Some judgments of fact

Value judgments do not settle anything without some judgments of fact. Here, then is a first judgment of fact.

The value of reciprocity is multiplied by its effectiveness in bringing us material well-being. Adam Smith taught us that division of labor increases the productivity of labor, leading to higher standards of living. Division of labor means that different people do different jobs, in such a way that their efforts complement and enhance one another, and this is a form of reciprocity. Smith's successors in the nineteenth century put increasing stress on mechanization, understandably, since mechanization was increasingly important at that time. Mechanization, too, can be thought of as a form of division of labor, since some people build machines and others put the machines to work. This "roundabout" production is reciprocity on a very large scale.

Following the ideas of Adam Smith and such other classical economists as John Stuart Mill and Richard Ely, the Cooperative Commonwealth idea includes a judgment that the work of society is more productive to the extent that it is more collaborative. By "collaborative work" I mean that different persons perform different tasks that complement one another and so enhance the productivity of one another. This encompasses Smith's "division of labor," Ricardo's trade according to comparative advantage, and the Austrian economists' "roundabout production." Together these constitute what Mill and Ely called "cooperative production," but I reserve the word "cooperative" for the form of organization. Thus the work process is collaborative, more or less, and the more collaborative, the more productive.

This terminology is used to state a second judgment of fact: cooperative organizations naturally foster collaborative work and thus lead to higher labor productivity than other kinds of economic organizations, other things equal. There is a good deal of empirical evidence to support this claim.

These two judgments of fact interact with the first two value judgments, of course. If one evaluates economic systems on the standards of living they support, and finds that cooperative organizations lead to higher productivity of labor and thus to higher standards of living, one concludes that a system based on cooperative organizations is superior.

A third judgment of fact reinforces this view. The judgment is that human beings have complex motives, and while (as Smith taught) self-interest is prominent among them, self-interest is not the sovereign governor of real human action. Among other important human motives are Smith's "moral sentiments," reciprocity, and parochial loyalty. We have already discussed reciprocity. Parochial loyalty is the loyalty to one's immediate group. The immediate group may be the neighborhood or the village, but in the modern world, the work group is also a focus of loyalty. A person's co-workers are part of her or his parochial group, and so loyalty to the co-workers becomes a key economic motive. In investor-owned or state-organized enterprise, this loyalty is at best neutral, and at worst hostile, to increased labor productivity. In a cooperative, in John Stuart Mill's contrasting words, it is "both the principle and the interest" of the workers to increase productivity. This, too supports the judgment of superiority for cooperative organizations. Reciprocity, too, has direct implications for economic organization, supporting the cooperative form. In the best circumstances, to be employed and to give a good day's work for a good day's pay is yet another instance of reciprocity -- and many paternalistic enterprises have relied on this reciprocity. But employment is inherently an unreciprocal relationship, a power relationship, a system of relationships based on exploitation. So the paternalistic enterprise is the exception, and the average capitalist enterprise gets resistance and shirking as the reciprocal response to exploitation. The cooperative enterprise, however, can rely on reciprocity among a group of democratically organized workers to get a higher productivity -- and that helps to explain the evidence we see that cooperatives do in fact achieve higher productivity.