Self-Management or Self-Exploitation

A co-operative is simply self-exploitation

People are suffering and hungry for a solution. People are becoming increasingly atomised, alienated, and anxious. With the financialisation of capital and globalisation it seems that power is concentrating in the hands of a few – a class – the elite capitalist class. The situation that we are in is getting worse politically, socially, and economically, and a Left that is so divided we can't get organized to oppose the powers that be. Today the Left faces the same problem that it has faced since the 1800s, which is being comprised of so many factions that there is no popular and radical force to challenge the current power structure.

Gallup in 2013 showed that 70% of workers "emotionally disconnected" and approximately 20% are "actively disengaged" meaning that they are acting out their unhappiness and, effectively, sabotaging their workplaces. Productivity and profitability are higher for cooperatives than for capitalist firms. It makes little difference whether the Mondragon group is compared with the largest 500 companies, or with small- or medium-scale industries; in both comparisons the Mondragon group is more productive and profitable. The major basis for co-operative success, and the survival of capitalistically unprofitable plants, has been superior labor productivity, higher physical volume of output per hour, higher quality of product and also economy of material use. The point is that the survival of firms is determined neither by productivity nor the volume of profit, but by the rate of profit. Firms whose rate of profit is too low are ejected from the market. But those that maintain a high rate of profit compared to their competition survive, even if they are grossly inefficient or if their profits are not exactly impressive. Co-operatives have an abysmally low rate of profit almost by default, because the owners of the co-operative are also its labourers. So they receive remuneration that is much higher than the necessary cost of reproduction of labour-power.

And that is why, while co-operatives are re-discovered as an exciting new thing in bourgeois liberal circles every decade or so (seriously, they're about as new and radical as municipalisation, which I swear I saw some lost soul advocating on RevLeft a couple of weeks ago), and a lot of them are formed, very few survive until the next cycle (and those that do tend to be held together more by political will than market forces).

A key problem of worker cooperatives is that they exist within the context of capitalism, ie the pressures of the market competition, and context of wage labour. Proponents leave unaddressed the classic criticisms of worker cooperatives, which aren’t just theoretical but based on real problems that cooperatives have encountered in practice. For sure, co-ops are a positive creation when workers occupy the workplace after abandonment by the owners that has happened in various situations and different countries in history.

But co-ops can’t “out-compete” capitalism. Corporations will always have larger capital to invest in research, technology, machinery and their willingness to cut costs through lower wages, less environmentally sounds practices, outsourcing, etc, will give them an advantage. Second, is that cooperatives are subject to market pressures to compete just the same as capitalist enterprises and this lends itself to pressures to create the same practices of corporations. For instances, in the Mondragon cooperatives there have been strikes in the past, outsourcing and low wages in production sites opened developing countries, as well as a trend towards unelected management that is more like a typical capitalist corporation. It is self-managed capitalism, because it offers no solution for changing the underlying logic of capitalism, which is production for maximum profit. There would be restrictions on the lengths to which a self-directed enterprise would go as opposed to a traditional capitalist company, but those restrictions would likely not hold up when they threaten the survival of the enterprise.

Co-ops do not eliminate owners. What happens is that ownership changed hands. And whereas previously a company might have had a few influential shareholders, it now has a few hundred (or thousand) But private property has not been abolished. Socialists aim to abolish the social structures that allow for the division between the rich and the poor - private ownership, money, markets etc. Socialists advocate the socialisation of the means of production, not the dilution of ownership of the same. "Capitalist" isn't a needlessly obtuse term of abuse for people we don't like, it denotes people who own capital, the means of production under capitalism. The owners of a co-operative are collective capitalists. The problem is that what exploits us isn't the bosses, but capital. As long as the purpose of productive units is to produce value, workers will be enslaved to the production of value, regardless if there are an enterprise’s owners. Coops aren’t an alternative way to socialism because they still produce value. Both capital and value are social relationships. By making them the owners, workers do not abolish the relation of ownership, nor do they abolish the anarchy of the market etc. etc.

Many cooperatives face the same issues as small business owners face. Often worker cooperatives are in the service, food or other specialty industries with lower profit margins and because they are smaller and do not have the advantages of scale which larger companies do, workers are often are forced to work long hours at lower wages to stay afloat. I’ve heard this called by some “self-managed exploitation.” As well, many cooperatives such as these in part remain afloat because they produce niche products like radical books or vegan/specialty food products that don’t really compete with the major corporations that dominate their industry.

There will be a tendency of worker cooperatives to see their needs and interests as an entity apart from and/or above other workers. After all, as cooperatives exist within a market system, their interests are to compete with other companies and expand their market share. This is a key and important difference between workers cooperatives, where the means of producing goods and services are owned by a specific group of workers competing with other cooperatives and capitalist companies through a market system and the deeper and post-capitalist goal of a socialized economy whereby all the means of producing goods and services are seen as belonging to society as a whole and while directly operated and run by the workers at each entity would be federated and coordinated in a horizontal manner to produce products and services based on need.

Even sympathetic observers such as Noam Chomsky understands the limitations:

“Worker ownership within a state capitalist, semi-market system is better than private ownership but it has inherent problems. Markets have well-known inherent inefficiencies. They’re very destructive. … [what is needed is to] dismantle the system of production for profit rather than production for use. That means dismantling at least large parts of market systems. Take the most advanced case: Mondragon. It’s worker owned, it’s not worker managed, although the management does come from the workforce often, but it’s in a market system and they still exploit workers in South America, and they do things that are harmful to the society as a whole and they have no choice. If you’re in a system where you must make profit in order to survive. You are compelled to ignore negative externalities, effects on others.”

Cooperatives that exist under a market economy inevitably replicate the problems of capitalism although it makes life better for some, but it doesn’t end the system of exploitation. They reproduce capital and prioritises sectional interests of pockets of workers of the class interests over the working class as a whole. Socialists regularly use the term “wage slavery.” What is meant by this is that workers under capitalism are not ‘slaves’ to a particular boss, but through the system of wages they are compelled to work for employers as a class in order to survive. This is why anti-capitalist labour radical such as the the IWW believe that an end to capitalism required a struggle to organise workers eventually leading to workers to taking control of their workplaces and what they called the “abolition of the wage system.” Men and women will never be free from exploitation and oppression until all work is voluntary and access to all goods and services is free. This is a practical proposition now. Tinkering with administrative forms is of no use. Buying and selling must be abolished. The wage packet—the permission to live—must be abolished. It is true that our masters live off the fat of the land in luxury, but even if they adopted the austere puritanical lifestyle of a monk we should still be slaves.

The most crucial error of Richard Woolf and Gar Alperovitz models is that the essential features of capitalism are retained, yet they believe capitalism can be guided by "workers' management" towards humane and liberating ends. The market is to remain, but not, apparently, its laws. It should be obvious that if any enterprise produces to sell, and pays its bills out of its revenue, it will be subject to the same basic market laws as any other enterprise. Of course, at the moment these laws are observed and interpreted by management, which then makes the decisions and' imposes them on the other workers in the interests of the shareholders. But it should have occurred to Woolf and Alperovitz that these same laws might have the same force whoever does the managing and even if the shareholders, so to speak, are the workers. This is a suggestion which proponents of a “new economy” ought at least to consider. "Capitalism without capitalists" could never in fact come about. Should the working-class reach a level of understanding where they could pressurise the owning class out of existence, they would long since have passed the stage where they would have abolished the wages system and established socialism. They argue for some sort of “self-managed capitalism” that could only exist on paper.

Even if we consider "capitalism without capitalists" in our imaginations, we can see it would be no improvement on capitalism with capitalists. Workers collectively administering their own exploitation is not an objective socialists should aim for. Those groups demanding "workers' management," "workers' participation" and "workers' control" (though their various adherents distinguish very loudly between these three) will probably be used by capitalism, as in Yugoslavia, to give workers the impression that the enterprise they work for in some way belongs to them. If all employees can be drawn into the process of management, and can be given the illusion of an identity of interests between workers and employers, this helps to muffle the class struggle and enhance the process of exploitation.

The basic contradiction of capitalism is that between socialised production and class monopoly of the means of production, which manifests itself as working class discontent with its general conditions of life, not just its work experiences under capitalism. If this was better understood it would be realised that socialism is not just concerned with emancipating workers as workers (i.e. wealth-producers) but as human beings (i.e. as men and women). It would also give them a clearer conception of socialist society. Socialism aims not to establish "workers power” or “workers control” but the abolition of all classes including the working class. It is misleading to speak of socialism as workers ownership and control of production. In socialist society there would simply be people, free and equal men and women forming a classless community. So it would be more accurate to define socialism/communism in terms of the common ownership and democratic control of the means of production by and in the interest of the whole people.

Frequently defenders of co-operatives will resort to the argument that they are at least a stepping stone towards socialism. But socialism is the movement against capitalism in all its forms. Co-operatives are just as much a "transitional form" as joint-stock companies are. And I don't think anyone is naive enough to claim, in 2014, that joint-stock companies are "socialist" in any way. Marx didn't say that stock companies are "socialist" in any way. He said they are an association, and cease to be individual property, which is an antithesis to old form. However, they remain trapped in capitalism. There can be no transition from one thing to something else that is in complete opposition to it. The task of socialism is not a change in management, but a social transformation of all institutions and structures of society. If there are cooperatives exchanging their products, there's self-managed capitalism and not socialism. You say you like the idea of not having a CEO or boss, but you will still have a market dictate and can be just as cruel – never mind the inequality. Cooperative labour will of course be a pillar of socialism, but not in the context of competitive markets. It is impossible to have a nice sort of capitalism. Capitalist firms are brutal not because their owners are bad people, whatever that means, but because they need to be brutal to their workers in order to prop up the falling rate of profit. If they can't do that, they are ejected from the market, it's that simple. Socialists are not opposed to "Big Business” per se but business, period. If co-operatives are to supersede capitalism, their production has to be regulated by a general plan determined by society as a whole, which means that they cease being co-operatives because co-operatives are distinguished by their status as autonomous business entities.

Compromising with co-ops and building from the ground up (and all other such nonsense that utopian liberals who want to call themselves socialist preach) has led to nothing but dead ends. It didn't work in France with Louis Blanc, it didn't work in Algeria under Ben Bella or in Tito’s Yugoslavia. It didn't work anywhere, and it won't work, ever. The idea is to change the way people live and work together. Not to replace the system we have now with co-op's then call it a day and quit. Co-operatives are simply another form of private property. They aren't changing the system.

To sum up, the economics Woolf and Alperovitz support is simply the dead-end of self-managed capitalism, which is every bit as reactionary as private or state capitalism. The communist society we are fighting for can only be established by the complete destruction of ALL private property, money, wages and markets - whatever their form. We don't want to own or manage our own misery. Socialists stand for a society based on the abolition of remuneration in the form of wages and democratic control and an economy based on the destruction of the wage system, and a de-linking of the value of labor in production from the distribution of society’s wealth to its members. It is simply not possible anyway to measure an individual’s contribution to production, our production is largely social. The contribution of an individual is very difficult to isolate from the contributions of countless others that make work possible. Any such attribution can only be arbitrary. Having co-workers judge each other’s work would turn gossip and in-fighting at work presently from an annoyance into a system of power over wages. The assets of a co-op do not cease being capital when votes are taken on how they are used within a society of generalised commodity production and wage labour. That is to say there remains an imperative to accumulate with all the drive to minimise the labour time taken to do a task this requires, even in a co-op.