The Development of a Cooperative Economy in Practice

By Geminijen
Anti-Capitalist Meetup
, September 18, 2011

Separating Utopian Goals from Working Models.

In Part 1 (DailyKos, AMC, Is a Non-exploitive Economy Based on Worker-Owned Cooperatives Possible,…, Sun Jul 24, 2011) we analyzed the dynamics of developing a cooperative economy as an alternative to a competitive capitalist economy. Under Capitalism, economic growth is based on competition and the accumulation of monetary profit. This is increasingly proving to be an unsustainable form as money is accumulated in the hands of a few at the expense of the general well-being of global society.

Currently 100 million people are members of 47,000 cooperatives in the United States. Globally cooperatives employ more than 100 million people and have over 800 million members. While still part of the private ownership capitalist model, a cooperative economy is rooted in the democratic wishes of the workers (people power vs. money power) and might eventually provide a transition toward an economy based on societal cooperation to maximize the use of material goods for all. In other words, creating goods and services people want (fixing the bridges, cleaning up the air, providing good schools) for society in general instead of amassing individual monetary wealth for a few.

Since cooperatives are still subject to the dictates of the capitalist society under which they operate, most worker-owned and managed cooperatives vary to a greater or lesser degree from the “pure” cooperative model.  While some of these variations can be explained by the particular situation of a particular cooperative –the type of enterprise, the needs and wishes of the worker-owners, etc. and do not threaten the democratic or equitable nature of the cooperative, most of the deviations are determined by regulations/laws of the particular state or country and the competitive capitalist environment in which the cooperative has to operate.

Two different models of cooperative networks:

This post (part II of the article) will compare: 1) The state sponsored model in Venezuela where funding and regulations that define cooperatives originate in the political process and 2) the Evergreen Initiative private sector model in Cleveland, Ohio which uses a network of existing industries and community nonprofits to drive cooperative development.

Because of its importance as a model to the overall development of cooperative networks, we will also refer back to the Mondragon Model in Spain which was discussed generally in Part 1 and in detail in an excellent diary by T Pau in the AMC (Mondragon Miracle, sun Jul 3l, 2011,…).

This piece analyzes how each model deals with the major problems that are barriers to the development of a cooperative economy within a capitalist economy. The point is not to judge, at this juncture, the superiority of one model over the other, but to see how different models are affected by and operate in practice given the economic and ideological environment in which they have developed.

1) How do the different models raise capital for economies of scale?

To have a fully developed cooperative economy, the major industries must be worker-owned and managed. Worker/producer coops breakdown into those that produce commodities which are capital intensive, and those that produce services, which are generally labor intensive. Obtaining the capital and economies of scale necessary for capital intensive projects is one of the major problems the cooperative movement has faced.  Original accumulation of capital that financed the industrial revolution was a combination of primitive accumulation through exploitation of the transatlantic slave  trade, and of imperialist exploitation of cheap raw materials and resources in third world countries, first in Latin America, then in Africa and finally, in the Middle East.

Since the current global economy is controlled by the Multinationals and banks through financial institutions such as the World Bank, the International Monetary Fund and the World Trade organization, new models of economic development must develop new sources of financing if they don’t want to be absorbed into the existing capitalist model.

2) How much control do workers have over their workplace?

While the cooperative movement is innately oriented toward democracy and principles of social cooperation, many people confuse the movement for worker-owned enterprises with worker-managed enterprises (cooperatives). Many conservative capitalists are eager to encourage worker-ownership (Employee Stock Ownership Plan) as a way to bust unions, provide incentives to increase production and worker and capital retention (workers-ownership profits are tied up in their retirement plan and cannot be accessed until they retire). In most cases, the workers do not own a majority of the stock and share stock ownership with outside (non-worker) shareholders for whom profit is still the primary motive.  Even as owners, they generally do not manage their plants and have no control over policy decisions (to move a plant to another country) or the hiring and firing of workers.

Cooperatives, on the other hand,  are defined by the International Cooperative Alliance’s Statement on Cooperative Identity as “autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly owned and democratically controlled enterprises.” Anarcho-syndicalists suggest that, unlike profit oriented enterprises, cooperatives which are worker-owned and managed enterprises, where each worker owners one share and has one vote, will create a transformative economic form that could replace a capitalist system based on profit accumulation.  Based on the ideas of economic democracy and voluntary cooperation without class conflict or labor exploitation, anarchists focused on organizing from the ground up, establishing locally managed cooperatives, further linked through confederations of unions, cooperatives and communities.

3) How can a cooperative model compete with global capital in a free market economy?

As capitalist corporations have grown into multinationals, creation of maximum profit is based on financial aspects only.  Buying and trading of corporations and stock become further and further removed from the production of actual commodities. Profit becomes abstracted from the underlying real economy. Management increasingly ties wealth and profit to “money wealth” at expense of the wealth creation based on producing products and services people want made under humane, democratic conditions.  Considerations for a safe commodity of value, for retaining an experienced workforce do not apply. With the increased domination of financial capital, CEOs go for immediate, short-term maximization of profit by cutting workers at plants to increase the cost benefit ratio and moving plants and outsourcing jobs in pursuit of cheap labor. profits.

Cooperatives offer a much more grounded way of encouraging democratization in the work place, stabilizing the workforce by emphasizing the group ethos over the individual.  Since the “stakeholders” are the workers, it is in their interests to make the actual product they produce successful.  This stabilizes the economy from the productive end.  Instead of maximizing money profit, it maximizes the use value of the goods produced—that is, the workers are rewarded by improving goods, keeping the enterprise solvent. In worker-owned cooperatives the orientation is toward building profitability by emphasizing the  use value for the workers as a whole rather than monetary value for an individual.   Instead of chasing around the globe looking for bigger monetary profits, cooperatives tend to focus on their local economy, where their life is. The workers’ goals often include a sense of how their work fits into the community.  They buy from other local producers, they are concerned about the education their kids will get in local schools, they are concerned about how their workplace effects the environment and the health of their neighbors. The shift in direction from financial profit for a few to the value of the enterprise to all the workers helps locally developed cooperative communities resist the pull of profit driven capitalism.

Source: Anti-Capitalist Meetup

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