In and against the market

By Liam Payne

Introduction

The latest edition of New Left Review (NLR 130) contains a book review of the recent publication How China Escaped Shock Therapy. As part of this, the author charts a broad course through relevant areas of Chinese economic thinking down the ages. One such area, hailing from the era of the Han dynasty, is the concept of light and heavy in political economy. This concept continues to play an informative role in Chinese economic thinking, and aims to distinguish between “economic processes and commodities that were ‘heavy’, in the sense of central or important, over which the state should exercise control, and those that were ‘light’: marginal or inconsequential goods and practices, which could be left to the market.” (Andreas, p.103).

In 1979, as the result of a gathering of the Labour left in Britain, a theoretical pamphlet was published titled In and Against the State. Recently republished, this gathering and subsequent publication sought to reconcile the possible relationships between existing state structures and the aims and practices of radical socialist politics. The overview on the Pluto Press website describes it as follows: “Informed by autonomist political ideas and practices that were central to the protests of 1968, the books authors spoke to a generation of activists wrestling with the question of where to place their energies.”

As the title suggests, the path proposed was for socialists to work through the existing state apparatus – the public sector, Labour Party, trade unions – to in turn radically alter its structures and purpose in a socialist direction.

A possible fusion of these two concepts can be discerned from a section of the John McDonnell-sponsored Labour Party report Alternative Models of Ownership. In section three of the report, the cooperative model of collective ownership is investigated. Using our two foundational concepts, the radical efficacy of this proposal can begin to be understood.

The report clearly delineates between the areas of ‘light’ and ‘heavy’ in terms of future proposals for state intervention in the UK economy. In later sections, it posits the need for central state ownership of key utilities, such as rail and energy; although with an inclusion of more localised control contained within this overarching structure. In dealing with economic areas that would be designated ‘light’, the report proposes advancing the scale and influence of the cooperative model and movement across the UK economy.

Similar to the ideas of In and Against the State, this idea of proposing a form of socialised and democratic ownership of areas of the economy that have traditionally fallen outside the scope of Western state ownership, could be termed as the concept of socialism advancing ‘In and Against the Market’.

Cooperative Model of Ownership

The report encapsulates the ethos of this model of ownership by beginning: “A cooperative is essentially an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity.” (p.11).

The idea of cooperatives germinated in 19th century Britain, and has since spread across the world. Currently, the report acknowledges the existence of five distinct types of cooperatives:

  1. Worker cooperatives
  2. Consumer cooperatives
  3. Purchasing cooperatives
  4. Producer cooperatives
  5. Multi-stakeholder cooperatives

The large and still vibrant Co-op organisation in Britain is generally classed as the second of these.

Advancing Workers Control

While each of these types of cooperative ownership could be considered a welcome alternative to private ownership, the report centres its attention on advancing the prospects of one in particular.

The idea of worker cooperatives replacing capitalist ownership and management of commercial interests has long been a totem of the democratic socialist left in the UK. In the Labour government of the mid-1970s, Tony Benn briefly held the post of Secretary of State for Industry. Through this role, he sought to enable the establishment of worker cooperatives in struggling private sector firms. This commitment was borne from serious debates on the UK left, through such organisations as the Institute for Workers Control, around this concept. 

Perhaps due to this historic interest and commitment, the model of workers cooperatives is the one concentrated on by McDonnell’s report. These types of cooperatives are: “where the members and beneficiaries work for the cooperative and have direct ownership and control.” (p.11).

Advantages of such a model of ownership are defined as a “stability of employment rates among cooperative members during recessions”, and comparative “productivity and efficiency gains”. One informed estimate states that worker cooperatives can enjoy a 6-14% productivity advantage over similar private enterprises.

International Indicators

Probably the most famous example of the possible success of the worker cooperative model is the Mondragon cooperative group, located in the Basque country. Formed by a priest and recent graduates of a local technical school in 1954, by 2008 the Mondragon group had grown to employ around 100,000 workers in 250 cooperatives and affiliates. It controls 73 manufacturing facilities outside of Spain, and its retail arm has similar sales figures to the John Lewis Partnership in the UK. The report notes that the group maintains a higher investment rate per-employee and is “less sensitive to business cycles”.

A crucial component for the success of a reinvigorated cooperative ownership model is the establishment of what the report describes as a central “shelter” institution. This would provide funding, planning and advice to the nascent cooperatives. An example of this type of shelter institution, which the report identifies as being the main vehicle behind the continued success of Mondragon, is the credit union that the founders set up around the time of the group’s creation – the Caja Laboral Popular (CLP).

The CLP is responsible for fiscal oversight of the group, and is party to the overall planning decisions taken by the elected Mondragon councils. Perhaps most crucially, the CLP is responsible for the pooling of the mandated surplus reserves which each cooperative in the group is required to put aside, which the CLP then directs to investment and social causes which are “ideologically supportive of the cooperative form of organisation”.

A further continental example of the success of workers cooperatives highlighted by the report is the Legacoop group in Italy. There are an estimated 800,000 worker-members of cooperatives in Italy, with Legacoop being one of the oldest and largest of the “umbrella organisations” – or federations – that cooperatives affiliate to. Closely linked to the former Italian Communist Party, by the late 1980s Legacoop had 3.4 million worker-members and was the fourth biggest exporter in all of Italy.

The report identifies three of the key factors behind the success of Legacoop, and the cooperative sector in Italy in general: “First, the federations lobby on behalf of their constituent cooperatives, work closely with trade unions and political parties (at least historically), and own financial institutions dedicated to credit and advice to cooperatives. Second, they are actively engaged in converting failing private enterprises into cooperatives. And finally, they are aided immensely by a sympathetic legal system and sympathetic tax system.” (p.16).

What is to be done?

Alternative Models of Ownership closes it section on cooperatives with an outline of what a radical Labour government could do to support the spread of this type of ownership in ‘light’ sectors of the UK economy.

A primary first objective would be to improve cooperatives’ access to finance, through the creation of a UK-wide shelter institution – similar to the CLP in the independent Mondragon group. The creation of a new state-owned and operated banking sector – inclusive of a Cooperative and Community Ownership Finance (CCOF) arm – could provide this:

“CCOF encourages local economic regeneration by enabling people to create, own and democratically control the businesses in which they work, or which operate in their local community. Its funds are available to enterprises which practice or support principles of co-operation, common ownership, employee, community or social ownership, equal opportunity and workplace democracy, and sustainable development. It prioritises organisations where the management is representative and relevant to the community, with directors elected on a rotational basis. CCOF actively supports businesses which benefit employees, communities and environment.” (p.17).

To aid in the creation of new workers cooperatives, a UK version of the Italian Marcora Law could be enacted. This law mandates the Italian state to provide funds for worker buyouts of failing or contracting private enterprises. This legislation also provides for on-going technical and financial assistance to the new cooperative. All of the above could fall under the aegis of the old Cooperative Development Agency in the UK.

Finally, a scaled up version of the fashionable concept of community wealth building could be utilised to foster the success of a newly expanding cooperative movement in the UK. Combining local and national government procurement practices with a preference for cooperative options can provide a growing demand for cooperative services, and utilise the large state budgets in an ethical manner – favouring democratically owned providers over the rapacious private sector. ‘In and against the state’ fusing with ‘in and against the market’, you could say.

In and Against the Market

A radical socialist movement promoting the expansion and abilities of the cooperative sector could be a useful means of beginning to create a socialist economic settlement in sectors of the economy that are considered ‘light’. Traditional 20th century left-wing economic priorities like state ownership and central economic planning have seemingly proved incapable of adequately adapting production, goods and services in these areas.

Workers cooperatives could prospectively deal with this issue through a form of common ownership, which also advances the cause of workers emancipation and democracy. Combining this with municipal and state ownership gives the left a holistic view of the economic sphere, and possible socialist changes to the current settlement.

Taking the concept of ‘in and against the state’, and subverting it to the workings of the market can also give the left a useful and purposeful path to apply our ideas and energies towards. There remain vibrant independent cooperative, mutual and credit union structures in the UK which the left could engage with more thoroughly. With the largescale exercise in gerrymandering at this year’s Labour Party conference foreclosing the possible return of outright left control of the party (for now), such alternative paths of opportunity could well prove the most effective. 

Liam Payne is a Labour Party member based in Edinburgh.

Image: Source: Viaje a la Corporación Mondragón en el País Vasco.Author: Colaborativa dot eu from Córdoba, Spain, licensed under the Creative Commons Attribution 2.0 Generic license.

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