excerpts from a piece by Phil Gasper here
The idea that society can be transformed by the introduction of cooperatives is not a new one. It was part of the strategy for peaceful social change advocated by the German socialist Eduard Bernstein at the end of the nineteenth century. But Rosa Luxemburg subjected Bernstein’s ideas to withering criticism in her pamphlet Reform or Revolution8, and Luxemburg’s criticisms retain their validity today.
“Co-operatives,” wrote Luxemburg, “especially co-operatives in the field of production, constitute a hybrid form in the midst of capitalism. They can be described as small units of socialized production within capitalist exchange.” The problem is that cooperatives that are established in the context of the capitalist market must compete in order to survive, and if the rate of exploitation is high among your competitors, then you must match it.
As Luxemburg put it, “in capitalist economy exchanges dominate production. As a result of competition, the complete domination of the process of production by the interests of capital—that is, pitiless exploitation—becomes a condition for the survival of each enterprise.” She continues:
The domination of capital over the process of production expresses itself in the following ways. Labor is intensified. The workday is lengthened or shortened, according to the situation of the market. And, depending on the requirements of the market, labor is either employed or thrown back into the street. In other words, use is made of all methods that enable an enterprise to stand up against its competitors in the market.
Some cooperatives find small niche markets in which to survive, but the majority will either be driven out of business or be forced to copy the practices used by other employers. In Luxemburg’s words:
The workers forming a co-operative in the field of production are thus faced with the contradictory necessity of governing themselves with the utmost absolutism. They are obliged to take toward themselves the role of capitalist entrepreneur—a contradiction that accounts for the usual failure of production co-operatives which either become pure capitalist enterprises or, if the workers’ interests continue to predominate, end by dissolving.
§ § §
The history of the world’s biggest co–op, the Mondragón Cooperative Corporation in Spain, is a perfect illustration of Luxemburg’s argument. Mondragón was set up with the ideals of worker participation, solidarity and equality, but as the business has grown bigger and bigger, and become more and more integrated into global capitalism, its founding principles have applied only to a shrinking percentage of its workforce.
In 1993, Britain’s Guardian newspaper reported that Mondragón was restructuring to get ready to compete in the European single market. It noted that “increased salary differentials, advertising campaigns in Fortune and cooperative alliances with companies like Hotpoint have had many co–op workers wondering whether in the new Mondragón Cooperative Corporation [MCC] some members are more equal than others.”9
By this time daily life for most Mondragón workers was not noticeably different from working for a more traditional capitalist employer, although with greater job security. Decision-making had become highly centralized, with most co–op members having no say in the company’s day-to-day operations. Perhaps not surprisingly, in a survey comparing job satisfaction of Mondragón manual workers with workers in a similarly sized privately-owned company, there was little difference between the two groups, with the Mondragón workers slightly less satisfied.10
A few years later the Guardian reported, “MCC members have learned to think like the shareholders of any other global business. In order to protect their own jobs from fluctuations in demand, 20% of the workforce are on part-time or short-term contracts and can easily be shed.” The corporation president, Antonio Cancelo explained: “Our clients cannot guarantee us steady workloads, so we have to have a number of people on temporary contracts. We live in a market economy. That we cannot change.”11
Meanwhile, most workers employed by Mondragón outside of the Basque region are not members of the co–op. By the late 1990s Mondragón was setting up joint ventures with capitalist firms in other parts of Spain, and operating plants employing low-wage labor in countries such as Morocco, Egypt, Thailand, and China.
MCC adopted an ethical code for its foreign employees and promised that their treatment would reflect the cooperative’s “core values.” But in early 2011, Mondragón was accused of employing sweatshop labor in an appliance manufacturing company it owns in Poland, where low-paid workers started a work-to-rule. According to one commentator sympathetic to Mondragón:
The Polish struggle represents the dark underside of worker co-operation. Our movement can’t engage in the exploitation of workers even to protect other members of the co-operative or, worse, a nostalgic legacy. I don’t think that this means that Mondragón should simply accept worker demands; however, when the situation gets to the point of a work slow-down, work-to-rule, or all-out strike, it seems to me that a worker co-operative is no longer acting according to the principles of co-operatives or worker rights.12
MCC’s image suffered a further blow last November when one of its largest components, the domestic appliances manufacturer Fagor Electrodomésticos, was forced to declare bankruptcy. Fagor had run up debts of over one billion dollars during Spain’s severe and continuing economic crisis, and the Mondragón Group General Council decided it could not risk lending the company any more money. Attempts by Fagor’s management to persuade US hedge funds to invest in the co–op also fell through.
Almost 2,000 workers lost their jobs in the Basque region and another 3,500 were laid off from Fagor factories in France, China, Poland, and Morocco. MCC’s Corporate Employment Office offered the Basque workers help with finding work, but hundreds of them occupied one of the affected plants in Edesa and workers later formed a human chain outside MCC’s main office in Mondragón.13
§ § §
But the problem is not just that over time Mondragón has accommodated itself to the practices of the capitalist market in order to survive, as Luxemburg predicted. From the very beginning the co–op saw itself as providing an alternative to struggle against the system.
...
The idea that society can be transformed by the introduction of cooperatives is not a new one. It was part of the strategy for peaceful social change advocated by the German socialist Eduard Bernstein at the end of the nineteenth century. But Rosa Luxemburg subjected Bernstein’s ideas to withering criticism in her pamphlet Reform or Revolution8, and Luxemburg’s criticisms retain their validity today.
“Co-operatives,” wrote Luxemburg, “especially co-operatives in the field of production, constitute a hybrid form in the midst of capitalism. They can be described as small units of socialized production within capitalist exchange.” The problem is that cooperatives that are established in the context of the capitalist market must compete in order to survive, and if the rate of exploitation is high among your competitors, then you must match it.
As Luxemburg put it, “in capitalist economy exchanges dominate production. As a result of competition, the complete domination of the process of production by the interests of capital—that is, pitiless exploitation—becomes a condition for the survival of each enterprise.” She continues:
The domination of capital over the process of production expresses itself in the following ways. Labor is intensified. The workday is lengthened or shortened, according to the situation of the market. And, depending on the requirements of the market, labor is either employed or thrown back into the street. In other words, use is made of all methods that enable an enterprise to stand up against its competitors in the market.
Some cooperatives find small niche markets in which to survive, but the majority will either be driven out of business or be forced to copy the practices used by other employers. In Luxemburg’s words:
The workers forming a co-operative in the field of production are thus faced with the contradictory necessity of governing themselves with the utmost absolutism. They are obliged to take toward themselves the role of capitalist entrepreneur—a contradiction that accounts for the usual failure of production co-operatives which either become pure capitalist enterprises or, if the workers’ interests continue to predominate, end by dissolving.
§ § §
The history of the world’s biggest co–op, the Mondragón Cooperative Corporation in Spain, is a perfect illustration of Luxemburg’s argument. Mondragón was set up with the ideals of worker participation, solidarity and equality, but as the business has grown bigger and bigger, and become more and more integrated into global capitalism, its founding principles have applied only to a shrinking percentage of its workforce.
In 1993, Britain’s Guardian newspaper reported that Mondragón was restructuring to get ready to compete in the European single market. It noted that “increased salary differentials, advertising campaigns in Fortune and cooperative alliances with companies like Hotpoint have had many co–op workers wondering whether in the new Mondragón Cooperative Corporation [MCC] some members are more equal than others.”9
By this time daily life for most Mondragón workers was not noticeably different from working for a more traditional capitalist employer, although with greater job security. Decision-making had become highly centralized, with most co–op members having no say in the company’s day-to-day operations. Perhaps not surprisingly, in a survey comparing job satisfaction of Mondragón manual workers with workers in a similarly sized privately-owned company, there was little difference between the two groups, with the Mondragón workers slightly less satisfied.10
A few years later the Guardian reported, “MCC members have learned to think like the shareholders of any other global business. In order to protect their own jobs from fluctuations in demand, 20% of the workforce are on part-time or short-term contracts and can easily be shed.” The corporation president, Antonio Cancelo explained: “Our clients cannot guarantee us steady workloads, so we have to have a number of people on temporary contracts. We live in a market economy. That we cannot change.”11
Meanwhile, most workers employed by Mondragón outside of the Basque region are not members of the co–op. By the late 1990s Mondragón was setting up joint ventures with capitalist firms in other parts of Spain, and operating plants employing low-wage labor in countries such as Morocco, Egypt, Thailand, and China.
MCC adopted an ethical code for its foreign employees and promised that their treatment would reflect the cooperative’s “core values.” But in early 2011, Mondragón was accused of employing sweatshop labor in an appliance manufacturing company it owns in Poland, where low-paid workers started a work-to-rule. According to one commentator sympathetic to Mondragón:
The Polish struggle represents the dark underside of worker co-operation. Our movement can’t engage in the exploitation of workers even to protect other members of the co-operative or, worse, a nostalgic legacy. I don’t think that this means that Mondragón should simply accept worker demands; however, when the situation gets to the point of a work slow-down, work-to-rule, or all-out strike, it seems to me that a worker co-operative is no longer acting according to the principles of co-operatives or worker rights.12
MCC’s image suffered a further blow last November when one of its largest components, the domestic appliances manufacturer Fagor Electrodomésticos, was forced to declare bankruptcy. Fagor had run up debts of over one billion dollars during Spain’s severe and continuing economic crisis, and the Mondragón Group General Council decided it could not risk lending the company any more money. Attempts by Fagor’s management to persuade US hedge funds to invest in the co–op also fell through.
Almost 2,000 workers lost their jobs in the Basque region and another 3,500 were laid off from Fagor factories in France, China, Poland, and Morocco. MCC’s Corporate Employment Office offered the Basque workers help with finding work, but hundreds of them occupied one of the affected plants in Edesa and workers later formed a human chain outside MCC’s main office in Mondragón.13
§ § §
But the problem is not just that over time Mondragón has accommodated itself to the practices of the capitalist market in order to survive, as Luxemburg predicted. From the very beginning the co–op saw itself as providing an alternative to struggle against the system.
Comments