Transcripts
"Can worker's cooperatives be a component of a better world?"
by Benoit Borrits
After one and a half century of history, the concept of cooperation seems to have a very meagre balance sheet; in Britain, the Co-operative Group (CWS) is declining and in financial trouble. Outside Britain, many successful cooperative companies have become big financial groups, with very little reference to the principle of cooperation. Should we conclude that there is no future for the cooperative movement?
What is a cooperative vs. a traditional company? In a traditional company, owners of the company are suppliers of capital equity; they bring money to the company, in exchange for which, instead of a reimbursement of capital plus interest (as with a loan or a bond), they receive the right to manage the company in their way, in order for them to extract profits and dividends from it. Their right is proportional to the money they invested in the company. At the opposite end of the spectrum, a cooperative is based on democratic principles: in a cooperative company, each member (cooperator) has equal right in managing the company, whatever his or her investment is (one person, one vote).
The second question, then, is this: who are the cooperators? Historically the first trend has been to consider that consumers should be the cooperators. In this context, Robert Owen and the Rochdale pioneers founded the Co-op (which later became the CWS). A few years later, another type of cooperative appears: the worker's cooperative. In this form of cooperative, workers are the owner of the company. The French socialist Jean Jaurès promoted the worker's cooperative at the end of the 19th century (Verrerie Ouvrière d'Albi). Although it is true that a worker is also a consumer, and that from this standpoint it is progressive to set up a user's cooperative for specific needs (credit, housing, services...) instead of a traditional capitalist company, it also appears that as they grow, these companies increasingly tend to act as ordinary companies; users behave like ordinary shareholders, and workers do not have their say. History shows that the biggest success in this type of company (the best example being the French bank Crédit Agricole) are those which are the least compliant with the initial goals of the cooperative movement.
Workers' cooperatives have had a different history. Although this type of company is marginal in Britain, there are famous examples of successes in other countries. For example, in France, the Workers' Cooperative (SCOP, which stands for Société Coopérative Ouvrière de Production) represents 1,500 companies, with 30,000 workers, realising together £1.5 billion of turnover. In Italy, 35,000 workers are members of a workers' cooperative (Cooperative di Produzione e Lavoro). In Spain (Euskadi), in the fifties, a radical priest founded Mondragon, a group of coordinated worker's cooperatives. Results of this group are very impressive: it represents 47,000 workers with £3.9 billion of turnover (1999). More impressive still is their £1.2 billion capital equity, which represents three times the capital equity of all French SCOPs together.
This shows that the balance sheet of workers' cooperative is brighter than the bleak picture that we drew at the beginning of this text. However, the workers' cooperative movement will have to face many challenges and pitfalls.
The first one lies in the under-capitalisation of cooperatives. Because the capital equity is remunerated at a lower interest rate than in capitalist companies, while the risk remains just as high as in private companies, it is hard to capitalise the company properly, and this under-capitalisation makes bankers reluctant to grant significant loans for development. The cooperators must them make up for this under-capitalisation with intense effort, which too often erodes cooperative principles, and leads the cooperative to accept private capital equity. Finally, when the proportion of private capital exceeds 50%, the cooperative becomes an ordinary company. The key to Mondragon's success may well be that instead of having independent companies without capital links (like the French SCOPs), Mondragon has been built as a financial group with shared equity among the different companies. Therefore, Mondragon is now able to compete with significant capitalist companies after just 50 years of existence.
The under-capitalisation of workers' cooperatives means that even though the movement has great successes in various countries, the sector remains marginal. This situation leads to a trap, which is the way workers' cooperatives are positioned by the political establishment: they are there to cope with the social consequences of neoliberalism, to make up for a declining welfare state, and to access "markets" which are not profitable to the private sector. Under these conditions they receive public funds, which too often represent crumbs compared with the tax benefits that some industrial groups receive for investing in certain areas. Positioning workers' cooperatives in this way will therefore lead to a negative answer to our initial question: can workers' cooperatives be a component of a better world? In order to answer this question in the affirmative, we will need to find ways to finance workers' cooperatives independently from the state.
Benoit Borrits.
Related Web sites:
www.radicalroutes.org.uk
www.scop-entreprises.tm.fr
www.mondragon.mcc.es
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