The Economics of Co-operation - Part 2

What then are the progressive features of Capitalism as it currently exists, and how can those features be advanced. How can the reactionary features of modern Capitalism be negated?

The following features can be listed as generally progressive and leading to a raising of productive potential.

1. Large scale production of mature commodities. Contrary to orthodox economic theory, which posits the onset of diminishing returns beyond a certain level of output, there is in reality no indication for most mature products of such a phenomenon. On the contrary all empirical evidence indicates that for such products alongside greater and greater levels of production goes lower level of costs through the economies of scale. Rationally, such production should be encouraged as an efficient use of man’s resources with the proviso that consideration of transportation costs to markets, including the external costs in terms of environmental damage, be taken into consideration in locating such large plants around the globe. However, such large-scale production necessarily implies a degree of monopoly or oligopoly, which might have a reactionary consequence in terms of the willingness to innovate, to restrict consumer welfare etc. As previous experience has demonstrated addressing such monopoly power through the replacement of a private with a public monopoly does not constitute a progressive solution.

The State as a Capitalist State can only carry on its activities including the provision of goods and services according to the norms of Capitalist production, including all of the limitations that entails – in particular the idea of production for profit rather than for need. Capital in the form of State owned Capital continues to confront the worker as Capital rather than as means of production. In fact, as Kautsky argued it can because of the power of the State confront the worker in a more awesome manner than does private Capital. The worker continues to suffer alienation, and all of the attributes that limit large-scale production by private Capital are reproduced. The alienated worker has no connection with their product or with the final consumer of that product. They have no incentive to work efficiently, in fact, the general bureaucratism that always accompanies the activity of the Capitalist State is likely to ensure that they work if anything less efficiently than under a private capitalist regime, and consequently the products and services produced are often shoddy, and costly. Its clear that only by transferring such production into the hands of the workers can such problems be overcome. But, although such a transformation is a necessary condition it is far from a sufficient condition. A Monopoly simply in the hands of workers need not be any more progressive than a monopoly in the hands of the Capitalist State, or in the hands of private capitalists. Indeed, on its own such an enterprise could make its workers little more than such private capitalists. Such a venture can only be progressive if it acts in such a way as to utilise the advantages of large scale production to ensure both a reduction in costs, and a mobilisation of its resources to meet the needs of consumers now and in the future, that is that the problem of alienation is overcome in practice by fusing the interests of the workers in the enterprise with the interests of their fellow workers in the community at large. In other words it means that the enterprise must be organically linked to the working class, which acts to feed into it, ideas, needs and so on, whilst actual control of the means of production reside with the enterprises’ workers themselves.

Only in so far as these workers directly associate their own individual and collective interests with those of the working class as a whole can this be achieved. In short it implies, a qualitative shift in class-consciousness, and in working class democracy; the establishment of whole new structures of participation and discussion. Only on that basis could workers in these enterprises be persuaded to invest the necessary resources into Research and Development to ensure the creation of new products and designs to meet consumers needs, or to invest in Quality Control measures to ensure an ever improving quality of products and services provided to consumers and so on rather than simply sitting on their laurels and enjoying the benefits of being a monopoly supplier. Yet, it is in these areas that the real benefits of Co-operative production should be greatest. It is in the eradication of alienation as workers make contact with those for whom they expend their Labour that the worker can begin to transform “work” into a normal human activity, through which the worker expresses themselves, and thereby raises the productivity of labour to levels that Capitalist production cannot match. It is through the desire to produce as effectively as possible, and to produce new exciting products that the worker desires for themselves as a member of the community at large that the drive can come to innovate in products and techniques.


2. Technology Sharing. Given the huge costs of developing new products like engines the sharing of technology makes enormous sense. One area where competition continues perhaps to make sense is competition amongst workers to innovate, not necessarily for any financial gain, though there is no reason why under the rules of the Capitalist game that have to be observed at present workers should not gain financially from such innovation, but, for personal pride and satisfaction, and for the results of that innovation to be shared. At the present time such innovation under Capitalism is restricted. The large monopolies technology share with each other for their mutual benefit, but only amongst themselves. Although, some specialised workers engaged in R&D Departments may be well-paid to engage in such activity, the huge reservoir of talent that resides within the workforce in general is not utilised, and even the R&D workers remain just workers with no immediate incentive to innovate. More generally, monopoly capitalism is marked not by such technology sharing, but by the opposite, by commercial secrecy, by the protection of innovation by patents, etc. In some of the most important areas of life such restrictions are immediately harmful to the public well-being e.g. in the development of pharmaceuticals.

Although, a Worker Co-operative would have no reason to share its technology and innovations with private Capitalist enterprises, Co-operative enterprises operating as part of a broader Co-operative holding Company would have such an incentive, because with profits going to the holding company all workers in the Co-operative sector would directly benefit from the increased profits that would accrue from the rapid take-up across the sector of such new products, techniques and so on. Further arrangements to directly benefit the innovating enterprise by some kind of licensing arrangement or other financial inducement could also be considered.

3. Planned Production. The introduction of enterprise planning techniques, many of which have been learned from the experience in the USSR, represent a progressive development within Capitalism. However, it has to be remembered that although these techniques are similar to those that would have to be utilised in a socialist society the content and intent is completely different. A socialist society would use planning techniques such as Market Research and so on to determine the needs of society in order to allocate resources so as to best meet those needs. Capitalist enterprises utilise such techniques in order to maximise their own profits. A Workers Co-operative operating within a continued Capitalist environment would have to walk a line between both. A socialist society can allocate resources to fulfil a need for certain social goals irrespective of whether the enterprise/s producing those use values do so at a profit or not, because society as a whole decides to do that, and finances it by diverting surpluses created elsewhere in the economy. A Workers Co-op within a Capitalist environment cannot do that for the obvious reason that any resultant losses will not be financed.

However, the opposite is not true. Whereas, an individual capitalist enterprise produces to maximise profits in the long term, the worker co-operative has no such imperative. It may not even have to produce profits at all on an individual basis. Very large Capitalist enterprises may well operate on a basis in which certain parts of their business produce no profit, for a number of reasons. One Department might produce inputs for another department, and the losses of one are the gain of the other. Production may continue at a loss in one Department if that production makes a contribution to the enterprises overall fixed costs. In other words, if that production ceased the firms fixed costs then had to be borne by the remaining Departments who as a result produce a lower overall amount of profit than was previously the case. But, enterprises have to make a profit overall – at least in the long-term. But, the worker Co-operative might have other goals than simple profit maximisation. It may engage in some form of market research in order to determine consumer needs, and then plan its production not to maximise profits, but to maximise the long-term employment stability of its workers. As part of a C-operative holding Company it might produce at a loss, in order that its products can be used by other Co-operatives profitably giving them a competitive advantage over their private competitors and so on.

Planning by Capitalist enterprises is also restricted in the obvious sense that each enterprise seeking to maximise its profits works with closed books and commercial secrecy. Its planned decisions are not shared with competitor firms, and so the underlying planning assumptions of each firm may well turn out to be false. Each enterprise might think it knows what capacity its competitors has and its ability to expand that capacity, it may expend resources on employing industrial espionage to uncover those secrets and plans, but it can never really know what they are going to do. Experience in the realm of microprocessors over the last couple of decades has shown competing firms spending large amounts of money on new capacity only to find that their competitors have done the same creating a resultant glut. Economic theory describes such behaviour in terms of the cobweb theorem which shows the way such production decisions rather than leading to conditions of equilibrium, rather lead to ever wider disparity between demand and supply.

See: Cobweb Theorem

But, a worker’s Co-operative as part of a Co-operative Federation would work with open books in relation to other Co-operative enterprises. Not only would each Co-operative enterprise in a particular industry have an incentive to share its plans with its fellow co-operatives, because in doing so it would avoid making costly investment decision mistakes, but it would have an incentive to share such information both with its suppliers to ensure that they could gear their own production plans to its needs for inputs, thereby avoiding dislocation and costly hold-ups, but would have an incentive to share those decision with those which it supplied for similar reasons, particularly in the case of co-operative retail outlets, which could be an important secondary source of consumer information and feedback.

4. Globalisation

One of the reasons that Capitalism has revolutionised production has been its ability to take the division of labour to new heights. Its pinnacle is the globalisation of production. The latest Nobel Laureate for Economics Paul Krugman won for his work on analysing trade patterns. He asked the question why was it that trade cannot be theorised in the terms of Ricardian Comparative advantage, why is it that some countries produce essentially the same products, but trade these similar products between them? His answer was simple – economies of scale. It does not make sense to produce at a single car plant small batches of 5 different models. It makes sense to produce a large number of one model. It then makes sense to produce the other 4 models at 4 other plants, and these can just as easily be in say Canada as in the US, resulting in trade between the two.

Although, there has been a lot of opposition to globalisation in recent years focussing on the exploitative nature of such investment in poor countries a lot of this opposition has, in fact, been ill-thought through. Most of it comes from that “anti-imperialist” Left, in the West, that also lines up with assorted reactionary “anti-imperialist” forces in some of these countries that are the immediate and real enemies of the workers there. In fact, for the same reasons that Marx saw Capital performing a revolutionising role in India, and Lenin saw it performing in Tsarist Russia, globalisation performs a truly revolutionising role in industrialising poor countries, and creating the basis for them transcending Capitalism through the creation of powerful new Labour Movements. Of course, Marxists do not condone or encourage the oppression and exploitation of workers in this country, but the solution to that as in the opposition to the rule of Capital at home is to organise the workers into Trade Unions, Co-operatives and Workers Parties, not to condemn the peoples of these countries to perpetual backwardness. Of course, workers here are limited in what they can do to assist such a development in poorer countries simply through their Trade Unions, and campaigns such as “Fair Trade”, which focus simply on consumerist boycotts and so on can never provide a real solution to the workers in these countries. But, Worker Co-operatives can, because they have a direct incentive to assist in the development of worker owned Co-operatives in those countries, and to integrate them into such an international Co-operative conglomerate.

Such a development is a direct means of ensuring direct technology transfer into these economies, and the immediate effect that would have in raising both the productivity and living standards of workers there. It would also provide a powerful motive force to encourage further development, not to mention encouraging further such Co-operatives and he consequent effect on workers class consciousness and the facilitation of the development of Labour Movements and Workers Parties.

In short the spread and co-ordination of Co-operative production on a global basis is a direct and practical application of the slogan – “Workers of the World Unite”.

5. The Greening of Business

In recent years business has responded to the growth of environmental concerns by taking on board green issues. Even Investment houses have established so called Ethical Funds, which only invest money in companies that conform to some code of ethics, be it in terms of environmental impact, avoidance of trade with certain regimes and so on. Some of the leaders of these companies do actually seem to be committed to these ideals, but in large part it is, of course, just a marketing exercise, intended to win market share from that large number of middle class consumers who wish to assuage their consciences. In the end, capitalist business will continue to attempt to maximise profit – the current downturn has seen a marked move away from concern for such issues by companies that have tried to maintain their bottom lines – and this is just a ploy to that end. Having said, that in the process some useful tools have been developed in the way of Green Audits, Carbon footprinting and so on that will be useful to workers in developing Co-operatives that really do have a concern for the environment.

More than that, it has become clear that the amount of investment that should be being directed to green industries is not being made, partly due to the frictions that arise from large amounts of Capital remaining tied up in traditional monopoly capitalistic business. Considerable scope exists for Co-operatives to expand into these new technology areas, which because they are at the leading edge tend to have a low organic composition of Capital in their initial stages – that is they require relative small amounts of Capital compared to the high value intellectual Labour involved in developing new technologies and technological products – but which have high value added, and potentially high growth rates driven by exceedingly high rates of profit. A Co-operative conglomerate could and should help to foster such industries and development.

6. Taking on the socialised production of the state

In the twentieth century the State socialised considerable functions important to the running of a modern Capitalist economy. It provided an educated workforce via State Education, it provided a healthier longer-lived workforce via socialised healthcare, it socialised social care through National Insurance Pensions, Unemployment Benefits etc. in order to maintain a calmer social order, and more compliant workforce, it socialised Housing Provision through the construction of Council Housing and so on.

During the Long Wave downturn from the mid 90’s to the end of the 90’s it rowed back from some of these programmes as the cost became too high, reducing them to minimum levels, and where possible privatising provision. As I have written previously it was no coincidence that the State introduced National Insurance just at that point where workers living standards had risen to a level where their own Friendly Societies could have become well-financed Social Insurance organisations directly owned and controlled by workers, and instead diverted those funds into the pocket of the Capitalist State, for scant return, and no control. Marxists should not support the privatisation of these functions, but we should look to transfer them back into the hands of the workers themselves so that the workers have control over their own finances, and can use them for their own purposes not to finance some latest idea of the Capitalist State such as building a new Trident nuclear submarine and so on.

In the news today, for instance, was the crisis over housing. One of the BBC Newsreaders asked the Government spokesman why with lots of unemployed building workers, and lots of housing needed the Government could not itself simply employ those building workers, providing them with a job, and the homeless with a home. Of course, no reply was forthcoming. But, we should not expect the Capitalists’ State to do that anymore than the Capitalists themselves. It operates according to the same principles of profit, and concern for the profit of the Capitalists who would pay the taxes to finance such a scheme. They work according to different criteria and interests to us.

But, the point itself can be addressed to the workers movement itself. The Co-operative Bank is in the midst of a £70 billion merger with Britannia Building Society. The latter as a mutual BS is controlled by its members as is the Co-op. Both have links with the Labour Movement, and the Co-op in particular through the Co-operative movement. Brittania finances people to buy houses, the Co-op Bank in addition as part of its business helps finance businesses. It seems obvious to me that the focus of attention of the merged organisation should be to prioritise and direct their funding towards a) the creation of Housing Co-ops, which can buy up existing properties that are empty, and the construction of new co-operative housing, and b) towards the financing of worker-owned and controlled construction Co-operatives that could employ some of those unemployed building workers at decent rates, and who could then build and maintain the former housing thereby not only housing the homeless, but who through their rents/and or mortgage repayments would not only replace the wages and costs of the Co-operatives, but would create a large new pool of finance to cover the expansion of the Co-operative Housing sector.

The solution to these problems lies within our own hands, if we only mobilise to bring it about rather than sitting back and waiting for the bourgeois state to do it.

7. The Decentralisation of production

As the introduction of new technologies has once again revolutionised production, so property forms and social relations are once again undergoing change, and the form of co-operation is once again changing in consequence. Alongside all of the above, the concentration of production etc. is occurring a contradictory development, not the concentration of production, but its decentralisation. That has come about as a result of a number of developments.

Firstly, mass production led to automation, and automation has led to computerisation and roboticisation. Where mass production manufacturing has not already been shifted overseas it is now undertaken in huge factories that employ few actual workers, and where many of the repetitive jobs have been taken over by robots. There are already a number of fully automated workplaces. Similar, transformations have occurred in distribution too. Point of Sale terminals in stores now send instructions directly to computer systems that automatically place orders with suppliers once some minimum stock level is reached, and those computers communicate directly with the suppliers computer to make the order, which in turn sends those instructions to robots which pick the necessary products from the shelves, and take them to be shipped out. Now even the shipping function might be further automated. Not only do the huge freight ships have very few crew for their size, but a new technology is being introduced, which will enable a convoy of vehicles to be led by a single lead vehicle with a driver, whilst the others are computer linked to it behind!

Even in banks and other service industries, computers have replaced cashiers, and increasingly banking is done electronically by Internet. It cannot be long before the cost of maintaining large supermarkets and stores becomes such that the advantages of online shopping will see a change in that area to. Already online shopping is increasing at a far more rapid rate than through retail outlets. And in high cost areas, already there is a move to avoid the high cost of office space by encouraging home working. The danger for workers of such a development is of isolation and atomisation, undermining collective bargaining power.

The simple answer to that is to use the techniques that peasant producers have developed in Europe, the establishment of marketing and distribution co-ops. In fact, such a solution could be useful as a response to the increase in casualisation of labour. In other words workers could form their own distribution Co-ops that acted as suppliers of labour power. It would in fact be a way of replacing all of those private manpower agencies that rip workers off and provide them with no protections in the supply of temporary and part-time labour to minimum-wage paying employers. A Co-operative Labour exchange of this kind could act as a monopoly supplier of Labour Power to Capital, thereby raising the price of labour-Power as a commodity, and putting an end to the back street sweatshops.

But, more than that already there has been established Co-operative ventures into the world of ISP with Poptel. Not only should such Co-operatives be developed, but a Co-operative for homeworkers could also ensure that the potential for their atomisation was overcome, and their services could be marketed by such a Co-operative over the Internet.

And as I have said, previously the tendency is increasingly towards consumer spending on Leisure and entertainment as living standards rise and spending on traditional consumer items declines as a percentage of spending. That together with the Internet and the cheapness of much of the required technology has led to the growth of new artists and creative people selling their product over the Internet to a global marketplace. Again, such production is highly suitable to organisation and distribution through a Co-operative. In fact, a Co-operative for Creative people already exists - Creative Co-op . If all of those socialist film directors, writers, musicians, actors and other creative people were to combine their talents in such a Creative Workers Co-op what a tremendous force that would be to undermine the monopoly of bourgeois ideas, and the bourgeois media!

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