made in rochdale: exported globally

Scumboni offers a radical defence of worker co-operatives

The late development of theory around worker, producer and community co-operatives could be one explanation for the widespread indifference of communists to this part of the working class movement.(1) In the UK, ignorance about its reach, nature and significance contrasts with an apparently inexhaustible, tailending-the-left fascination with party or group politics and rank-and-file trade unionism. Yet people are often ready with an ideological view of co-ops; they are self-exploitation, or bourgeois, or prefigure communism, or impossible, and so on.

The International Co-operative Alliance (ICA) defines a co-op as an “autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly-owned and democratically-controlled enterprises”. Co-operatives are a type of collective organisation for the satisfaction of needs unmet by private enterprise and the state – for work, shelter, access to markets, land, leisure activity, credit, clean water, food, health, education.

The ICA’s statement of ‘values’ and seven working principles denominates a global movement with around 1bn individual members.(2) More than half the world’s people – mainly, in money terms, the poorest half – depend on co-operatives for their livelihood. Co-operatives employ 20% more people than all the world’s multinational companies. In the UK, individual membership of co-ops, at around 12 million, is greater than the combined membership of trades unions and political parties. These rather mystifying statistics, and others revealing the scale and local composition of the co-op movement, suggest there’s a segment of the social economy as underinterpreted by communists as it is ignored by business schools and the financial press.(3)

Like trade unions, co-operatives often start as defensive formations, then become capable of aggression in the fight for economic territory. In Argentina, workers took over hundreds of bankrupt businesses after the 1999-2002 crisis (some regretted it later); in the Basque region, the €16bn turnover Mondragon federation of worker co-operatives was founded in a context of Francoist economic strangulation and cultural repression during the 1950s; in Reggio Emilia, thousands of worker co-operatives were formed in the period of postwar economic devastation.
Like trade unions, co-operatives have a role under capitalism in reproducing the working class. Like trade unions, they decay. UK consumer co-ops had more than 50% of the grocery market in the 1950s, reduced through corruption and incompetence to 3% by 1990. The Co-operative Group, a £13bn retail and financial services conglomerate, subsequently reinvented itself as an ‘ethical business’. It now has 6 million members, of whom 200,000+ are considered to be ‘engaged’, but an etiolated democracy.
Unlike trade unions, co-ops organise non-waged workers and agricultural producers on a large scale; more than 80% of African, Asian and South American producers of Fair Trade commodities work through co-operatives. Like unions, they have a conservative wing (English Food and Farming Partnerships; First Division Association) and a radical left (Rootstock; IWW). Like unions and left parties, their character is formed by local political conditions and class or cultural relations – Peronism in Argentina; Catholicism and Stalinism in Italy and Spain; evangelism in China; nonconformism and mercantilism in the UK; self-help community entrepreneurialism in the US; rural anarchism and land rights conflict in Mexico; the memory of state-run ‘co-operatives’ in eastern and central Europe.

‘Foaming at the mouth’

The 2011 UK Co-operative Economy Report counted around 450 worker co-ops, including a handful of medium-sized businesses and a long tail of small ones.(4) This does not include ‘employee-owned’ businesses, many of which are held in trust ‘for the benefit’ of their workers, often through a bequest by high-minded former owners. In these, effective control is exercised by trustee and executive boards, and there is little in the way of economic democracy beyond the kind of supercharged employee participation schemes run by lots of private firms. It thus excludes enterprises like Scott Baader, Tullis Russell Papermakers, and John Lewis Partnership. For present purposes, neither would I include ownership through shares, management or worker buyouts, where workers’ income deriving from share and investment options is mixed with income from wages.

A worker co-operative in this definition is an enterprise where workers identify as workers, not employees or partners; where capital is nominally employed by labour, usually through loans; where wages are the sole source of workers’ income; and which have as core purposes the development of ‘decent jobs’ (minimum hours for maximum pay and leave time, work/life balance, job flexibility in workers’ favour); workplace equality; workers’ individual and collective autonomy; self-directed education; and collectively self-directed working lives.
There are a few co-ops like this operating at competitive commercial scale in the UK. Confronted by groups of workers trying out a strategy which appears both reformist and utopian, libertarian and rules-based, localist and internationalist, workerist yet anti-work, it’s little wonder such co-ops have had communists foaming at the mouth since the collapse of the Paris Commune.

Part of the real movement?

The question for us is not whether worker co-operatives are or aren’t a solution to capitalism, although autonomous workers choose co-operative organisational models with absolute regularity. It is: are they part of the real movement of the working class, or a parody of non-alienated economic relations – or both? At least one member of the UK Worker Co-operative Council, a founder member of Europe’s largest equal pay co-op, believes that not only are worker co-operators not capitalists, but that co-op firms are not capitalist as such. He views worker co-operatives as ‘a bubble in the bloodstream of capitalism, which will eventually give it an aneurism.’ Others see them simply as workplaces demanding high levels of participation and solidarity, in return for jobs where they won‘t be made summarily redundant, and the wages and conditions are tolerable.
Actually, worker co-operatives a cultural laboratory for a range of techniques workers use to resist compulsory waged and unpaid labour, and mitigate its social effects. Worker co-ops are often built on sweat equity and pay a high price for capital, but they can be spectacularly durable and competitive with private shareholder owned firms, partly because they develop a market edge by retaining skilled workers. They modify the usual relationship between dead and living labour at the level of the firm, or group of firms. Bankers and rentiers extract value in the form of rents and interest, but there is little or no dividend on shares and little or no scope for asset privatisation. The principle that you come with nothing but labour power and leave with nothing, combined with common ownership of assets, means that capital, accumulated by virtue of the work of past members, is passed on to future members.
Worker co-ops also use their own version of limited liability – the scam which allows business owners to dump trading losses when their firms goes bust – to collectively protect individual worker members. The Industrial and Provident Society legal form also guarantees the common ownership and democratic control of co-op assets. So, for instance, a co-op might borrow commercial money, in the form of asset finance (a kind of mortgage) to buy productive equipment. If the gamble fails, they may lose the jobs and the hardware, but not their savings or personal property. An analogy with the way co-ops détourne legal incorporation is the way software developers use the framework of intellectual property law to protect a new type of commons – free code.
In most European countries, including Wales and Scotland – but not England – there is no clear divide between worker co-ops and ‘employee-owned’ enterprises. England is peculiar. Like the US, the relatively small scale of the worker co-op sector is reflected in its radicalism and egalitarianism. The last wave of worker co-op formations, between 1970 and 1990, came about partly in response to the demands and requirements of currents like feminism, environmentalism and radical communist or anarchist activism. This is why a large percentage of them operate in markets like whole food production and distribution, communications, clean technology and education. Relatively few are in manufacturing – unlike Spain, France or Italy, and for that matter Wales and Scotland, where worker co-ops are more closely allied with trade union blocs and traditional left parties.

Nasty, brutal and small

A second reason for the underrepresentation of worker co-ops in England is the historical dominance of its large consumer co-operative sector. In the C19th and C20th, the consumer co-ops set up wholly-owned, large scale manufacturing and farming subsidiaries, in direct competition with worker co-ops – and outflanked them everywhere, except in the manufacturing areas of Leicestershire and Northamptonshire. By the 1920’s, the Co-operative Party was allied with Labour, in a period¬ when Fabianism and moderate trade unionism – both enduringly hostile to worker co-operation – were securing their ideological hegemony on the British left.
The present restructuring in the UK labour market , with a rise in unemployment and the spread of part time, atomised and unpaid jobs, has seen a revival of interest in worker co-ops, and the rapid rise of two new types of co-operative. The first is the consortium, where groups of firms, self-employed or underemployed workers combine to share services. These may include negotiating conditions and rates of pay, administration, legal support, marketing and joint working. The arts industries, particularly fine arts, have always been a holdout of feudal employment relations; but in the last ten years the disease of unpaid internships, naked patronage and various forms of unpaid work has spread quickly, particularly affecting claimants, graduates and young workers in the design and creative industries, and professions like law and architecture.
The second is the community co-operative, based around the co-design and co-production of public goods or amenities. These are often financed through the issue of community shares, which attract variable interest but not dividend, and whose value cannot rise above par. Such co-ops are typically promoting community ownership and control of sports clubs, food projects, social centres, pubs and village shops, and renewable or local energy projects. Like worker co-operatives, these new kinds of co-op test the meaning and limitations of the seven principles – open membership, democracy, member economic participation, co-operative education and propaganda, autonomy, solidarity and sustainable community development.

Social Enterprise, Big Society

Social Enterprise began in the US, a country with a low-slung or non-existent social safety net. It described a particular kind of business; for instance, a for-profit enterprise set up by an already-successful working class entrepreneur from South Chicago, aimed at improving the life prospects of neighbourhood youth. Transplanted to the UK by New Labour thinkers in the mid 1990s, and government policy by 1997, it became the catch-all ‘business with a social purpose’- originally thought to include co-operatives, but also the trading arms of charities, plus diverse community-oriented projects and firms, the majority of them (as well as the various agencies set up to foster the sector) in receipt of start-up capital or arms-length funding from the local state, in the form of grants or money-up-front contracts.
Like Big Society, Social Enterprise was conceived as a business-led response to social ‘problems’, and a surrogate for the state as it withdraws from its role in social reproduction. The mantra of Social Enterprise is that ownership, control and self-determination don’t matter – only outputs and outcomes. The ‘social purpose’ criterion is particularly cretinous, since all businesses have social purposes. In the end, Social Enterprise reveals itself as charity, unregulated by charity law. Social enterprise (ideologically) and charity (legally) insist on separating control, ownership and benefit. The co-operative movement insists that they belong together.
The Big Society, conceived by Tory moral philosopher Phillip Blond and Cameron adviser Steve Hilton, welds together ideas of ‘good’ business, one nation golden age social conservatism, social innovation, voluntarism and charity. It is a Frankenstein invention, and it means business – even as it evaporates in the public consciousness, its champions in government fade away, funding cuts undermine the voluntary sector, and state contracts and assets wind up in the hands of large private companies.
In 2010, David Cameron famously proclaimed that his government would support the transfer of public service delivery to worker co-operatives, while directing their work and retaining ownership of their assets. Two years earlier, he hadn’t even known that co-operatives were businesses. The UK co-operative movement more or less politely declined his offer – not on the grounds that the state should have a monopoly, but rather that services should be co-owned, co-directed and co-designed by the people who use them, work in them, and fund them – ‘multi stakeholder’ co-operatives.
The usual territory for worker co-operatives is private industry. However, faced with being compulsorily spun out by the state, with the certainty of reduced wages and pension rights and increased work intensity, some public sector workers (and unemployed ex-public sector workers) have set up worker / community co-operatives, as an alternative to offering themselves to Serco, A4E, G4S, Capita and the like. If people think that pure workerism, or a menu of rank-and-file activism, voting, one-day strikes and demonstrations won’t hold the line, let alone change the balance of power, then using co-operatives to occupy economic territory may recommend itself. The issue is not co-operatives, right or wrong, but how to stop co-operating with capitalism, and start co-operating with each other.


1 B. Jossa, ‘Marx, Marxism and the Cooperative Movement’

2 ‘Statement on the Co-operative Identity’

3 ‘Statistical Information on the Co-operative Movement’

4 ‘The UK co-operative economy: Britain’s return to co-operative, 2011’