As a continuation of last week’s discussion, I touched on how the post-industrial landscape of the United States has given way towards a tendency to not only alienate the worker from their labor, but redefines our relations with one other, with the products we consume, and ultimately how we view ourselves in a world of predetermined choices. If the goal is for the worker to regain ownership of themselves in the wider economy – to feel the satisfaction of the esteemed clock-maker in their small hamlet – then the workplace must be democratized. I acknowledge in presenting this argument that it does not serve as a panacea to the problems laid out in my last article – or indeed, the many other challenges I’ll be sure to elaborate on elsewhere. Nevertheless, there are not only existing frameworks for how to realize these ideas but numerous examples across the globe where nearly everything, from the decision-making process to the means of production, is implemented through a system of democratic accountability.
A Bold Vision
If we take one of the defining symptoms of capitalism to be its tendency towards exploitation, as economist Richard Wolff argues, then the vaccine is the democratization of the workplace. When those who have capital own the means of production, they alone can determine the value of labor, the use of the worker’s surplus, and the many other ways in which capital’s power can manifest. Answers cannot be found, as some have suggested, in the gradual regulation and fine-tuning of the markets. The solution also isn’t simply to turn to capitalism’s foil – a centrally planned economy, where the boss is replaced by the bureaucrat. Rather, Wolff and his syndicalist contemporaries see the wheels of change being driven by a concept known as Worker Self-Directed Enterprises (WSDE), which function via the “internal organization of productive enterprises” and “positioning workers within each productive enterprise as themselves the appropriators of that enterprise’s surpluses.” Political Economist Gar Alperovitz insinuates this transformation is already taking place, citing the 40% of US workers who have joined co-ops and the over ten million who have become members of employee stock-ownership plans (ESOPs). ESOPs, he adds for emphasis, includes “three million more [members] that are members of unions in the private sector.” By these figures, it would seem the “quiet democratization” of the workplace is happening under the watchful eye of capital. If solutions like these can be developed in the present that simply requires the right amount of class consciousness and mass participation, then we ought to turn to those if they exist. In the case of two of the largest models today, they are not only existing but thriving.
A Tale of Two Cities
In a Spanish town called Mondragon, where the world’s largest coalition of worker cooperatives derives its name from, the story is different than much of the hardship experienced in the rest of the country. The region’s unemployment sits at 9%, while the national average is nearly double that. The Mondragon Cooperative, which is comprised of 255 companies working across a variety of sectors, earned $13 billion in revenue and secured a spot as one of Spain’s most prominent multinational corporations. Unlike many multinationals, however, who often reap their rewards at the expense of their domestic workers and consumers, Mondragon has been able to weather economic downturns while protecting their labor force. When a company within the cooperative is falling behind and would look to lay off its employees, those employees have the choice of transferring their skills to other, more successful ventures within the cooperative. Not only does it give the former enterprise a chance to stay afloat, but provides workers a way to continue their craft and stave off the all-too-common pitfall of unemployment.
Worker’s cooperatives, when equipped with the tools to empower their base, can often secure protections and benefits that a union cannot. The stark difference between Mondragon and other Spanish corporations during the recession has been defined by its collective decision-making framework, which has allowed themselves to be protected from layoffs. This process, in turn, facilitates democratic choices to be made on managing cutbacks, wage raises or decreases, and other company-wide decisions. The Mondragon model has even appeared to entice spectators across the Atlantic, with worker buyouts becoming a viable option as an older generation seeks to transfer ownership of their companies. One study found that converting to worker-ownership enterprises boosts profits by as much as 14%. But the embrace towards co-ops says less about the vested class becoming sympathetic to quasi-socialist policies and more about the limits of what worker’s cooperatives can accomplish in their wider context. Reflecting on the confines in which Mondragon is forced to operate, Noam Chomsky comments:
“It’s worker owned, it’s not worker managed, although the management does come from the workforce often, but it’s in a market system and they still exploit workers in South America, and they do things that are harmful to the society as a whole and they have no choice. If you’re in a system where you must make profit in order to survive, you’re compelled to ignore negative externalities, effects on others.”
In this respect Chomsky is correct; the company cannot avoid how its cost-benefit analysis will externalize its impact on other, unsuspecting members of the global working class. These are consequences of the profit paradigm; perhaps may require the close coordination of participating countries to resolve these inequalities that transcend borders. For the time being, however, the Spanish model attempts to channel the profits of capital away from investors and shareholders and back to the workers: a concept that no doubt has widespread appeal as the earnings between a CEO and their employees grows wider. We need not look far to feel the energy of Mondragon; in the heartland of America, a 10-year experiment has turned Cleveland Ohio from a crumbling metropolis to the epicenter of a movement towards worker empowerment.
Like many cities in the Rustbelt, Cleveland was a bastion of economic production and job opportunities. Those opportunities dwindled and factories moved away in the shadow of the Recession, leaving in their wake a high rate of childhood poverty, increased stratification from a lack of investment, and barriers to employment. The Evergreen initiative took what is successful in the area, namely Cleveland’s world-class hospitals and universities as the foundation for a wider economic wellspring. These “anchor institutions” are nonprofit organizations that are rooted in the community and unlikely to relocate. Additionally, the city generates a significant amount of revenue from the goods and services these institutions provide; yet these billions of dollars venture away from the communities that would yield the most from their investment.
Out of this challenge comes an opportunity; as anchor institutions strive to make their operations more sustainable, they allow new local businesses to develop and fulfill these needs. In order to ensure that the revenue generated always remains within the community, so too should these new ventures remain unique to the city. Of particular relevance to this discussion, the Evergreen Model emphasizes that these businesses are worker cooperatives. With the decision-making and shareholding nature of the company being democratically-owned, the workers have the collective freedom to decide that their operations remain local. These models provide a degree of accountability to mitigate the potential for any one shareholder to relocate their earnings to a wealthy suburb or offshore bank account. With better investment and better earnings, workers are more willing to spend on goods and services locally, accumulating the total wealth of the city. With an increasing demand for things such as sustainable products or clean power sources, providing both the resources they need in exchange for job creation these demands spurn. Decisions that involve buying from local businesses can develop into contracts, with the assurance they’ll get both high-quality goods and the knowledge they are investing in their city.
These co-ops thereby invest in the community, putting profits back into the city, and invigorating this virtuous cycle. Some cooperatives, such as the Evergreen Model, coalesce into a larger non-profit network; in the case of Evergreen, participating businesses promise to maintain their ethical practices and remain independent of outside ownership, and in exchange, the non-profit provides additional resources, such as technical expertise and strategic planning. Non-Profits such as Evergreen also manage loan funds, which allow money from anchor institutions, local foundations, and government programs to be invested into the cooperatives. Successful ventures return some of their earnings back into the fund, allowing for more opportunities to develop new cooperatives that can fill existing challenges, and with it the potential for new jobs.
Nearly 10 years on, the Evergreen Model has proved its merits, and by fine-tuning the system through empowering workers with resources and expertise to help become better decision makers, they can take own their economy and make choices that will be in their best interests. The model’s initial hurdles should be instructive, as David Brodwin points out; while the cooperative struggled to grow their core businesses, following a new management structure in 2014, they were able to rapidly boost sales, that ended the year seeing two of their three businesses being profitable, and the third breaking even. Mondragon and Evergreen both serve as beacons of success to the power of worker-owned and worker-managed institutions, inspiring a gradual yet steady push towards this trend. Beyond the language of feasibility and profits, worker cooperatives are an important step to a more democratic future, not only in the economic sphere but in conceiving a more democratic idea of politics, participation, and community.
The project to ensure that the worker feels a connection not only to their labor, but how their value is reflected in their community, is long-term, multifaceted, and comprehensive. The worker’s cooperative is merely one building block in the grander vision of transnational solidarity. We should not overlook the very real barriers the experiment currently faces, as Sam Gindin illuminates in a very sobering piece on their shortcomings. A clear-headed analysis of what worker cooperatives mean today and the potential they hold in the future should recognize them as a driver of politicization. The co-op could be an integrative model of education and activism, with businesses being hubs of not only local industry but facilities for cultural and political engagement. A survey into the history of consumer and credit unions is useful in this regard. What is most encouraging, however, is the bold notion that democracy in the workplace declares: that every individual has the agency to make their own choices, to own their economy, and to craft a vision of a more fair and equitable society for all.