Cooperation is a fundamental human trait. You may find it bizarre to read a post that begins with such a sentence, but sometimes we do have to point out the obvious.
Competition, we are continually lectured, is the primary driving force animating human beings. It is rarely, if ever, put quite so explicitly, but the prevailing ideology does tell us exactly that. Competition is the fuel of economic growth and progress in a system based on never-ending life-and-death fights to gain dominance at pain of going out of business — so we are told. Competition, conveniently, can be won by only a few heroic figures, who must be given control over other peoples’ lives and rewarded with stratospheric pay.
We lowly employees, who can not comprehend the divine will of the market (which is governed by an invisible hand that only the chosen few of the business elite can see because they possess the magic glasses that see what is otherwise invisible), must sit in awe and gratitude of our capitalist masters. In fact, we should turn over the workings of our entire government to them, and be grateful for their selfless attitude in leaving the business world behind so that they can change the laws to benefit the businesses to which they will return.
Yes, I am going to commit sacrilege here. The world of the preceding two paragraphs, despite their continual propagation, does not have to be so. Places where they aren’t so already exist. Human beings can cooperate with one another (and routinely do — how would a product or service exist if employees did not work together?). The following is by no means a comprehensive list of successful cooperative enterprises, but represent building blocks toward a different way of organization.
Cooperative enterprises, in which all employees share in all the decision-making and manage themselves, are not pie in the sky. They already exist. Cooperatives are distinguished by higher pay than received by employees in traditional businesses, and studies have shown greater levels of job satisfaction — neither is a surprise when large sums of money are not funneled upward and workers have control and decision-making power over their jobs.
The recovered factories of Argentina
Practical experience in Argentina, where cooperatives have existed in a variety of industries since 2001, has provided a demonstration of worker-run enterprises forging strong links with their communities, with mutual benefit to the enterprise and the community that supports the enterprise.*
Solidarity and community instincts have not disappeared under the stress of competition from the capitalism surrounding Argentine cooperatives. A high level of idealism was necessary to initiate the process and in turn the experience has raised consciousness to new levels. After an upsurge in new occupations in 2009 (the latest year for which I can find a reliable figure), the Argentine movement of worker recovery of factories encompassed about 250 enterprises with more than 13,000 workers. The factory takeovers came in the wake of economic collapse a decade ago.
Néstor Kirchner, upon taking office as president early in 2002, suspended Argentina’s foreign-debt payments before agreeing to pay only 30 percent of the crippling debt, an unusual example of a country standing up to the capitalist world’s multi-national financial institutions. But Kirchner and his wife and successor as president, Cristina Fernández, did almost nothing internally to disturb the workings of capitalism — Argentina’s worker-run factories have contended with hostility from domestic political authorities and from corporate power inside and outside the country.
Most of the cooperatives formed in the worker-run factories began with similar stories — owners failing to pay employees, owners stripping the enterprises of assets, owners shutting down plants with no notice and of police using force to expel workers who had occupied plants for the purpose of getting some of the back pay owed to them after production was halted. The cooperatives were formed when workers maintaining their occupations realized that their factory owner did not intend to restart production, and decided to restart production themselves. The employees doing so first had to overcome their own doubts about themselves, but were able to draw on the experience of those who went first and created national organizations to represent the cooperatives and enable coordination among them.
The president of the national coordinating body National Movement of Reclaimed Companies, Eduardo Murúa, explained this process in an interview published in the book Sin Patrón:
“Since the restoration of democracy [after the 1976-1983 military dictatorship], all the laws that have been passed are against workers’ rights. The laws, enacted first by the dictatorship and then by the formal democracy, served to consolidate a global economic model organized according to the [existing capitalist] international division of labor. The changes to the bankruptcy law, for example, had left us without the possibility of severance pay. The reformed law also requires the judge to liquidate a bankrupt company’s assets in 120 days. The only way to reclaim the company is to occupy it and show, first the judge, and then the political class, that we’re not going to leave the factory. … Certainly, if there weren’t so many doubts and fears among the entire working class, there would be many more reclaimed factories. Because of these uncertainties, this process only works in places where there is some level of organization and capable leadership.” [pages 214-215]
The largest of these reclaimed factories is the Zanón factory producing ceramic tiles, which is now known as FaSinPat, a contraction of the Spanish-language words meaning “Factory Without a Boss.” The process started when the original owner, Luis Zanón, stopped paying his employees, who went on strike in response. Zanón received loans from the provincial government to pay back wages, but pocketed the money instead. Finally, the employees went back in, occupied the silent factory, sought and received community support, and decided to restart production themselves in March 2002.
Despite legal obstacles and police harassment, the collective works. In the first four years of worker self-management, the number of employees increased from 300 to 470, wages and factory output increased, and without the speedups and insensitivity to safety imposed by bosses, accident rates were reduced 90 percent. New workers are not hired hands, but become part of the collective. The collective allies itself with the struggle of local Indigenous peoples, who have donated clay from their lands to the factory. The collective also donates tiles to community centers and hospitals and, in return, the nurses’ union donates the services of a nurse during each shift.
The path of the FaSinPat collective was not an easy one — the workers had to physically defend their occupation, with community assistance, more than once and they had to wait eight years before the provincial government passed a law granting the collective legal control of the factory in August 2009. The government also paid off part of the debt incurred by Luis Zanón — much of it owed to the World Bank, which gave a loan of 20 million dollars to Zanón for the construction of the plant, a loan he never paid back. Zanón’s creditors had pushed for the eviction of the collective and foreclosure of the plant during the months leading up to the legislative vote.
The cooperatives operate in a myriad of Argentine industries, including “white collar” businesses. One example is a speciality newspaper covering economic and judicial issues in Córdoba. The newspaper, Comercio y Justcia, was sold by its long-time family owners to a conglomerate during the 1990s wave of corporate consolidation of Argentine media. The new corporate owners hired managers at enormous salaries, stopped paying employee salaries and staged a fake robbery that emptied the office of most of its equipment. The workers brought in their own computers so the newspaper could continue to publish, then went on strike when the new owners failed to pay them for five months.
Finally, the workers went back in to restart the newspaper themselves, making it a going concern after a great struggle. In contrast to other media outlets cutting staff and quality, the Comercio y Justcia collective maintained the size of its staff and its quality, more than doubling circulation in its first year.
In almost all of the Argentine cooperatives everybody earns the same amount, and none hires outside managers — the cooperatives are governed by assemblies of the entire workforce with their decisions carried out by managers who are elected from their own ranks and who serve limited, specified terms. In a separate interview in Sin Patrón, one of the Comercio y Justcia collective members said of the new way of working:
“Inside, we have a setup that goes against the logic of capitalism. A humanized work régime, a production arrangement decided by workers themselves. In relationships outside the institution, we can’t detach ourselves from the economy’s logic, but we give ourselves the luxury of doing work for free and doing what we decide as workers. On the inside the revolution has already happened. And looking externally, our biggest contribution is demonstrating that workers can efficiently run an enterprise.” [page 208]
Not all the Argentines who recovered their abandoned companies initially wanted to form cooperatives — there were those who wished for nationalization. There was no interest on the part of the federal or provincial governments to take over factories, so those workforces that initially sought nationalization had no choice but to adopt the cooperative form. Proponents of nationalization argued that cooperatives would be at the mercy of an intact capitalist system and that the cooperatives would eventually be forced to pay the old owner for the recovered factory, an expense they would be unable to meet. Proponents of cooperatives argued that direct worker takeovers would be faster and more practical — the jobs would be saved faster this way, the aim of the takeovers.
The cooperatives — although many successfully bought their factories from the old owners at discounted prices thanks to strong community support and their perseverance through long legal battles and repeated attempts at physical expulsion — remain small islands in a vast sea of capitalism. They are merely tolerated by an Argentine establishment loath to appear too openly to challenge continuing community support, and they represent an example that capitalists everywhere wish to stamp out. These cooperatives must survive in an economic environment that operates on a very different basis than they do and are at the mercy of the powerful forces unleashed by that environment, including boom/bust economic cycles. But they have survived.
Mondragon, the world’s biggest cooperative
Based in the Basque Country of northern Spain, Mondragon has more than 83,000 jobs among its many businesses. Mondragon produces industrial components and consumer goods, provides construction services, and operates a supermarket chain, a bank and a university. These are not small operations — the cooperative reports annual revenue of nearly 15 billion euros.
New workers become full members after a trial period of six to twelve months. All ownership is in the hands of Mondragon workers; each buys one non-transferable share upon become a member and sells it back to the collective upon leaving or retiring. In addition to the regular wage, members also share in the profits, with a dividend being paid to each out of the surplus the members’ business earns. Thirty to seventy percent of the profits are distributed as dividends, depending on the health of a given business. Profits are also distributed among the individual businesses, set aside for investment and to replenish reserves, and distributed into the overall organization’s internal support fund.
Mondragon’s English-language web site explains the basis of its workers’ renumeration, which are on a very different principle than a capitalist corporation:
“Labour is granted full sovereignty in the organisation of the co-operative enterprise, the wealth created is distributed in terms of the labour provided and there is a firm commitment to the creation of new jobs. As far as the wealth generated by the co-operative is concerned, this is distributed among the members in proportion to their labour and not on the basis of their holding in Share Capital. The pay policy of Mondragon’s co-operatives takes its inspiration from principles of Solidarity, which are expressed through sufficient remuneration for labour on the basis of solidarity.”
All decisions on working hours, pay, allowable pay differentials, strategic decisions and management are made by a collective vote off all members. The supreme body of Mondragon is the general assembly, in which all members participate and vote on the basis of “one member, one vote.” The general assembly elects the governing council, which represents and governs the cooperative — and is accountable to the general assembly. The governing council in turn appoints the executive management team. Management does not act independently, however — a separate cooperative congress, consisting of 650 members delegated by individual businesses, is tasked with “establish[ing] the strategic criteria by which the Corporation is to be administered.”
Members are also represented in all internal bodies by the social council, and an elected monitoring commission ensures compliance with accounting principles.
Decision-making power, however, resides with the full membership. According to Mondragon:
“The first and foremost body of participation is the General Assembly, in which rests the full sovereignty of the co-operative. Its most important powers include: appointing and revoking members of the Governing Council and Accounts Auditors by means of a secret vote; examining company management, approving the annual accounts and the distribution of surplus and apportioning of losses; approving the general policies and strategies of the co-operative; approving increases in share capital, the rate of interest to be accrued by capital contributions and the joining fees for new members; modifying the Company Statutes and approving everything implied by a substantial modification in the economic, organisational or functional structure of the co-operative.”
Management comes from within; it is not hired from outside. And there are no layoffs — if a business experiences a slowdown, some of its members are transferred to another business that has need of more workers. Mondragon, however egalitarian its internal structure, does have to compete in a capitalist environment against capitalist enterprises, and so continues to expand into new ventures and to, outside of Spain, buy companies. The latter are bought with an eye toward converting them into cooperatives and making the bought companies’ personnel worker/owners equal to those in established businesses, but has not succeeded in converting all.
Nonetheless, Mondragon’s workers don’t face the continual prospect of being laid off every time there is a slight dip in profits. Georgia Kelly and Shaula Massena, writing in Yes magazine, reported on what happened when one of the Mondragon businesses experienced difficult times:
“The worker/owners and the managers met to review their options. After three days of meetings, the worker/owners agreed that 20 percent of the workforce would leave their jobs for a year, during which they would continue to receive 80 percent of their pay and, if they wished, free training for other work. This group would be chosen by lottery, and if the company was still in trouble a year later, the first group would return to work and a second would take a year off. The result? The solution worked and the company thrives to this day.”
Nobody votes to send their jobs to a low-wage haven in another country.
The “Cleveland model” starts with anchors
The Evergreen Cooperative Initiative — often referred to as the “Cleveland model” — seeks to strengthen a local community from the ground up through the creation of cooperative enterprises anchored to large institutions. Based on the east side of Cleveland, Ohio – a city that has lost half of its population since 1960 — Evergreen creates worker-owned small businesses that provide products and services to established “anchor” institutions in the immediate area (such as hospitals and universities) and other customers.
The Evergreen Cooperative Corporation, which describes itself as a holding company “leading this initiative,” says on its web site:
“The Evergreen Cooperative Initiative is based on a vision of ‘community wealth building.’ Community wealth strategies aim at improving the ability of communities and individuals to increase asset ownership, anchor jobs locally, strengthen the municipal tax base, prevent financial resources from ‘leaking out’ of the area, and ensure local economic stability.
The strategic pillars on which the Initiative is built are: (1) leveraging a portion of the multi-billion dollar annual business expenditures of anchor institutions into the surrounding neighborhoods; (2) establishing a robust network of Evergreen Cooperative enterprises based on community wealth building and ownership models designed to service these institutional needs; (3) building on the growing momentum to create environmentally sustainable energy and green collar jobs (and, concurrently, support area anchor institutions in achieving their own environmental goals to shrink their carbon footprints); (4) linking the entire effort to expanding sectors of the economy (e.g., health care, our aging population, local food, and sustainable energy), many of which are recipients of large-scale public investment; and (5) developing the financing and management capacities that can take this effort to scale (that is, to move beyond a few boutique projects or models to have significant municipal impact).”
Evergreen hopes to create as many as ten more cooperatives in the next three to five years, and ultimately create 5,000 cooperative jobs during the next decade. In a city the size of Cleveland, that is a small number, but it represents a model that others can replicate. Success in this initiative would also demonstrate a different, more humane model than that of modern-day capitalism, with its authoritarian top-down structures and vastly unequal levels of compensation and power.
Successful local businesses such as these would also stabilize neighborhoods that suffer when jobs in manufacturing and older industries are moved away.
Cooperative businesses include Evergreen Laundry, which provides industrial-scale laundry services; Evergreen Energy Solutions, which designs and installs solar panels and provides energy-efficiency services; and Green City Growers Cooperative, which operates a hydroponic food-producing greenhouse covering more than three acres (more than one hectare). Local institutions that contract for services from the cooperatives include Case Western Reserve University, the University Hospitals system and the Cleveland Clinic (a local medical center and research facility).
By using local institutions that will not be moving as anchors, the Cleveland model seeks to create worker-owned enterprises that will also stay in the community:
“Rather than a trickle down strategy, it focuses on economic inclusion and building a local economy from the ground up; rather than offering public subsidy to induce corporations to bring what are often low-wage jobs into the city, the Evergreen strategy is catalyzing new businesses that are owned by their employees; rather than concentrate on workforce training for employment opportunities that are largely unavailable to low-skill and low-income workers, the Evergreen Initiative first creates the jobs, and then recruits and trains local residents to take them.”
The Cleveland Foundation, a local funding organization, provided capital, guaranteed a bank loan and conducted talks with executives of the anchor institutions to start the initiative. Each individual business received a loan that was subsidized with federal tax credits, and low-interest funding was also provided by the U.S. Department of Housing and Urban Development. Using its seed capital, Evergreen provides long-term financing to start cooperative businesses and to provide them with technical support and training.
Similar to Mondragon, on which Evergreen is modeled, employees work a six-month probationary period, then begin to buy into the company through payroll deductions over three years. Evergreen estimates that its worker-owners will build an equity stake of $65,000 after eight years of working at an Evergreen cooperative in a section of Cleveland in which the median annual income is $18,500. When worker-owners retire or leave the company, they relinquish their ownership share and the value of their capital account is returned to them, as their equity stake in the company. Workers also share in the profits generated.
Cooperatives as yet are too small to represent anything other than the smallest crack in the edifice of capitalism. But the bricks of today will be used to build the world of tomorrow. These models could spark similar enterprises or cooperatives on different models — and demonstrate that cooperation can become the standard in a better world.
* This discussion of Argentina is based on an excerpt from my forthcoming book It’s Not Over: Lessons from the Socialist Experiment. Among the sources used here are lavaca collective, Sin Patrón [Haymarket, 2007]; Peter Elliot, “Zanon Workers in Argentina Still Waiting for Security,” posted June 27, 2006, on the Upside Down World web site, upsidedownworld.org; Ginger S. Gentile, “Argentine Lessons,” posted March 8, 2004, on the ZNet web site, http://www.zmag.org; Marie Trigona, “Argentine Factory Wins Legal Battle: FaSinPat Zanon Belongs to the People,” posted August 14, 2009, on the Upside Down World web site