Worker co-operatives in the capitalist system

Proponents of capitalism would have you believe that there is no alternative, that the free market provides the most efficient system of exchange and that any deviation risks endangering freedom and prosperity. This is a falsehood, for humans have demonstrated throughout history a remarkable capacity to co-operate without private ownership and the insatiable need for profit. Closer examination of worker co-operatives, despite their long-standing orientation towards generating wealth within the capitalist system, offers a glimpse at how humanity may one day succeed in recasting incentivisation to meet people’s needs rather than to make a profit.

The history of worker co-operatives and self-management is deeply rooted in the 19th-century efforts to address the socio-economic challenges brought about by the Industrial Revolution. Robert Owen, a visionary social reformer and industrialist in the early 1800s, laid the groundwork for the co-operative movement. Owen championed the idea that workers should collectively own and manage the means of production to ensure fair wages and better working conditions. His experiments at New Lanark in Scotland and later at New Harmony in the United States provided early models of co-operative living and working. Others like Charles Fourier, a French social theorist, contributed to the co-operative movement by proposing the concept of phalansteries—self-sustaining communities where individuals could live and work co-operatively. Although Fourier’s ideas were not widely implemented, they inspired later developments in the co-operative movement.

Elsewhere, the Rochdale Society of Pioneers, formed in 1844 in England, played a pivotal role in shaping the co-operative principles that persist today. They established a successful consumer co-operative, emphasising open membership, democratic control, and distribution of surplus based on patronage. Indeed, the so-called ‘Rochdale Principles’ became a blueprint for subsequent co-operative endeavours.

The modest successes of the co-operative movement led Marx to pronounce that worker self-management proved the superfluousness of capitalist managerialism; a statement ostensibly corroborated decades later during the Spanish Civil War (1936-1939). Worker co-operatives and self-management gained prominence across the Republican zone as a means for labourers to assert control over their workplaces. In Catalonia, particularly in the city of Barcelona, workers took over factories and implemented self-management practices. Notable examples include the textile industry with enterprises like Fabrica de Hilaturas Fabra i Coats and the metal industry with companies like Talleres Roca. These initiatives were characterised by worker assemblies, decision-making through consensus, and the elimination of hierarchical structures. The success of these worker co-operatives during the Spanish Civil War was evident in increased productivity and improved working conditions. The textile co-operative, Fabra i Coats, for instance, not only maintained production levels but also witnessed enhanced efficiency under worker control. Similarly, in the metal industry, Talleres Roca thrived under self-management, showcasing the viability of co-operative principles in sustaining economic activity during a tumultuous period.

Contradictions
However, the existence of worker co-operatives within a capitalist system has inevitably led to certain contradictions. Notwithstanding the inculcation of workplace democracy and equality, the necessity to compete and accumulate in the broader system persists, and in face of these structural demands, worker co-operatives have often proven ineffective and unreliable.

Despite his visionary ideals, Owen’s experiments at New Lanark and New Harmony faced internal strife and financial difficulties. The co-operative model struggled with issues of governance, as decision-making by consensus often led to slow and inefficient processes. In New Harmony, the lack of a clear organisational structure and the imposition of Owen’s communal ideas contributed to the ultimate failure of the experiment.

Similarly, during the Spanish Civil War, worker co-operatives in Barcelona faced both internal and external challenges. While some co-operatives thrived, others struggled with management issues, as decision-making by assembly sometimes hindered effective responses to rapidly changing circumstances. Even the relatively successful Fabrica de Hilaturas Fabra i Coats faced difficulties due to disagreements among workers on key decisions, highlighting the challenges of implementing democratic practices in high-stakes situations. External factors too, such as wartime pressures and political instability, also impacted the sustainability of these initiatives. The Barcelona co-operatives, despite notable successes, faced challenges in the broader socio-political context of the Spanish Civil War, ultimately contributing to their limitations and demonstrating the complexity of implementing worker self-management in tumultuous times.

Mondragon
That said, worker co-operatives endure today. The Mondragon Co-operative Corporation, based in the Basque region of Spain, is an often-cited example. Founded in 1956 by a group of visionary individuals led by Father Jose Maria Arizmendiarrieta, Mondragon has grown into one of the world’s largest and most successful co-operative networks. Proponents point to the active participation of employees in decision-making processes through a system of co-determination, where major decisions are made collectively by the workers and management, as well as the commitment to equality of income. While wage differentials exist based on skills and responsibilities, the ratio between the highest and lowest-paid worker is significantly lower than in traditional corporations. This approach promotes a more equitable distribution of wealth among the co-operative members. In terms of profit distribution, a portion of the profits is reinvested in the co-operative, another portion is allocated to social and cultural activities, and the rest is distributed among the members.

Critics, however, argue that Mondragon, while often lauded as a successful worker co-operative, still operates within the broader capitalist system, raising concerns about its limitations and contradictions. One major criticism is that, despite its co-operative structure, Mondragon has adopted certain hierarchical elements, resembling a conventional corporation. While the co-operative members elect management, there exists a professional managerial class that holds considerable decision-making power, potentially diluting the essence of true workplace democracy.

Additionally, Mondragon’s global expansion has led to accusations of replicating conventional corporate practices, including outsourcing and wage differentials, especially in its international subsidiaries. Critics contend that this compromises the co-operative’s commitment to equality, as the wage gaps between the highest and lowest-paid workers have widened in some instances.

Furthermore, the co-operative has faced challenges in maintaining its founding principles as it expanded. In certain situations, Mondragon has implemented cost-cutting measures and layoffs, contradicting the ideal of job security within a co-operative framework. The co-operative’s financial structure has also been a subject of scrutiny, with some arguing that it still operates within the capitalistic framework, reliant on traditional banking and financial institutions. These criticisms highlight the complexities and challenges of attempting to establish a fully co-operative model within the capitalist system, revealing that Mondragon, despite its successes, does not represent a complete departure from capitalist structures and practices.

World co-operative commonwealth
Thus, it is evident that simply introducing a system of worker co-operatives cannot expunge capitalism. The worker co-operative in its current form is not a panacea. Like other workplaces it is geared towards the generation of wealth within the capitalist system. However, the worker co-operative endures as an ideal, an alternative framework where decision-making is collective and understanding one’s role in a larger societal context becomes paramount, fostering a spirit of co-operation and shared responsibility.

If humans across the globe were to adopt worker co-operatives within the confines of capitalism, it would likely serve to mitigate some of the exploitation associated with the current economic system by redistributing wealth and cultivating workplace democracy. That said, an integral component of the capitalist system would remain in the form of surplus value and money exchange, and so there would persist a means to profit through the exploitation of workers. The ideal of a global system of co-operatives could only reach its full potential on the basis of world socialism, a system in which production is geared not towards sale and the accumulation of private wealth but towards using one’s abilities to meet both individual and community needs.

JOHN ELLISTON

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