By Dave Stockton
John McDonnell’s speech at the Cooperative Ways Forward Conference in Manchester on 21 January opened his campaign for what he calls “the new economics” – involving a clear break from the austerity-lite policies pursued by Labour under Gordon Brown and Ed Miliband. This was John’s opening gambit in a welcome – and long overdue – public debate in the Party and beyond on how a Labour government can create “a fairer, more democratic society”.
McDonnell’s speech focused on the role workers’ cooperatives could play in overcoming what he described as an economy dominated by private monopolies in industry commerce and banking. John presented coops as a modern alternative to the top-down nationalisation programmes which saw Labour governments buy out and run steel, car manufacturing, railways and other industries in the 1940s 60s and 70s.
There are certainly many reasons to criticise Labour’s nationalisation schemes which existed to funnel state funds into industries starved of investment by the bosses, providing cheap inputs for private capitalist production, saving jobs but maintaining production for profit within a capitalist market.
Such public ownership was both expensive, since the owners who had refused to invest and let industries run down were compensated for decades afterwards, but also did nothing to vercome either the exploitation and alienation of workers in the industries or services concerned or give other workers as consumers or users any real direction or control.
But is it state ownership per se that is the problem and can the workers in a particular company, by buying out the capitalists and running it collectively – i.e. a workers’ cooperative – serve as a useful alternative to state takeovers of industry?
A new model
Although nationalisation featured prominently in Jeremy Corbyn’s platform during the Labour leadership election, John McDonnell has committed to “balancing the books” without austerity. This means the would-be chancellor has very little money to buy out the private owners. It is the mainstream Labour left’s commitment to economic orthodoxy – balanced budgets, rejection of nationalisation without compensation, etc. – that is behind McDonnell’s assertion that Labour should “look elsewhere” for solutions, including supporting workers’ co-operatives.
“We should look to extend this approach, offering employees first rights on buying out a company that is being dissolved, sold, or floated on the stock exchange,” he said.
Adapting a phrase Thatcher used to sell-off council housing at subsidised prices he added
“The Tories have offered a Right to Buy, Labour would seek to better this. We’d be creating a new Right to Own,”
But he also faced up to immediate problem that confronts workers becoming owners of their workplaces – where will the money come from to buy the machinery, offices, etc. Most workers have no capital to invest in an industry or service beyond that tied up in their own houses, despite the fact that our labour and that of our predecessors was the source of all the capital accumulated by our employers. John pointed out that the “biggest hurdle” facing co-ops and other small businesses was getting initial funding from high street banks. Here he saw the major problem as monopoly.
“No other major developed economy has just five banks providing 80% of loans. We’d look to break up these monopolies, introducing real competition and choice. Regional and local banks, prudently run and with a public service mandate, have to be part of the solution here.”
Ironic that John should see greater competition as the solution rather than recognising that all commercial banks must lend at interest, must seek a secure profit, and that the big banks’ unwillingness to lend is not fundamentally due to the ill-will or class prejudice of their owners.
Perhaps sensing that this is not a solution John added that he is looking at the Italian government’s post-1991 policy of state funding to help employee-owned enterprises to get off the ground. These he added include “social cooperatives” to provide social services and producer “consortium cooperatives. Italy has about 400,000 people working in worker or social co-ops.
“With consortium co-operatives providing an effective means for new businesses to share and reduce costs, we’d look to support these at a local level, working with local authorities, businesses and trade unions,” he said.
Experience
As McDonnell himself referred to in his speech, there is a long workers’ cooperative tradition in Britain, dating back to the utopian socialists of the nineteenth century and the followers of Robert Owen (1771-1858). These projects – like Orbiston in Scotland and New Harmony in the USA – failed. Some small specialised ones later in the nineteenth and early twentieth century lasted a few decades, often because of links to consumer cooperatives which in contrast flourished. To survive, producer cooperatives need a niche product and a controlled market.
The modern enthusiasm for worker cooperatives reached a peak in the 1970s and early 1980s. Tony Benn was a strong advocate and as industry minister in the 1974 Labour Government, faced with mass unemployment and bankruptcies and closures in industry, he was able to get the government to sponsor a small number of worker takeovers to save the jobs. The best known was the West Midlands based Meriden motor-cycle cooperative which took over the assets of the ailing Triumph company in 1974 after a workers’ occupation but collapsed in 1983. Workers’ management and even the development of new models could not stave off commercial failure.
The popularity of worker cooperatives has to be seen in the context of the collapse of British manufacturing industry, particularly in ship building (Upper Clyde Shipbuilder) the car and motor cycle industries. Where such enterprises took off it was in large measure due to workers occupying their workplaces to prevent closure, being willing to sink considerable redundancy payments in a new venture and there being a (Labour) government willing to fund or guarantee them. There were some 200 or so such experiments in this period.
Another period of the development of workers’ cooperatives occurred in the early 2000s in crisis wracked Argentina, famously with the Zanon ceramics company. Though the Zanon workers were led by far leftist militants and though the cooperative survived it in fact evolved into a profitable company with worker shareholders – albeit spending its profits on many worthy social products.
Market
The fundamental problem facing worker cooperatives is the same as that facing nationalised industries – the capitalist market for which they must produce. Problems of finding capital investment, making an average or above average profit and markets in which to realise this (selling the commodity produced) will force their workers to act like a collective capitalist and exploit themselves or go to the wall. The experience of such cooperatives is that either they turn back into normal private enterprises (perhaps with the some workers as shareholders) or they collapse.
The tradition of cooperatives teaches the working class a lesson born from experience. Worker cooperatives cannot compete in a capitalist market economy; by posing as a ‘social’ alternative they direct workers away from a class struggle against mass unemployment, making individual workers and not the capitalist class responsible for job losses, thereby turning industrial militants into business owners. In short, the formation of workers cooperatives is not a highway – let alone a shortcut – to socialism, but at best delays the process of bankruptcy and job losses.
For this reason the enthusiasm for co-operatives stretches far beyond the Labour Left. In the case of public sector service workers it is a dangerous move aimed at rationalising away jobs and eroding or cheapening services. With this in mind a Lib-Dem Tory government paper circulated long before the elections stated
“We will give public sector workers a new right to form employee-owned co-operatives and bid to take over the services they deliver.”
And in the 2015 Tory Manifesto we find the promise
“We have supported the growth of public service mutuals – organisations that are owned by their staff and deliver public services. We want more of them, so we will guarantee a ‘right to mutualise’ within the public sector. This will free up the entrepreneurial spirit of public servants and yield better value for money for taxpayers.”
Producer cooperatives were set up in Franco’s Spain (the famous Mondragón) and in Mussolini’s Italy, with no opposition or outright support from the state. The “social teaching” of the Catholic Church has long smiled on cooperatives as a bastion against communism. This should be enough to give enthusiasts for cooperatives and critics of “old-style nationalisation” some pause for thought.
Why should the working’s class’s bitter enemies favour such a course – because it is an alternative to the class struggle, to workers’ control of production, an alternative to making the capitalist class pay the social costs of their system in crisis, its bankruptcies and mass sackings. Ultimately it is an alternative to a revolutionary expropriation of the capitalist class and the creation of an economy planned not by state bureaucrats but by a working class democracy.
Class struggle
This does not means that socialists should pedantically say to workers faced with a collapsing capitalist enterprise or industry that nothing can be done short of “making the revolution”.
The practical alternative is to occupy all workplaces faced with closure – not with the ultimately hopeless project of continuing production (a work-in such as the UCS workers tried in the 1970s) – but to seize control of the employer’s assets, appeal to other workers to support them and demand the government guarantees jobs and investment through nationalisation. The government should not compensate bosses for their mismanagement and exploitation.
The aim should be to elevate the conflict from the terrain of economic struggle with a single employer onto the political terrain of struggle against the bosses’ state. The demand for nationalisation under workers’ control poses the question of which class interests in society the state defends. Of course, achieving this demand does not transform the bosses’ state into a workers’ state, but it would give massive impetus to the class struggle both nationally and internationally.
That is precisely why the bosses and agents in government and the workers’ movement so often prefer the road of cooperatives. This route avoids a clash with the boss-class over the ownership of the means of production. The development of a new capitalist crisis – likely to feature far more severe bankruptcies and unemployment than that of 2009-10 – makes the question of our response a subject or urgent debate in the Labour Party and workers’ movement.
