I really liked this piece. Particularly the part correlating a breakdown in trust with gini as a measure of inequality (and all of the social/political problems therein). Of course, I would say that because it confirms what I already believe. But every once in a while, it is nice to have your beliefs confirmed by some detailed engagement with empirical details rather than relentlessly seeking to destroy, disconfirm and refine your views!
I've always instinctively liked the idea of workplace democracy but what do you think about the concern that cooperatives might sacrifice efficiency for inclusivity and the struggles this can lead to when trying to implement them in competitive markets?
Much like how authoritarian regimes can make decisions more swiftly than democratic governments, traditional firms—where decision-making is typically centralized—may operate more efficiently than co-ops, which often require broader consensus. Would we be risking our firms dying out when competing in the global markets?
This and the struggles co-ops have raising money trouble me, but still I think co-ops should get some kind of regulatory support. Like you point out in the article, I think (like democracy itself) they could bring real benefits to society that are not immediately quantifiable in a capitalistic sense.
I originally wanted to tackle everything in one post, but it was becoming too long, which is why I said I was going to split it up. But let's spoil my future blogpost:
Co-ops are not out-competed everywhere. In places where there are already lots of co-ops (like France, Uruguay and Italy) co-ops are very competitive. Capitalist firms do better when there are more capitalist firms around, co-ops do better with more co-ops around. See e.g. this study: https://resources.uwcc.wisc.edu/community%20development/Alberta%20Co-op%20Survival.pdf
And I don't want to hear anyone say "beware the man of one study", this is a meta-analysis. (Now, personally I suspect they're actually about equally productive and this meta-analysis shows they're more productive for complicated reasons I might get into in a future blogpost)
So if they're *more productive*, why are they often *less competitive*? Because the idea that most productive will succeed under capitalism, is a myth. Co-ops are a perfect counterexample. Capitalists favor capitalist firms (obviously):
If a startup co-op can turn $10 of investment into $1000, but will split that $500 with the workers and $500 with investors, while a capitalist startup can turn $10 into only $900, of which $1 goes to the workers and $899 goes to the investors, of course the investors will invest in the capitalist startup even though it's less productive.
Just like how a capitalist firm would be less competitive than the monarch's firm in a feudalistic society. The political context matters.
So for raising initial capital, yes that is something which co-ops struggle with, but again, it's *because of the capitalists*. But socialist firms struggling to get started in a capitalist society is as much of a flaw with socialist firms as capitalist firms struggling to get started in a feudalistic society is a flaw with capitalist firms.
I don’t think it’s just “because of the capitalists” that worker co-ops struggle to get capital up front. Worker co-ops have less access to capital even than supplier and customer co-ops (which are 90% of all co-ops). If you’re a customer or supplier, you either own some capital or some liquid assets, which you can use as collateral for a loan. But workers can’t use their labor as collateral because of free labor laws. The repo man can’t come for your labor if you default — which is a good thing, overall!
>In fact, that’s what Marx and the other early socialists were really focused on. They never endorsed a planned/command-economy, which is what much of the West now wrongly equates with socialism.
Do you have a source for this? It's hard to believe that self-described Marxists would be in favour of planned economies if Marx and Engels weren't. Plus the Marxists kicked anarchists and mutualists (who were in favour of cooperatives) out of the First International.
I have read (in "Anarchism" by Daniel Guérin) that Marx and Engels weren't as committed to authoritarianism as later self-proclaimed Marxists were, and that Bakunin's critique of Marxism/communism as authoritarian weren't completely well-founded at the time (although he accurately described what Marxism would eventually become: "the notion that a group of individuals ... could become the soul and the unifying and directing will of a revolutionary movement and of the economic organization of the proletariat of all countries").
However if Marx were really as committed to cooperatives as you say here one would think that history would have played out differently.
> The cooperative factories of the workers themselves are, within the old form, the first examples of the new, although they naturally reproduce, and must reproduce, all the defects of the existing system.
Marx and Engels made a distinction between early socialism (sometimes just called socialism) and late socialism (sometimes called communism). It seems they liked co-ops for early socialism, but didn't think they would be the end state in late socialism. But that doesn't mean they thought late socialism would be a command-economy, which they never endorsed (not sure how I would prove that negative, I guess it's a challenge for anyone to find a quote).
That's not exactly a glowing review... And it seems like more of a side remark, whereas in the Communist Manifesto they explicitly advocate that the working class should "centralise all instruments of production in the hands of the State."
And also in the Manifesto:
>...when all capital, all production, all exchange have been brought
together in the hands of the nation, private property will disappear of its
own accord, money will become superfluous, and production will so
expand and man so change that society will be able to slough off
whatever of its old economic habits may remain.
This sounds a lot like a command, marketless economy to me.
They say in the preface to the 1872 edition that conditions have changed, and not everything they wrote in the Manifesto still applies, but that it is "in principle still correct." And Engels wrote this in "Anti-Dühring" in 1878:
>The seizure of the means of production by society eliminates
commodity production and with it the domination of the product
over the producer. The anarchy within social production is replaced
by consciously planned organization. (p. 265)
Elsewhere he explicitly advocates getting rid of money, and I'm not sure how you could have anything but a planned economy if you do that.
Well, we should once again differentiate between early socialism and late socialism. They did want a moneyless society, but only in late socialism. They didn't have a concrete plan for what it would look like, so one shouldn't read it as a blueprint but more as an ideal end state. Think of the people who say AGI will usher in a post-scarcity society where no-one has to work or use money. They're not saying we don't need to work or use money now, but rather that this is what we should end up with.
Labor vouchers was something he did toy with, while even the idea of gosplan-style directives or a command economy more broadly, was only developed later, so he couldn't even have endorsed it in principle. I'm not saying labor vouchers are a good idea (I don't think they are), I'm just saying that they're one way to have a moneyless society without having a command economy (there are also others but I don't think Marx discussed those).
One should also be careful with applying modern meanings to an old text. Marx had the annoying tendency to use loaded words in a way that confuse modern readers. The most famous of those is "dictatorship of the proletariat", and "state" is another one. When Marx envisioned a socialist "state" or "dictatorship of the proletariat", he didn't envision it as a bunch of actual dictators running it top down, he was talking about a big association of workers (so more democratic and bottom up), and used the worst possible phrase to describe it. He is explicitly pro a classless, stateless society.
I've never read Anti-Dühring, I found it online and started reading that section. Some things that jumped out at me, he says:
>"The seizure of the means of production by society"
so "society" and not the "state", which he does talk about later in that section:
> In proportion as the anarchy of social production vanishes, the political authority of the state dies away. Men, at last masters of their own mode of social organization, consequently become at the same time masters of nature, masters of themselves -- free.
So this reads as quite against the state. This "anarchy" he refers to is almost certainly not anarchism in the modern sense, but rather the chaos of markets in capitalism. I mean it's all a bit hard to interpret so I might be off base here, but he keeps linking this anarchy with capitalism in the text so I'm pretty sure that's what he means.
In truth I never finished Capital either. I find modern economics books generally a lot better, so I only vaguely remembered that they were positive about coops and used the search function to find it again in my ebook. But I do remember them being more positive elsewhere and upon searching "Marx" and "co-op" I found it; it's from his speech at the first international:
> We speak of the co-operative movement, especially the co-operative factories raised by the unassisted efforts of a few bold “hands”. 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
He goes on to say that this cannot be the end state, but I already told you that.
As for the Soviet union and command economies, we will never truly know for certain what Marx would have thought of them, but given his general hatred of authoritarians it seems pretty safe to assume he would've hated them.
I really liked this piece. Particularly the part correlating a breakdown in trust with gini as a measure of inequality (and all of the social/political problems therein). Of course, I would say that because it confirms what I already believe. But every once in a while, it is nice to have your beliefs confirmed by some detailed engagement with empirical details rather than relentlessly seeking to destroy, disconfirm and refine your views!
I've always instinctively liked the idea of workplace democracy but what do you think about the concern that cooperatives might sacrifice efficiency for inclusivity and the struggles this can lead to when trying to implement them in competitive markets?
Much like how authoritarian regimes can make decisions more swiftly than democratic governments, traditional firms—where decision-making is typically centralized—may operate more efficiently than co-ops, which often require broader consensus. Would we be risking our firms dying out when competing in the global markets?
This and the struggles co-ops have raising money trouble me, but still I think co-ops should get some kind of regulatory support. Like you point out in the article, I think (like democracy itself) they could bring real benefits to society that are not immediately quantifiable in a capitalistic sense.
I originally wanted to tackle everything in one post, but it was becoming too long, which is why I said I was going to split it up. But let's spoil my future blogpost:
Co-ops are not out-competed everywhere. In places where there are already lots of co-ops (like France, Uruguay and Italy) co-ops are very competitive. Capitalist firms do better when there are more capitalist firms around, co-ops do better with more co-ops around. See e.g. this study: https://resources.uwcc.wisc.edu/community%20development/Alberta%20Co-op%20Survival.pdf
Why? Because, scientific research suggests, worker co-ops are actually *more* productive than capitalist firms: https://onlinelibrary.wiley.com/doi/abs/10.1111/1748-8583.12115
And I don't want to hear anyone say "beware the man of one study", this is a meta-analysis. (Now, personally I suspect they're actually about equally productive and this meta-analysis shows they're more productive for complicated reasons I might get into in a future blogpost)
So if they're *more productive*, why are they often *less competitive*? Because the idea that most productive will succeed under capitalism, is a myth. Co-ops are a perfect counterexample. Capitalists favor capitalist firms (obviously):
If a startup co-op can turn $10 of investment into $1000, but will split that $500 with the workers and $500 with investors, while a capitalist startup can turn $10 into only $900, of which $1 goes to the workers and $899 goes to the investors, of course the investors will invest in the capitalist startup even though it's less productive.
Just like how a capitalist firm would be less competitive than the monarch's firm in a feudalistic society. The political context matters.
So for raising initial capital, yes that is something which co-ops struggle with, but again, it's *because of the capitalists*. But socialist firms struggling to get started in a capitalist society is as much of a flaw with socialist firms as capitalist firms struggling to get started in a feudalistic society is a flaw with capitalist firms.
I don’t think it’s just “because of the capitalists” that worker co-ops struggle to get capital up front. Worker co-ops have less access to capital even than supplier and customer co-ops (which are 90% of all co-ops). If you’re a customer or supplier, you either own some capital or some liquid assets, which you can use as collateral for a loan. But workers can’t use their labor as collateral because of free labor laws. The repo man can’t come for your labor if you default — which is a good thing, overall!
I largely agree but I think there are ways around it. I might do a post on it in the future.
Looking forward to reading it!
>In fact, that’s what Marx and the other early socialists were really focused on. They never endorsed a planned/command-economy, which is what much of the West now wrongly equates with socialism.
Do you have a source for this? It's hard to believe that self-described Marxists would be in favour of planned economies if Marx and Engels weren't. Plus the Marxists kicked anarchists and mutualists (who were in favour of cooperatives) out of the First International.
I have read (in "Anarchism" by Daniel Guérin) that Marx and Engels weren't as committed to authoritarianism as later self-proclaimed Marxists were, and that Bakunin's critique of Marxism/communism as authoritarian weren't completely well-founded at the time (although he accurately described what Marxism would eventually become: "the notion that a group of individuals ... could become the soul and the unifying and directing will of a revolutionary movement and of the economic organization of the proletariat of all countries").
However if Marx were really as committed to cooperatives as you say here one would think that history would have played out differently.
> Do you have a source for this?
Sure! In Volume 3 of Capital, Marx writes:
> The cooperative factories of the workers themselves are, within the old form, the first examples of the new, although they naturally reproduce, and must reproduce, all the defects of the existing system.
Marx and Engels made a distinction between early socialism (sometimes just called socialism) and late socialism (sometimes called communism). It seems they liked co-ops for early socialism, but didn't think they would be the end state in late socialism. But that doesn't mean they thought late socialism would be a command-economy, which they never endorsed (not sure how I would prove that negative, I guess it's a challenge for anyone to find a quote).
That's not exactly a glowing review... And it seems like more of a side remark, whereas in the Communist Manifesto they explicitly advocate that the working class should "centralise all instruments of production in the hands of the State."
And also in the Manifesto:
>...when all capital, all production, all exchange have been brought
together in the hands of the nation, private property will disappear of its
own accord, money will become superfluous, and production will so
expand and man so change that society will be able to slough off
whatever of its old economic habits may remain.
This sounds a lot like a command, marketless economy to me.
They say in the preface to the 1872 edition that conditions have changed, and not everything they wrote in the Manifesto still applies, but that it is "in principle still correct." And Engels wrote this in "Anti-Dühring" in 1878:
>The seizure of the means of production by society eliminates
commodity production and with it the domination of the product
over the producer. The anarchy within social production is replaced
by consciously planned organization. (p. 265)
Elsewhere he explicitly advocates getting rid of money, and I'm not sure how you could have anything but a planned economy if you do that.
Well, we should once again differentiate between early socialism and late socialism. They did want a moneyless society, but only in late socialism. They didn't have a concrete plan for what it would look like, so one shouldn't read it as a blueprint but more as an ideal end state. Think of the people who say AGI will usher in a post-scarcity society where no-one has to work or use money. They're not saying we don't need to work or use money now, but rather that this is what we should end up with.
Also, Marx was probably thinking of something like labor vouchers when he talked about a moneyless society. https://en.wikipedia.org/wiki/Labour_voucher
Labor vouchers was something he did toy with, while even the idea of gosplan-style directives or a command economy more broadly, was only developed later, so he couldn't even have endorsed it in principle. I'm not saying labor vouchers are a good idea (I don't think they are), I'm just saying that they're one way to have a moneyless society without having a command economy (there are also others but I don't think Marx discussed those).
One should also be careful with applying modern meanings to an old text. Marx had the annoying tendency to use loaded words in a way that confuse modern readers. The most famous of those is "dictatorship of the proletariat", and "state" is another one. When Marx envisioned a socialist "state" or "dictatorship of the proletariat", he didn't envision it as a bunch of actual dictators running it top down, he was talking about a big association of workers (so more democratic and bottom up), and used the worst possible phrase to describe it. He is explicitly pro a classless, stateless society.
I've never read Anti-Dühring, I found it online and started reading that section. Some things that jumped out at me, he says:
>"The seizure of the means of production by society"
so "society" and not the "state", which he does talk about later in that section:
> In proportion as the anarchy of social production vanishes, the political authority of the state dies away. Men, at last masters of their own mode of social organization, consequently become at the same time masters of nature, masters of themselves -- free.
So this reads as quite against the state. This "anarchy" he refers to is almost certainly not anarchism in the modern sense, but rather the chaos of markets in capitalism. I mean it's all a bit hard to interpret so I might be off base here, but he keeps linking this anarchy with capitalism in the text so I'm pretty sure that's what he means.
In truth I never finished Capital either. I find modern economics books generally a lot better, so I only vaguely remembered that they were positive about coops and used the search function to find it again in my ebook. But I do remember them being more positive elsewhere and upon searching "Marx" and "co-op" I found it; it's from his speech at the first international:
> We speak of the co-operative movement, especially the co-operative factories raised by the unassisted efforts of a few bold “hands”. 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
He goes on to say that this cannot be the end state, but I already told you that.
As for the Soviet union and command economies, we will never truly know for certain what Marx would have thought of them, but given his general hatred of authoritarians it seems pretty safe to assume he would've hated them.