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Co-operatives

Socialism and economic democracy

For many, capitalism is synonymous with democracy. It’s said to provide people with the freedom to ‘choose’ and empowers consumers. It’s popularly believed that, since we in the west are able to vote once every four or five years, we live in healthy democratic societies in which the people are sovereign. This notion of democracy is a glaringly shallow one, however. Under this setup, one’s average democratic input amounts to around two votes every decade – not exactly power of the people. During the long periods in between the occasional election, we live under the almost total domination of our bosses.

Capitalism is a profoundly anti-democratic system. Workplaces, where we spend the majority of our lives, are run on an authoritarian basis, with workers given almost no say on how production is organised. Key investment decisions are taken by unaccountable, unelected wealthy individuals in pursuit of private profit, while employment of human labour is subject to the whims of “the markets”. Although we enjoy a certain amount of political democracy – and that is not to be taken for granted – we live under what is essentially an economic dictatorship. A key political task for socialists in the 21st century is to highlight the lack of democracy which exists when it comes to economics. A deeper and more participatory form of democracy should be strongly advocated. As journalist Peter Tatchell said: “We expect political democracy. Why not economic democracy too?”

Democracy under socialism necessarily means economic democracy. Those who work in a certain organisation should be entitled to have a say on how it is run on the basis of one person one vote. Managers should be elected and decisions made democratically. This may sound unrealistic to many, who have been conditioned to believe that only those with “special talents” have the ability to run economies. Paul Foot did an admirable job of tearing down this common assumption when he wrote about US industrialist Howard Hughes. Describing him as a “mediocrity”, he wrote:

“He started life as playboy and ended it as a lunatic. He had no ability at all. Yet through a mixture of luck and the ability to read a balance sheet, Hughes became the boss of a gigantic financial and industrial empire. He was able, almost alone, to nominate the President of the United States, Richard Nixon, who also had no ability, knowledge or skill of any kind. Howard Hughes designed an aeroplane which crashed and directed a film which was a monumental failure. He couldn’t do anything which mattered. Yet he made the decisions. The list is endless. Successful capitalists, almost to a man, are not people with any natural ability. Yet they decide what the experts do…They decide that engineers must build the Concordes. They decide that physicists must work on nuclear weapons.”

Given the current state of the world’s economy, it is clear that those who control it are unable to carry out their task in a humane, logical and sane manner. If the economy was organised democratically, would the results really be worse than what we are experiencing at present? Should we really expect to see the same level of economic chaos, environmental destruction and extreme inequality which occurs under the existing system? With the proper training, experience and education, there’s no reason why most people would not be able to acquire the skills necessary to help organise an economy. As David Schweikhart asked in his pioneering book, After Capitalism: “We deem ordinary people competent enough to select mayors, governors, even presidents. We regard them as capable of selecting legislators who will decide their taxes, who will make laws that, if violated, consign them to prison, and who can send them off, the young ones, to kill and die in war. Should we really ask if ordinary people are competent enough to elect their bosses?”

Actually existing economic democracy

And rather than abstractly theorise about what form democracy would take under socialism, we can look to real life examples – worker co-operatives. They are practical living alternatives to authoritarian capitalism and serve as vital tools in educating working people on how the economy operates on a daily basis. They have a proven track record of success, many of which would be the envy of capitalists the world over, and show that production can be carried out without bosses looking over the shoulders of workers.

One of the world’s largest and most successful worker-led co-operatives is the Mondragon Corporation. Based in the Basque Country, it is currently the sixth largest company in Spain and employs almost 100,000 people. And with an annual revenue of around €15 billion, it’s certainly not a small operation. Mondragon is entirely different from a modern corporation, however. All decisions are made by the workforce, who collectively own and control the firm, with job creation being seen as a key pillar of the organisation’s ethos. Writing for Yes magazine, Georgia Kelly and Shaula Massena, reported on what happened when the corporation was faced with difficult financial times:

“The worker/owners and the managers met to review their options. After three days of meetings, the worker/owners agreed that 20 percent of the workforce would leave their jobs for a year, during which they would continue to receive 80 percent of their pay and, if they wished, free training for other work. This group would be chosen by lottery, and if the company was still in trouble a year later, the first group would return to work and a second would take a year off. The result? The solution worked and the company thrives to this day.”

This stands in glaring contrast to the common spectacle of authoritarian companies who close down factories on a whim in order to exploit cheaper labour in the developing world. Had Mondragon’s principles of fairness and solidarity been existed across the economy, wages would not have stagnated, trade unions would not have been supressed and, most likely, we would not have experienced the crisis we are going through now. And since wages are set democratically by the workforce, Mondragon’s top executives receive a maximum income of six times more than the organisation’s lowest paid members. This is a remarkable figure, considering that Apple CEO, according to the Fortune 500 list, this year received 6,000 times more than the average worker at his company.

Although Mondragon and other co-operatives are not explicitly socialist, they do provide a model which progressives can emulate. It is part of a wider movement springing up around the world and is a living alternative to the workplace totalitarianism which most of us are subjected to. They give a small glimpse of what work life, as well as democracy, could be like under socialism. While acknowledging the important role they can play we must also, however, recognise their limitations. Ultimately, co-operatives are obligated to operate within a capitalist market. As such, they are unable to overcome some of the greater problems caused by capitalism, such as the destruction of the eco-system and the chaos which comes from the unplanned use of resources. They should be seen primarily as a living example of economic democracy and should be employed as a tool to challenge the legitimacy of capitalism.

A post capitalist society should ensure that workplaces are organised democratically. They should, however, be part of a national economic plan, which treats both human well-being and the survival of our ecosystem as top priorities. As has been argued previously, the most practical way to ensure the fairest allocation of resources is with a central economic plan worked out on a democratic basis.

Nora Castañeda, president of the Women’s Development Bank of Venezuela, summed up the economic goal of socialism well when she said: “We are creating an economy at the service of human beings instead of human beings at the service of an economy.”

Part One can be viewed here.

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