Solidarity instead of hierarchy as “common sense”

When the serious work of building a better world starts, we will have no choice but to use some of the bricks of the current world as we begin that construction. A social or economic system does not completely eradicate all traces of the immediately preceding system overnight. Nonetheless, the repressive elements of the prior system must be eliminated as quickly as possible, with new structures and thinking capable of defining the better world.

If socialism is to be that better world, what structures might be necessary? Socialism can be defined as a system in which production is geared toward human need rather than private profit for a few; where everybody is entitled to have a say in what is produced, how it is produced and how it is distributed; that these collective decisions are made in the context of the broader community and in quantities sufficient to meet needs; political decision-making is the hands of the communities affected; and quality health care, food, shelter and education are human rights. There is no class, vanguard or other group that stands above society, arrogating decision-making, wealth and/or privileges to itself.

A blueprint for such a future is not possible; a better world will be created in its making. But neither can we leap to a different world empty-handed or without a compass. Tangible counter-examples and concrete ideas are necessary if working people — the vast majority of humanity — are to break free from their acceptance of capitalism as “common sense” or the “only alternative.” When ideas become rooted in masses of people, they become a natural force, argues Michael Lebowitz in his latest book, The Socialist Imperative: From Gotha to Now.* He uses the example of the “socialist triangle” to explicate a structure for a better, democratic system.

Socialist Imperative coverThe three sides of the socialist triangle (a concept put in this form by Hugo Chávez) are production for social needs and purposes, social production organized by workers and social ownership of the means of production. None or any two of the three sides stand on their own; each is dependent on the other two.

Production for social needs is defined as production accomplished for our common needs. This is envisioned as production in which we would go beyond self-interest and therefore create a “solidarity economy.” Social production organized by workers is essential for developing the capacities of working people. Decisions in the workplace are made by the workforce as a whole, developing the capacities of all. Social ownership of the means of production does not mean the state owns all enterprises; it “implies a profound democracy” in which people, in their capacities as workers and as members of society, determine the results of their labor.

A society in which all can freely develop

Professor Lebowitz proposes a “Charter for Human Development,” offered as “self-evident requirements”:

“1. Everyone has the right to share in the social heritage of human beings — an equal right to the use and benefits of the productions of the social brain and the social hand — in order to be able to develop his or her full potential.
2. Everyone has the right to be able to develop his or her full potential and capacities through democracy, participation, and protagonism in the workplace and society — a process in which these subjects of activity have the precondition of the health and education that permit them to make full use of this opportunity.
3. Everyone has the right to live in a society in which human beings and nature can be nurtured — a society in which we can develop our full potential in communities based upon cooperation and solidarity.” [page 174]

The goal of these three points, Professor Lebowitz writes, is to redefine the concept of fairness:

“It is unfair that some people monopolize the social heritage of human beings; it is unfair that some people are able to develop their capacities through their activities while others are crippled and deformed; and it is unfair that we are forced into structures in which we view others as competitors and enemies.” [page 174]

We are talking about a different world than the one we live in now. Quite different. A world in which these are guiding principals is a world that has a new concept of “common sense.”  Any ideology, if its hold on a sufficiently large percentage of people is strong, becomes a material force. Industrialists and financiers, who constitute the dominant class in the present world and thus decisively shape contemporary belief systems, can and do wield an enormous and deadly apparatus of violence to maintain their dominance, true, but that is insufficient in itself. Capitalism’s staying power rests on the widely held belief that there is no alternative to it.

Capitalism “tends to produce the workers it needs,” Professor Lebowitz argues, drawing on Karl Marx’s insights. People’s need to sell their labor power — that is, their need to obtain employment in order to survive — and the creation of perpetual unemployment creates a dependency on capital that has continued for so long that the capitalist mode of production comes to be seen as “self-evident natural laws.” Struggles are therefore contained within the confines of capitalism. Bargaining over wages and working conditions can become contentious, but this is never more than bargaining over the terms of exploitation; the relations within this system are never touched. Thus an alternative common sense must be constructed.

Going beyond limitations of past models

Neither the Soviet model, overly centralized and lacking in democracy, nor the Yugoslav model of cooperative enterprises constitute that alternative common sense. The Socialist Imperative argues that the Soviet system discouraged innovation because workers and managers saw it as disruptive. Moreover, initiative was monopolized by central planners and party elites, reproducing problems of alienation even if workers’ expectations of guaranteed employment and rising consumption were sufficiently strong to constrain leaderships.

In the case of Yugoslavia, unemployment was produced because workers (who were self-managers) sought to maximize their enterprises’ income per worker. Workers acted in solidarity, but only within their own enterprise; eventually loans were used to finance higher pay in weaker enterprises. The logic of capital gained ground, Professor Lebowitz argues, until Yugoslavia accepted an International Monetary Fund loan and passed a 1988 law that substituted stockholders for workers’ councils, hastening the end of the Yugoslav experiment.

Solidarity across society and a decoupling of consumption with work capacity are offered as the keys to a socialist society. Income distribution based on an individual’s capacity to work is a distribution based on unequal personal endowment or inheritance and thus a “right to inequality.” In other words, different people are born with different capacities, and social solidarity mandates that those accidents of birth not be made into permanent sources of inequality. Permanent inequalities are products of capitalist relations.

We are stunted individuals under capitalism; paid a small fraction of the value of what we produce and, given the dictatorial nature of relations in the capitalist enterprise, told we are incapable of making decisions and thus unable to develop ourselves. We are also kept divided along gender, racial, religious and national lines and fighting among ourselves, helping keep capitalists in power. Going beyond reformism and instead struggling together to overturn capitalist relations creates the capacity to do so:

“The working class makes itself a revolutionary subject through its struggles — it transforms itself.” [page 143]

Who is this working class? It everybody who has no choice but to “sell their labor power” — those who can not survive other than by hiring themselves to a capitalist. Those who have a job, those out of work and those who survive in the informal sector. Crucially,

“They may not correspond to the stereotype of the working class as a male factory worker, but that stereotype was always wrong.” [page 145]

Building a solidarity state from a local base

A social state can only be constructed from the bottom up, The Socialist Imperative argues. Drawing on the example of the communes of Venezuela, the book envisions neighborhood councils as the basis of local decision-making, with successively larger representations through councils established on city, regional, state/provincial and national levels. Mechanisms would be needed to transmit information up and down these levels for national-level decisions to be made as democratically as possible and for communities to have proper input. Needs and capacities would be assessed to democratically plan to meet those needs and make adjustments based on available capacities.

Socialist triangleEnterprise transparency and worker education would be established in the workplace to begin the process of social production. Worker decision-making would be increased step by step through negotiations between workers and management on the basis of social contracts filed with a ministry of work. These would be steps toward social ownership of the means of production necessary for the full development of human beings and society. The local self-interest that would exist at the start of this process would be a relic of the old (capitalist) system that would need to be overcome to establish a system fully rooted in social solidarity.

The movement must go beyond simply taking state power, Professor Lebowitz writes, but must create spaces for the grassroots to transform into active agents. Old structures must be subordinated:

“Working within a hierarchy, functioning without the ability to make decisions in the workplace and society, and focusing upon self-interest rather than upon solidarity are activities that produce people on a daily basis; this is the reproduction of the conservatism of everyday life — indeed, the reproduction of elements of capitalism.” [pages 189-190]

No blueprints are offered in the book; properly so as pre-conceived conceptions are useless. It would have been useful to have had more concrete examples in a book that is sometimes a little too abstract, but it does provide a thorough grounding in why the salvation of humanity and Earth itself rests on a transition to a rational, democratic system, one based on human need and not the profits of a privileged few. The form of that system will be different from 20th century systems that called themselves “socialist” and necessarily vastly different from any form of capitalism. We have a world to win, a goal for which Michael Lebowitz has given us an inspirational guide.

* Michael Lebowitz, The Socialist Imperative: From Gotha to Now [Monthly Review Press, New York 2015]

What if Bernie Sanders were really talking about socialism?

Socialism has re-entered the realm of popular political discussion in the United States, for the first time in decades. There are several reasons for this, the most important being that a quarter-century has passed since the fall of the Soviet Union and the force of the bogey it represented has little resonance for a younger generation; several years of ongoing economic turmoil has led to more people being willing to question capitalism; and the popularity of Bernie Sanders’ presidential campaign because of the Vermont senator’s willingness to challenge the status quo.

Senator Sanders routinely speaks in front of large, enthusiastic crowds and although it remains unlikely that he will win the Democratic Party nomination, his strong showing and common-sense demeanor has forced the corporate media to expand the ordinarily heavily constricted boundaries of political and economic discourse. He calls himself a “democratic socialist,” and the corporate media by and large seems content to use his label, often even dropping the “democratic” and simply referring to him, without the usual rancor, as a “socialist.”

So is it really true that socialism has become acceptable and mainstream? Or, to be more direct: Is Bernie Sanders really a socialist?

Bernie Sanders rally in Louisiana (photo by Bart Everson)

Bernie Sanders rally in Louisiana (photo by Bart Everson)

The answer to the first question remains to be answered, but the answer to the second is “no.” Senator Sanders offers reforms to the capitalist system. Significant reforms, ideas and platforms far beyond any other major-party candidate for president. These would certainly be welcome if they could be enacted. But they are still reforms, not real change. Reforms, unfortunately, can and are taken away — as the past three decades have vividly demonstrated. Just as Keynesianism is not going to save us, there is no going back to the past nor is it still possible to believe capitalism can be a progressive force.

In the first Democratic Party presidential primary debate, Senator Sanders offered Denmark and Sweden as examples of the democratic socialism he has in mind. The front-runner, Hillary Clinton, immediately parried with a claim that the United States dare not “turn our backs on what built the greatest middle class in the history of the world.” That more of those in the broad middle or with less are struggling just to keep a roof over their heads and keep from drowning in debt, that wages have been stagnant since the 1970s while the one percent grab all the gains, that prospects for students and recent graduates are more dismal than for their parents or grandparents, it would seem that Secretary Clinton’s middle class doesn’t have it so good.

Europe versus the United States

It tales no more than a cursory glance at Denmark, Sweden or many other countries to see the unreality of her claim. For one thing, health care is a right in most of the countries of the world, but in the United States health care is a privilege reserved for those with money or a full-time job (if it has reasonable benefits). In Denmark, all people who reach age 65 are entitled to a retirement pension, all residents have sickness benefits if they are unable to work, health care is a right, stays in public hospitals are free and paid parental leave is available up to 46 weeks. Danish workers are entitled to five weeks of vacation each year by law and many workers have a negotiated sixth week of vacation.

European countries require 20 to 30 day of vacation, and Australia and New Zealand require 20 days. The United States is the only advanced capitalist country that mandates none.

The idea that working people in the U.S. have it good is laughable. Secretary Clinton is no different than her Republican challengers in her ideological belief in “American exceptionalism,” the nationalist term used by United Statesians to claim theirs is the greatest country and a mandatory ideology for those seeking political office. However much better life may be there, however, it isn’t true that Denmark or Sweden are socialist countries. Those countries, and others applying versions of the Scandinavian welfare model, are capitalist countries that have laws and regulations to ameliorate the conditions of capitalism. So austerity is not an impossibility there; the relentless downward pressure applied to working people under capitalism is in force across Europe.

It is no accident that the European Union bureaucracy is unaccountable to any democratic vote; the E.U. is designed by central bankers to benefit European big business and financiers. European capitalists desire the ability to challenge the United States for economic supremacy, but cannot do so without the combined clout of a united continent. This wish underlies the anti-democratic push to steadily tighten the European Union, including mandatory national budget benchmarks that require cutting social safety nets and policies that are designed to break down solidarity among wage earners and different regions by imposing harsher competition through imposed austerity.

The European Union, in its current capitalist form, is a logical step for business leaders who desire greater commercial power on a global basis: It creates a “free trade” zone complete with suppression of social accountability while giving muscle to a currency that has the potential of challenging the U.S. dollar as the world’s pre-eminent currency. Europeans’ ability to keep the reforms they have won are dependent on their organizing and going into the streets, the same as in the U.S. or any other country.

A basic sketch of socialism

What would socialism look like? There is no specific set of formulae, but some basics are:

  • Everybody who contributes to production earns a share of the proceeds — in wages and whatever other form is appropriate — and everybody is entitled to have a say in what is produced, how it is produced and how it is distributed, and that these collective decisions are made in the context of the broader community and in quantities sufficient to meet needs, and that pricing and other decisions are not made outside the community or without input from suppliers, distributors and buyers.
  • Nobody is entitled to take disproportionately large shares off the top because they are in a power position.
  • Every person who reaches retirement age is entitled to a pension that can be lived on in dignity. Disabled people who are unable to work are treated with dignity and supported with state assistance; disabled people who are able to work can do so.
  • Quality health care, food, shelter and education are human rights.
  • Artistic expression and all other human endeavors are encouraged, and — because nobody will have to work excessive hours except those who freely volunteer for the extra pay — everybody will have sufficient time and rest to pursue their interests and hobbies.

In such a world, there would not be extreme wealth and the power that wealth concentrates; political opinion-making would not be dominated by a numerically tiny but powerful class perpetrating its rule. Without extreme wealth, there would be no widespread poverty; large groups of people would not have their living standard driven as low as possible to support the accumulation of a few.

In any country in which a model of worker cooperation or self-management (in which enterprises are run collectively and with an eye on benefitting 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. Prices would be negotiated, with all enterprises’ financial information publicly available so no unfair profiteering could take place.

Investment 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. Energy, another critical industry, would also be nationalized and under democratic control.

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.

None of the foregoing is being talked about by Bernie Sanders, and certainly not any other candidate for the U.S. presidency. But such gains are unattainable under capitalism, no matter how many reforms are (temporarily) extracted from industrialists, financiers and the politicians who whistle their tune.

The six-hour work day comes to Sweden

Why do we work so many hours? I mean beyond the obvious answer that the dictatorial employment relationships of capitalism force us to on pain of unemployment. Working hours declined from the inhuman work weeks of the industrial revolution until the mid-20th century, when the hours we work leveled off; in more recent years work hours have been increasing.

It certainly isn’t because productivity has plateaued. On the contrary, advances in machinery and computerization make us more productive than ever before. So why do we still work an eight-hour day after all these decades? (Or more than eight hours in many cases, and not necessarily with extra pay for office workers receiving a flat salary.) An eight-hour day was an outstanding achievement of social movements from the 19th century, when work days lasted 10 and 12 hours.

With the advancements in productivity over the years, we could certainly work fewer hours and still provide all that is necessary. Why not a six-hour day? Or less? In Sweden, there are ongoing experiments with six-hour work days, which so far have met with success. Not surprisingly, given the one-sidedness of workplace relations, these experiments are being done in the name of “greater productivity.” In other words, the standard is to be: Will this be good for the boss’ profits? That it might be good for the workers is part of the equation, but even this is commingled with the idea that rested workers will be more productive workers and thus more profitable for bosses.

Gothenburg, Sweden

Gothenburg, Sweden

Let’s first examine six-hour work days on these capitalist terms. The issue of how much productivity can be extracted out of workers, interestingly, is more explicitly stated in a test case of public workers than it is for private employers, in part due to right-wing opposition. In Gothenburg, Sweden’s second-largest city, two groups of municipal workers are part of a test in which one set will work six-hour days with full pay and the other set continues to work a standard eight-hour day. The hope is that a shorter day will reduce sick leave, boost efficiency and ultimately save money, according to a report in the Stockholm newspaper The Local. A Gothenburg deputy mayor, Mats Pilhem of the Left Party, said:

“We’ll compare the two afterwards and see how they differ. We hope to get the staff members taking fewer sick days and feeling better mentally and physically after they’ve worked shorter days.”

One group of public workers on six-hour days are nurses at an elder-care facility. This experiment is to continue until the end of 2016. Fourteen new staff members were hired to cover the lost hours, but a consultant told The Guardian that the nurses “are less stressed and have more time for the residents.” The city government is closely monitoring the experiment to see if the quality of service is higher with the six-hour work day. Nurses report having more energy at work because they are no longer exhausted from longer days of work, and a Left Party member of the Gothenburg council said quality of life for the employees should also be a consideration. He said:

“Not everything is about making things cheaper and more efficient, but about making them better. Under the Conservative-led coalition government in Sweden from 2005 to 2014 we spoke only about working more, and more efficiently — but now we want to discuss how to survive a long working life so we don’t destroy our bodies by the time we are 60.”

Not an unreasonable thought.

Private employers see benefits to shorter day

In the private sector, a Toyota service center in Gothenburg switched to a six-hour work day in 2002, with no cut in pay, and reports that its profits are up thanks to more efficient use of the center’s machinery. The Swedish Internet company Brath reports strong growth in revenue and profits using a six-hour work day. The company’s chief executive officer, Maria Bråth, believes that employees with time for the rest of their lives are more productive employees:

“That we have shorter days is not the main reason people stay with us, they are the symptom of the reason. The reason is that we actually care about our employees, we care enough to prioritize their time with the family, cooking or doing something else they love doing. … Another big benefit is that our employees produce more than similar companies do. We obviously measure this. It hasn’t happened by itself, we’ve been working on this from the start. Today we get more done in 6 hours than comparable companies do in 8. We believe it comes with the high level of creativity demanded in this line of work. We believe nobody can be creative and productive in 8 hours straight. 6 hours is more reasonable, even though we too, of course, check Facebook or the news at times.”

At the other extreme, working more than 40 hours per week is detrimental to physical and mental health. A study published earlier this year in The Lancet found that people working 55 hours per week had a 33 percent greater risk of a stroke than those who worked 35 to 40 hours per week and a higher risk of heart disease. This study analyzed more than 600,000 individuals, through data drawn from 20 studies, in several countries.

Studies conducted in the early 20th century, as the working day was progressively shortening toward the eight-hour norm, that productivity was actually greater with a shorter day. For example, the 1913 book Psychology and Industrial Efficiency by Hugo Münsterberg, regarded as a pioneer in applied psychology, summarizing the results of various factory studies, stated:

“It was found that everywhere, even abstracting from all other cultural and social interests, a moderate shortening of the working day did not involve loss, but brought a direct gain. The German pioneer in the movement for the shortening of the workingman’s day, Ernst Abbé, the head of one of the greatest German factories, wrote many years ago that the shortening from nine to eight hours, that is, a cutting-down of more than 10 per cent, did not involve a reduction of the day’s product, but an increase, and that this increase did not result from any supplementary efforts by which the intensity of the work would be reinforced in an unhygienic way. This conviction of Abbé still seems to hold true after millions of experiments over the whole globe.”

It is hardly a revelation that a tired workforce is going to make more mistakes and be subject to more accidents. The common belief by bosses that it is cheaper to force overtime on current workers, even in those cases where it must be paid when employment laws or union contracts can’t be evaded, than to hire new workers to handle increasing workloads isn’t necessarily true. Beyond the benefits to productivity or employer satisfaction, working fewer hours would be a partial compensation for pay that has badly lagged increases in productivity since the 1970s.

We produce more but don’t earn more

This pattern is persistent throughout the world. It has been in place since the early 1970s in the United States and although a more recent phenomenon elsewhere in the world’s advanced capitalist countries, workers everywhere suffer from stagnant wages while producing more. U.S. workers on average earn nearly 12 dollars per hour less than they would if wages had kept pace with productivity gains since 1973. Canadian workers earn on average 11,000 dollars per year less then they would if if wages had kept pace with productivity gains since 1980. Other studies demonstrate lags in wages versus productivity in Britain, France, Germany, Italy and Japan.

The bottom line is that we work more hours because bosses can extract more from us, even if they don’t extract as much as they believe they do when we are pushed beyond an eight-hour day. That a handful of bosses have the foresight to see that more profits can come from shorter work days does nothing to change that basic capitalist equation. Profits ultimately derive from the difference between what we are paid and the value of what we produce — the drive to increase this difference underlies both the stagnant pay of recent decades and the accelerating shifting of production, both manual and office work, to locations with ever lower wages and weaker regulations.

Graphic courtesy of Economic Policy Institute

Graphic courtesy of Economic Policy Institute

What if we worked for ourselves instead? If shorter work days are beneficial to working people — and reduce unemployment by requiring more workers to carry out necessary work — why shouldn’t this be widely implemented? So far, the discussion around the length of the working day has centered around what is best for bosses, as would be expected under capitalism. (And, make no mistake, Sweden is a capitalist country, albeit one that ameliorates some of capitalism’s harshness more than most others countries.) What if the workers ran the company themselves, or managed a public enterprise themselves?

A cooperative enterprise could similarly reduce the work day or possibly even more since it wouldn’t have to generate a large profit for a boss or, in the case of larger enterprises, for the top executives and shareholders. The steady increase in inequality, the immense fortunes held by the world’s billionaires that are far beyond any reasonable possibility of useful investment, the trillions of dollars stockpiled by multi-national corporations, and the immense waste of advertising and planned obsolescence attest to the fact that we work beyond what is necessary to meet human need.

If the economy were organized on the basis of an economic democracy — in which production is oriented toward human, community and social need rather than private accumulation of capital — the work day could reasonably be well less than eight hours. Economic democracy can be defined as where everybody who contributes to production earns a share of the proceeds — in wages and whatever other form is appropriate — and everybody is entitled to have a say in what is produced, how it is produced and how it is distributed, and that these collective decisions are made in the context of the broader community and in quantities sufficient to meet needs, and that pricing and other decisions are not made outside the community or without input from suppliers, distributors and buyers.

By no means is anything written in this article intended to be an argument against shorter, more humane working hours or higher pay today. But as such struggles intensify, as they must, they can help us move beyond reforms that somewhat lessen our exploitation to ending exploitation. If a six-hour work day is better for us, why not have more of the benefits accrue to those who do the work and to the community that supports that work?

Are we ready for the twilight of neoliberalism?

Not since the Great Depression have so many people in the global North called into question capitalism, yet among most of the advanced capitalist countries there is little organized pushback. Worse, parties of the Right appear to be gaining ground as voters who in the past backed the traditional parties of the center-left increasingly stay home, disgusted at their “me, too” approach to economics.

A decaying order increasingly reliant on repression that delivers immiseration to ever more people ought to be under more pressure. It can’t be said there are no serious challenges — social movements such as Spain’s Indignados and political coalitions contending for power such as Greece’s Syriza, for example — and the dramatic instant popularity of the Occupy movement demonstrated widespread discontent.

Still, the limitations of Occupy led to its demise and nothing yet has arisen in its place. Is there a weakness in our movements that is preventing them from organizing that discontent and channeling it into productive forces capable of challenging prevailing social orders?

We Make Our Own History coverAny answer to the puzzle of why Left movements have gained so little traction comprises multiple parts. Certainly the enormous institutional advantages that industrialists and financiers possess through their ability to exert decisive influence over governments, their domination of the mass media, the disposal of police and military forces at their service, and ability to infuse their preferred ideologies through a web of institutions can’t be discounted. Nonetheless, that does not relieve ourselves of the necessity to think about how we attempt to organize.

Activist knowledge has been “frozen” in specific forms, and today’s movements must be willing to break with past patterns and to build different styles of organization, argue Laurence Cox and Alf Gunvald Nilsen in their study of social movements, We Make Our Own History: Marxism and Social Movements in the Twilight of Neoliberalism.* In writing this book, the authors, both of whom have long histories in activist work, set out to “reclaim” activist knowledge for today’s movements and problems.

The authors quite reasonably argue that the failure of neoliberalism is “evident” and that we are now living in the “twilight” of the neoliberal era. That neoliberalism is reaching its end does not necessarily mean that capitalism is reaching its end; merely capitalism’s latest phase. “There is no alternative” retains a powerful punch even as conditions continue to deteriorate around the world. Moreover, activists are at a disadvantage when operating within rules designed to maintain the status quo.

Theory does not derive from an armchair

Theory, Professors Cox and Nilsen write, derives from the activist work of making sense of, and changing, social experience. Theory helps grasp ideas in opposition to dominant discourses, helping us go beyond our immediate situation or experience. A “unity of theory and action, and not simply practice,” is a necessity. But theory is not a concept imposed from high above nor the province of a handful of philosophers. They write:

“The producers of theory are — potentially — everyone who reflects on their experiences so as to develop new and improved ways of handling problematic aspects of that experience. Theory, in this perspective, is knowledge that is consciously developed out of experience, and has been worked through using experience as a touchstone, that has become explicit and articulate, and which as been brought to a level where it can be generalised.” [page 8]

The everyday experience of creating new forms of organization during struggles itself provide bases for a better world.

“At their best and within wider movements for social change, the council, the assembly, the occupied factory, the social centre, the self-organised neighbourhood, or the liberated zone can simultaneously prefigure a different way of living together, represent an effective means of organising here and now, and embody a critique of key social relationships and institutions.” [page 11]

Building from abstract concepts in its early pages, We Make Our Own History steadily builds concrete scaffolding. A key concept of this scaffolding, introduced to emphasize the understanding that the current organization of the world is a product of human construction that can be disassembled and replaced through human agency, is that of “movements from above.” We are used to seeing grassroots activity as movements — movements from “below.” We Make Our Own History defines “movements from above” as the collective agency of dominant groups to reproduce or extend their power and hegemonic positions.

Movements from above draw upon a multitude of positions to cement their hegemony, among them their directing role in enterprises, superior access to state power, ability to extract “consent” from significant sections of the subaltern and ability to apply repression to those who refuse to consent. Movements from above are “forever moving.” the authors write, and are able to use a variety of tactics in their responses to movements from below: military force, police force, the law, and school and workplace sanctions. When necessary, concessions will be made, but only to some groups and in forms that reinforce clientalism and patriarchal relations while blocking self-activity and organization.

Seeing the efforts of elites as “movements from above” enables an understanding of our ability to change conditions, through the combined efforts of movements from below.

The building blocks of a movement

Movements from below must become strong enough to counter the hegemony of capitalist elites with a “counter-hegemony.” Professors Cox and Nilsen propose three “levels” of movements from below in distinguishing their ability to force structural change. Local, defensive struggles (the basic building block) can coalesce into much more effective offensives when they connect with other movements from below on the basis of common grounds to forge extra-regional or international coalitions that critique dominant ideas and projects.

Such coalitions, however, tend to remain field-specific and don’t necessarily relate to the social totality that shapes the issue being struggled against. If activists begin to examine larger structural issues, the authors write, they may go beyond field-specific campaigns to become a “social movement project” that targets the social totality. Thus,

“[S]uch a social movement project stands out from other forms of collective agency from below by virtue of its capacity to identify its own actors socially; name its central opponent; and recognizing that the social totality is the product and object of such struggles. In other words, there is a return ‘up’ the sequence from opposing everyday routines to opposing the structures that generate them, and finally to directly confronting the movements from above which have constructed the whole.” [page 83]

From this comes the question of: What is the nature of what we are fighting? To assist in answering that question, the authors divide the history of capitalism into three eras:

  • “Disembedded” market-centered liberal capitalism that lasted into the early 20th century. This era was marked by the violent incorporation of the colonized world into the world-system of capitalism, and concessions made to emergent middle classes split them from the subaltern, linking them to the aristocracy and bourgeoisie.
  • “Re-embedded” state-centered organized capitalism from the end of World War II to the 1970s. This period arose out of the breakdown of the previous era and in response to mass uprisings carrying the potential to sweep away capitalism. Some measure of development was allowed for the global South through import-substitution industrialism; workers of the global North received increasing wages and concessions in exchange for de-politicizing their demands.
  • “Disembedded” neoliberal capitalism since the 1980s, a project to “disembed” capital from institutional regulations. The turn to neoliberalism is grounded in changed conditions, in particular the profit squeeze that set in during the 1970s, and is organized globally through alliances with capitalists in all regions of the world and links among trans-national capital. Capitalists’ attempt to restore previous profit levels centers on breaking the power of labor and a strategy of “accumulation through dispossession” — the conversion of common property into private capital.

The victory of neoliberalism is “pyrrhic,” the authors write, because the accumulation strategies that restored power for capitalists are the root of the present crisis. Thus, we are in the twilight of neoliberalism. That elites can offer nothing new is a sign of their brittleness, but the simultaneous weakness of movements from below has led to an unusually long period of stalemate.

Learning from one another, not blindly following

How then will this logjam be broken? As no movement, organization or leader has a monopoly of ideas, Professors Cox and Nilsen envision a “movement of movements”: The coming together of independent movements without the intention of submitting to the leadership of any single party or of privileging narrow definitions of working class interests. This necessitates not only learning from one another to increase the body of knowledge that can be drawn upon but also learning from the past. It also stresses the full incorporation of struggles against racism, sexism and all other forms of oppression.

Winning, the authors write, means defeating the state, breaking up at least some power relations and instituting new ones, but doing so through the masses, not a vanguard. Success, then, is the collective achievement of people going beyond what they previously believed possible.

“These situations share a potential for human self-development to flourish beyond the normal limits set by exploitation, oppression, ignorance and isolation, creating institutions driven by human need rather than by profit and power. … These ‘everyday utopias’ do not need to be installed from above by decree; what they do need is a breaking of power relations within communities, workplaces, state institutions and globally, which stand in their way.” [pages 186-7]

Building the “counter-hegemony” that can check and then supplant the hegemony of capitalists is far from an easy task. Those who benefit from the current world order spare no exertion in attempting to convince us that no other world is possible. Realizing that such assertions are nothing more than self-serving ideology helps to give ourselves the necessary consciousness to liberate ourselves:

“[I]f we do not see not see neoliberalism as a complex, contested, fragile and ultimately impermanent achievement of elite agency we are taking the intentions of its makers as given fact — and in essence conceding permanent defeat.” [page 142]

Professors Cox and Nilsen set themselves the audacious goal of reclaiming activist knowledge through filling a void in studies of social movements. They have succeed: We Make Our Own History is recommended reading for activists serious about bringing into being a better world.

* Laurence Cox and Alf Gunvald Nilsen, We Make Our Own History: Marxism and Social Movements in the Twilight of Neoliberalism. [Pluto Press, London, 2014]

Bankruptcy of Mondragon company demonstrates limits of cooperation under capitalism

The announcement that one of Mondragon’s companies is filing for bankruptcy isn’t a commentary on cooperatives, but it is a reminder that even the world’s largest cooperative enterprise is not immune to capitalist competition.

Cooperatives point toward a more humane way of organizing production, but in themselves don’t necessarily alter market relations. That is true not only because cooperatives are yet minuscule islands in a vast sea of capitalism, and thus must make decisions strongly impacted by a continual buffeting by market forces, but because a cooperative economy would require that cooperation, rather than competition, be the basis of relations.

The shuttering of Mondragon’s household-appliances company, Fagor Electrodomésticos, is also an opportunity to ask if there comes a point where a cooperative becomes too big. Mondragon has expanded steadily, through internal growth and creating new businesses but also through buying companies outside Spain. Although that expansion is not a factor in Fagor’s closing, Mondragon has had difficulty absorbing some of its acquisitions, with the result that at least 14,000 workers are actually employees of the cooperative.

Mondragon UniversityThus the cooperative members profit through extracting surplus value from these employees, who do not share in the decision-making. In fact, Fagor’s Polish factory (where the workers are employees, not members of the cooperative) was the subject of a slow-down strike in 2011. Fagor, reacting to capitalist competitive pressures, had moved some production there from France to take advantage of lower wages.

The failure of Fagor, unable to survive the drastic downturn in the Spanish economy, is also noteworthy because it is Mondragon’s original business, and one of the larger among Mondragon’s federation of 110 cooperatives. A manufacturer of washing machines, refrigerators, dishwashers and other “white goods,” Fagor’s revenues declined to €1.1 billion in 2012 from €1.8 billion in 2008, the year of the financial crash, and has not earned a profit since 2008. Revenue has been hurt by the intensity of the economic downturn in Spain, where unemployment is 27 percent amidst a collapse of the housing market.

Cooperative members better off than capitalist employees

Unlike at a capitalist corporation, where workers are routinely laid off merely because of a slight decline in profits, Mondragon strives to keep all its members employed. Decision-making is made by the workers themselves, in assemblies and through their elected, accountable managers, representatives and board members.

In the case of Fagor, its cooperative members had previously agreed to cut their pay by 20 percent. In addition, Mondragon had provided €300 million in financing in an effort to keep the appliance maker afloat. But Mondragon’s general council, which coordinates the policies of the various companies, decided it would provide no more funds, rejecting Fagor’s request for another €180 million that Fagor believed would finally stabilize itself.

A Mondragon press release issued on October 30 said:

“[T]he proposal submitted by Fagor Electrodomésticos is not viable, and [Mondragon’s general council] has unanimously agreed the company no longer responds to market needs, and the financial resources it requests would not ensure its business future.

“The [Mondragon] Corporation has analysed the situation following the financial assistance given to Fagor Electrodomésticos in recent years both by the cooperatives themselves and through sundry corporate instruments, and it has considered that the feasibility plan submitted by Fagor Electrodomésticos is not viable.”

Because each of Mondragon’s companies are autonomous, self-managed cooperatives (which assist each other through mutual support mechanisms), Fagor’s closing has no effect on the viability of other units. But because one of the mutual-support mechanisms is retraining workers in struggling companies and their transfer to stronger businesses, Mondragon may have difficulty absorbing a bankruptcy unprecedented in size.

On the other hand, the cooperative members of Fagor are not simply out in the street, as they would be at a top-down capitalist corporation. Mondragon’s press release went on to say that its general council pledges to:

“[C]ontinue to activate all the support mechanisms required to reduce to the furthest possible extent the impact on employment due to the circumstances of Fagor Electrodomésticos. These measures will range from reassignments to early retirements and the implementation of training schemes that will reinforce the employability of the worker-members of Fagor Electrodomésticos. … The diversity of sectors and markets in which our cooperatives operate is an assurance that leads us to believe they will continue to launch new activities in the short-to-medium term, with a positive knock-on effect on job creation. The fact our businesses are competitive in their respective markets is good news for the absorption of any redundancies forthcoming at Fagor Electrodomésticos.”

Given Mondragon’s history, that is not empty talk, although El País reports that Fagor’s employed workers, which would include those in its Polish factory, are not covered. There have been no layoffs in Mondragon despite the exploding Spanish unemployment rate; instead workers have agreed to reduce their wages by an average of five percent with a shifting of some to stronger from weaker companies. Fagor’s cooperative members will be paid 80 percent of their salaries for two years through Mondragon’s own insurance company.

Forced to ‘become their own capitalists’

Mondragon’s growth from a handful of people in the 1950s to its status as a major competitor in a range of industries rests on its ability to successfully compete against capitalist enterprises while riding the ups and downs of market competition. No article about Fagor’s closing — not even the sneering “I told you so” of The Economist’s report — so much as hints at any quality-control issues. Rather, Fagor went under due to slack demand in Spain and France, and stiff competition from low-wage Asian imports.

Therein lies a contradiction. Mondragon operates as a cooperative, fully under the control of its workers (at least those in Spain), in which all management and oversight posts are elected internally, wages are vastly more equal than in a capitalist enterprise, and it is owned exclusively by its workforce. In other words, the cooperative members share in the risks, gains and decision-making, with profits distributed to the workers themselves, to investment funds and to the overall organization’s internal support fund.

Despite that internal cooperation, Mondragon must operate like a traditional capitalist enterprise outside its gates. Forced to compete against capitalist corporations operating in capitalist market conditions, it can not do otherwise if it is to survive. This is the case for other cooperatives today. In essence, cooperative workers in a capitalist economy are, in the words of Karl Marx, forced to “become their own capitalists.”

Because of Mondragon’s size, Fagor’s workers may be able to secure work elsewhere in Mondragon. They didn’t face the prospect of their jobs being moved to a low-wage haven on the other side of the world, but they also could not stay in business in the face of capitalism’s worst slump since the Great Depression.

Moreover, Mondragon also acts like a capitalist corporation in that it acquires businesses and sometimes the employees of those acquired businesses, particularly those outside Spain, remain employees of the cooperative rather than become full members. Such a result flows from the need to expand to survive the rigors of capitalist competition. Any economy that operates on the basis of market competition — that is, in which markets are allowed to determine social outcomes — will lead to some form of “grow or die,” in which enterprises struggle to survive.

Cooperators’ own wages remain a commodity if everything else is a commodity priced by markets. In an economy dominated by cooperatives but with capitalist market relations intact, collective workers would face market pressure to reduce their own wages in order to compete better against their competitors. Some enterprises would become much bigger than others; smaller enterprises would be compelled to sell themselves to larger competitors, consolidating production until an oligarchy arose. Some industries would be much bigger than others. As market competition intensified, survival would require more ruthless behavior.

Democratic control as the basis for a new economy

A cooperative economy, therefore, has to not only be based on enterprises run on cooperative lines, but the cooperatives must cooperate with each other as well. The entire economy would have to be based on democratic control, with commodity prices negotiated in fair and open talks, and with a rational system of distribution that would be supple enough to respond to changes in consumer demand while not over-producing. Such an economy might largely be in the hands of cooperative enterprises, but with critical industries, such as banking and energy, in state hands, under democratic control.

Successful cooperative enterprises such as Mondragon provide glimpses of an economy organized for human need rather than uncontrolled private profit, but are insufficient by themselves. That is not a criticism of cooperatives; on the contrary, the growth of cooperatives should be encouraged as strongly as possible. In present circumstances, they exist on the margins, fully subject to the rigors of capitalist competition.

No cooperative today, no matter how successful, can operate outside the demand of the “market” — and the capitalist market is the aggregate interests of the world’s largest industrialists and financiers. As more industries follow the leads of textiles and electronic gadgets — that is, move production to places with ever lower wages and ever less regulations — the more pressure there will be to follow suit or go out of business. Fagor will not be the last cooperative to face this dilemma. It is inevitable as long as cooperatives remain small islands at the mercy of capitalist competition.

A better world, a rational economy geared to human need, requires a different system. As large as Mondragon is, it is has no ability to operate outside the logic of capitalism. Overall, it has thus far competed successfully, but at the price of becoming too large to integrate all its workers. The world would need many more Mondragons, cooperating and negotiating with one another, to even begin to crack the façade of capitalism, and capitalists are not likely to sit by idly while an alternative to their rule grows.

As worthy a model as cooperatives can be, they are not a substitute for working people around the world struggling collectively to create a better world. All the advances of the 20th century are the product of collective struggles, but because those movements settled for reforms while leaving the system in place, the gains have steadily been taken back.

If capitalism is to be transcended, the relations among enterprises, and between people and enterprises, have to be put on a new footing — one based on cooperation, not competition.

Those who do the work in the workplace should get the rewards

A cooperative enterprise rests on a basic concept — the people who do the work earn the money. Strange, isn’t it, that this straightforward idea is considered radical.

It shouldn’t. Yet it is. The modern capitalist system is advertised as a “meritocracy” — those who work the hardest earn the most. In reality, this is a fairy tale; those who accumulate the most are those who have the most capital, often inherited. The system is called “capitalism” for a reason.

Not even the hardest-working chief executive officer works 340 times harder than his or her average employee. The financier who manipulates numbers on a computer screen, indifferent to the humanity that produces those revenues and net incomes, surely does not work hundreds of times harder. Or, likely, even as hard, particularly if the corporate raider is looting a manufacturing company with a factory floor.

If the chief executive, or any manager, is elected from the ranks of the workforce by those same co-workers due to his or her meritorious effort and/or willingness to obtain a degree in management, then indeed an enterprise can be said to operate on a meritorious basis. Such enterprises already exist; some were created as cooperatives at the start and some were taken over by their workers to forestall closure or abandonment.

If you gave the average employee the choice of working in a cooperative, in which everybody shares in the rewards if the enterprise succeeds and everybody has a vote in strategic decisions in a democratic process, as opposed to being an exploited, powerless cog in the traditional authoritarian, top-down capitalist enterprise, there would be considerable support for the former option. If the person given this choice were to be told that wages, benefits and working conditions would be better in the cooperative (as in fact is the case), the decision becomes easier.

But what do we say to a small-business owner? Mom-and-pop businesses form part of the backbone of communities and, unlike a large corporation in which ownership shares are traded among speculators far removed from the actual underlying business, the small businessperson is present, often for long days. Here we have people who do put in more hours than others, and have put their limited capital at risk.

Why should anyone have to work 14 hours a day?

Two recent conversations have gotten me to think about this particular question. One was a debate conducted on another blog in direct response to a question from a small business owner who said he works 14 hours a day, six days a week. The other was a debate with a passerby I had last weekend while staffing an Occupy Wall Street literature table who insisted she was more deserving than others because she worked 12 or more hours a day when others weren’t willing to do so.

If someone chooses to work such hours and is personally fulfilled by doing so, that is that person’s business and not mine. But if you are at your job 14 hours a day, six days a week, your family is missing all the other things you have to offer them. And no matter how nice a house you may have, you’re not there to enjoy it.

Nobody should have to work such punishing hours. There are those who choose to do so out of personal conviction, but there are many millions of people in sweatshops working such hours, or still longer hours, who earn starvation wages — and they have no choice about it. The big capitalists of the world — people who have far more than any small-business owner — earn their fabulous wealth by exploiting such people, and by exploiting relatively more privileged people in advanced capitalist countries who work lesser hours but nonetheless work long, hard days.

Capitalists become rich by paying their employees less than the value of what they produce — usually far less. That doesn’t mean that there aren’t capitalists who don’t work, but a person who runs a small family business is not in the same category as a big capitalist. The passerby with whom I debated last weekend said if the people whom she claimed were jealous of her house were to run businesses like she does, and put in as many hours, they could have what she has.

But there is only so much space for such businesses; under capitalism, most people are going to have to work for somebody else. Moreover, opportunities are vastly unequal. I grew up in a middle class household where the expectation was always that I would go to college (which I did), and we lived in a town with an excellent public-school system, so I received a better education than most students. I had advantages that many people do not have, had I wished to pursue a business career.

Yes, some folks do climb out of disadvantageous situations, but only so many can do that in a (capitalist) system that puts tremendous roadblocks in front of people. Saving is difficult when mere survival is an increasingly difficult struggle.

A small-business owner may object that s/he puts in more hours than employees do (if they have any) and has capital at risk. That may be true, but having to do so is a requirement imposed by the capitalist system; it is not something ordained by some natural order. The capital put at risk was undoubtedly lent by a bank, which collects high interest — in other words, the bank is exploiting the small businessperson. The banker did nothing but sign a piece of paper while the owner works 14 hours a day. Why should the banker earn such big money? Quite likely, the banker, who repeats this exploitative operation with others, earns far more money and works far fewer hours.

The small businessperson is exploited by capitalists, too, just in a different way than an employee is.

The proprietor works, the landlord takes

Let’s take a concrete example. For more than 30 years, including two decades at his last location, a vegan baker much loved by the community operated a bakery before being forced out of business by a landlord who continually jacked up his rent, at three times the rate of inflation. The baker always gave to the community, frequently donating goodies at public events; I was far from the only person routinely greeted with a hug and often offered a free tea when I stopped in. During those years, the Lower East Side neighborhood of New York City changed from a unique enclave of Puerto Ricans, Ukrainians, Poles, artists, squatters, community gardeners, anarchists, communists and beatniks to its present-day state of gentrification run amok.

[Credit: at]


The baker worked from early afternoon to midnight six, and usually seven, days a week, just so all of his money could go to the landlord, who merely needs to sit in his comfortable office many miles away and let the money roll in. For landlords, the neighborhood is nothing but a cash cow to exploit, cynically taking advantage of the cachet created by the residents they are squeezing out by their exorbitant rents. The baker’s fate has been the fate of countless small businesses; only faceless chain stores are able to afford the rents. This corporatization has been replicated in countless other neighborhoods.

The free-lance worker gets the short end as well. For years, I was self-employed, and had to, for tax purposes, operate as my own small business and fill out tax forms the same way an actual small business would. But I was no businessperson — I was a worker who didn’t have a regular job. I was exploited; in fact I was more exploited than I now am with a regular job because I had no health insurance and I had to pay double the usual Social Security taxes (my half and the employers’ half).

People are taught to have a 19th century, romantic notion of capitalism — a myriad of small enterprises competing in a free market. But a “free market” has never existed. Capitalism was built on pushing people off their farms and passing draconian laws to force them into the new factories; markets are expanded through force both military (World War I is one particularly bloody example) and financial (such as International Monetary Fund diktats); and the largest competitors become a handful of oligarchs whose wealth enables them to get governments to give them yet more advantages and who compete by cutting wages rather than through competition that exists only in textbooks.

Employees are exploited through this system, regardless of collar color, by being paid only a small fraction of what they produce and forced to compete for a dwindling number of jobs, but also because they, as consumers, have to pay the high prices that result when competition reduces an industry to a small number of oligopolistic behemoths who dominate a market. Small businesses are also at the mercy of larger corporate entities, including rapacious bankers, and are hurt when their customers have less money.

In a cooperative economy, no individual must assume all the risk. The cooperative can do so, taking loans at reasonable rates by making a good case to a publicly accountable bank operated as a public utility. Enterprises would relate to other enterprises in a cooperative, not competitive manner, eliminating much of the anxiety inherent in a capitalist system in which humans serve markets instead of the other way around.

Hard workers such as the small businesspeople under discussion would be valuable to a cooperative enterprise. Someone possessing such drive would likely wind up being elected to an administrative or management post by their collective. Talents and hard work would still be recognized; such a driven person would still have the personal satisfaction of a job well done; and s/he could work fewer hours, allowing more time to be spent with family and friends.

Others, too, will contribute talent and work to the cooperative enterprise while sharing the burden. Everybody who works should have a say in what is produced, how it is produced and how it is distributed, with community input — after all, it is the community that would be supporting the enterprise, and the enterprise in turn would be operated by people from the community. Production should be for human need, not for a minuscule elite’s private profit with no regard to the greater good. Benefiting the community and earning a comfortable living while working a humanistic workday shouldn’t be oxymoronic.

The formation of cooperatives doesn’t by itself eliminate competition

More people are becoming interested in cooperative enterprises as an alternative to the capitalist top-down corporation. In reading about and discussing the topic, I have found an interesting pattern: An assumption that competition will continue but that it will become benign.

It would be unrealistic to forecast that a cooperative economy would be without competition. But competition in what, and in what form? When we think of competition, often the visualization is of two or more companies competing to make a better consumer product. That is visible — the company that produces a shoddy product when another company produces a quality product puts itself at risk of going out of business (at least in theory).

Less visible, because it is abstract unless it is your job that is shipped overseas or eliminated, are the marco-economic results of competition. Among these are increasing downward pressure on wages; the creation of rust belts as industrialists move production to locations with ever cheaper wages; the relentless pressure (most often applied by the financial industry) to reduce costs, often by workforce reductions; the drive to produce ever higher profits, regardless of human cost; and environmental destruction. All these developments arise not because of this or that greedy banker or the personality of this or that industrialist. They arise because they are the inevitable product of market forces.

Market forces are not a “natural” phenomenon, they are the aggregate interests of the most powerful capitalists. The concentration of production in most industries into a handful of giant corporations — an oligopoly — is also the result of capitalist competition. Expand or die is the inexorable law a capitalist lives by: If you don’t get bigger and stronger, your competitor will and put you out of business. As the winners from this ruthless competition grow bigger and more powerful, they have more weight to throw around the political arena, and can (and do) exert decisive influence over the political process. It is in their interest for them to do so — and we shouldn’t expect them to act otherwise.

I have often been struck by a belief I often encounter that presumes that we need only convert business enterprises into cooperatives and capitalist competition will cease. Underlying that assumption, in my opinion, is locating the cause of greed, injustice, inequality and other social ills in the authoritarian, hierarchical structure of the capitalist enterprise. That structure is surely a significant contributing factor. But that shouldn’t obscure the cut-throat nature of unfettered, market-driven competition: The relentless pressure to increase profits, maximize market shares and eliminate competition — on pain of enterprise death for those who don’t do this sufficiently — makes unethical or anti-social business decisions inevitable.

It is not only the direct competition that compels such behavior, it is also the financial industry: Billionaire speculators, institutional investors, hedge funds, investment banks and other financiers are ever ready to apply the whip if profits falter — and can move gigantic sums of money through stock, bond and foreign-exchange markets at the click of a button to punish those who don’t deliver. During periods of economic upswing, wages may rise for a time as unemployment falls. But wage increases eventually eat into profits; falling profits are intolerable and will be punished by financiers. Cuts to wages, whether in givebacks or in the form of layoffs, and the destruction of productive capacity ensues.

Wages — and thus the human beings who work for the wages — are commodities in capitalism, or any system in which distribution is monopolized or largely controlled by capitalist-style market relations. If all enterprises were converted into cooperatives, collectively owned and managed by the full workforce, but capitalist market relations were left intact, the same competitive pressures would exist. There would be much less inequality because, presumably, all workers within a given enterprise would receive the same wage or would have small differentials, and the workers would be sharing in the profits they create rather than have them confiscated by top executives and financiers.

But their own wages would remain a commodity if everything else is a commodity priced by markets. The collective workers would face market pressure to reduce their own wages in order to compete better against their competitors. Some enterprises would become much bigger than others; smaller enterprises would be compelled to sell themselves to larger competitors, consolidating production until an oligarchal situation arose. Some industries would be much bigger than others. As market competition intensified, survival would require more ruthless behavior. In somewhat different form and with somewhat less intensity, the instability and social ills of capitalism would be reproduced.

A cooperative economy, therefore, has to not only be based on enterprises run on cooperative lines, but the cooperatives must cooperate with each other as well. An economy would have to be based on democratic control, with commodity prices negotiated in fair and open talks, and with a rational system of distribution that would be supple enough to respond to changes in consumer demand while not over-producing.

Part of the waste of capitalist production lies in its chaotic, unplanned nature: Production is increased until too much product is produced that can’t be sold; productive capacity is then destroyed (such as shuttering factories) until a shortage arises and a new cycle begins. This is done through uncoordinated, individual decisions based on guesswork. The pressure of competition compels decision-making to be done in secrecy and, additionally, no mechanism exists to judge composite demand. The result is alternating booms and busts, with accompanying human costs.

Democratic planning, from the bottom up, would be necessary to determine need and enable proper distribution. Ideally, there would be many enterprises for most products. Enterprises might work best as small or midsized production units. Here is where competition would still exist and provide a positive, rather than a destructive, role. If there are dozens of cooperatives producing shoes, the consumer would have many choices, and the enterprise that made a poor-quality shoe would have to do better — a producer that makes a product that people don’t want to buy won’t stay in business.

If one cooperative makes an innovation that gives it a higher-quality product, then other cooperatives would naturally copy the innovation. If democratic planning, to throw out a hypothetical example, determines that 1.2 million shoes need to be made because 1.1 million shoes were produced last year and the supply fell a bit short, and there are several shoe makers who make a quality shoe, that increased target can be distributed among them. If limits to capacity are being approached, one or more cooperatives can go to the local community-run and -controlled bank for a loan to expand capacity by making a case that more shoes should be made.

Production in unfettered markets will become production for private profit, not social need, even if that private profit is collective rather than concentrated at the top. Production needs to be oriented toward human need — that is the other half of the equation of cooperative enterprises.