Co-operatives: all in this together?

Co-operatives: all in this together?

An interesting article from The Economist discussing the merits of workers' co-operatives as a means to avoid class conflict in a time of recession.

These are difficult times for the Fagor appliance factory in Mondragón, in northern Spain. Sales have seized up, as at many other white-goods companies. Workers had four weeks’ pay docked at Christmas. Some have been laid off. Now salaries are about to be cut by 8%. Time for Spain’s mighty unions to call a strike? Not at Fagor—for here the decisions are taken by the workers themselves.

Fagor is a workers’ co-operative, one of dozens that dot the valleys of Spain’s hilly northern Basque country. Most belong to the world’s biggest group of co-operatives, the Mondragón Corporation. It is Spain’s seventh-largest industrial group, with interests ranging from supermarkets and finance to white goods and car parts. It accounts for 4% of GDP in the Basque country, a region of 2m people. All this has made Mondragón a model for co-operatives from California to Queensland. How will co-ops, with their ideals of equity and democracy, cope in the recession?

Workers’ co-ops are often seen as hotbeds of radical, anti-capitalist thought. Images of hippies, earnest vegetarians or executives in blue overalls could not, however, be further from reality. “We are private companies that work in the same market as everybody else,” says Mikel Zabala, Mondragón’s human-resources chief. “We are exposed to the same conditions as our competitors.”

Problems may be shared with competitors, but solutions are not. A workers’ co-op has its hands tied. It cannot make members redundant or, in Mondragón’s case, sell companies or divisions. Losses in one unit are covered by the others. “It can be painful at times, when you are earning, to give to the rest,” Mr Zabala admits. Lossmaking co-ops can be closed, but members must be re-employed within a 50km (30-mile) radius. That may sound like a nightmare for managers battling recession. But co-ops also have their advantages. Lay-offs, short hours and wage cuts can be achieved without strikes, and agreements are reached faster than in companies that must negotiate with unions and government bodies under Spanish labour law.



Workers’ co-ops are often seen as hotbeds of radical, anti-capitalist thought. Images of hippies, earnest vegetarians or executives in blue overalls could not, however, be further from reality.


The 13,000 members of Eroski, another co-operative in the Mondragón group and Spain’s second-largest retailer, have not just frozen their salaries this year. They have also given up their annual dividend on their individual stakes in the company. A constant flow of information to worker-owners, says Mr Zabala, makes them ready to take painful decisions.

It sounds conflict-free, but that is misleading. One of Mondragón’s many paradoxes is that worker-owners are also the bosses of other workers. People have been hired in far-flung places, from America to China, as the group has expanded. It now has more subsidiary companies than co-operatives. Mondragón has two employees for every co-op member. The result is a two-tier system. And when recession bites, non-member employees suffer most. They are already losing jobs as temporary contracts are not renewed. Like capitalist bosses, the Mondragón co-operativists must, indeed, occasionally handle strikes and trade-union trouble.

Some worry that Mondragón-style success kills the idealism on which most co-ops are based. Those within the Mondragón group are aware of the danger. Eroski wants to offer co-op membership to its 38,500 salaried employees.

The most successful co-ops, however, are those least shackled by ideology. Mondragón used to cap managers’ pay at three times that of the lowest-paid co-operativist, for example. But it realised it was losing its best managers, and that some non-member managers were earning more than member managers. The cap was raised to eight times. But this is still 30% below market rates, and some managers are still tempted away. “Frankly, it would be a bad sign if nobody was,” says Adrián Celaya, Mondragón’s general secretary.

Lately Mondragón has had trouble keeping successful co-operatives locked in. Irizar, a maker of luxury coaches, split off last year, reportedly because it no longer wanted to support lossmaking co-ops elsewhere in the group.

Henry Hansmann, a professor at Yale Law School, says co-ops often fall apart when worker-owners become too diverse. He points to United Airlines—not a co-operative, but once mainly owned by workers from competing trade unions—as an example of how clashing interests can kill worker ownership. By bringing in tens of thousands of new members at Eroski, many far from the Basque country, Mondragón risks falling into that trap. The group’s bosses believe, however, that the way forward is to promote the idea that co-operativism brings advantages. The global downturn may strengthen the group internally. As unemployment sweeps the globe, after all, there is no greater social glue than the fight to keep jobs.

Comments

Steven.
Oct 7 2009 17:09

This is a great article. Hopefully the anarchists who mistakenly support co-op's as a revolutionary strategy will read this and learn something.

Yorkie Bar
Oct 7 2009 19:42

My support for co-ops died the day I went to work for one.

~J.

husunzi
Oct 7 2009 19:51

Thanks for posting this, Joseph Kay. This confirms what anthropologist Sharyn Kasmir described in The Myth of Mondragon: Cooperatives, Politics, and Working-Class Life in a Basque Town - well worth the read. It was a long time ago when I read that, but basically she documented how Mondragon was able to survive Spain's neoliberalization in contrast with other cooperatives and regular capitalist enterprises in the area, largely because Mondragon members identified more strongly with Mondragon than with the working class, and so they were willing to put up with increasing work loads, falling income, and a corporate restructuring that rendered Mondragon much less democratic and egalitarian than before. Kasmir focuses on the cultural aspects of all this, but one conclusion she draws (if I remember correctly - maybe I read this into it), was that capital tends to force cooperatives to either fold or become increasingly similar to regular capitalist enterprises.

This is consistent with Marx's comments in a couple places - two I can think of are his inaugural address to the First International and chapter 27 of Capital, volume 3.

While searching for those I ran across this article that seems to use Marx to do the opposite - that is, emphasize the positive role cooperatives might play in some kind of transition to communism. I haven't read it yet, but really the two positions aren't contradictory - Marx's point was that cooperatives will tend to fail or become like (ordinary) capitalist enterprises IF they do not become part of a movement to transform their capitalist context.

But it is an interesting question for me exactly what kind of role cooperatives might play in such a movement. Marx's proposal in his address isn't that inspiring: "To save the industrious masses, co-operative labor ought to be developed to national dimensions, and, consequently, to be fostered by national means." For those of us who think communization will have to occur through some kind direct action on the part of those rebelling against capital, I'm curious what others think about the potential role of cooperatives in this process.

One possibility is that something like cooperatives might be used in a post-capitalist society - as many syndicalists, pareconists and market socialists believe. I think the Libcom Collective's critique of Parecon deal with some aspects of this question well. Another good source - coming out of the Marxist milieu - is a collection edited by Bertell Ollman called Market Socialism: The Debate among Socialists. Here David Schweickart introduces his elaborate blueprint of a market socialism based on cooperatives competing on a (highly regulated) market, and Ollman and Hillel Ticktin give pretty good critiques of it. Then there's that book Non-Market Socialism in the Nineteenth and Twentieth Centuries, reviewed here, which used to have a few chapters online but I can't find them now. I don't remember whether that deals with cooperatives as such, but it deals with the anti-market positions of Kropotkin, Bordiga, and the Situationists, among others.

Anyway, assuming we're all anti-market, I'm curious if anyone has any ideas about what kind of role cooperatives might play in communization, and whether something akin to cooperatives might function in a communist society.

Spassmaschine
Oct 8 2009 05:04
Quote:
Then there's that book Non-Market Socialism in the Nineteenth and Twentieth Centuries, reviewed here, which used to have a few chapters online but I can't find them now. I don't remember whether that deals with cooperatives as such, but it deals with the anti-market positions of Kropotkin, Bordiga, and the Situationists, among others.

There's a couple of articles from it on libcom: the Adam Buickone on Bordiga, and Mark Shipway's one on council communism. If I recall correctly the Bordiga one deals with some of the problems with cooperatives/self-management, although it's a while since I read it so I may be imagining things.

Anarcho
Oct 8 2009 09:46

I wonder how supportive the Economist would be if workers were seizing their workplaces and turning into co-operatives? Not very, I would imagine!

And the problems raised are all examples of what happens to co-operatives when they operate within capitalism. Bakunin, for example, raised these kinds of objections back in the 1860s and suggested that seeing co-operatives as the main means of changing society (by out-competing capitalist firms) was doomed to failure. This did not support him supporting co-operatives or viewing co-operative workplaces as the basis of a socialist society.

There are two issues here.

First, whether creating or supporting co-operatives is enough in itself to overcome capitalism. Obviously not, as they adjust in order to survive within capitalism.

Second, whether anarchists should be encouraging workers facing redundancy to seize their workplaces and start to run them themselves (which would be a co-operative!). I would think that anarchists should encourage that as part of a general process of collective class struggle.

What is the alternative? Simply point workers to the nearest dole centre? I've discussed this before:

http://anarchism.pageabode.com/anarcho/bailouts-or-co-operatives

http://anarchism.pageabode.com/anarcho/co-operatives-and-conflicts

Yorkie Bar
Oct 8 2009 10:24
Quote:
This did not [stop] him [Bakunin] supporting co-operatives or viewing co-operative workplaces as the basis of a socialist society.

Evidence plz.

I may be wrong, but didn't JK give you a proper kicking in that argument?

~J.

Joseph Kay
Oct 8 2009 11:07
Anarcho wrote:
What is the alternative? Simply point workers to the nearest dole centre?

so it's expropriation or the dole queue? as jack says, this is a dishonest binary. it's also ironic, considering in our debate you made out i was being a 'revolution now!' impossibilist compared to your realistic advocacy of co-ops...

as i pointed out at the time, if you're in a position to actually expropriate capital and get away with it (which i doubt can happen without a widespread wave of militant occupations; e.g. Zanon was a result of a very particular confluence of circumstances), then you're certainly in a position to make demands like decent redundancy, pensions, training etc since capitalists will sooner concede those than their actual capital.

to be perfectly honest i think i'd rather get say, a year's salary, protected pension and some free retraining than work in a co-op for a year, probably under the conditions The Economist describes at Fagor. that's probably also more realistic than seizing the boss' capital and expecting to keep it, which can only really work as part of a wider wave of militant class struggle which by definition is approaching revolutionary intensity.

Joseph Kay
Oct 8 2009 13:10

for casual readers, the previous debate being refered to is Bailouts, co-operatives or class struggle - a debate

littlehorn
Oct 11 2009 18:21
Quote:
All this has made Mondragón a model for co-operatives from California to Queensland.
[...]
Mondragón used to cap managers’ pay at three times that of the lowest-paid co-operativist, for example. But it realised it was losing its best managers, and that some non-member managers were earning more than member managers. The cap was raised to eight times. But this is still 30% below market rates, and some managers are still tempted away. “Frankly, it would be a bad sign if nobody was,” says Adrián Celaya, Mondragón’s general secretary.

Uh question: what kind of cooperative or federation of cooperatives has MANAGERS ?

Joseph Kay
Oct 11 2009 18:31

one that's operated in a competitive market for years and become more and more like the corporations it was supposed to differ from. "be careful when you fight with monsters that you do not become a monster, for when you stare long into the abyss, the abyss also stares into you." i never realised that quote applied to the marketplace, but if the cap fits...

littlehorn
Oct 11 2009 18:45
Quote:
one that's operated in a competitive market for years and become more and more like the corporations it was supposed to differ from.

I would figure a cooperative that has a hierarchy is not a cooperative anymore; so it's a little weird people are arguing against the principle of cooperatives when it's clear that we're not dealing with such things in the current situation. If anything, this argues for cooperatives. What degree of hierarchy is tolerable ? And why isn't this held against Mondragon ?

Joseph Kay
Oct 11 2009 18:59

well as far as i'm aware managers are elected at Mondragon, so it would require a pretty significant redefintion of 'workers' co-operative' to exclude firms that are both worker-owned and worker-controlled. in any case the point is that Mondragon didn't end up the way it is by accident, but because of the logic of running a business in a capitalist society.

littlehorn
Oct 11 2009 19:13

I think we have a disagreement with regards to the extent to which election means control, and how legitimate an elected authority can be. I would certainly find it quite unequal that some workers would be elected to manage the rest, and to me that would also mean that it's not truly a cooperative.

Joseph Kay
Oct 11 2009 19:23
Wikipedia wrote:
The sovereign body is the 650-member Co-operative Congress, its delegates elected from across the individual co-operatives. The annual general assembly elects a governing council which has day-to-day management responsibility and appoints senior staff. For each individual business, there is also a workplace council, the elected President of which assists the manager with the running of the business on behalf of the workers.

it does seem pretty humpty dumpty to deny that's a co-operative. but even if it isn't, the onus on you is to explain how something that was very definitely founded as a co-operative ceased to be so when it was under both the ownership and democratic control of its workers; surely at some point they must have voted to allow managers. why would they do that?

Django
Oct 11 2009 19:32
Littlehorn wrote:
I would certainly find it quite unequal that some workers would be elected to manage the rest, and to me that would also mean that it's not truly a cooperative.

Out of interest, would you also exclude co-operatives which hire workers who aren't members? This is certainly a form of inequality, IMO. If this was the case, it would write off a huge number of UK co-operatives. Two of the most successful in Manchester for instance hire part-time wage workers and casuals, one, a health food shop, treats its wage workers like shit.

littlehorn
Oct 11 2009 20:13

I think this is a problem with me not being up to date on the definition of a cooperative. My bad.

Quote:
The two central characteristics of worker cooperatives are: (1) workers invest in and own the business and (2) decision-making is democratic, generally adhering to the principle of one worker-one vote.

I guess I'm against cooperatives after all.

Joseph Kay
Oct 11 2009 20:10

yeah that's the definition i've been working off. ironically i agree with the Economist when they say "workers’ co-ops are often seen as hotbeds of radical, anti-capitalist thought. Images of hippies, earnest vegetarians or executives in blue overalls could not, however, be further from reality."

Chris Bovington
Oct 12 2009 19:50

Good discussion.

timl
Oct 13 2009 18:53

Well co-operatives might not be perfect, but can anyone suggest a better way of running something like this?

Perhaps Mondragón became too big & a victim of its own success, what would you do instead?

wojtek
Aug 14 2012 20:01

BBC News: Basque co-operative Mondragon defies Spain slump

Anarcho-Syndicalist Review: Bakunin: The Collectivist Tradition

Quote:
Quote:
Anarcho wrote:
This did not [stop] him [Bakunin] supporting co-operatives or viewing co-operative workplaces as the basis of a socialist society.

Yorkie Bar wrote:
Evidence plz.

In Statism and Anarchy (1873) here? It sounds like highlighting an upside as opposed to supporting them...

Quote:
Bakunin wrote:
The various forms of cooperation are incontestably one of the most equitable and rational ways of organizing the future system of production. But before it can realize its aim of emancipating the laboring masses so that they will receive the full product of their labor, the land and all forms of capital must he converted into collective property. As long as this is not accomplished, the cooperatives will be overwhelmed by the all-powerful competition of monopoly capital and vast landed property; ... and even in the unlikely event that a small group of cooperatives should somehow surmount the competition, their success would only beget a new class of prosperous cooperators in the midst of a poverty-stricken mass of proletarians. While cooperatives cannot achieve the emancipation of the laboring masses under the present socioeconomic conditions, it nevertheless has this advantage, that cooperation can habituate the workers to organize themselves to conduct their own affairs (after the overthrow of the old society) ...
fingers malone
Aug 15 2012 23:09

Actually I worked for Mondragon a couple of times. I was one of their non-member employees, that is, you are not a member of the co-op and don't have any of the rights. I was on a one month contract. It was just like any other job, no control over the work etc. There was a factory they bought, all non member employees, that went on strike in Poland a couple of years ago, there's an article about it somewhere on libcom.

Spikymike
Oct 13 2012 17:49

Not wishing to start up a whole new thread on the Co-ops debates, well rehearsed in Josephs and Stevens blogs, thought I'd mention here in ''the International year of Co-operatives''! the competition sponsored by 'the Ethical Consumer/New Internationalist/Co-operatives UK' and others under the heading 'Is there a Co-operative Alternative to Capitalism' . The question is posed roughly as ' addressing the core problems of global inequality, unsustainable resource depletion and climate change' versus 'just another way of organising business in a predominantly capitalist economy' but since the winning entries are to be reproduced in a book actually entitled ''The Co-operative Alternative to Capitalism?'' and the sponsors are all pro-co-operative, including those operating in the commercial world of capitalism, I doubt they will want anything too negative to win. The Award is to be announced on the 29th in Manchester.

see: www.ethicalconsumer.org/cooperativealternative/whatonething.aspx

Was anyone around libcom tempted to submit something I wonder?

Uncontrollable
Oct 13 2012 23:00
husunzi wrote:
One possibility is that something like cooperatives might be used in a post-capitalist society - as many syndicalists, pareconists and market socialists believe. I think the Libcom Collective's critique of Parecon deal with some aspects of this question well.

That's odd since i'm pretty sure participatory economics has nothing to do with cooperatives. In parecon the land, our natural resources, the means of production are socially owned by everyone in society or owned by no one if you want to think of it that way. In the parecon model the means of production are not owned by seperate worker cooperatives competing against each other producing commodities for markets.

Chilli Sauce
Oct 13 2012 23:59

Well, some folks who espouse to be pareconists have advocated for a parecon model of co-operatives as a current alternative to capitalism.

In fact, here you go:

http://parecon.ca/wpwc#.UHoAOlYifLw

Related, a think a lot the criticism comes from parecon's retention or remuneration for effort which if taken to it's logical conclusion could lead to a lot of aspects of capitalism which Parecon rightfully purports to be against--not the least of which includes wages and commodity production (after all, one must be exchanging that remuneration for something).

Spikymike
Aug 25 2018 13:19

Maybe this deserves a bump up along with the many other critical discussions of Workers Co-ops as a supposed revolutionary strategy that appear on libcom, given marx-lover's recent extensive promotion of this tired old strategy as something new.

Marx-lover
Aug 27 2018 04:46

It's very easy to criticize cooperatives. But I've answered all the conventional criticisms in my book Worker Cooperatives and Revolution. The transition to a new society will take place on many different axes, including nationalizations, public banks, and cooperatives. And other institutions we can't foresee at present.

zugzwang
Aug 27 2018 12:37
Marx-lover wrote:
It's very easy to criticize cooperatives. But I've answered all the conventional criticisms in my book Worker Cooperatives and Revolution. The transition to a new society will take place on many different axes, including nationalizations, public banks, and cooperatives. And other institutions we can't foresee at present.

Sounds no different from the worker cooperative (or "worker self directed enterprises") and other stuff pushed by Richard Wolff (American Marxist academic) and co. What do you think of them? They're not so popular here. My basic objection to worker coops is there's still the need to valorize capital (generate a surplus) and to compete or be steam rolled by the competition. They're still subjected to the same pressures as any other capitalist enterprise and so are forced to act in similar anti-social ways.

Steven.
Aug 27 2018 15:29
Marx-lover wrote:
It's very easy to criticize cooperatives. But I've answered all the conventional criticisms in my book Worker Cooperatives and Revolution. The transition to a new society will take place on many different axes, including nationalizations, public banks, and cooperatives. And other institutions we can't foresee at present.

So when the Conservative-Liberal Democrat coalition government in the UK nationalised some banks to prevent them going under, was that a step towards a free communist society?

zugzwang
Aug 28 2018 01:21

Nice of you to make your 2014 Worker Cooperatives and Revolution book available here, Marx-Lover. And I see you mentioned Richard Wolff favorably in multiple places and quoted his Democracy at Work: A Cure for Capitalism as well:

Quote:
The death of Marxism has been announced so many times that it might seem anachronistic to reconsider Marx’s ideas yet again. In the twenty-first century haven’t we moved beyond Marxism? The answer, it seems, is no. For one thing, in recent years even the mainstream media has suggested that the ghost of Marx is haunting the world. Articles are published with headlines like “Why Marx was Right” [227] and “Marx’s Revenge: How Class Struggle Is Shaping the World,” [228] and mainstream economists like Paul Krugman and Nouriel Roubini invoke Marxism to explain capitalism’s current crisis. Radical thinkers such as David Harvey and Richard Wolff have become academic celebrities, and magazines like Monthly Review and Jacobin are becoming more popular. In fact, the Pew Research Center reported in 2011 that among Americans aged 18 to 29, 49 percent have a positive view of socialism whereas 46 percent have a positive view of capitalism. [229] It seems, then, that reports of Marx’s death have been greatly exaggerated.