The concept of cooperatives as an alternative to both private and state ownership has resurfaced courtesy of a recent speech by Labour’s shadow chancellor John McDonnell. This article sets out the Marxist critique of the prospects of cooperatives to exist within and act as a focus to overcome a capitalist market economy.
In the 19th century the utopian socialists, especially Robert Owen and Charles Fourier, and their followers had tried to create numerous cooperatives of various shapes and sizes. None survived for long. In Germany, Ferdinand Lassalle, founder of the first German workers party, advocated state funding of cooperatives to overcome the inherent difficulties they faced in acquiring capital and investment.
By contrast, the German communists Karl Marx and Friedrich Engels centred their programme on the demand for the nationalisation of the large-scale means of production by the working class, after it had seized state power. They would then be run according to a common plan democratically developed by the producers and consumers (socialisation).
In his “Inaugural Address to the International Working Men’s Association” in 1864, Marx praised the “cooperative movement, especially the cooperative factories” because they demonstrated in practice that capitalists were not necessary for workers to carry out production .
“The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labour need not be monopolised as a means of dominion over, and of extortion against, the laboring man himself; and that, like slave labor, like serf labor, hired labor is but a transitory and inferior form, destined to disappear before associated labor plying its toil with a willing hand, a ready mind, and a joyous heart…”
But he immediately went on to criticise the idea that such experiments in cooperative production could simply grow exponentially until they eventually displaced capitalism:
“…however… excellent in principle and however useful in practice, cooperative labour, if kept within the narrow circle of the casual efforts of private workmen, will never be able to arrest the growth in geometrical progression of monopoly, to free the masses, nor even to perceptibly lighten the burden of their miseries.”
He concluded
“… To save the industrious masses, cooperative labour ought to be developed to national dimensions, and, consequently, to be fostered by national means. Yet the lords of the land and the lords of capital will always use their political privileges for the defence and perpetuation of their economic monopolies. So far from promoting, they will continue to lay every possible impediment in the way of the emancipation of labour. … To conquer political power has, therefore, become the great duty of the working classes.”
In Volume 3 of Capital Marx pointed out that with a series of separate cooperatives each producing for exchange via the market, “the antithesis between capital and labour is overcome within them, if at first only by way of making the associated labourers into their own capitalist, i.e., by enabling them to use the means of production for the employment of their own labour.”
And in the The Civil War in France, written under the impact of the Paris Commune, he made it clear that unless the entirety of large scale production were expropriated and planned, the operation of the law of value, above all the the extraction of surplus value, could not be overcome.
“If cooperative production is not to remain a sham and a snare; if it is to supersede the capitalist system; if the united co-operative societies are to regulate national production upon a common plan, thus taking it under their control, and putting an end to the constant anarchy and periodical convulsions which are the fatality of Capitalist production—what else, gentlemen, would it be but Communism, “possible” Communism?”
Later, during the Revisionism debate within the Second International, Rosa Luxemburg explained why industrial cooperatives could not survive competition within a capitalist market and a capitalist state. It is worth quoting it at length because it definitively sums up why the idea of workers cooperatives as anything more than a temporary expedient is not only a utopia but a reactionary (i.e a backward looking) one.
Reform and Revolution, part two, ch. 7.
“Cooperatives – especially cooperatives in the field of production constitute a hybrid form in the midst of capitalism. They can be described as small units of socialised production within capitalist exchange.
But 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. The domination of capital over the process of production expresses itself in the following ways. Labour is intensified. The workday is lengthened or shortened, according to the situation of the market. And, depending on the requirements of the market, labour 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. 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.
Producers’ cooperatives can survive within capitalist economy only if they manage to suppress, by means of some detour, the capitalist controlled contradictions between the mode of production and the mode of exchange. And they can accomplish this only by removing themselves artificially from the influence of the laws of free competition. And they can succeed in doing the last only when they assure themselves beforehand of a constant circle of consumers, that is, when they assure themselves of a constant market.
It is the consumers’ cooperative that can offer this service to its brother in the field of production. Here – and not in Oppenheimer’s distinction between co-operatives that produce and co-operatives that sell – is the secret sought by Bernstein: the explanation for the invariable failure of producers’ co-operatives functioning independently and their survival when they are backed by consumers’ organisations.
If it is true that the possibilities of existence of producers’ cooperatives within capitalism are bound up with the possibilities of existence of consumers’ cooperatives, then the scope of the former is limited, in the most favourable of cases, to the small local market and to the manufacture of articles serving immediate needs, especially food products. Consumers’ and therefore producers’ cooperatives, are excluded from the most important branches of capital production – the textile, mining, metallurgical and petroleum industries, machine construction, locomotive and ship-building. For this reason alone (forgetting for the moment their hybrid character), cooperatives in the field of production cannot be seriously considered as the instrument of a general social transformation. The establishment of producers’ cooperatives on a wide scale would suppose, first of all, the suppression of the world market, the breaking up of the present world economy into small local spheres of production and exchange. The highly developed, wide-spread capitalism of our time is expected to fall back to the merchant economy of the Middle Ages. (Reform and Revolution, part two, ch. 7.)”
Today, the concept of cooperatives ekes out an existence amongst petty-bourgeois political trends like Anarchism, which counterposes them to a unifying plan of production, or left-reformism which views them as an alternative strategy to the working class expropriating the capitalists’ property by seizing control of the state.
If the international workers’ movement is to achieve its historic mission of liberating humanity from the misery of capitalist exploitation, then it must utilise society’s scientific and technical achievements to overcome material and cultural inequality. This cannot possibly be done by an uncoordinated set of cooperatives – it will require the pooling and coordination of all society’s productive capacities according to a common plan of production to meet all our individual and collective needs and desires.
