1980s >> 1988 >> no-963-november-1988

Co-ops and capitalism

Co-operatives are usually portrayed by their proponents as more satisfying business arrangements than those found in the hierarchical power structures of corporate or state capitalism. Some have even argued that, if allowed to develop, they would fundamentally alter capitalism in favour of the working class and simultaneously facilitate the instigation of new forms of social ownership and economic democracy. For example, a recent pamphlet produced by the Tower Hamlets Co-operative Development Agency claims that co-operatives are “owned and controlled by their workers” allowing “no outside shareholders’ and no “bosses”. While a more politically motivated supporter writes:

The co-op seems to me to demonstrate that ordinary working people in the UK . . . can evolve democratic enterprise structures which have a fair chance of success; they can come to recognise that professional management is just as necessary in a co-op as it is in a capitalist operation: they can come to behave with unusual forbearance and responsibility in the matter of wage rates and to identify quite closely with the longer-term enterprise goals. (Oakeshott. R. The Case for Worker Co-ops. P.113)

What both of these two claims conveniently hide from workers is the uncomfortable fact that capitalist notions of profit-making and commodity production are intrinsic features of co-operatives, which have to function within a world capitalist market. If, for whatever reason, Robert Oakeshott is prepared to misrepresent their character and function — and it is noticeable that he supports the wage system and therefore the exploitation of the working class — Tower Hamlets CDA at least realises that co-operatives have to make a profit if they are to survive. In a recent advertisement in the above mentioned pamphlet entrants were urged to attend a series of lectures on finance, commodity production and competition. In many respects their content was no different from that of any bourgeois management or economics course.

In the advertisement for the first course applicants were told that production of the commodity is “the background of your business plan” because “its concerns are getting customers and satisfying them”, and that “any business unable to do both will not last long”. Discussing the development of a Business Plan, the pamphlet states that it is imperative “to persuade potential funders that you understand the market, that you have sufficient skills and that you will generate enough cash to pay back the money you have loaned”. These warnings are made more forcibly by Richard Macfarlane, another supporter of co-operatives, who reminds his readers that:

The questions you ask during financial planning raise questions about every aspect of the business; about markets and marketing; about people and employment; conditions; about equipment and premises; about sources of money and the legal arrangements under which it is obtained and repaid.
(Macfarlane. R.. Financial Planning and Control, a Practical Guide to Workers Co-ops, 1986. p. 5)

He concludes:

  Failing to get these forecasts right and failing to record, read and respond to financial information in the operating of the business has led to the failure of many initiatives. (Ibid, p.5)

It is because co-operatives raise capital from financial institutions, pay rent to landlords, produce commodities for profit, and pay wages to workers — as well as face all the problems inherent in a market economy — that socialists reject the claim that they either represent the Utopian idealism of Robert Owen or are organisational forms approximating to socialism. Co-operatives are in practice no different from any other form of capitalist venture: if profits cannot be secured, if interest or rent cannot be paid on time, then bankruptcy and unemployment are the end result. A high failure rate throughout the twentieth century has shown quite clearly that their life-span as profit-making businesses is often very short.

But underlying all the rhetoric in support of co-operatives is an unquestioned assumption that capitalism, in which co-operatives have to market their commodities, is crisis free. Co-operatives are not “productive islands” distinct from other forms of capitalism but part of a chain of production and distribution, buying and selling commodities with no other reason but to make a profit. So when an unpredictable crisis erupts — and they are unpredictable precisely because of the anarchy inherent in the commodity production itself — it can hit co-operatives as hard as any other form of business.

But what of the apologists themselves? Most support for co-operatives emanates from academic economists and sociologists, journalists and politicians, all of whom see in the co-operative movement a means to mitigate or play down the class-struggle. It is not an oversight that these writers fail to urge workers first to abolish capitalism and then to set up co-operatives. The truth is that for the academic or politician the wages system is taken as an article of faith; a perennial economic arrangement never to be questioned. All their pronouncements about co-operatives are couched in the language of commodity production and exchange.

This is clearly demonstrated in the book Revolution from Within, by two Social Democrat “theorists”. Unusually for political writers defending capitalism, they actually admit that the class struggle is “not just something Karl Marx wrote about . . .” but is “part and parcel of the everyday experience of most workers . . . “(p.23) and “The bitterness of the class struggle is now in evidence not so much in politics as in industry” (p. 140). However, instead of urging workers to end the class struggle by abolishing capitalism they argue that all that is needed is a change of heart or mind by those involved. They end their book with the following pitiful plea for a reformed capitalism;

The purpose of co-operation is not just to run a successful business, though successful of their kind they have to be, but to elevate the dignity of labour, to give more choice about how work should be done, to make paid work more fun; to give a new sense of independence to people who have always been told what to do, to realise the creative talents and imagination which bureaucracy has suppressed; to convert conflict in industry into a friendly partnership between management and members; to make work into a school for altruism, of people’s sympathies for each other; and to bring out more altruism by giving more opportunity for it to be expressed.
(Young M & Rigge M. Revolution from Within Co-ops and Co-operation in British Industry, 1983. p. 151)

The insidious Oakeshott is a little more candid:

   By making the workforce the owners of profits as well as of wages and by assigning to it ultimate responsibility and control we will induce positive feeling about at least a partial and modified market system among much larger numbers of working people (Ibid, p.7)

It is evident that these writers are aware of the class struggle and do not deny its existence, but they do not explain why it exists in the first place and on what grounds it is based. As such their propaganda is of a more subtle and debilitating nature as compared to that found in the writings of Hayek or Friedman, who are quite prepared to defend capitalism in all its sickness and squalor and do not hide their contempt for the working class. Instead, the advocates of so-called worker co-operatives argue the classic reformist line that the interests of capital and labour can somehow be reconciled.

The class struggle exists because the interests of wage and salary earners, on the one hand, and the imperatives of profit and accumulation dictated by capitalism on the other, are antagonistic and diametrically opposed. Co-operatives do not give workers security of employment; do not free them from exploitation; and do not allow the luxury of producing goods outside the parameters of commodity production. Co-operatives under capitalism cannot be organised in any other way. The products they make are available only to those who can afford them — what workers can pay for and what they want are two completely different things. Only the capitalist class get all the services they want. The profit system, whether unquestioned or defended by apologists for worker co-operatives, acts as a restraint on production.

Given the sordid and competitive environment in which the working class are exploited, it is quite understandable that some are seduced by the idea of co-operatives. Why, after all, should we not produce socially useful products to the best of our ability and be involved fully in the production process? But it is a mistake to believe that workers can achieve this by retaining the wages system and commodity production. As Tower Hamlets CDA rightly points out, co-operatives have to produce for markets and are therefore dictated to by them. If workers really wish to work co-operatively, freed from the constraints and pressures of the market, then the only way to do so is within a social system conducive to co-operation. Capitalism plainly cannot provide this framework and workers should realise this fact and organise politically for its abolition.

Richard Lloyd