What might a cooperative economy look like?

In any country in which a model of worker cooperation or self-management (in which enterprises are run collectively and with an eye on benefiting the community) is the predominant model, there would need to be regulations to augment good will. Constitutional guarantees would be necessary as well. Some industries are simply much larger than others. In a complex, industrialized society, some enterprises are going to be much larger than others. Minimizing the problems that would derive from size imbalances would be a constant concern.

Furthermore, if enterprises are run on a cooperative basis, then it is only logical that relations among enterprises should also be run on a cooperative basis. An alternative to capitalist markets would have to be devised—such an alternative would have to be based on local input with all interested parties involved. Such an alternative would have to be able to determine demand, ensure sufficient supply, allow for fair pricing throughout the supply chain, and be flexible enough to enable changes in the conditions of any factor, or multiple factors, to be accounted for in a reasonably timely and appropriate fashion.

It's Not Over coverCentral planning in a hierarchal command structure with little or no local input proved to not be a long-term viable alternative system. What of tight regulation? That is not a solution, either. Regulators, similar to central planners, can never possess sufficient knowledge to adequately perform their job and local enterprises can use their special knowledge to give themselves an advantage rather than share that knowledge with regulators.

Responsibility, then, would have to be tied to overall society. Negotiations among suppliers and buyers to determine prices, to determine distribution and a host of other issues would be necessary. Such negotiations are already common in certain industries; for example in the chemical industry, where companies negotiate commodity prices on a monthly or quarterly basis. Those are competitive negotiations in which the dominant position oscillates between buyer and supplier, resulting in dramatic price changes.

In a cooperative economy, negotiations would be done in a far more cooperative manner, with a wider group participating in the discussions. In this model, prices of raw materials, component parts, semi-finished goods, finished goods, consumer products and producer products such as machinery would be negotiated up and down the supply chain, leading to a rationalization of prices—markups to create artificially high profits or pricing below cost to undercut competitors would be unsustainable in a system where prices are negotiated and pricing information is widely available.

These would have to be fair negotiations—prices throughout the supply chain would have to be set with an eye on rational economics. Industry facilitators to assist negotiations and/or a government arbitration board to make decisions when parties are unable to agree to terms might be necessary. Community input would also be desirable, in the industries in which a given community is directly involved and for retail prices of consumer goods. It may be desirable to include these community interests in pricing negotiations directly. As more people take on more responsibility, more will gain the experience of fair negotiations, enabling more to peer over the shoulders of those involved in these decisions. In turn, more experience means more people within the community who can shoulder responsibility.

Regulating social standards

Although regulation, as noted above, is not in itself a solution, that is not a suggestion that regulation should be done away with. One method of using regulation to ensure socially positive economic activity might be a system of certification. Enterprises would be responsible for investment, production and financial decisions, but might be required to demonstrate full compliance with a range of standards on issues such as equal opportunity, workers’ rights, health and safety, environmental protection and consumer protection. Enterprises could be required to be certified on all relevant issues before conducting business, and perhaps be re-certified at specified intervals.

The allusion to “workers’ rights” in the preceding paragraph might seem a bit odd. These are enterprises under workers’ control already, so what rights are contemplated? That is a more specific question than can reasonably be answered in all situations ahead of time, but in large enterprises workers might still need protections codified in the laws covering the governance of enterprises. In the Czechoslovakia of Prague Spring, as we saw in Chapter 3, this issue was directly confronted. There, the enterprises were under state ownership, and no change was contemplated to that status—enterprises were to be managed directly by their employees on behalf of the country and its people. Activists had begun to set up (until the Soviet occupation stopped it) a system of workers’ councils as the instruments through which enterprises would be directed by all the employees.

Although these have a similar name, they should not be confused with the councils and soviets set up in 1917 and 1918 across Europe; these councils were enterprise-management bodies, not alternative government bodies. The Czechoslovak workers’ councils were designed to give the entire workforce of an enterprise a say in management and would also send representatives to national conventions that would coordinate production at the national level. These councils were to exist simultaneously with trade unions, which would represent the same workers as employees. The activists, mostly trade unionists and grassroots Communist Party members who worked in these factories, believed that separate organizations were necessary to represent workers properly in both their roles because there are potential conflicts between being a member of an organization and an individual worker.

Socialist triangleIn a country where capitalism has been transcended, and a new system of social control and democracy is being established, employees in those large enterprises that are to be formally owned by the state will have the same dual role of managing the enterprise collectively at the same time they remain workers. It is not impossible that biases or favoritism could slowly arise in such enterprises; a union would provide another source of protection that could defend a worker as an individual when necessary. Trade union membership, then, would remain a social value to be respected.

Workers in enterprises that are collectively owned, since they would be owners and not simply managers, might find less ambiguity between their two roles, as long as strategic decisions are made collectively. Still, it may be that there remains a place for trade unions even in these types of enterprises, or it could be that unionization is simply a social value and all members of the enterprise join or form a union for reasons of social solidarity or to provide another check against any centralizing tendencies emerging within the enterprise or within government.

Open information for social accountability

A system of democratic control and social accountability would require open information. Records and accounts of all enterprises and major production units of enterprises would have to be made available to all other parties to negotiations in order for the fairest deals to be reached and to prevent attempts to unfairly benefit at the expense of suppliers or customers. Social-justice organizations—such as those upholding civil rights, consumer rights or the environment—should also have a role, perhaps in enterprise negotiations when appropriate, but more likely in helping to set social goals, in monitoring compliance with standards and possibly being the bodies that issue certifications to enterprises that achieve the standards.

Some amount of planning and coordination would be necessary as part of the process of determining raw materials needs and ensuring that those needs are met. Any planning committee would have to be democratically controlled and have wide social representation to oversee production and to assist in the determination of investment needs.

Co-op symbolInvestment would need to go to where it is needed, a determination made with as many inputs as possible, but because of its importance banking is one area that would have to be in state hands and not in collectives. Financial speculation must be definitively ended, with banking reduced to a public utility. Enterprises seeking loans to finance expansions or other projects will have to prove their case, but should have access to investment funds if a body of decision-makers, which like all other bodies would be as inclusive as possible, agrees that the project is socially useful or necessary.

Government infrastructure projects should be subject to the same parameters as enterprises, with the added proviso that the people in the affected area have the right to make their voices heard in meaningful ways on local political bodies and on any other appropriate public boards. No private developer wielding power through vast accumulations of money will be able to destroy forests or neighborhoods to build a project designed for the developer to reap profits while the community is degraded. Development would be controlled through democratic processes at local levels, and regional or national infrastructure projects should require input from local bodies representing all affected areas.

Capitalist ideology holds that the single-person management that goes with private ownership produces the most efficient system, and soon after the October Revolution communist leadership agreed that single-person management is best. But in contrast to these “givens,” is it not true that a content workforce able to have control over its working life will produce better than a workforce that is alienated by a lack of control? Studies consistently conclude that measures of workers’ control increase satisfaction in work, productivity and solidarity. But workers’ control threatens the domination of elites.

An unprecedented level of democracy would be possible in a cooperative economy because the power of capital would be broken. Social constraints ensuring responsibility to the larger community would be required to prevent the accumulation of capital that translates into power, although such tendencies would be countered by a system that rewards cooperation rather than greed. The society that has been sketched out in these very broad strokes is a society with no classes. Working people—the overwhelming majority of society—have taken control. The (ex-)capitalists are just as free to go to work as everybody else. When the power of capital is abolished, capitalists are converted into ordinary people. Surely some, those with expertise and an ability to work well with others, would be among those cooperative members elected into administrative positions; regardless, they would have to become regular cooperative workers, contributing to the production of a quality product or service and having their say equal to all others who do the work.

This is an excerpt from It’s Not Over: Learning From the Socialist Experiment, officially published on February 26 by Zero Books. Citations omitted. Sources cited in this excerpt are: Pat Devine, “Self-Governing Socialism,” anthologized in William K. Tabb (ed.), The Future of Socialism: Perspectives from the Left [Monthly Review Press, 1990]; Diane Elson, “Socializing Markets, Not Market Socialism,” The Socialist Register, 2000; and Herbert Gintis, “The Nature of Labor Exchange and the Theory of Capitalist Production,” anthologized in Randy Albelda, Christopher Gunn and William Waller (eds.), Alternatives to Economic Orthodoxy, [M.E. Sharpe, 1987]

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21 comments on “What might a cooperative economy look like?

  1. newtonfinn says:

    Nice to see some detailed thought given to what an alternative to capitalism would look like and how it might operate. Back in the days of the counterculture, when I was young enough and lucky enough to be a part of it, Fritz Schumacher’s famous book “Small is Beautiful” was a big hit. In it, he was attempting to address some of the same issues with which you are now grappling.

    I’m sure you’re familiar with the book, but many today have forgotten the insight he offered in re-envisioning the whole idea of economics. For some of your readers who may not know of his work, I’ll insert a link to a chapter of his book which was widely circulated as an essay.

    http://www.centerforneweconomics.org/buddhist-economics

    • In truth, I am not at all familiar with the book. But I did a quick perusal via your link. What I found was a mixed bag.

      On the one hand: “From a Buddhist point of view, this is standing the truth on its head by considering goods as more important than people and consumption as more important than creative activity.” That is turning the upside down relations of capitalism right side up. But, on the other hand, we have this anachronism, in a discussion of “full employment”: “Women, on the whole, do not need an ‘outside’ job, and the large-scale employment of women in offices or factories would be considered a sign of serious economic failure.”

      So women should be dependent on men? And women should be in the home to prevent “children from running wild”? These are attitudes best left in the 19th century. On the contrary, it would be far better to treat all human beings as full human beings. Doctrines that promote inequality should gain no favor.

      • newtonfinn says:

        Yes, there are dated and erroneous positions taken by Schumacher on a variety of issues, including the one you reference. But the gems of insight in his work (he is a magnificent wordsmith on the popular literature level) and his overall take on capitalist economics is, frankly, among the best I’ve ever read, and I’ve been a voracious reader on this subject for several decades.

        I would respectfully urge you to read “Small is Beautiful” in its entirety and overlook its warts, similar to reading Schweitzer and overlooking his dated and erroneous views on colonialism. No doubt readers of contemporary material a generation or two from now (assuming we don’t snuff out ourselves) will see that we had our own blind spots and insensitivities.

        I guarantee you that once you get into Schumacher’s head, new modes of anti-capitalist attack will open like wildflowers in the spring sunshine.

        • I know much too little of the body of Schumacher’s work to make a judgment, and so won’t, but the sexism in the example of his work is not an irregularity that can simply be excised. There is a context here. The unpaid work of women, and thus their particular exploitation, has long been integral to the reproduction of capitalism. Silvia Federici has explored these issues well. A collection of articles on these and related topics is Revolution at Point Zero: Housework, Reproduction, and Feminist Struggle. I can personally strongly recommend her classic work Caliban and the Witch: Women, the Body and Primitive Accumulation, which describes in detail the establishment of capitalism on women’s bodies. A most interesting read.

          So although it is true that one generation is sensitive to oppressions unseen by previous generations (and the future will undoubtedly see our blind spots that we don’t), being blind to a pervasive division that was not unseen in the author’s own time — a division crucial to inequality — undermines a work’s analysis, no matter how literary the writing. The modern women’s movement, in fact, grew directly out of the sexism that women in the civil rights movements routinely faced. (See Freedom for Women: Forging the Women’s Liberation Movement, 1953-1970 by Carol Giardina)

          • newtonfinn says:

            Plato and Aristotle did not condemn the rampant slavery of their day. There are a myriad of significant thinkers who did not see some things in front of their nose. Schumacher, among other things, did an immense service in popularizing the environmental movement, which began with Schweitzer and was then reanimated by Rachel Carson in “Silent Spring,” dedicated to Schweitzer. If we don’t put the environment front and center, ahead of every other issue (many of which are, of course, intimately interrelated), then we won’t be around to liberate anyone.

            Do we write off MLK, Malcolm, and other civil rights leaders because of their explicit or implicit sexism? Is it socialist humanism or feminism that claims your deepest devotion? If it’s both, then you can still learn from socialist thinkers who haven’t fully become cognizant of the inherent capitalist exploitation and oppression of women, in which they themselves may be blindly participating. If it’s only the latter, then you wall yourself off from a great repository of wisdom that provides tools for liberation movements on all fronts.

            When we become obsessed with ideological purity or litmus tests, of whatever nature, we automatically marginalize our message and our movement. That said, I will certainly take a gander at “Revolution at Point Zero,” “Caliban and the Witch,” and “Freedom for Women,” and I thank you for recommending them. Let me make one last point–having lived through and been socially and politically active during the late 60s and early 70s, let me assure you that the women’s liberation movement was vibrant and formidable throughout this period. It did not grow out of the Civil Rights Movement. It grew up side by side.

            • Once again, I am not suggesting the entirety of Schumacher’s work should be thrown out. But context does matter. He created a model that explicitly calls for the marginalization of half the world, and that half’s historic marginalization has been a crucial component of the system he is critiquing; to ignore such a large, fundamental aspect is a serious handicap not only to analyzing it but is a flaw that can’t be waived away when it becomes institutionalized in a proposed different system.

              This “male supremacy,” as radical feminists would term it, is not something that can be set aside. Either it is dealt with or it is insufficient. The same goes for racism. We wouldn’t take seriously something that purports to critique capitalism but leaves racial disparities — or “white supremacy” to be more direct about it — intact, would we? I should hope not. Our attitude with women, or any other oppressed group, should be no different. Either we believe in the full emancipation of everybody, or we don’t. Socialism must mean that full emancipation. If a project on offer doesn’t, then it falls short.

              Now let’s contrast this analysis with Martin Luther King Jr. Dr. King did not advocate freedom and quality for Black men. He advocated freedom and equality for all Black people. Yes, there was sexism in the Civil Rights Movement — quite a bit of it, in fact — and Dr. King contributed some amount due to his own sexism. Yes, he was a flawed human being as all human beings are. But his project was not sexist; his project did not exempt women. Thus his personal flaws do not reflect on his movement, and the leader on the one hand and the movement or goal on the other hand can be separated.

              In contrast, Schumacher proposes to leave a specific, and major, oppression in place. That is something that must be directly challenged, and if it is a crucial aspect, as it appears to be, then that is a flaw that will be very difficult to overcome, if that is even possible.

              • newtonfinn says:

                The entire corpus of Schumacher’s work shows little sign of sexism. I think you took one statement from one essay–about how to go about providing sufficient work for all people who need it to survive (most families in my childhood and youth survived on only one income)–and assumed that he wasn’t interested in the welfare or advancement of women. Nothing could be further from the case, but no need to continue to argue. I understand your point and share your sensitivity on this crucial issue of gender exploitation and oppression.

                One question I’d like to pose, however, is your stance on species exploitation and oppression. Schweitzer believed that reverence for life–all life–was the essential underpinning of a humane civilization, that if we were routinely cruel and indifferent to animals and life itself, we would wind up treating each other the same way. I’d be interested in your thoughts on this, and thanks for the time and effort in creating a most interesting and informative web site.

              • Animal rights activists, in my opinion, display a high level of ethics that should be given serious consideration by all of us. I try to eat vegan, admittedly for health reasons rather than ethical reasons, but I am not immune to the arguments made by animal rights activists.

  2. It’s very refreshing to see it spelled out what so many of us are fighting for.

  3. […] Pete Dolack Guest Writer, Dandelion Salad Systemic Disorder February 24, […]

  4. Alton C. Thompson says:

    In 1984 I published a strategy for moving our society in a communitarian direction (cooperative communities, that is), but lacked–and still lack–the financial means to act on my ideas. Despite the fact that we seem to be headed for extinction soon (see, e.g., Guy McPherson’s lead article on his site), I don’t like giving up, and would love to see my ideas acted upon.

  5. Jay Jurie says:

    I’m going to buy a copy of your book, meanwhile, I’m curious if you did any comparison with guild socialism, as advocated in the U.K. during the first two decades of the 20th Century, or more recently, with the participatory economics as advocated by Michael Albert and Robin Hahnel.

    • I hope you are not disappointed, but I did not discuss either of those. For the most part, I discussed the history of the Soviet Union (and the internal factors in why it collapsed), Prague Spring (and its worker-organized experiments in popular management of industry), and the Sandinista Revolution of Nicaragua (a mixed economy with its own dangers). I had wanted to discuss the self-management experiments of Yugoslavia, but the book was getting too long.

      Discussion of ideas that remain on paper, however well thought out, as opposed to actual experiments was outside the scope of the book, but I would like to research and analyze such efforts at some point in the future.

      Any recommended reading toward these would be appreciated.

  6. Godfree Roberts says:

    Analysts claim that a cooperative economy is 25% more productive than a competitive one. The Basque Mondragon coop is an example of this.
    At the macro level, China’s economy is a hybrid cooperative/capitalist experiment that is working well. Their integrated labor union, for example, has managed to double wages every ten years for decades.

  7. troutsky says:

    One aspect of Albert and Hahnel’s Parecon that is innovative (and I believe critical) is an examination of the “coordinator class”, an extra-empowered faction of workers who tend to take control even in cooperative enterprises. To counter this tendency they propose that each worker have a “balanced job complex”, a bundle of tasks that range from high to low empowerment, that is in terms of increasing decision making skills, confidence, articulation, etc.

    Absent this re-definition of work itself, they believe we would find Councils and Assemblies dominated by those whose jobs empower them with more leadership skills.

    They also propose that remuneration for work be based on sacrifice and the degree of onerousness, to be decided collectively. This keeps the surgeon job complex from accumulating more wealth than the waitress job complex. Also, no inheritance of productive property, no “income generating” wealth passed down. Which is a little confusing because they also advocate removing “ownership of the means of production as an economic consideration….no one has any ownership of the means of production” , which I assume also includes investment and finance.

    • I am not familiar enough with Parecon to offer an overall opinion on it, but the point you brought out here is something that will have to be consciously struggled against. In Argentina’s recovered factories, managers and administrators are consistently drawn from the ranks; there are no “professional cooperative managers” hired from outside. But that certain people, based on their job duties or other factors, could monopolize managerial positions; policies and hiring practices would need to safeguard against that. Term limits might be one method (among others) guarding against such a trend.

      I would think that removal of ownership of investment and finance would be even more critical than other enterprises, given their importance. I have argued that banking must be reduced to a public utility, state-owned but under democratic control. Definitely no speculation nor stock, bond and derivative markets.

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