguments mobilised against Co-operatives are basically these. That they:

a. Are Utopian
b. Unable to Compete
c. Impose Capitalist Conditions on Workers


So, let me respond to these arguments in turn.

Utopianism

The charge of Utopianism stems from a number of sources. Primarily, it comes from Marx’s comments in the Communist Manifesto in respect of the Utopian Socialists, but additionally, it comes from Marx’s criticisms of the Anarchists, of Proudhon in particular. Indeed, the commonest charge against the advocates of Co-operatives by Leninists is that of Anarchism. Yet, as I have already shown in Part 1 these charges have no foundation in Marx whatsoever. Marx’s charge of “Utopianism” against the Owen, Fourier, and Saint Simon was not that they advocated the establishment of Co-operatives, but that they did not – and given the time they were writing could not – locate the working class as the social force, which would carry through such a transformation, rather they thought that it could be done, simply by persuading the bourgeoisie of the rationality of such a course of action, in the same way that Owen himself had arrived at that rationality, and acted upon it.

“The founders of these systems see, indeed, the class antagonisms, as well as the action of the decomposing elements in the prevailing form of society. But the proletariat, as yet in its infancy, offers to them the spectacle of a class without any historical initiative or any independent political movement.

Since the development of class antagonism keeps even pace with the development of industry, the economic situation, as they find it, does not as yet offer to them the material conditions for the emancipation of the proletariat. They therefore search after a new social science, after new social laws, that are to create these conditions.”


It is this failure to locate the workers as the means of bringing about the necessary change, not the form of the change that Marx identifies as being Utopian.
And, the same is true of Marx’s Critique of Proudhon, and the other Anarchists. It is not the establishment of Co-operatives within their schema that Marx challenges, but the fundamental economic and political concepts that they use in doing so, and which flow from their essentially Ricardian economic theory. It is the failure to understand the nature of Surplus Value, and the Value of Labour Power, the fallacies that spring up from that in relation to the workers enjoying the “full fruits of their Labour”, and so on that Marx attacks as being Utopian, and correctly so. But, nothing in that fundamentally challenges the idea of the development of Co-operatives as a valid means by which workers here and now can realistically answer their immediate problems without either the need for a complete overthrow of the Capitalist system (Maximalism), or else settling for appeals to the bourgeois state for a few concessions (Reformism).

And, indeed again, as I have shown this has to be the case, because Marx himself in his mature writings, and Engels even after Marx’s death put forward the establishment of Co-operatives as being precisely that form in which this social revolution manifests itself. As Engels put it,

“And Marx and I never doubted that in the transition to the full communist economy we will have to use the cooperative system as an intermediate stage on a large scale.”

It is certainly the case that if Co-operatives are viewed as an ALTERNATIVE to class struggle then such a development would be as Marx described the followers of Owen, reactionary, certainly, if as in their case it increasingly meant arguing against workers engaged in such class struggle. And certainly, if such Co-operatives simply operated as individual Capitalist enterprises then they would have little progressive content, the normal laws of Capitalist economy would ultimately tend to lead to their dissolution, and re-conversion to straightforward private Capitalist property, just as a state which attempted to create Socialism in One Country would ultimately suffer such a degeneration. But, the ultimate fate of such a state, is as Lenin and his comrades argued correctly, not a reason for not carrying through a revolution instead waiting for the conditions for a simultaneous global revolution to arise – which, of course they never would. Rather, it was an argument for utilising the ground gained, to demonstrate in practice what is possible, to take advantage of the superiority of co-operative, worker-owned property in the competition with private capitalist property, to utilise such an advance as a bulwark for workers economic and social power from which to advance support for workers outside in their continuing struggle against Capital. And that is precisely the basis on which Marx advanced the idea of building Co-operatives, it is precisely hat he meant about the need to develop them on a national basis, its what Ernest Jones meant when he more specifically described how it was necessary to develop a national Co-operative framework, in which the funds could be centralised, so that competition could be overcome etc. And, today we have seen in practice that method applied in Argentina, for example, in the way the recent wave of Co-operatives have linked up with their local communities to address themselves to their needs, and the way they have keyed into the wider class struggle.

There is no fundamental reason why a Co-operative should be a progressive institution, anymore than that a Trade Union or any other organisational form should be progressive. But, as organisational forms in which the working class as the revolutionary class can organise, and thereby represent THEIR class interest in opposition to the interests of Capital, they have the POTENTIAL, to be such progressive organisations. Whether they are or not is a function of the role of Marxists within them.

Unable to Compete


This is in fact, a mechanistic argument. It is based on a literal interpretation of some of the basic economic laws uncovered by Marx, for example in relation to the concentration of Capital. But, although those laws are perfectly valid when looking at Capital at a high level of abstraction they are not at all true when looked at in terms of specific concrete cases. It is certainly true that in the case of some large industrial production, say the production of motor cars, the general laws in relation to the economies of scale etc. will apply, which will mean that some small producer will always tend to be at a competitive disadvantage to a large producer. The scale of production will set high levels of Minimum Capital requirement even to enter production at an efficient level.

Yet, casual observation will show that even in this arena there are a number of small car companies that not only exist but prosper on the basis of producing for a niche market. In other words their selling point tends to be precisely the fact that the product is NOT mass produced, but is a quality hand-made product. In fact, the smaller scale of production, the labour-intensive nature of such production makes such firms ideal for Co-operative production. I have made similar points in relation to such production, or to production of commodities that have a high proportion of complex labour to Capital – and which tend to have the opposite laws to the Falling Rate of profit – elsewhere. See: thinking Outside the Box , Tendency of the Rate of profit to Rise , and Porn Free

There are a whole series of areas of production where the economies of scale do not really apply. Take, for example, the issue of Co-operative Housing. Not only is it almost certainly the case that such a Co-operative would work best on a local level in terms of managing its properties and controlling its estate, but the associated maintenance Co-op would also have no obvious huge advantages from large scale operation. On the contrary the nature of Co-operative production, and the tying together of its function in working with the Housing Co-operative to maintain the housing stock, to liaise with tenants etc. and thereby to undermine the conditions for the alienation of labour, would almost certainly be most effectively operated on a smaller scale, a fact, which many local Councils discovered in the move to return to estate based DLO units. Of course, that may not be the case in respect of a much larger construction Co-operative geared to large scale house building, or even the construction of roads, schools, hospitals etc., where such economies may be important. But, I will deal with that later.

A look at the examples taken from Marx’s analysis itself gives the answer to this objection. The Lancashire textile Co-operatives and the Ralahine Agricultural Co-operative both showed that Worker Co-operatives are often more competitive than comparable privately owned and managed firms. More recent examples, also prove the point.

Tower Colliery in South Wales was closed as part of the mine closure programme and taken on by a private company, who also proposed to close the mine on the basis that it was unprofitable. The miners at the colliery took it over and not only ran it profitably until it finally became exhausted recently, but were able to increase the number of people employed at the pit.

See: Tower Colliery

In “Self-Management – Economic liberation of Man” Edited by Jaroslav Vanek other examples can be found of similar success. One such is the US Plywood Co-ops See: Plywood Co-ops for example, which account ofr 20% of softwood production in the US. Other examples, quoted are the Scott Bader companies.

See: Scott Bader

But, of course, one of the most successful and best known Co-operatives is that based in the Basque country in Spain the Mondragon Co-operative.

See: Mondragon , which has not only managed to compete over the last 50 plus years of its existence, but has flourished and expanded into new areas of production and distribution, as well as into other parts of Spain and Europe. It not only engages in Co-operative production but combines it, and has done so from the beginning with educating and training its workers through its own University etc.







In fact, throughout Europe Co-operatives of one form or another are quite commonplace. Indeed, they are more commonplace throughout the world than you would think. One in four people in the US are a member of a Co-operative of some kind. Even millionaire Ponzi scheme operator Bernie Madoff lived in a housing Co-op!

See: Euro Co-op



In Britain the Co-op has not only managed to compete since its creation in the 19th century, but has expanded from its roots in Rochdale throughout Britain, and into a wide variety of businesses. It is, the largest farmer in Britain See: Coop Farms . And a whole range of other businesses See: here .

Although, Marxists would have criticisms of some of these Co-operatives, and as I have said above they really require a root and branch democratisation that can only come about as a result of socialists and trade unionists taking an active part in them, and which can probably only come about as a result of a conscious effort by Marxists to develop an overall Co-operative strategy that begins by developing worker owned and controlled production Co-operatives as part of an (initially) national Co-op organisation, the fact remains that these Co-ops have not only survived, and therefore, competed against Capitalist businesses, but often thrived, and expanded their operations.

Horvats in his essay in “Self-Management” discusses the role of statistical techniques in replacing the market pp 130-1. Although he is talking about this in relation to a planned economy it is related to this. There is a difference between planned economy and Co-ops. In a planned economy the State has to ensure proportionality. The problem of ensuring that planned supply is available e.g. a new steel mill. A Co-operative under Capitalism largely does not have to consider this, it buys on the market with no consideration for the Capitalist Economy as a whole. However, insofar as it can link to other Co-op producers it can begin to develop proportionality in the Co-op sector, and more importantly, Co-op producers should supply their retailers as a priority and given fixed long term favourable prices compared to sales to private retailers.

The other objection to Co-operatives raised, however, is that they impose Capitalist conditions on the workers. This criticism is particularly true of Consumer Co-ops, which by their nature place control in the hands not of the Co-ops workers, but of its consumers, who as stated above, often do not take an active part in the management of the business, and so such Co-ops can often become little different from a private Capitalist enterprise in terms of the relation between management and workers. That, of course, is not an insurmountable problem, given a Labour Movement that sought to address that problem, that sought to ensure such Workers Control of these Co-ops and so on. It is not a problem of the Co-op as such, but a problem of the lack of adequate class consciousness, and of Labour Movement organisation to ensure that such Co-ops operate in the workers interest.

It is inevitably true that a Workers Co-op to an extent imposes Capitalist conditions on its workers. The firm remains bound after all by the constraints of a Capitalist economy. Marx, himself was well aware of that. As he said in Capital,

““The co-operative factories of the labourers themselves represent within the old form the first sprouts of the new, although they naturally reproduce, and must reproduce, everywhere in their actual organisation all the shortcomings of the prevailing system. But the antithesis between capital and labour is overcome within them, if at first only by way of making the associated labourers into their own capitalist, i.e., by enabling them to use the means of production for the employment of their own labour.”

So, although this criticism is to some extent true, it was not sufficient to persuade Marx to argue against workers creating Co-ops, on the contrary, as we have seen, he argued that workers SHOULD create Co-ops. And, after all, Capitalist firms impose Capitalist conditions upon their workers, but we do not tell workers not to work for them. The advantage of the Co-op is that unlike in the private Capitalist firm the worker does have some control over those conditions etc.

In fact, the greater efficiency of the Co-op, and the fact that workers do have control over those conditions, means that workers in such Co-ops DO have the potential to improve their position, in a way that workers in a private company do not. The main reason that workers are forced even within their own company to accept Capitalist conditions upon themselves is the fact of capitalist competition, but it is the very nature of the Co-operative which provides the means for overcoming this constraint. For one thing, the more such Co-operatives work together to co-ordinate their activities, to integrate their activities one with each other, the more they replace market relations between themselves with planned, co-operative relations, thereby undermining those very laws of Capitalist competition that exert that pressure upon them.

Finally, there is the question of size and Capitalisation. This is undoubtedly a problem as Marx recognised. There is little possibility at the present time of workers, for example, establishing a Co-operative, mass production car company, even if that was desirable. The minimum size for such a company is too large to mobilise the kind of Capital required. But, even in smaller scale ventures one of the main problems for worker Co-operatives has been not any lack of competitiveness, but inadequate capitalisation, so that the workers begin at a disadvantage. They lack adequate Capital to buy the latest most effective machines in sufficient quantity, they lack the Capital reserves for working Capital in the event of some unexpected event, reduction in business, late payments or bad debts etc. Such a fate befell for example the Rowen Engineering Co-op in South Wales. Yet, even here such problems should not be overstated. Many start-up companies face these problems without the potential solutions to them that Co-operatives could enjoy.

A real workers control over the financial resources of the Co-op Bank, and other Mutual financial institutions could overcome the problem of financing for smaller scale requirements, and the very laws of Capital accumulation can be turned to the worker’s advantage in a Co-operative system, provided that the basis of developing Co-ops is done on the basis set out by Marx, and more particularly by Ernest Jones. Furthermore, I have outlined the way a struggle for the democratic right of workers to control their own pension funds rather than that control being in the hands of the same overpaid financial geniuses that brought about the current financial crisis, would make available around £500 billion, that would be more than enough to capitalise a large number of strategic Co-operative ventures.

Its important not to overstress the problems a Co-operative can face as Luxemburg does, which is to take Marxist economic principles and apply them mechanically. For example, Co-operatives have to exist within the anarchy of the Capitalist Market, which is susceptible to economic downturns. But, the point about Co-operative production is to establish means of subverting those downturns, by gearing production to consumption in a planned way, and by making long term as opposed to short-term decisions that can even out fluctuations – rather like the advice to store up food for the lean years given by Joseph to the Pharaoh. A Workers Co-operative, because its objectives – for example to maximise long term job stability rather than profit – are different from those of a Capitalist business, is in a better position to take those long term planning and investment decisions that avoid the danger of overtrading, and overexpansion which are the most common cause of private firms going bust.

As Hobsbawm points out one of the main factors affecting workers is fear. Yet, what is the reality? Even in the worst period to have affected workers – the Great Depression and War years – there was in reality little basis to such fears. Hobsbawm says quite rightly, there was little chance for any civilian being killed during the War, and, on average, workers were only out of work for a few months. See “Industry and Empire” p.209, and 221. It is not the situation facing workers as a whole that is the problem, but the effects on individual workers that has a generalised effect, through fear etc. The whole point about a Co-operative is that it can smooth out those individual effects, and, by taking a longer-term view than private Capitalist firms do, can smooth out the consequences over a period of rise and decline. Why? How? A Capitalist firm is concerned with maximising profit. In good times they expand to take advantage, knowing that when things slow down they can simply lay workers off. A Co-operative looking forward to that time when things may slack-off, will not want to lay workers off, but will want to be able to keep those workers in employment. A Co-operative during the good times will then ensure like Pharaoh that it puts resources aside precisely for such periods. By keeping workers in employment and maintaining their incomes it acts counter-cyclically. Of course, as Ernest Jones pointed out on an individual Co-operative basis that is pretty meaningless, but as part of a generalised Co-operative framework and strategy it is not. Imagine, a local Housing Co-operative, for example, that worked on this basis, and co-ordinated its requirements for the building of new homes, and the maintenance of existing homes with a local Construction and Building Maintenance Co-op, and preferably with a Co-operative Bank, Credit Union etc. Because each could engage in long-term planning based on meeting the reciprocal needs of each, all could build resources and reserves. Rather than expanding headlong during a boom as private Capitalist firms do a more measured expansion could take place, leaving room for the accumulation of funds. When a downturn occurred, the Housing Co-operative could draw on the funds built up, and held by the Co-op Bank, to ensure that even if the rate of expansion was slowed, resources would be available to keep the construction Co-op busy with maintenance work, the building Co-op would have resources to ensure that even with a slower pace of work it could keep its workers on its books, perhaps using the slower period for them to be re-trained or further trained and so on. The more a Co-operative sector developed on this basis the more it could insulate itself from the fluctuations of the Capitalist market.

In Capitalist firms competition leads to uptake of new technology and technique in a perfect competition model. However, in reality oligopolistic production means this is not the case. Oligopolies protect their innovations by patents, business secrecy etc. Co-operative production has an incentive to share best practice and knowledge throughout the sector, the more workers co-operate not just in their own factory but across the sector. Introduction of new labour-saving machines and techniques can be planned and anticipated so that new employment for workers saved can be developed where they cannot be simply absorbed through higher output levels.

There is a contradiction between the desire to maximise current income and Capital accumulation, and longer-term planning. This is true, but it assumes that workers cannot understand and deal with this contradiction. The advantages of Co-op production means that workers can both have higher current incomes than would be the case if they were employees of a private firm, and have higher levels of Capital accumulation/and/or creation of a reserve fund. But, workers may fail to appreciate that, and instead choose to go in for high current income. They will learn through experience the folly of such an approach. The job of Marxists is to try to minimise the pain of learning those lessons, by acting as the memory of the class. Moreover, in this sphere too the idea of the Co-op being a part of some national – preferably international – Co-operative federation can be important. Marx and Engels argued for a model for the transition period in which the workers would organise production through their Co-operatives, whilst the actual property of the Co-op was held in trust by the State, so that there was avoided the problem of the Co-op simply reconverting into a capitalist enterprise. The same idea was put forward by Lenin in one of the quotes above on his views on Co-operatives. Essentially, prior to the transition period this function of the State could be carried out by the Co-op holding Company, which would fulfil the function of the Bank as described by Michael Barratt Brown in his discussion of the Multinational Corporation in his book “The Economics of Imperialism”. That is it becomes the allocator of Capital within the Co-op sector. Indeed, as I will come to later there are arguments within economic theory as to why this model in which Capital is rented by the individual Co-op is preferable to self-financing.

As I said above, the laws of Capital accumulation can themselves work to the interest of the Co-op. Take the effect on the Rate of Profit of higher Labour productivity. If we assume a given quantity of Fixed Capital then the higher Labour productivity of a Co-op – arising from those factors which orthodox economics does not account ofr because it treats Labour as just another factor of production - will mean more C used up in production – because more raw materials will be consumed and machines will wear out faster- but S/V will be higher. Because R is calculated on Total Capital (K) i.e. including C that is not used up in production, but which has to be present then S/(K) will tend to be higher. This means higher wages, and or higher rate of accumulation, or the creation of a reserve fund is made easier/possible. Secondly, the consequence over fairly short time period of not paying out for unproductive consumption of Capitalist shareholders can be significant. Suppose only 10% of S goes to unproductive consumption. In just 7 years this will mean that double the accumulation of Capital can take place. The combination of these two factors means Co-operatives from a standpoint of Marxist economics are at a considerable advantage to private Capitalist industry.

There are some orthodox economics analyses of Co-operatives that are interesting. For example, Domar, in “Self-management”, that builds on the work done by Ward, and as Domar says some of his conclusions were also arrived at by Tugan-Baranovsky. The main weakness of these analyses, though, it seems to me, is that they simply treat Labour in a Co-op as in the way that orthodox economics always treats Labour, simply as a “factor of production”. But, as Mandel, for example, says in “Marxist Economics” this assumption is clearly untenable. So, for example, the assumptions made by Domar I think although they advance from those used by Ward, still do not take into account the real nature of a Co-operative, and certainly not of a Co-operative as part of some larger Co-operative organisation of the kind conceived of by Marx and elaborated by Jones. Surely, it is as likely that workers in a Co-op will have as their objective neither profit maximisation, nor income maximisation, but maximisation of long-term employment stability. That is, they are likely to trade off current income for the security of longer-term employment. That may be achieved by greater accumulation of Capital to generate greater efficiency and thereby protection in times of economic downturn, or else of the creation of a sufficient reserve fund to help get through such periods, or a combination of both. They may forsake profit maximisation, in order to achieve wider social goals, relating to the connection of the Co-op to the needs of the community of which it is a part, or else of its part within the wider class struggle. For example, an agricultural Co-op may provide free or cheap food to local striking workers, knowing that in return once the strike is over its actions will win it the loyalty and custom of those same workers. Additionally, a Co-op which exists as part of a wider national or international Co-operative Federation will agree to a part of its profits being transferred to that Federation, the better to provide greater Capital resources and strength in bargaining with private Capitalists, and the Funds built up here will provide the basis for extending Co-operative production into other areas, thereby further enhancing the stability of employment of workers in the Co-operative sector. Such funds would also provide the basis for developing an Insurance Fund for workers to provide for retirement, ill-health etc. in the same way that Workers Friendly Societies were intended to do. It would form the basis of creating the conditions in which existing Workers Pension Funds controlled by private Capital could be absorbed under such a scheme and democratically controlled by workers, thereby massively enhancing the amount of Capital available for workers to employ in expanding Co-operative production, and indeed, of arguing for the funds currently handed over to the Capitalist State in taxes and National Insurance payments to be transferred into the Workers Fund. Finally, the assumption made by Domar about the production function of the Co-operative firm is clearly false, because for all the reasons outlined there is a strong likelihood that Labour productivity in the Co-op will be much higher than in the private capitalist firm. Consequently, the comparison of the Marginal Product of Labour, and its concomitant the Marginal Revenue Product of that Labour cannot be compared between the two. Ken Coates, for example, makes an interesting point in his essay in “Self-Management”. Talking of suggestion schemes he says, workers are not likely in private firms to put forward suggestions, which will put them out of a job. This does not apply in a Co-op where workers themselves benefit directly from any such improvements either in higher incomes, or easier work.

Meade in “Self-Management makes a good point. Risk Capital that hires Labour, spreads the risk by Capital being invested in a range of production. Risk Labour that hires Capital cannot really do that. The worker would not normally share his Labour out amongst several Co-ops. So, it makes sense for the workers income to also be made up of wages, plus a share of profits from his own business, plus a share of over all profits of the Co-op Federation. This opens a number of possibilities. A number of questions arise from Meade and other orthodox analysis. One point of a Co-op is to give workers ownership as an incentive. As Lenin says, “We have to work with the real workers as they exist not the Socialist Man of tomorrow.” The workers that exist are motivated by the need for economic gain so a Co-op is only attractive if it provides this. This is why orthodox models frame assumptions in terms of individual gain per worker. This assumption is basically false, because the worker will take other things such as security, working conditions into consideration as part of a wider concept of economic gain. But, we cannot underestimate the need to provide real economic benefits. However, if that is taken to its logical conclusion the Co-op becomes just a Capitalist business owned by workers. This is one reason Marx and Jones proposed a National Federation with the Capital owned by that Federation. But, this runs the risk of perpetuating alienation, of Capital still standing over the worker as an alien power. The Co-op must own the Capital and buy it/rent it from the federation. Workers in each Co-op need an incentive for innovation, efficiency etc. There needs to be some formula by which Co-op workers are paid higher wages than the equivalent in private industry, OR receive equal wages, but some share of profits. HOWEVER, a full share of profits again makes them just worker capitalists. So, there should be some share of profits, but with the rest, after payment of interest to federation on Capital, divided into a reserve, and into a payment to the federation. Why would workers agree to this?

The Co-op Federation could maintain several reserves. One reserve could act to smooth out workers wages, maintaining employment levels during economic downturns – effectively an unemployment reserve. Another reserve could act as Sickness reserve or Pension Reserve. In other words workers pensions savings really could be deferred wages to retirement. It would be necessary to manage these reserves such that they could fulfil these functions. But, there is another function of the reserves held by the Federation. The Federation acts like the Bank of a multinational corporation as described by Michael Barratt Brown. It acts to allocate Capital amongst the various Co-ops according to agreed investment criteria. It would make sense for the functions of the Co-op Bank and Financial Services Co-op to fulfil this function.

The following scenario becomes possible. This central Bank is able to offer Capital to affiliated Co-ops at a fixed rate of interest – effectively fixed for all time. The interest accrued accumulates in order to finance expanded reproduction in the Co-op sector. When interest rates in the economy are higher than this standard rate Co-ops paying this rate obtain a competitive advantage over private Capital paying the higher market rate. When general interest rates are lower, they continue to pay this rate, but the Co-op Bank borrows in the market at the lower rate making a profit that can be utilised to finance expansion and or the building of reserves. Individual Co-ops suffer a competitive disadvantage during this period, but the Co-op sector as a whole does not, because it – the workers employed - gain both from being able to plan investment over the long term on the basis of a fixed rate, and because the workers funds for retirement etc. grow. Of course, if market rates remained much lower than the fixed rate for a long period it might be necessary to review this rate, but as the aim would be to fix this rate at a low but stable rate to begin with – which would help finance Co-op development, but would through stability provide the basis of long term security better than current investment of workers pension funds achieves, this would be unlikely to be a frequent occurrence. On this basis a beginning is made in replacing market relations in the Capital Market with longer term planned relations, and also the motivation is provided for workers to agree to the accumulation of the profits of their individual Co-operative into the Central Fund – after their profit share has been deducted. Those centralised funds then perform for the workers the function of spreading risk that the employment of Capital in a number of enterprises fulfils for Capital.

Questions do remain. A Trade Union acts as a counter to Management, but if workers ARE management then it cannot be effective. There are some arguments against this proposition put forward in Self-Management in relation to the experience of Workers Representation in Germany, that argue that the question of Trade Union representation and workers representation on the Board can be kept separate, but I remain unconvinced. See, for example, Blumberg in “Self-Management” p80 responding to Hugh Clegg. If the co-op operates a true democracy then management decisions are majority decisions of the workers. In that case if the union is also those workers then that majority decision would just be replicated within the union! Yet, the fact that a decision is democratic does not make it fair. In fact, as political science has long since elaborated, democracy, as merely rule by the majority can be more oppressive than rule by a benevolent despot – the tyranny of democracy. It becomes necessary to create some checks and balances outside the democratic structure of the workplace. What? It depends on the nature of the Co-operatives. Ideally, Co-operatives as part of a national federation or structure would agree to some constitution under which individual workers or groups of workers would have right of appeal or redress against decisions they felt unfairly affected them – obviously this doesn’t mean that if some worker or group of workers disagreed with some production decision they could challenge it, that would undermine self-management itself, but only those decisions which affected them personally – for example, discrimination, etc. But, initially, some Co-ops may not be a part of such a federation. In that case, workers could only seek redress through the wider Trade Union structure, and through the existing bourgeois framework of employment law – redress through Industrial Tribunals, the Courts etc. This is obviously undesirable. It introduces aspects of bourgeois control into the workers property. But, outside the formal structures of a Co-operative federation, and the acceptance of the condition thereby of the arbitration and settling of disputes through a system of workers arbitration panels, and courts there is no real alternative. It should be one of the factors encouraging all Co-operatives to bring themselves under such auspices, and protection. These issues have arisen within the Mondragon Co-op, for example, and particularly its large retail chain – Eroski. Of course, given what has been said about the opposition to Co-operatives by the statist Lassallean Left, it is no wonder that Co-operatives might be sceptical at the motives of some who might wish to foster antagonism within the structure for sectarian ends.

A further problem is raised by Horvatson p141 of Self-Management in relation to the. role of specialists. This is a question which applies equally to questions of management under socialism. He discusses the idea of specialists having a weighted vote in questions that require specific technical expertise. Clearly, I disagree with specialists having a weighted vote. Specialists should advise, workers decide. Workers need to become themselves specialists. Workers should take responsibility for decisions not specialists, or else there is a danger specialists will be conservative in their advice, and avoid risks for fear of blame. But, specialists have to be accountable for advice. It is a thin line.

Meade also raises questions about the optimum size of firm, which leads to other important questions. What about the need to reduce the workforce? This involves questions about democracy, and constitution of the Co-op. Should workers pay to join the Co-op? Should they be paid to leave?

Vanek’s sets out a list of what is the basic requirements. For workers Co-ops, which I think forms a useful basis for discussion. “Self-Management” p 34-6

1. All control, management and income (after payment of all costs and taxes) should always remain in the hands of those who work in a given enterprise, whatever their number. My objection to this would be in line with what has been said above that in line with Marx’ and Jones’ proposition that all Co-ops should be part of a national Co-op Federation surpluses should be fed into that Federation to spread Co-operative production in general, and to prevent the individual firm simply being a capitalist enterprise owned by workers.

2. Whenever, on grounds of static or dynamic economies of scale, division of labour and co-operation among two or more men in an enterprise are necessary, funding of capital assets other than through collective retained earnings must be brought about. Funding should preferably be based on national ownership, administered by a shelter agency. Funding should not imply control.

3. While Capital or more precisely the source of financial capital does not command any right of control, it is entitled to adequate remuneration at a rate reflecting the relative scarcity of that factor in the economy. Again I have dealt with that above, and would suggest that in the interests of replacing the market in Capital the Co-op “Bank” provides Capital on the basis of a long term low fixed rate.

4. Conditions 1,2, and 3 are equally applicable to productive land, which for all practical purposes can be treated as Capital.

5. The returns of Capital and Land should in their entirety or at least predominantly be earmarked for accumulation.

6. In principle the returns charged on Capital should be the same for all users, guaranteeing an optimal allocation of capital resources.

7. It is imperative to establish a shelter organisation or institution on the national level, (which can be decentralised according to need), whose express function would be to fund and promote the self-managed sector of the economy.

8. To minimise he need for the services of the sheltering institution it is advisable that existing firms be given the priority of using funds which they paying as interest on Capital for the purpose of their own expansion or creation of new firms. The projects must pass accepted criteria of viability, and the funds reinvested must yield the same rate of return as other investments.

9. In general, but especially in young countries interested in rapid accumulation and the efficient flow of resources, the depreciation allowances of the self-managed firms should also be collected and added to the national investment fund and allocated according to optimality criteria.

10. The optimal form of the self-managed economy or sector is one based on the market mechanism. I would accept this in the context of what I have said above. That is that in its natural operation Co-operative production necessarily should – even within the capitalist context – begin to systematically replace market relations with planned relations, based on increasing co-operation between enterprises and enterprises and communities. The very operation of modern large scale capitalist enterprise, which proceeds on the basis of long-term business planning as opposed to the classical notion of price signals facilitates such a transition. The very operation of the Co-operative sector in working with open books, the sharing of best practice and the increasing integration of production plans between enterprises gives the sector a powerful advantage over the private competitive sector.

11. At all times, but especially in its early stages, the effort of introducing self-management must be accompanied by an educational effort focussing on the basic philosophy of economic self-determination and the specifics of self-management. This effort should be co-operative to the greatest possible degree as much as self-management itself.

12. On the political plane, especially in countries having or aspiring to political democracy, it is most constructive, honest and effective to place the struggle for self-management on the philosophico-ideological base of fundamental rights of the working man. I disagree with Vanek here, especially in his rejection of the idea of struggling for such forms on the basis of a socialist platform. Whilst, some of these ideas can be argued for on the democratic plane, such a perspective has the danger of reducing such a plan to the same Utopianism of the Owenites. Only by combining this struggle with the class struggle as a whole can it be progressive, only on that basis can the inevitable obstruction of Capital to workers co-operatives encroaching on their profits, power and influence be overcome. As Marx said, Co-operative production can never simply expand to replace Capitalist production, neither economically nor politically. The function of Co-operative production is to provide workers both with a bastion of economic and social power, and to demonstrate in practical terms – thereby changing the material conditions – the desirability of the new society. But, only class struggle, and ultimately a political struggle for proletarian power can overcome the resistance of Capital, and create the conditions under which that new society can develop.

Horvats sets the question in a wider context in his essay in particular discussing. equality in Production, Consumption and Civic Society pp127-8. Again this is a useful framework within which to discuss the issues but missing from this perspective is the necessity of locating the struggle for these various forms of equality within the context of class struggle. Equality may be a bourgeois concept, but the bourgeoisie will only grant workers formal equality, and only that in so far as it does not challenge their rule.

It is, in fact, impossible to divorce the questions that arise in relation to Co-operative production and self-management outside the discussion of the problems that the construction of a socialist society will face, a point which those who denigrate the idea of co-operatives should themselves contemplate. The problems set out by Luxemburg et al apply to socialist production too. Unless we are to assume some simultaneous revolution, taking place in a number of advanced countries, then the problems of development in an isolated economy will be no different than those of a Co-operative. Indeed, they may be worse. Workers as part of a Co-operative may recognise their own ownership and control of their means of production. They may be prepared to accept constraints on their income, insofar as they retain control over them. But, where the means of production are owned by the State that may not be the case. The same restrictions, the same need to keep incomes at a level that enable Capital reproduction and accumulation to occur will still be present, but insofar as those restrictions are communicated to the workers by the State they may create the conditions for inevitable conflict. It is one thing as an owner and producer to recognise the need to adjust your wages, and another to be told that you have to by someone else. That may be possible for a short period, as revolutionary enthusiasm persists, but as many instances showed in the Russian Revolution, revolutionaries tend to underestimate the consequences of time. Ten years may not be a long time period viewed from the perspective of an unfolding international revolution, but ten years from the perspective of workers being told they have to constrain their wages etc. could seem a lifetime. Such a situation undoubtedly explains some of the conflict that quickly broke out between workers as workers, and the Bolsheviks as controllers of a State trying to manage such economic problems.

Conclusion

Co-operatives, as Marx said, cannot act as an alternative to class struggle. Workers continue to need Trade Unions to fight for their immediate needs within the context of a continuing Capitalist economy. They need a Workers Party to act both as a memory of the class, an educator, and an organiser of the class’s activity, and as its political representative to wage the ideological and political struggle on its behalf against the inevitable attempts of the bourgeoisie to frustrate the economic and social progress of the class. Co-operative forms within Communities can build alternative democratic structures, which will form a part of an emerging alternative workers state, but so long as the bourgeois state remains in place, the Workers Party will have to take the strength built up in these alternative structures into the political forums of that bourgeois state, into the Council Chamber, and into Parliament, because it is there that bourgeois law will continue to be written, and workers can only counterpose their own law to bourgeois law when they are in a position to counterpose their state to that of the bourgeoisie.
But, the development of Co-operatives is not an either or option for workers. We would have to believe that the working class in its majority is able to arrive at a fully worked out socialist class consciousness, in its head, that enables it by one means or another to undertake a revolution whereby it seizes the means of production from the bosses and begins to manage those means of production for itself. We have no reason to believe that such a transformation is possible. Marx and Engels did not believe it was possible, it flies in the face of their whole theory of Historical Materialism. Lenin didn’t believe it was possible, for the same reason, which is why he argued that the revolution would have to be carried through by a Vanguard, and why the Party would in fact, be only the Vanguard of the Vanguard. Nothing in our present society shows us the possibility of workers arriving at such a consciousness purely on the basis of argument. They need to see in practice that what is being advocated is possible. The experience they have so far of Socialism coming from such beginnings gives them every reason to disbelieve those arguments.
We would also have to believe that from Day One, and for every subsequent day, the vast majority of workers would play an active role in the management of the means of production. Lenin, and Buchez, in the quotes above, tell us why that would not happen. Nothing in what we have seen of any working class indicates that this would happen. The most revolutionary working class in history so far, that in Russia in 1917, certainly didn’t. If it had then no bureaucracy in the factories, or in the State could ever have arisen. Nothing we see in the actual working class, rather than in a romanticised and mythical working class that exists in the heads of petit-bourgeois romantics indicates that would be the case. How many workers attend their union meetings, how many attend political meetings, how many utilise the right to vote in the Co-op even? The likely scenario would be that workers would do what they do now. They would leave those things up to the activists, the party men – and they would likely in the majority be men – while they got on with doing what they prioritise now, making a living, trying to enjoy what leisure time they had, looking after their families. Like now, the only time they would play any part would be when they were unhappy with something, and as in Russia the response would likely be the same; to dismiss such rebellions as reactionary, the response of backward elements that didn’t understand etc. In short, what had been the revolutionary vanguard would become an ossified elite with its own interests.

Only worker owned Co-operatives can act as the necessary training ground to prevent that. The worker as direct owner of the means of production has an immediate need to take an active part in managing his/her means of production, which can never be the case when those means of production are seen as being owned by some State, and thereby alienated from them. Co-operative production, especially when it is initially disciplined by production for the market, forces the individual worker under such conditions to play such an active part, because their immediate livelihood depends upon it. It is this function of the change in the productive relations that Co-operatives bring about that transforms the worker himself, and brings about that necessary change in his ideas and culture without which socialist production is impossible

Back to Part 3

12 comments:

CharlieMcMenamin said...

Challenging and impressively argued stuff. I've posted a link on my blog, in the hope it will attract more people to read this (not that my blog is exactly Piccadilly Ciricus, but you can only do what you can...)

http://itslifejimbutnotaswknowit.blogspot.com/2009/03/hold-front-page-leftwing-blogger-does.html

Boffy said...

Charlie,

I've replied on your blog. That's for your link. I will reciprocate.

CharlieMcMenamin said...

Arthur,
As I say on my blog, I’m not an activist nor do I think of myself as a Marxist, though I’ve considered myself both in the past. I do recognise the heroic nature of the feat of historic recovery you have performed on the Marxist tradition to argue your case for co-operatives – but I’m coming at it from a different angle. What’s currently nagging away at me is the way that people from different traditions are returning again and again to the question of meaningfulcommon ownership.

So Tom Phttp://labourandcapital.blogspot.com/ over at Labour and Capital (who once described himself in my comments box as ‘a weedy social democrat’ and used to work for the TUC)painstakingly grinds his way through the task of trying to understand financial market theory, and find policies for market socialisation, from a TU pension fund perspective. It’s important work; I’m glad he does it because I’d go mad with boredom. And the very unusual and thought provoking Chris Dillowhttp://stumblingandmumbling.typepad.com/stumbling_and_mumbling/ of the Stumbling and Mumbling blog (a self described ‘methodological individualist Marxist’ economist working for, er, the Investors Chronicle no less) returns again and again to questions of worker ownership.He also has an interesting way of turning the arguments of conventional (I'd guess you'd say 'bourgeois') economics against itself. e.g. http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2009/02/stalinist-companies-vs-market-forces.html There's also the semi-anarchist, semi-greenish stuff around the parecon movement as well.

So though you've gone to great lengths to situate your impressive contribution within a very specific tradition - which is quite fair enough - I have a sense of it as a stream running alongside others. I have a sense of a new, or at least radically re-worked, challenge to the rule of Capital struggling to be born. Good luck in your efforts.

oh - and do keep posting those Northern Soul classics!

Boffy said...

Charlie,

Thanks for your further comments. In addiiton to the other blogs you've mentioned I'd also mention the work being done by the Comrades over at The Commune , and I think that Mike McNair of the CPGB is also looking at some interesting ideas in that light too.

I'm not sure if Tom is the same Tom Rigby I know, but I have been plugging away for some time at the idea that I cannot udnerstand for the life of me why socialists do not raise a campaign arouynd the fairly obvious bourgeois demcoratic demand to have the right to control the workers money in their pension funds!!!!

As an economist I've also been spending a lot of time in recent years trying to get a practical understanding of the financial markets. For one thing I don't bet on horses or football, and apparently Marx himself wasn't averse to Stock Market speculation, though obviously not very successfully! But, as Trotsky argued back in the 1920's we have to udnerstand all those things before we can control them as part of a transition to socialism, and as lenin said, we all have to become Accountants!

Glad you also liked the Northern Soul - picked that at the moment because of the Visa advert. Paul Mason from Newsnight wrote to me a while ago, and he's an old Wigan Casino hoofer as well!

Boffy said...

PS. If you or anyone else can tell me how I can get the videos to play in the sidebar in a full view I'd be grateful.

CharlieMcMenamin said...

I'm no teckky type, but I fear you'd need to change the template to one with a wider right hand column to get a full picture. You can get loads of free templates - quite apart from the ones already on Blogger - from the link below. Some of them are described as 'fluid width' which suggests they can be adjusted.

http://btemplates.com/category/fluid-width/

Paul Mason has many virtues, not just a yen for Northern Soul.

Anonymous said...

As an argument for saying Marx saw co-operatives as an important feature of the transition, this is first class.

However, I think your methodology is incorrect. You should have started by looking at society now, examining the development of class conflict/relationships and analysing where the capitalist economy currently stands. From this starting position you should have expanded your argumnet to where this analysis leads you.
Instead, you start by looking at the solution first and working back from their.

This unmarxist method can only lead to error and is a reason why you blame the left for the failure of co-operatives.

Now I am not necessarily disagreeing with your view that Co-operatives play a crucial role in the development of socialism.

But yours is an example of how Marxism has become a property argument rather than an application of his method.

I look forward to your future economic analysis of co-ops, which should be more enlightening.

Boffy said...

MARWRA,

You say,

“However, I think your methodology is incorrect. You should have started by looking at society now, examining the development of class conflict/relationships and analysing where the capitalist economy currently stands. From this starting position you should have expanded your argument to where this analysis leads you.
Instead, you start by looking at the solution first and working back from their.”


I disagree. Elsewhere, I have analysed the nature of Capitalism today. As part of that analysis I have looked at the tendency of Modern Capitalism to take on board many of the aspects of Socialism e.g. the fact that the Economy is dominated by very large enterprises, that enterprises determine their production on the basis of long-term plans as opposed to the response to the price mechanism of Classical free market Capitalism, that Capitalist economies necessitate similar long-term planning at a macro-economic level by the State, that the State itself accounts, in all developed economies, for around 50% of all economic activity, that the purpose of all this planning is a recognition not only of the need to minimise crises and social disruption, but that the central dynamic of Capital – the maximisation of Profit – can only be accomplished within the context of the production of Use Values, including the satisfaction of wider social goals – the provision of healthcare, education etc. – which at the same time fit in with the needs of a modern Capitalism, which requires the maintenance of a well educated, generally healthy, and contented workforce. Indeed, much of that analysis, fits nicely into the idea I have developed elsewhere of simply driving this development forward – the idea that Capitalism can never develop this planning adequately, because of the continuing role of Monopolistic Competition, and the profit motive – by utilising Workers pension Funds to simply buy up strategic industries, and continue what are existing planning methods within them, to link up with a wider planning and co-operation across such taken over industries. I have also looked at the nature of modern Capitalism, in terms of its essentially State Capitalist nature understood as follows. Not only does the State set overall macro-economic frameworks, but that State is also closely linked with a tiny class of people who own the decisive means of production – perhaps as little as 0.1% of the population. This ownership is not exercised in the fashion of classical Liberal Capitalism, but is exercised via a widespread Share ownership, and ownership of other financial assets. Although members of this class retain some connection to a “family” business e.g. Bill Gates and Microsoft, their wealth is such that it exceeds the potential of such individual ownership, and so becomes ultimate movable wealth. It achieves Marx’s “Average rate of Profit”, by instantaneous re-allocations of Money Capital from ownership of shares in Company A, to shares in B,C,D etc. increasingly undertaken not just within National confines, but on a global financial market – in fact, it should perhaps, increasingly be designated an International State Capitalist Class.

In addition, I have also in previous articles discussed the potential – and I would rate it no higher than that – of modern Capitalism developing in the direction of a society that would be best described not a Socialism, but as Technological Feudalism. That is the increasing tendency for workers to be removed from the workplace environment into the potential for home-working via computer, the potential to organise such work not on the basis of wage labour, but of individual commodity producers (a piece of book-keeping being a saleable commodity) competing in a virtual marketplace for buyers – I have referred in previous posts to this already beginning to happen in relation to Computer programmers for example. But, on a wider scale we see that happening with musicians and other artists increasingly using the Internet as the medium by which they perform and sell their commodity. In such a society the owners of the virtual land – the cyber space – in which such activity is conducted become Landlords, extracting a monetised surplus product from the cyber peasants operating upon it. A class of serfs, and of landless labourers would continue to exist as it did under feudalism proper either dependent upon the State, or else continuing to provide wage labour on the fringes of such an economy.

However, at the end of the day I am a Marxist interested in how the transition to Socialism can be achieved from where we are. Absent some significant changes which make that last technological feudalism scenario likely, I continue to believe that the progressive development of society from here is indeed socialism, and so my main concern is how best can that transition be achieved. Again, for reasons I have outlined on many previous occasions I have rejected the standard Leninist model of that transition, and come to the conclusion that it is only via a bottom up self-activism of the working class that such a transition can be achieved.

This piece which was after all entitled “Can Co-operatives Work?”, cannot be seen as in some way separate from all of those other pieces of analysis which lead me to that conclusion. It is neither desirable nor possible in each work to write an opus that covers every aspect of Capitalist society that leads to those conclusions. The aim of the piece then was quite clear. Having previously and in some detail rejected the traditional Leninist model and decided upon the bottom up model, it was to ask that question “Can Co-operatives Work?”, and in doing so to challenge the standard Leninist objection to such a perspective, especially to challenge the rooting of those objections within the context of a misrepresentation of the views of Marx and even of Lenin.

“This unmarxist method can only lead to error and is a reason why you blame the left for the failure of co-operatives.”

For, the reasons set out above, I do not think there is anything “Unmarxist” in the method adopted. On the contrary, I think the method used is fully consistent with Marx’s method. I do not blame Marxists for the failure of Co-operatives. I blame Marxists for adopting a hostile attitude to Co-operatives, which is unjustified both in Marxist theory, and in empirical evidence. But, I would not suggest that a general explanation for the failure of Co-operatives can be laid at the door of “The left”. Clearly, there are examples, such as the evidence from Gramsci of the experience in Italy, where a hostile even “Left” Trade Union bureaucracy which sees its interests in continuing “collective bargaining” can work to deliberately undermine Co-operative production, and there could no doubt be similarly adduced instances of the actions of sectarians seeking to undermine Co-operative production for no other reason than that with which sectarians generally operate – to prove their own view of the world correct, whatever consequences that has for the working class. But, in general the reasons for Co-operatives failing are those to which I have referred, under-capitalisation, taking over already failed businesses where market conditions are not conducive, failure to build Co-operative enterprises within the framework of a National (preferably International) Co-operative Organisation, failure to conduct business on a commercial basis – the News on Sunday was perhaps a good example of that – and the hostility and opposition of Capital – in essence the same argument that applies to building Socialism in One Country.

More importantly, the examples I have given I think demonstrate that there is plenty of examples of Co-operatives NOT failing as the statist Left has suggested they are bound to do.

“Now I am not necessarily disagreeing with your view that Co-operatives play a crucial role in the development of socialism.

But yours is an example of how Marxism has become a property argument rather than an application of his method.”


Again, obviously I would disagree. I think that the Marxist method based as it is on the development of the material forces, and how that development brings about changes of social relations is fundamentally about forms of property and who owns them, how they use them, the distribution relations that arise from them, the ideas, culture and social norms that arise out of the social relations that those property forms create and so on. There has never been a social revolution where that change of property relations has not arisen in the old society as the basis of all of those changes in social relations and ideas and culture, and has formed the basis of the transition to a new form of society, and the transition to socialism is no different. It is that fundamental aspect of Marx’s method, which I think Leninism and the Statist Left ignore at their peril. Even the empirical evidence demonstrates that workers themselves gravitate towards such solutions.

Anonymous said...

I don’t believe anyone on the left should close their mind to the idea of co-operatives and those that do should not even be considered on the left.

Now your article has prompted me to look into the co-operative movement more closely and I have found this enlightening. Your view that the left has ignored this movement is absolutely spot on.

I don’t think there is any doubt that co-operatives could work as enterprises, in a restricted bourgeoisie sense of the word. I am well aware that co-operatives can out perform capitalist firms and provide better efficiency and more equality. They also provide arguments against right wing theories about human nature etc.
The question is not can co-operatives work but how, given current conditions (economic and structural), can co-operatives increase in number and develop in a way where they combine into a national framework.

For example, if the motivation for people joining a co-op was to become a capitalist and all that brings, i.e. not motivated by socialist idealism, how will these co-ops join up? I think in Mondragon there is a split between those that want to expand co-ops and those that actually want to restrict it.

I think you should have made this article your opus as it is something of extreme importance. A rigourous, scientific Marxist analysis is what this subject deserves.

Now finally you say that a transition to the new society must be born from the womb of the old, does this not include the state?

Boffy said...

Marwra,

I am flattered you consider me capable of an opus. My intention has not been so grand. It would, perhaps, at some point be good were I to have time, to collect some of the ramblings presented here into something more comprehensive. My aim at the moment is to provoke those who perhaps have more years left to them, and perhaps greater access to academic facilities to take up the cudgels.

You have prompted me, however, from your previous comments, in attempting to address the question of the economics of Co-operatives to address the question more specifically from the angle of the nature of Co-operation throughout Man's Productive history, and to locate within Capitalist production those elements, which can be identified as progressive and can be advanced beyond the restrictions that Capitalist production imposes through such Co-operative production. Now to address the points you raise in your current post.

1. In one of the quotes from Lenin I used he says, "Co-operatives are Socialism." I think this has to be read as one of those grand sweep statements for which Lenin was famous, and not taken quite literally. Maybe in the context in which he was writing of a Workers State, an economy comprised of Co-operatives might be considered on the road to Socialism, but in and of themselves the Co-operative cannot be considered socialist any more than can the Trade Union, or indeed the self-employed person. All of these contain elents, which can cause the worker to develop a different conscioussness than the ordinary worker within the capitalist enterprise, all have the potential for development in a progressive direction, but potential is not reality, becoming is not having already become.

Unless the Co-operative is locate within the national (international) framework previously alluded to, then what exists is nothing more than a capitalist enterprise owned by workers, and the fate of such will be to be swallowed up one way or another by Capital, just as an attempt to build Socialism in One Country will suffer that fate unless it is linked with an attempt to build socialism on an international level.

So key to the success of such a perspective is that establishment of a Co-operative Federation, and not just as some loose association of assorted Co-ops but as a strategic concept, a determined effort to mobilise resources on a Co-operative basis in oppsoition to Capital. Only that as a serious organisation - which implies also some political agenda and Programme driving such a strategy forward, can provide the basis which will give workers confidecne to engage in experiments to develop their own Co-operatives on a meaningful scale, and only that will lead them to merge their efforts into it. Without it workers who do set up Co-operatives will see it simply as a short term tactic to save their jobs, or else a means to make money, possibly by selling out to Capitalist buyers at some point if the business becomes succesful. There are a number of examples of that such as with Poptel.

2. The role of Marxists in this process is important too. I was having a discussion with a US comrade on this some time ago, and making the point that the assumption that a Workers State - let alone a Workers Co-operative - had to be all sweetness and light, and embrace all of the progressive ideas of socialism is a fallacy. I can conceive of a situation that would be quite possible where workers arrive at a level of conscioussness in which they recognise the need to possess and control the means of production themselves, and yet continue to hold a whole series of reactionary ideas such as homophobia, sexism, racism and so on. The development of Co-operatives in various forms again provide the material basis on which those ideas can be better challenged, but they will still need to BE challenged. It will take the persistent work of marxists within such organisations day in day out in winning the confidence of workers and drawing out the lessons of their experiences to generalise the lessons of solidarity, compassion etc. in relation to all of those other aspects of human life without which socialism is impossible.

3. And this follows on to your question about the State. I remain on this question on the same ground as Marx and Lenin. That is I do not beleive that the State can simply be taken over by a new ruling class. The existing State has to be smashed - at least as Lenin says that part of the State whose function is repression, not necessarily that part whose fucntion is merely accountancy and administration.

However, where I would perhaps differ with Lenin, and where Marx is not to be heard is that I do not beleive that what replaces the State can simply spring up like Minerva, any more than can the new forms of property and production. On the contrary, I would argue that a look at the State in all previous societies has itself grown up alongside the new ruling class. Noew Co-operative forms of production and control will of necessity lead to new forms of democracy, and these democratic forums established by the workers to co-ordinate their actions within their communties, across workpalces etc. will form the embryonic Workers State, which will increasingly come into conflict with the bouregois state and ultimately force a conflict between the two over who rules.

I am, however, somewhat taken by one of the things I read in researching the article on Co-operatives. It was this in Jossa,

"But there is also a ‘third road’ towards ‘true socialism’. No major political shift
– Hayek argued – is obtainable through mass propaganda; the problem is just to
persuade intellectuals (Hayek, 1983, p. 192; see, also, Keynes, 1936, last page). If this
is correct and intellectuals are won over to the idea of a system of democratic firms as
a major advancement over capitalism, this far-reaching political shift could be set off
by a majority vote in parliament abolishing wage labour in ways and to the extent
deemed appropriate in the circumstances prevailing from time to time. In line with
Hayek’s and Keynes’s suggestion, once intellectuals have fully interiorised this notion,
the general public would gradually assimilate the beliefs of their leaders and, sooner or
later, a parliament would probably be in a position to pass the legislative provisions
required for implementing socialism by democratic means. From our perspective, the
most effective measure would be an act of parliament simultaneously converting
equities of joint stock companies into bonds of equal value and limited companies into
firms run by their own workers.7
Following the enactment of such a revolutionary parliamentary measure, the
managers of one-time limited companies might remain in office unless the workers’
councils of the cooperatives established by operation of law should otherwise resolve."


Now I think this is wrong and fanciful, but there is an element within it which I would take up. I would date the point at which the British State became a bouregois state as being that point at which the general ideas which underlie bouregois society became broadly accepted by those self-same intellectuals, and he consequence that had for the transmission of those ideas into the corridors of power, and through the various networks of the ruling elites. As I have written before I would date that at the time of the Glorious Revolution, and its theoretical representation is Locke's Second Treatise on Government.

There is a difference between this establishment of bourgeois ideas, however, and the establishment of socialist ideas. The acceptance of bouregois ideas by sections of the old ruling class, and its representatives in the State alongside the accession to those positions of agents and representatives of the bouregosiie itself was facilitated by the fact that it was the acceptance of ideas of one exploiting class by members of another exploiting class. The Aristocrats only had to accept that they should exploit society in a new way, not that they should give up the right to exploit altogether!!

Even so, it was only when the Commercial bourgeoisie had ammassed considerable wealth and power in its own right that such a transition was possible, and even then the old ruling class remained wedded to its old forms of exploitation alongside its alliance with the Money and Merchant Capitalists. It still required a political revoluiotn in the 19th century for the industrial bouregoisie to fully establish bourgeois rule.

But, I do not rule out the possibility that given a sufficient development of Co-operative production, and the extension of Co-operative forms in other aspects of life - especially if this is tied to an icnrease in the strength of the working class industrially, to its icnreasing economic and political assertiveness, that sections of that intelligentsia could swing decisively in favour of such an ideology, and if those ideas became accepted as increasingly valid, then such a waterfall of ideas into the working class in general could occur bringing about such a dramatic shift in class conscioussness.

Such a change might even lead some capitalists to conclude that they would be better off simply selling up, and living off their proceeds, but I would not bank on it. As something I was reading recently about the role of such people in developing economies put it, "The Capitalists might not like the thought of death much,but they are unlikely to commit suicide to avoid it!"

Anonymous said...

I think the role of the party is more crucial than you have argued in these articles. At least I think that is what you are arguing, though your urgency to educate the left in these matters would seem to be suggesting otherwise? Somehow the workers need educating/informing –whatever way you look at it this could be defined as a “top down” method.

Looking at your analysis of the dialects of this process, I think the leap from New Labour to the kind of party needed is not such a giant chasm. (Ironically the leap from Old Labour may have been bigger).

Also, how do you see democracy developing as co-ops increase in sphere and join together, wouldn’t it become diluted?

Boffy said...

Marko,

You are probably correct that I did not actually make clear the role that the Party had to play. That was because the function here was to address the question of whether Co-operatives could work. However, I think that what I have said about the fact that Co-operatives can only work as an element of class struggle, as one component alongside the Trade Unions and the Workers Party, and what I have said about the need for individual Co-operatives to be a part of a Co-operative Federation or holding Company - rather like the International Co-operative Association, but with a much more interventionist, much more strategic and political dimension - indicates the importance I attach to the role of the Workers Party whose job it is to drive that process forward, and to develop the adequate programmatic basis on which the class struggle is fought.

As I have said in my reply to MARWRA Co-operatives are not innately socialist, it is that overall structure, that integration with the class struggle which creates the condiiotns under which they transcend being simply capitalist enterprises owned by workers. But, the kind of agenda for that set out by Marx and the First International, or by Lenin DOES require a political strategy, and it is likely that such a strategy CAN only come from a Workers Party - or at least from Marxists working through a Workers Party to mobilise much larger forces, what has been referred to as using a lever.

Now, that does not mean that Marxists have to FIRST win control of that Party have to FIRST develop such a strategy. Not at all. The process is dialectical. For instance, I was talking to a Labour Councillor a couple of weeks ago who is involved in a Tenants and residents Association on a local Miners Estate with considerable problems relating to absentee landlords. Now as part of a Regeneration Project for the District it is being proposed to demolish a large number of the houses - some of which hav been bought by their tenants - in order for some development company to come in and probably put some commercial development there.

I have suggested that one soluiton would in fact be for the Residents and Tenants to set up their own Co-operative Housing Company which could own the rented houses - and even those bought if the owners wanted to sell them into the Co-op, and to Co-operatively manage the estate. It would mean that the Co-op could seek to buy up property from the absentee landlords, thereby icnreasingly bringing the entire estate under their ownership and control.

Such soluitons can be argued for, driven, organised and promoted by Marxists acting through a Branch LP - though I doubt some Marxist belonging to XYX sect would get any kind of hearing for such a proposal.

As I have shown elsewhere the facts speak for themselves Housing Co-ops repeatedly outperform either Council or Social Housing in terms of efficiency and satisfaction of tenants, according to independent analysis. By developing such succesful schemes not only do marxists begin to get a hearing from workers for actually doing something practical to help workers in their immediate problems, but they do so in a way that directly shows to workers how such a Co-operative society CAN work, and how it provides them with direct benefits compared to Capitalism. It provides the basis for changing conscioussness AND for recruiting those workers into the workers party, and thereby transforming it. The two things go together dialectically intertwined.

In so doing they create the conditions by which these individual co-ops can be integrated into a wider structure, and how the necessary political strategy and programme can be deeveloped within both that Co-operative sector,and within the Workers party itself. It provides he basis for generalising those lessons into society at large, and in particular into those more significant aspects of workers lives in the workplace. At the very least if workers learn that they can control their own neighbourhoods it raises within them the question as to whether they should not also control their own work process!!!

Now to come to your question of democracy from that. My experiecne is that with such ventures its amazing how much they generate real democracy and involvement. Especially, if the scale is right, and people feel comfortable with their involvement, people can have a real feeling of control that encourages participation. By contrast every poll carried out shows that the large majority - I think around 60% - of people feel that they have no control over what Government's do!!!

And as I have written a Workers Co-operative HAS to involve Workers on a constant basis in such discussion and demcoratic decision at all levels of the factory or enterprise whether those discussions are structures or ad hoc to resolve some immediate problem or issue, or to take up some new idea, and so on. As every worker has a direct financial interest in such participation, and as part of the work process would BE such discussion it becomes embeded in the workers conscioussness.

It is these aspects which I think are the ost poweful aspects of Co-operatives in bringing about real changes both in the material condiiotns and in the workers conscioussness.

But, a look at one of the items on the ICA website shows a further aspect. It talked about the fact that EU law restricted the ability of Co-ops throughout Europe to integrate. It became necessary for the ICA to lobby for a change in EU law to enable it. As it happened that was merely a technical issue it affected private companeis to soem extent to. But, the reality is that increasingly workers whether in Co-operative Housing schemes, or in Co-operative Production will as part of a programme of class struggle come into conflict with the interests of Capital,and Capital will use all the tools and levers of existing bouregois demcoracy to frustrate it. As I have spoken about before, integration of Co-ops beyond a certain level as they reach a size and importance that challenges important sectors of Capital will be confronted with charges of Monopoly etc. It is not possible to simply ignore the role of bourgeois demcoracy and bouregois law in these matters anymore than Trade Unions can be indifferent to anti-Trade Union laws. It will be necessary for workers to protect the interests of their property by political means by developing the Workers Party to a level where it can go into the corridors of Capitalist Power - be it the local Council Chamber or Parliaments - and fight for those interests.

My point on this is that in the past such Parliamentary action has never been successful, because those who were sent as representatives were never truly accountable to the workers. The workers parties at their best only represented a Minority of workers in their membership, and the parliamentary leaders in going their own way could always appeal to that more passive and backward layer outside the Party. A movement which icnreasingly mobilises a majority of workers through such self-activity will preclude such an outcome. The workers demcoracy that grows up in the workers communities in their Co-operative organisaitons, in the Producer Co-operatives and so on, and the growth of demcoracy and class conscioussness that engenders will ensure that those chosen as representatives are real class fighters already proven in practice, and directly accountable to those who send them forward, and continually under pressure to fight by those very organs of workers demcoracy, the nascent organs of workers power outside those bourgeois Parliamentary structures.

So I agree with Lenin that so long as workers contiue to have faith in bouregois democracy, and more particularly so long as the law of the land is legislated via that bouregois democracy it will be necessary to relate to it. But, I do not see it as an important avenue in which Marxists should be spending their time at the moment. It is more important to do that immediate work in rebuilding the workers mvoement, by addressing the needs of workers here and now by practical measures that encourage self-activity by the class, engender the culture of self-help as opposed to relaicne on the bouregois state etc., and having built that bedrock then the questions that flow from that can be addressed.