Posted August 11, 2015
In the aftermath of the failure of the cooperative communities in the United States (see “Utopian socialism in the USA” 8/10/2015), a movement for the formation of workers’ cooperatives emerged. These were different from the Owenite and Fourierist cooperative communities, which were to be organized by enlightened capitalists who recognized that capitalism is not politically sustainable in the long-term. The worker’s cooperatives were organized by workers; they were cooperatives from below. However, in spite of this evident virtue, the workers’ cooperatives also were utopian, in the sense that they did not have real possibility for economic survival in the context of the capitalist system in which they were located.
The first workers’ cooperative was formed by striking iron molders in Cincinnati in 1848, who established a cooperative foundry to support themselves during the strike. The venture was initially successful, and by 1850, the venture was chartered by the State of Ohio, and it had forty members. Inspired by the example, a host of producers’ cooperatives were established by workers across the country (Foner 1975:178-81).
However, the cooperatives were destroyed by capitalists through the strategy of “ruthless competition.” The strategy involves selling at a price below cost in order to eliminate competition, a maneuver that can only be adopted by a large company with sufficient capital to engage in an economic war against targeted companies. In the era of the Robber Barons, ruthless competition was employed against both workers’ cooperatives and small-scale private property, and it was central to the emergence of large-scale and concentrated capitalism in the second half of the nineteenth century in the United States. Once a few concentrated companies emerge in an industry, they are in a position to cooperate with one another in establishing high prices and stability in high profit margins (Foner 1975:180, 183; Josephson 2011).
The destruction of workers’ cooperatives and small-scale private enterprises demonstrates the need for popular control of the state, which can establish effective legislation against ruthless competition and price fixing. At the end of the nineteenth century, there was legislation against monopoly capital, but inasmuch as the state remained in the control of the capitalist class, the legislation was full of loopholes, and it was inconsistently enforced (Josephson 2011). In contrast, a state truly under the control of the people, and not merely in rhetoric, can effectively eliminate capitalist practices that are attacks on the people in the pursuit of profit. It also can nationalize companies, if the economic and political conditions are appropriate; and it can provide technical and financial support to workers’ cooperatives.
In the case of Cuba, real possibility for cooperatives has existed both politically and economically since the triumph of the revolution in 1959. In the 1960s, cooperatives were formed voluntarily by independent small scale farmers, encouraged by the state and with ample structures of state support. These cooperatives still exist today, and they have been very successful economically, politically, and culturally. However, the judgment of the revolution during the 1960s was that the formation of workers’ cooperatives in the large-scale sugar and coffee plantations would introduce a host of practical problems. So the revolutionary government, having nationalized privately-owned plantations, converted them into state-managed enterprises, combining state management with structures of popular democracy from below. With the collapse of the socialist bloc in the 1990s, the state-managed farms were converted into cooperatives, with the intention of stimulating greater worker incentive and making the plantations economically independent and viable. The results have been mixed. At the present time, taking into account the desire by the people to improve the standard of living and the energy of an informal entrepreneurial class, the social and economic model of 2012 is expanding the possibilities for cooperatives in the non-agricultural sector, hoping that this will improve productivity. Thus, in each moment, steps toward cooperatives were taken in response to real needs and a real possibilities, based on analysis of economic and social conditions.
What role should the cooperatives play in the development of the Cuban socialist economy in the future? What should be their weight relative to small-scale private entrepreneurship or state companies? The answer to these questions should not be driven by utopian or idealist expectations. They should be based on actual needs and real possibilities. In fact, the revolutionary government sees possibilities not only with respect to the expansion of cooperatives, but also in the expansion of small-scale private property and joint ventures with foreign capital. Cuba is not so much moving toward cooperatives at the present time but toward the development of a mixed economy, under state direction and regulation, in a manner consistent with the new forms of socialism that are emerging in Latin America. In this historic moment, the meaning of socialism is being redefined in Latin America by governments whose authority rests on a foundation of popular movements.
For those of us who are intellectuals of the core nations, our task is not to suggest one or another direction in the evolution of socialism in Third World nations, but to reflect on the possibilities for the development of popular revolutions in our own nations, revolutions that would seek to take power in the name of the people and that would develop forms of property that respond to the needs of the people.
In the aftermath of the failure of the cooperative communities in the United States (see “Utopian socialism in the USA” 8/10/2015), a movement for the formation of workers’ cooperatives emerged. These were different from the Owenite and Fourierist cooperative communities, which were to be organized by enlightened capitalists who recognized that capitalism is not politically sustainable in the long-term. The worker’s cooperatives were organized by workers; they were cooperatives from below. However, in spite of this evident virtue, the workers’ cooperatives also were utopian, in the sense that they did not have real possibility for economic survival in the context of the capitalist system in which they were located.
The first workers’ cooperative was formed by striking iron molders in Cincinnati in 1848, who established a cooperative foundry to support themselves during the strike. The venture was initially successful, and by 1850, the venture was chartered by the State of Ohio, and it had forty members. Inspired by the example, a host of producers’ cooperatives were established by workers across the country (Foner 1975:178-81).
However, the cooperatives were destroyed by capitalists through the strategy of “ruthless competition.” The strategy involves selling at a price below cost in order to eliminate competition, a maneuver that can only be adopted by a large company with sufficient capital to engage in an economic war against targeted companies. In the era of the Robber Barons, ruthless competition was employed against both workers’ cooperatives and small-scale private property, and it was central to the emergence of large-scale and concentrated capitalism in the second half of the nineteenth century in the United States. Once a few concentrated companies emerge in an industry, they are in a position to cooperate with one another in establishing high prices and stability in high profit margins (Foner 1975:180, 183; Josephson 2011).
The destruction of workers’ cooperatives and small-scale private enterprises demonstrates the need for popular control of the state, which can establish effective legislation against ruthless competition and price fixing. At the end of the nineteenth century, there was legislation against monopoly capital, but inasmuch as the state remained in the control of the capitalist class, the legislation was full of loopholes, and it was inconsistently enforced (Josephson 2011). In contrast, a state truly under the control of the people, and not merely in rhetoric, can effectively eliminate capitalist practices that are attacks on the people in the pursuit of profit. It also can nationalize companies, if the economic and political conditions are appropriate; and it can provide technical and financial support to workers’ cooperatives.
In the case of Cuba, real possibility for cooperatives has existed both politically and economically since the triumph of the revolution in 1959. In the 1960s, cooperatives were formed voluntarily by independent small scale farmers, encouraged by the state and with ample structures of state support. These cooperatives still exist today, and they have been very successful economically, politically, and culturally. However, the judgment of the revolution during the 1960s was that the formation of workers’ cooperatives in the large-scale sugar and coffee plantations would introduce a host of practical problems. So the revolutionary government, having nationalized privately-owned plantations, converted them into state-managed enterprises, combining state management with structures of popular democracy from below. With the collapse of the socialist bloc in the 1990s, the state-managed farms were converted into cooperatives, with the intention of stimulating greater worker incentive and making the plantations economically independent and viable. The results have been mixed. At the present time, taking into account the desire by the people to improve the standard of living and the energy of an informal entrepreneurial class, the social and economic model of 2012 is expanding the possibilities for cooperatives in the non-agricultural sector, hoping that this will improve productivity. Thus, in each moment, steps toward cooperatives were taken in response to real needs and a real possibilities, based on analysis of economic and social conditions.
What role should the cooperatives play in the development of the Cuban socialist economy in the future? What should be their weight relative to small-scale private entrepreneurship or state companies? The answer to these questions should not be driven by utopian or idealist expectations. They should be based on actual needs and real possibilities. In fact, the revolutionary government sees possibilities not only with respect to the expansion of cooperatives, but also in the expansion of small-scale private property and joint ventures with foreign capital. Cuba is not so much moving toward cooperatives at the present time but toward the development of a mixed economy, under state direction and regulation, in a manner consistent with the new forms of socialism that are emerging in Latin America. In this historic moment, the meaning of socialism is being redefined in Latin America by governments whose authority rests on a foundation of popular movements.
For those of us who are intellectuals of the core nations, our task is not to suggest one or another direction in the evolution of socialism in Third World nations, but to reflect on the possibilities for the development of popular revolutions in our own nations, revolutions that would seek to take power in the name of the people and that would develop forms of property that respond to the needs of the people.
References
Foner, Philip S. 1975. History of the Labor Movement in the United States, Volume I: From Colonial Times to the Founding of the American Federation of Labor. New York: International Publishers.
Josephson, Matthew. 2011. The Robber Barons: The Great American Capitalists, 1861-1901. New Brunswick, New Jersey: Transaction Publishers. Originally published in 1934 by Harcourt, Brace, and Company.
Key words: Cuba, cooperatives, socialism, utopian
Foner, Philip S. 1975. History of the Labor Movement in the United States, Volume I: From Colonial Times to the Founding of the American Federation of Labor. New York: International Publishers.
Josephson, Matthew. 2011. The Robber Barons: The Great American Capitalists, 1861-1901. New Brunswick, New Jersey: Transaction Publishers. Originally published in 1934 by Harcourt, Brace, and Company.
Key words: Cuba, cooperatives, socialism, utopian
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