Cooperatives Are Not a Viable Strategy Against Capitalism

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Sam Gindin:

"If state ownership is rejected as a proxy for the commons and if ownership in worker-controlled enterprises is in the hands of the workers, then these groups of workers essentially become their own capitalists. They have ownership rights, mobilize their own finances, and control and reinvest “their” surplus for their own advantage.

The significance of having legally authorized property rights was driven home in the aftermath of Argentina’s 2001 economic crisis. While workers took over shuttered factories, they needed the clear collateral of property rights to avoid being denied financing and credit to purchase components and supplies in advance of sales.

The state gave into this demand, but only on the condition that the workplaces become co-ops, meaning workers inherited the debts of the “recuperated” factories and were also responsible for their losses.

The most militant workers balked at such an arrangement. They wanted a role in managing the workplaces, but argued the state should legally take them over, finance their renewal, and link them together in a plan across workplaces. Those demands were generally defeated.

So workers ended up with co-ops and were triply undermined as competitors within capitalism: they started with facilities capitalists had left undercapitalized and uncompetitive; they were saddled with debt; and they had to put their own savings into the facilities or accept lower wages to address the issues of debt and new investment.

The case of Argentina casts doubt on the notion that having more worker-controlled workplaces or co-ops readily translates into an increasingly egalitarian social order.

Without an alternative institutional mechanism for coordinating productive activities, competitive markets — which Hahnel described as “the cancer of socialism” — transform differences in assets, skills, locational advantages, and product valuation into stark inequalities between workers and communities.

The negative impact of such inequalities on social solidarity was made painfully evident in the former Yugoslavia, which had implemented full market socialism. The uneven distribution of historic and geographic advantages meant that inequalities across firms were also expressed regionally.

Where this overlapped with ethnic and clientelist political structures, it dangerously aggravated ethnic tensions. And as northern Yugoslavia developed closer economic ties with Europe, these inequalities were amplified." (