Sen. Bernie Sanders (I-VT) has electrified the 2016 presidential race with his no-nonsense energy, authenticity, and class-politics platform. Some of his proposals have already made right-wing heads spin, like his support of a top marginal tax rate of 90 percent (as it was under Eisenhower), and legislation to break up the biggest banks in America, about which he declared: “No single financial institution should have holdings so extensive that its failure could send the world economy into crisis. If an institution is too big to fail, it is too big to exist.” Additionally, Sanders has advocated raising the minimum wage, guaranteeing sick leave and vacation for all employees, making public college free, and eliminating money from politics.
Of course, one of the most important ideas for the new century advocated by Sanders has had limited coverage. In his 12 steps forward plan, number three is “creating worker co-ops.” The Sanders campaign writes:
“We need to develop new economic models to increase job creation and productivity. Instead of giving huge tax breaks to corporations which ship our jobs to China and other low-wage countries, we need to provide assistance to workers who want to purchase their own businesses by establishing worker-owned cooperatives. Study after study shows that when workers have an ownership stake in the businesses they work for, productivity goes up, absenteeism goes down and employees are much more satisfied with their jobs.”
Out of all of Sanders’ plans, this is the most “socialistic,” which in its original definition, before it became a meaningless word that Bill O’Reilly likes to shout, meant communal or worker ownership of the means of production. Contrary to what many people think today, socialism and social welfare states are very different -- socialism was and is about the workers of the world uniting to grab control of industries and state from the capitalist class, while social welfare states are capitalistic, with the state providing basic necessities to mediate class tensions.
During the 20th century, capitalist nations, like the Unite States, became increasingly egalitarian; much more so than Karl Marx could have ever imagined. There are many reasons for this progressive shift, one being that the ideological threat of communism made it necessary for capitalist governments to limit inequalities, or face the threat of revolution. The rise of unions that fought hard for fair pay and worker rights also helped create what many progressives today call “the golden age of capitalism.” The main point here is that this “golden age” of worker rights and increasing equality was a movement within the capitalist system. Worker unions did not attempt to overthrow the entire “bourgeois state apparatus,” but worked within it.
And for many decades this seemed to work. As is well documented, and regularly brought up by liberals, the post-war period was a time when wealth spread and the middle class as we know it formed. It was a time when progressive taxation was at its highest, and when the strength of unions peaked. Unfortunately, it was only temporary. Union power has been falling for 40 years, while capitalist power has become stronger (and bigger) than ever. For anyone who understands the motions of capitalism, this shouldn’t have come as a great surprise.
First of all, the American (and European) middle class was greatly assisted by WWII, which destroyed massive amounts of capital, requiring tremendous amounts of reinvestment, and subsequently created an economic boom in the post-war period. With this destructive event, along with the rise of communism in the east and unions in the west, capitalists were forced to negotiate with workers, or face more drastic movements. One of the basic tenets of capitalism, however, is the exploitation of labor, which is achieved either by increased productivity, or the movement of capital when labor becomes too expensive. Technology has not only increased productivity rapidly, but has made capital more mobile, making it cheaper and more convenient to produce overseas. This has been magnificent for those who own the capital, and all of the new wealth has gone to those few individuals. For the labor (which does not own capital), it has been catastrophic. It was naive to think that capitalists would simply accept a new form of capitalism, where workers are given their fair share, especially as capitalism has become a global system.
Since the '80s, when todays worldwide capitalism really took off, technology and automation have increased rapidly. In a 2013 MIT report, it was found that innovation over the past few decades, specifically in computer technology, has destroyed jobs faster than it has created them. Since the new century began, productivity has steadily grown, while employment has stagnated. This points to what we all know by now -- all of the economic gains that have been realized over the past few decades have gone to the capitalist class. At the same time, many citizens have continued consuming at staggering rates (our economy is, after all, based on consumption) through cheap credit, rather than real income and wealth. Like drug dealers out on the streets, corporations rely on the addiction of consumers, while exploiting their labor -- and this is capitalism at its finest.
This is where worker co-ops, which could be a major and crucial part of future worker movements, come in. After 40 years of crumbling unions, we can say quite honestly that the 20th century union movement, while it helped pave the way for basic worker rights within capitalism, was only a temporary solution. A capitalist must always look for ways to better exploit labor, or cease to be a capitalist -- Marx called this the “coercive laws of competition.” As long as we operate within this system (where the very few own capital), worker gains can only be temporary, before they are lost to technology or cheap labor overseas.
Worker co-ops could provide a new platform for future workers movements. Last year, Sanders introduced a bill that would provide states with funding from the Department of Labor to “establish and expand employee ownership centers,” which would “provide training and technical support for programs promoting employee ownership and participation throughout the country.” Another bill would create a U.S. Employee Ownership Bank to “provide loans to help workers purchase businesses through an employee stock ownership plan or a worker-owned cooperative.”
According to the U.S. Federation of Worker Cooperatives, there are an estimated 350 “democratic workplaces” in the United States that employ 5,000 people and generate over $500 million in revenues. The largest worker co-op in the world is Spain’s Mondragon Corporation, which employs about 80,000 people, and is made up of 147 subsidiary companies. Founded in 1956 by Catholic priest Jose Maria Arizmendiarrieta, Mondragon has been a great success that proves industries can be successfully run through cooperative and democratic means.
There are, however, great challenges with worker co-ops, especially if they become massive organizations like Mondragon. They operate in a free market system and compete with companies where workers are disposable. (Although Mondragon does have employees that are not owners, especially outside of Spain.) These challenges were magnified at Mondragon when one of its most important companies, Fagor Electrodomesticos, collapsed in 2013 after a 37 percent downturn in sales because of the economic crisis. Commenting on this collapse and the problems that co-ops face, Gar Alperovitz and Thomas M. Hanna wrote in Truth Out:
“The fate of Fagor - and the future of many other cooperatives now attempting to compete at higher levels - suggests that if “the system question” is not addressed in theory and in practice, and in sophisticated longer-term design, many of the hopes generated by even so brilliant an experiment as Mondragón may be thwarted by forces more powerful than any one element in a system can handle alone.”
Advocacy for worker co-ops is hardly new in the American labor movement. In the 1860s, National Labor Union leader William Sylvis proclaimed, “The time has come when we should abandon the whole system of strikes and make cooperation the foundation of our organization and the prime object of all our efforts.” The Bernie Sanders campaign is gaining a lot of traction, and could help shine a light in the co-op movement. However, as Alperovitz made clear, the system question is not going away, writing:
“A serious 'next stage' systemic design almost certainly will have to adopt one or another form of 'planned trade' rather than 'free market trade' - else the fate of specific firms, and specific groups of workers, and also the communities in which both exist, become subject to the ever-intensifying challenges as corporations play one low-wage country off against another, with the destruction of wage standards and firms (cooperative or otherwise) the inevitable result.”
The union movement operated successfully within the capitalist system for many years, and it has largely collapsed after gaining too much power within that system. Worker co-ops could also prove to be temporary solutions if the system question is once again ignored. If it is not ignored, however, co-ops could work as a conduit towards a system that works for all, and not just the wealthiest individuals at the top.
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