Worker Cooperatives: Contemporary Possibilities and Challenges

790352 research-article2018 RRPXXX10.1177/0486613418790352Review of Radical Political EconomicsBook Review/Essay Book Review Essay Review of Radical Political Economics 1­–6 Worker Cooperatives: © 2018 Union for Radical Political Economics Contemporary Possibilities Reprints and permissions: sagepub.com/journalsPermissions.nav and Challenges rrpe.sagepub.com Cooperatives Confront Capitalism: Challenging the Neoliberal Economy By Peter Ranis. London, England: Zed Books, 2016. 171 pages. Paper $26.95. ISBN: 978-1783606498. Labor Managed Firms and Post-Capitalism By Bruno Jossa. Abingdon, Oxon, UK, and New York, NY: Routledge, 2017. 250+vi pages. Cloth $160. ISBN-13: 978-1138237568, ISBN-10: 1138237566. DOI: 10.1177/0486613418790352 Date accepted: June 29, 2018 1. Introduction Worker cooperatives have a lengthy, often radical history, with interest in them growing since the onset of global recession in 2007–2008. Their resurgence, especially in parts of Latin American and Southern Europe, usually as a response to firm closures, has seen them emerge as an alterna- tive to the proliferation of the “gig economy” and its associated job insecurity. Yet, despite their historical longevity and substantial evidence of their relative resilience to economic fluctuations, their presence in most countries remains at most marginal. While cooperative firms overall (including consumer, producer, and buying cooperatives) are quite prominent internationally, with nearly 280 million people working in them, cooperatives owned and managed by workers account for only around 11.1 million members worldwide (Eum 2017: 13). This low figure, though, indicates that worker cooperatives have considerable scope for growth—the premise underpinning these two books. Each provides significant theoretical and strategic insights into how worker cooperatives might not only galvanize worker and community resistance to insecurity, poverty, and unemploy- ment but also inform strategies for long-term radical-democratic mobilization. Yet there are also significant differences in emphasis and purpose. Ranis (2016), building on previous publications (e.g., Ranis 2010, 2014), demonstrates how worker cooperatives in Argentina and other coun- tries, such as Cuba, can inspire and inform workers and communities in the United States. He focuses particularly on how eminent domain (the U.S. term, broadly comparable with compul- sory purchase, acquisition, or appropriation by the state, in other national jurisdictions) might be used to realize the progressive potential of worker cooperatives. In earlier work (e.g., Jossa 2009; Jossa and Cuomo 1997), Jossa had argued for a view of socialism as a system of labor-managed firms (LMFs) within a market economy, whereby he rejected any need for central planning. In Labor Managed Firms and Post-Capitalism, he extends the theoretical and empirical dimensions of this argument, illustrating how his interpretation of LMFs might contribute to a new under- standing of both Marx and Marxism. 2 Review of Radical Political Economics 00(0) 2. Cooperatives, Communities, Resistance Ranis frames his exploration of the possibilities of contemporary worker cooperatives by illustrat- ing how, for Marx (quoted in Ranis 2016: 3), “associated laborers” taking responsibility for deci- sions on production could resolve the “antithesis between capital and labor.” Earlier efforts to “humanize” the workplace had been influential on both Marx and Engels, particularly in demon- strating the capacity of cooperatives to remove the “middleman” between producers and consum- ers. These included Robert Owen’s still paternalist New Lanark community, as well as more radical nineteenth-century activists such as William Thompson, who proposed that workers should act on their collective interests through mutual cooperation, and John Frances Bray, who argued for workers to struggle for a new system of production in which they were no longer subordinate to employers. The emancipatory, anti-capitalist potential of worker cooperatives is also identified by Ranis (2016: 2–16) in such remarkably different figures as Bernstein, Luxemburg, and Gramsci. The twenty-first century’s growing wealth and income inequality, weakened worker rights, and declining unionism, though, pose unprecedented challenges. New strategies for worker coopera- tive formation, allied to a strong state committed to pro-worker policies, are required. While the overall picture “may be as bleak as a Victorian novel depicting England a century and a half ago,” Ranis (2016: 32–33) sees eminent domain as offering possibilities for the “multiple strata of work- ing classes” to pursue social and economic justice. Cooperatives need to become embedded within their local communities, to further democratic, popular, participatory organizational forms that are captured by neither capitalist nor state socialist forms (Ranis 2016: 43–44). He sees Argentine worker-recuperated enterprises (empresas recuperadas por sus traba- jadores, or ERTs) as especially significant. Emerging in the 1990s as a response to impending factory closures and capital withdrawal, they have constituted an effective defensive measure against impending unemployment and poverty, producing mainly for domestic consumers and providing wages considerably above Argentine averages. Ranis shows how worker cooperatives have challenged capitalist hierarchies, enabling workers to assert their own organizational capac- ities and imagination. Despite operating in often hostile political environments, cooperatives have garnered considerable public sympathy (Ranis 2016: 58–62). For Ranis, the Zanon ceramic tile and porcelain factory is emblematic of the Argentinian recuperated factories movement. Drawing on his own first-hand experiences, he documents how Zanon’s workers and their union have extended democratic participation and introduced important initiatives (such as enhanced work-time flexibility), while reaching out (e.g., via weekly radio programs) to their local com- munity, exemplifying their ongoing social commitment. Thus, the Zanon workers “see their fac- tory as being at the service of the community and not the market” (Ranis 2016: 64–68). In many cases, cooperative organization has become the “default position” when firms face bankruptcy, closure, or withdrawal of workers’ pay and benefits, with cooperatives gaining momentum in various Argentine industries (Ranis 2016: 75–76). Yet, even under the reasonably supportive governments of Néstor Kirchner (2003–2007) and Cristina Kirchner (2007–2015), cooperatives were frequently placed in tenuous situations, requiring both community support, and political and legal expertise. Nonetheless, cooperatives’ promotion of democratic goals has tested the limits of civil society, while expanding legal options, such as the right to occupy facto- ries abandoned by owners (Ranis 2016: 80–81). The Argentine movement has also strongly influ- enced worker occupations in Greece, Spain, and Italy, as well as across Latin America, especially in Venezuela under Hugo Chávez. While acknowledging that Argentine cooperatives have to operate within a capitalist market context, Ranis still identifies them as a meaningful alternative to hierarchical workplace organization. They can encourage new forms of worker democracy and community engagement that, in a phrase encapsulating the book’s purpose, challenge “the modus operandi of the neoliberal capitalist economies” (Ranis 2016: 93). Book Review/Essay 3 Overall, Ranis endorses the capacity of Argentine experiences to inform the efforts of U.S. workers and communities in developing a “survival coalition,” defending employment through eminent domain interventions that hold job-shedding and outsourcing corporations to account. The landmark 2005 Kelo v. New London Supreme Court ruling, which permitted the City of New London to take over property for public purpose to increase employment and tax revenue, is seen as potentially pivotal in protecting workers and communities from poverty, unemployment, and socioeconomic decline, through the application of eminent domain (Ranis 2016: 95–102). To address the two main problems of the sanctity of private property and the preparedness of work- ers to accept severance pay and redundancy, Ranis proposes a series of strategies to implement eminent domain, including workers occupying factories immediately on news of planned clo- sures and attracting broad community support. Although cooperatives and recuperated enter- prises may be initially defensive, they can provide a medium for progressive class action that reaches beyond liberal-democratic constraints, increasing community mobilization, and con- fronting dominant understandings of private property. Thus, eminent domain can provide a legal mechanism through which workers and communities can reassert a collective social contract broken by employers (Ranis 2016: 103–17). In this regard, Ranis views recent Cuban developments, with the re-establishment of U.S. diplomatic relations in 2014, as highly relevant. Although still confined to below 5 percent of the workforce (Ranis 2016: 118–26), Cuban cooperatives organized around worker autonomy, par- ticipation, and collective decision making may be seen as providing a democratic alternative to both bureaucratic Communist Party rule and hierarchical neoliberalism. For Ranis (2016: 137– 40), contemporary struggles should combine worker activism with state regeneration to combat inequality and wage stagnation, reasserting the welfare of the many. He goes on to evaluate the most influential of worker cooperatives, Spain’s Mondragon. Founded in the mid-1950s, it has retained an impressive level of worker participation, wages, and job security, while avoiding extreme differences between manager and worker incomes. Mondragon’s 2009 agreement with the United Steelworkers (see Schlachter 2017) affords considerable potential for extension of the Mondragon philosophy of autonomy and participation to the United States. In conclusion, Ranis contends that cooperatives can embody new forms of democratic, participatory work organiza- tion, through which workers can exercise autonomy accumulating capital, and thereby eliminat- ing the need for capitalists. Workers can express their own human values, extending community engagement while demonstrating the limitations of hierarchical management, illustrating ave- nues toward a post-capitalism that retains the spirit of Marx while pointing beyond neoliberal capitalism and state socialism. Ranis (2016: 155) presents an eloquently argued and largely persuasive case for the possible role of democratic worker cooperatives in resisting “capitalism run amok.” His innovative argu- ment that eminent domain should be pursued more vigorously to encourage and support worker cooperatives illustrates how effective local community campaigns can be implemented. One obvious criticism, acknowledged by Ranis, is that the Fifth Amendment’s eminent domain provi- sion has routinely been used by business interests to suppress community opposition. Yet his Argentine experiences provide grounds for optimism in this regard, illustrating how cooperatives might be integrated within a broader, radical-democratic movement. For example, he describes how the Zanon tile factory workers have contributed to local educational, health, economic, and cultural activities, as with their donation of free tiles to local building projects. Such demonstra- tions of commitment to “the community and not the market” (Ranis 2016: 68) can consequently reinforce cooperative and local bonds within an inclusive narrative of mutual solidarity and sup- port. Thus, cooperatives born of desperation but embedded within local communities can reach beyond the immediate prevention of unemployment and poverty, toward fundamental socioeco- nomic and political change. Therefore, we acquire a sense of how initially defensive cooperative 4 Review of Radical Political Economics 00(0) measures can lead on to more radical outcomes—a theme that also permeates Bruno Jossa’s proposals for LMFs. 3. Worker Control as Socialism Like Ranis, Jossa begins with Marx, observing a division within Marxism between those who identify socialism with worker cooperatives and those who see it as a centrally planned command economy. Jossa adopts the former position in arguing that democratically organized firms within market capitalism can constitute a new mode of production. Therefore, firms controlled by work- ers’ councils can be seen as a “feasible model of socialism” (Jossa 2017: 2)—a position that has extensive textual precedents, but which he acknowledges is far from universally endorsed in Marxist analysis and practice. In contrast to capitalism’s inherent egoism and indifference to oth- ers, worker control (unlike central planning) necessarily generates solidarity and greater har- mony in personal relationships, reducing capitalism’s socially destructive tendencies—even within a globalized market economy. Thus, he distances himself from those Marxists who acknowledge the value of cooperation but maintain that central planning remains essential to socialism (Jossa 2017: 1–6). In Jossa’s Marxism, then, socialism is understood as a system of worker cooperatives, in which dilution of the competitive drive of capitalism should lead to greater altruism and solidar- ity, effectively transforming human nature—although cooperatives will need to embrace the “strategies and tools” of private firms while maintaining their ethical principles. Still, worker cooperatives can engage in “softer” competition due to reduced bankruptcy risk, distribution of profits and losses among all partners, and the maintenance of reasonable wage rates (i.e., not tak- ing on workers prepared to accept lower wage rates) (Jossa 2017: 13–44). Consequently, coop- eratives can reverse the dominant capital-labor relation since workers, rather than capitalists, make decisions and become “variable-income entrepreneurs” (Jossa 2017: 46–60). Thus, the “decision powers” of capitalists are removed. Further benefits include reduced alienation; enhanced personality development; increased labor productivity; discouragement of monopolies; lower risks of bankruptcy; more equitable, socially determined income distribution; reduced need for state intervention in the economy; and lower unemployment (chapter 6). As democrati- cally organized firms are clearly a “merit good” for workers, the community, and the economy, and would lead to a more egalitarian income distribution, all governments should support their growth—for example, through tax concessions (Jossa 2017: 71–92). Jossa (2017: 95) foresees a system of worker cooperatives as aligning with his interpretation (following Lukács) of Marx’s view of “world history as a unitary process,” leading to a new mode of production equivalent to socialism, in which workers appropriate the surplus from revenue, after production costs. Having been defined as a system of worker cooperatives, socialism becomes possible within a market-driven economy in which the “rules of economic science” must be observed (Jossa 2017: 97). Jossa draws on Jaroslav Vanek (1970) to distinguish between two kinds of worker cooperative: worker-managed firms (WMFs) self-finance their investments without strictly seg- regating labor incomes from capital incomes, whereas LMFs are firms that finance their invest- ments with borrowed funds. For Jossa, the former are characterized by several problems, including chronic under-investment. However, their most critical shortcoming is that, unlike the latter (in which labor hires capital, runs production, and separates labor from capital incomes), the capital-labor relation is not reversed, and therefore, an “anti-capitalistic revolution” is not set in motion. For Jossa (2017: 98–101), only a system based on LMFs would constitute socialism— and this would not require control of the state. Thus, the labor-capital contradiction can be resolved through a system of worker coopera- tives: a practical possibility as cooperatives tend to achieve higher productivity than capitalist- run businesses—workers will also become more inclined to this socialist option as societies Book Review/Essay 5 become more polarized (Jossa 2017: 140–61). The proposition that worker cooperatives consti- tute a new mode of production that can compete with capitalist-run firms within a market econ- omy is a recurrent theme, which Jossa (2017: 161–74) identifies in several passages in Capital, in constructing a “new Marx” and a “resulting revisited version of Marxism” that is “critical of capitalism but not inimical to markets.” While acknowledging several potential problems with the operation of cooperatives (e.g., some members seeking to take control by excluding others), he nonetheless confidently concludes that cooperatives organized according to his model can “secure maximum efficiency and trounce the competition of capitalistic enterprises” (Jossa 2017: 185–87). There is certainly textual evidence in Marx and different Marxist traditions to support the contention that democratic worker control can constitute a “new” mode of production, insofar as workers replace capitalists in ownership and management. Yet identifying a system of worker cooperatives as “socialism” demands a considerable further step, particularly if cooperatives seek to compete within a global market economy, with its accompanying pressures on pay, job security, and working conditions. While “softer competition” is undoubtedly preferable to low wages, long hours, diminished rights, and job insecurity, the argument that worker cooperatives should compete on global markets merits some scrutiny. The collapse of the Mondragon subsidiary, Fagor, in 2013 revealed how it had sought to com- pete on global markets through emulating corporate strategies of outsourcing to low-wage econo- mies, where workers never attained the membership status of those in the Basque homeland. During downturn, the overseas workers provided a protective bulwark for the Basque member- workers: the latter largely retained their jobs, wages, and conditions, while the former were subjected to wage cuts and unemployment (Errasti, Bretos, and Nunez 2017; Kasmir 2016). Any “softening of competition,” therefore, was confined to the relatively privileged worker-members in an international “core-periphery” strategy. Consequently, we may require a more complex, inclusive interpretation of “socialism” than Jossa’s “system where firms are run by workers” (2017: 15), one in which decision making involves a far wider range of participants and concerns—for example, community and consumer groups—who might contribute to decisions on the socially and environmentally responsible production of goods and services. 4. Conclusion Viewed in conjunction, these two books raise a range of questions related to fundamental terms used almost routinely on the Left—including “capitalism,” “socialism,” and “post-capitalism”— on which there may be neither consensus nor even mutual comprehension. Many cooperatives have demonstrated remarkable resilience, and there is significant evidence to indicate their con- tinuing ability to survive and prosper, even within the most adverse circumstances. Of particular note is Ranis’s observation that cooperatives have often become a “default” position in situations of impending firm closure in Argentina, indicating the capacity of worker cooperatives with com- munity support to shift public policy and political-economic options. Worker cooperatives clearly provide an important avenue toward “humanization” of workplaces. Yet the extent to which this can be achieved within a predominantly market-driven economy may be questioned; the Mondragon case gives particular pause for reflection. This observation leads on to the issue of whether or not a system of worker cooperatives producing commodities in a global market economy can be viewed convincingly as socialism. At a minimum, would socialism not require the provision of health, education, housing, and social welfare as citizen- ship rights—that is, decommodification of basic services and the democratic subordination of markets? Therefore, the question, originally posed by Marx, of what should be produced and how, remains as salient as ever. Yet it also raises the further question of whether workers are the only ones who should make such decisions, if we are concerned with the broader long-term 6 Review of Radical Political Economics 00(0) social, political, economic, and environmental consequences of production. This clearly has implications for how we might understand “capitalism,” “socialism,” or “post-capitalism” for the coming decades of the twenty-first century. George Lafferty Employment Relations Western Sydney University Parramatta, New South Wales 2150, Australia E-mail: g.lafferty@westernsydney.edu.au Acknowledgment My thanks to Fletcher Baragar and Julio Huato for their helpful comments and suggestions on the original version of this essay. References Errasti, Anjel, Ignacio Bretos, and Altziber Nunez. 2017. The viability of cooperatives: The fall of the Mondragon cooperative Fagor. Review of Radical Political Economics 49 (2): 181–97. Eum, Hyung-sik. 2017. Cooperatives and Employment, Second Global Report 2017. Brussels: International Cooperative Alliance. Jossa, Bruno. 2009. Gramsci and the labor-managed firm. Review of Radical Political Economics 41 (1): 5–22. Jossa, Bruno, and Gaetano Cuomo. 1997. The Economic Theory of Socialism and the Labor-Managed Firm. Brookfield: Edward Elgar. Kasmir, Sharryn. 2016. The Mondragon cooperatives and global capitalism: A critical analysis. New Labor Forum 25 (1): 52–59. Ranis, Peter. 2010. Argentine worker cooperatives in civil society: A challenge to capital–labor relations. Working USA 13 (1): 77–105. ———. 2014. Promoting cooperatives by the use of eminent domain: Argentina and the United States. Socialism and Democracy 28 (1): 51–69. Schlachter, Laura Hanson. 2017. Stronger together? The USW-Mondragon union co-op model. Labor Studies Journal 42 (2): 124–147. Vanek, Jaroslav. 1970. The General Theory of Labor-Managed Market Economies. Ithaca, NY: Cornell University Press.