The cooperative movement has a considerable history in capitalist society. The cooperative movement long ago forgot its origins and is just another capitalist trading organisation. But it does not so regard itself. It still claims to be a movement to help the working people. The operation of the cooperatives are conducted according to normal capitalist rules within the framework of capitalism, create precisely the same outlook as is to be found in any other commercial concern. Of course those responsible for this will indignantly retort that they could not do anything else in the circumstances. Too true. Those who think they can "beat the capitalists at their own game” have no choice but to strive to preserve the great illusion they have created. Is this really surprising? Co-ops has always had a parsimonious existence. They were conceived in poverty, born in penury, cradled in privation, and nurtured in frugality. We only need to add that the Socialist Party will criticise profit-sharing as it has always criticised nationalisation, and for the same reason; that socialism is what the workers interest requires not the perpetuation of capitalism.
The origin of the cooperative movement is the objective result of the indispensable cooperation that exists in capitalist production. It is cooperation that has made possible the development of capitalism. While no doubt that modern capitalist production is collective in character, the problem is that while the labour of the workers is collective, what they produce is privately owned by a small number of millionaires and billionaires, who literally dominate the millions of people. Powerful transnational corporations are the levers which direct capitalist production. It is no exaggeration to say that the bulk of the earth's wealth is firmly in their hands.
The hope of the early Utopians, like Saint-Simon, Robert Owen and others, was to set up cooperatives free of exploitation, an idea seemingly so just, so fair, that it would be irresistible. As they saw it if the worker received the full product of his or her labour, minus the cost of administration and organization, it would be easy to do away with the extortion of the private capitalist, who appropriated the unpaid labour of the workers. The unpaid labour of the workers, according to the Utopians, would then go into the common fund, for health care, housing and all human needs. They grew under the conditions of class warfare. They served as a weapon of the class-war.
The cooperative would also show that the capitalists are really not necessary, that they could be gotten rid of by mere example — no violence needed. Life would show the superiority of the collective over private enterprise. One strategy for disadvantaged and oppressed groups is to use economic cooperation and group solidarity to create businesses that will provide meaningful work and income, greater control for workers and the possibility of wealth creation.
Unfortunately, the cooperatives — small and scattered as they were, among other reasons — came late on the scene. Capitalism was already a world system by that time, with a world market. In order to undo the capitalist system, the cooperatives had to compete with full-grown capitalist enterprises. Not only was the capital investment of these enterprises formidable and overwhelming, but they had enormous capacity to under-cut the prices of the co-ops, even taking big losses, in order to drive the cooperatives out. Moreover, the capitalist enterprises have a singular advantage: access to credit and financing from the banks. The banks proved the most potent factor in the undoing of the cooperatives, because of their strategic role in dispensing credit. The worldwide cooperative movement was therefore relegated mostly to fringe areas of the economy. For the most part, cooperatives survived in those areas of the economy where the capitalists felt they couldn't get an adequate rate of profit, and driving them out was thus not worthwhile.
While the cooperatives could set an example, of how work could be made more liveable and humane, free of exploitation and oppression, what stood in their way was the class struggle of the master class against working people. Its drive for greater and greater concentration and centralisation of industry just sweeps away most cooperatives. It is futile to attempt to beat the capitalists at their own game in competition. Cooperatives are now in reality capitalist enterprises, mostly in the consumer field or in farming areas. And the differences between the large capitalist firms and the cooperatives are not of a qualitative, but quantitative character. They do not affect the devastating operations of the capitalist system. The cooperative movement was easily integrated into the capitalist system. They are in reality an element in capitalist production. It is impossible for them to be used as a lever in the struggle against the capitalist system. The cooperative movement itself, not only can it offer no solution to the problems created by capitalism, but adopts, out of necessity, the commercial techniques of all other business concerns (wages, profits, competition, management, etc.). To expect the cooperatives by themselves (as so many reformers imply) to effect an emancipation of the working class behind the back of society is to subscribe to sheer utopia.
It may be said that the co-operative society represents a socialistic system of production, inasmuch as it does not produce for the market, but for the needs of its members, while, instead of aiming at profit, it offers its workers the best conditions that are compatible with the vitality of the undertaking under existing conditions. It will, however, be confined to a few branches of industry which directly produce for the personal consumption of the masses. Only a very few commodities which are destined for the personal consumption. The production of the means of production remains practically impossible for it to attempt, and yet this type of production, with the progressive division of labour, tends to comprise the greatest part of social production. Those who imagine that the cooperatives already contain the seed of a socialist order forget an important factor in the contemporary situation: the reserve army [of the unemployed]. Even if we suppose that cooperatives gradually put all capitalist enterprises out of business and replace them, we certainly cannot entertain the fantastic notion that, given the current market relationships, the demand for goods could be filled without a general plan to determine production relationships. The question of the unemployed would remain. Capitalist exploitation has not been done away with at all.