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Friday 23 April 2010

Can Cooperatives Control Capitalism?

see http://www.social-europe.eu/2010/04/taming-the-tiger-the-challenge-for-european-social-democracy/.

A recent article by me in Social Europe Journal.

My argument is that capital has become so liquid it is threatening the 50 year old EU model. A model which balances the demands of capital (business investors), organised labour (the trade unions) and the state together to create social democracy. But the banks have become 'vampire squids' to use a current buzz phrase, sniffing out stored capital in businesses, latching on and using private equity funds to suck it out to use as betting chips in the global casino of capital speculation.

To prevent capital (investment for business as well as stored financial reserves and the capital infrastructure underpinning our societies) disappearing and dumping us in the capital famine that typifies the Rust Belt inner cities of the American mid west, we need to find business models which lock down capital and put it under democratic control.

The ideal model, which works well in a competitive capitalist market, is the cooperative model.

5 comments:

  1. I did notice that you didn't define "capitalism" in your article, which is a big problem.

    There's a nice story the philosopher Slavoj Zizek told about a journalist friend of his being told by an editor to change the word "capitalism" to "economy" in an article. An example of how under-theorised our economic system is these days.

    Being a little old-fashioned, I tend to subscribe to the view of capitalism which was prevelant amongst classical economists such as Adam Smith, David Ricardo and Karl Marx. Plenty has changed since these guys wrote - but the centrality of labour to the production of capital, and the class divide between capitalists and workers still remains.

    It would be meaningless to describe an economy in which co-owned enterprises predominate as capitalism - what could be more anti-capitalist than integrating the interests of the workforce, surrounding communities, the environment, and future generations, into the decision-making of a firm?

    If we think that the model is superior to the dominant business models, we must be aiming for cooperation to become the norm for all businesses - if not in ownership structure, then in changes to company law to ensure the recognition of stakeholder interests.

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  2. Capital is the 'extracted essence' of the surplus value produced by labour. It's perfectly possible to establish an entitirely democratic, worker and community managed capitalism ('sack your chief exec and do it yourself', as Bob would say). As long as the vital life force of the economy is the endless replication and growth of capital, as it seeks to revalorise itself by looking for new markets in the pursuit of profitable advantage, it's still capitalism - even if the cycle is 'managed' by us robotniks, rather of a distinct class of capitalists. In reality, of course, this is the final escape of capital from human control, as theorised by Fredy Perlman in 'Against Leviathan', Castoriadis et al - capital itself is the giant squid, with its tentacles wrapped round the face of humanity. From this perspective, transcending capitalism would involve suppressing a lot more than just the ruling class.

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  3. But if we define capital in this way, how helpful is it to refer to a system of democratic enterprises as capitalism given the qualitative difference - especially given that there is a key distinction in terms of the basis upon which investment decisions are made. For example, where institutional investors make decisions on the basis of maximising the return on capital and where other investors are likely to act in this way too, a system in which capital was primarily directed by labour would make quite different decisions.

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  4. If you want a social economy that's animated by the needs of human community rather than the hand of capital, then it's simply calling a spade a spade. To me, co-operatives pefigure human community, because they are a response to 'market failure'. People form co-operatives to fulfil their needs and desires (work, housing, food, education etc) precisely where capital can see no possibility of profit (and here I'm obviously not talking about cartels of rich farmers, or decadent retail giants). They are a kind of microcapitalism with a human face. Hence their reliance on sweat equity to compensate for lack of working capital. My co-op, which is relatively 'successful' in terms of providing decent work over a period of more than thirty years, has built up princely reserves of about £250,000 - which is about 5% of what we've paid out to rentier landlords and banks. So it's still very much capitalism. Even the idea that we are 'workers employing capital' is laughable. I guess what I'm suggesting is that a society where workers control capital, you're actually talking about a society where the 'workers','capital' and 'markets' no longer exist, in the sense that they're understood in classical economics.

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  5. Sion, I think our disagreement here is largely semantic. Though of course some of an enterprises profits will be used to pay interest to lenders, etc., usually co-operative enterprises will attempt to trade with other co-operatives - including co-operative and mutual financial institutions.

    This is not quite the same thing as a firm being owned by investors (capitalists) seeking to maximise the return on their capital (which is what I understand capitalism as being). So, when I used the term "workers employing capital" it was not in the individual sense, but within a collective sense of working people co-operating with each other.

    For example, it would be in line with commercial operations were your enterprise to attempt to externalise social and environmental cost within the confines of the law in an attempt to maximise profits and cease trading with other co-ops, seeking out the lowest cost alternatives.

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