Cooperative Socialism

This being written in the United States in the third millennium, I have to begin by pointing out what socialism is not, at least as I am using the term here. Socialism is not government control of the economy. The Nobel Laureate economist W. Arthur Lewis defined a socialist society as a democratic society without distinctions of hereditary economic class -- a democratic classless society. Government control of economic activity would then be, at most, a means to the more fundamental end of a classless society, as Lewis pointed out. I understand that most anti-socialists would interpret "socialism" as meaning that the individual should be subordinated to society, with government as the voice of society; but should the opponents of a movement be allowed to define it? (If so, I will define conservatism as infinite evil and leave it at that. You see where this gets us?) Socialists themselves have been far less unified on the relation of socialism to government control. Some socialists are anarchists. Many are liberal, in the sense of advocating that government be limited in certain ways. Some, who seem to me to have been fatally confused, have been totalitarians. What they do agree on is the objective of the classless society. It makes more sense, I suggest, to define a political movement by what its followers agree on rather than what they disagree on.

The term "democratic socialism" and the phrase "democratic classless society" do seem to me to be redundant. A classless society would have to be democratic. Give some group or party a monopoly of power, and it will make itself into a ruling class -- which seems to me to have been just what happened in the Soviet Union. Thus the idea behind the Soviet Union, the so-called Dictatorship of the Proletariat, was fatally confused and destined to fail as socialism from the start. And there were socialists who understood that all along, although we didn't have the power.

The idea that government control of the economy could be a means to create socialism -- to create a classless society -- had a deceptive simplicity. If all enterprises were to be nationalized, then, on the one hand, the property of the capitalist class would be abolished, so the capitalist class would cease to exist. The former capitalists would have to get jobs; they would then be members of the working class. On the other side, all employees would be employees of the state, that is, civil servants, so all would be of the same class. This, roughly, was the plan of the Fabian socialists under the leadership of Sidney Webb. Webb anticipated that the government that would employ everybody would be a parliamentary democracy. Stalin adopted it for the Soviet Union, in the context instead of a one-party totalitarian state. We will probably never know whether this approach to socialism might have succeeded in a parliamentary democracy, but much of the experience of the twentieth century suggests that it was an oversimplified vision.

But what is the alternative? At least Webb had a recipe for socialism -- a vision and a way forward. I have said that government control was the means and not the objective, but the point of that distinction is that there might be other means put forward, and if one means fails, another means may yet succeed. How else might we conceive of organizing a classless society? Before Webb and Lenin and Stalin, the Cooperative Movement was already established, and Christian Socialists and their allies proposed a different means. They envisioned a society in which production would be organized, not by government owned nor by capitalist firms, but by worker cooperatives.

A worker cooperative is an association of labor suppliers that operates according to the cooperative principles as set out by the International Cooperative Alliance, (1995) a democratic enterprise in which "control rights follow from membership in the firm's workforce and ownership by itself confers no decision-making rights." (Bonin, Jones, and Putterman 1993, p. 1307) The cooperative principles are

1st Principle: Voluntary and Open Membership

2nd Principle: Democratic Member Control

3rd Principle: Member Economic Participation

4th Principle: Autonomy and Independence

5th Principle: Education, Training and Information.

6th Principle: Co-operation among Co-operatives

7th Principle: Concern for Community

The first four and the sixth are the most important for our purposes because they are principles of economic organization. We can conceive of a society in which everyone either is a member of a worker cooperative, from which she or he derives earned income, or a family dependent of such a person. We suppose further that the cooperatives have about equal access to the means of production. There is just one class, the working class, and all enterprises are autonomous, coordinating their production and their members' consumption through mutually voluntary arrangements: "Cooperation among cooperatives," or, failing that, markets. The government, if there is one, does not control economic activity. This is what we mean by cooperative socialism.

Indeed, the existence of a government in this ideal society would present something of a problem, since (in modern conditions) it seems to imply the existence of a separate group, civil servants, who could define a separate class, either subordinate and exploited by the rest (that seems to have been Sidney Webb's worry) or superior and exploitative. But perhaps if government is kept very modest, that could be handled by such things as giving coop members time off to serve temporarily in government. A professional military establishment would be a still bigger problem, though.

Writing at midcentury, under the influence of the fatal misconception called the Dictatorship of the Proletariat, Sweezy observed that the capitalist and Soviet systems were both property systems -- in the case of capitalism, individual property; in the case of Soviet "socialism," state property. The ideal we have just described is one in which property is subordinated to membership, and membership in turn determined by work. Perhaps we can conceive of many property systems, including a large subset that could be consistent with a classless democratic (socialist) society. Any of this subset could be alternative means to the end of a classless society, though not all need be equally promising ends.

In any case, the political position advocated by this website is cooperative socialism. We recognize, of course, that the real world is more complex than any ideal, and that is especially true for cooperation, since cooperation by its nature can only be voluntary. The twentieth century gave us plenty of evidence that "mandatory cooperation" is a short road to disaster. On the other hand, the last two centuries have also left us plenty of evidence that, when people get together and build cooperative organizations for themselves, they can be successful in the most basic economic senses. Some studies that document that success empirically will be cited at the end of this page. We can put some hope in the advance of human knowledge, slow and indirect as that may be!


Here are links to two papers that have been available on this site for some years and have been relatively frequently downloaded:

A paper of mine following up on a 1970's paper that tried to solve some very real problems of finance and incentives for worker cooperatives.

An essay on a group of British socialists of the early twentieth century who thought very carefully about these matters.


Bartlett, Will and John Cable, Saul Estrin, Derek Jones, and Stephen Smith (1992), “Labor-managed cooperatives and private firms in North Central Italy: an empirical comparison,” Industrial and Labor Relations Review v. 46, no. 1 (Oct.) pp. 103-118.
Bellas, Carl (1972), Industrial Democracy and the Worker-Owned Firm: A Study of Twenty-One Plywood Companies in the Pacific Northwest (New York: Praeger).
Berman, K. V. (1967), Worker-Owned Plywood Companies (Pullman, Washington: Washington State University).
Bernstein, Paul (1976), Workplace Democratization: Its Internal Dynamics (Kent, Ohio: Kent State University Press).
Blasi, Joseph and Michael Conte, Douglas Kruse (1996), “Employee Ownership and Corporate Performance Among Public Corporations,” Industrial and Labor Relations Review v. 50, no. 1 (October) pp. 60-79.
Bonin, J. P. and D. C. Jones, and L. Putterman (1993), “THEORETICAL AND EMPIRICAL-STUDIES OF PRODUCER COOPERATIVES - WILL EVER THE TWAIN MEET,” JOURNAL OF ECONOMIC LITERATURE v. 31, no. 3 (Sept.) pp. 1290-1320.
Cable, John and and F. Fitzroy (1980), “Productivity, Efficiency, Incentives and Employee Participation,” Kyklos v. 33, pp. 100-121.
Craig, Ben and John Pencavel (1992), “The Behavior of Worker Cooperatives: The Plywood Companies of the Pacific Northwest,” American Economic Review v. 82, no. 5 (Dec) pp. 1083-1105.
Craig, Ben and John Pencavel (1993), “The Objectives of Worker Cooperatives,” Journal of Comparative Economics v. 17, pp. 288-308.
Craig, Ben and John Pencavel (1995), “Participation and productivity: A comparison of worker cooperatives and conventional firms in the plywood industry,” Brookings Papers on Economic Activity, p. 121.
Craig, Ben and John Pencavel (1994), “The Empricial Perfomance of Orthodox Models of the Firm: conventional firms and worker cooperatives,” Journal of Political Economy v. 104, no. 4 (Auf) pp. 718-744.
Defourney, J. S. and Saul Estrin and Derek Jones (1985), “The Effects of Workers' Participation on Enterprise Performance: Empirical Evidence from French Cooperatives,” International Journal of Industrial Organization v. 3, pp. 197-217.
Defourny, J. S. (1992), “Comparative Measures of Technical Efficiency for Five Hundred French Workers' Cooperatives,” Advances in the Economic Analysis of Participatory and Labor Managed Firms edited by Derek Jones and Jan Svejnar (Greenwich, Conn: JAI press) pp. 27-62.
Doucouliagos, Chris (1995), “Worker Participation and Productivity in Labor-Managed and Participatory Capitalist Firms: A Meta-analysis,” Industrial and Labor Relations Review v. 49, no. 1 (Oct) pp. 58-77.
Estrin, Saul and Derek Jones (1992), “The Viability of Employee-Owned Firms: Evidence from France,” Industrial & Labor Relations Review v. 45, no. 2 (January) pp. 323-338.
Jones, Derek and D. Backus (1977), “British Producer Cooperatives in the Footwear Industry: An Empirical Evaluation of the Theory of Financing,” Economic Journal v. 87, pp. 488-510.
Jones, Derek (1985), “The Cooperative Sector and Dualism in Command Economies: Theory and Evidence for the Case of Poland ,” Advances in the Economics of Participatory and Labor-Managed Firms v. 1, pp. 195-218.
Mygind, Niels (1987), “Are Self-Managed Firms Efficient? The Experience of Danish Fully and Partly Self-Managed Firms,” Advances in the Economics of Participatory and Self-Managed Firms edited by D. Jones & J. Svejnar (Greenwich, Conn: JAI Press) pp. 243-323.
Perotin, Virginie (1987), “Conditions of Survival and Closure of French Worker Cooperatives: Some Preliminary Findings,” Advances in the Economic Analysis of Participatory and Labor-Managed Firms edited by D. C. Jones and J. Svejnar (Greenwich, Conn: JAI Press) pp. 201-224.