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Cooperatives and Workers’ Self-Directed Enterprises

An Interview with Richard Wolff

by ED RAMPELL

Richard Wolff got his B.A. from Harvard, a Master’s in economics from Stanford University in Palo Alto, California and a Ph.D. in economics from Yale. Wolff is a Professor Emeritus at the University of Massachusetts in Amherst and a Visiting Professor in the graduate program for international affairs at the New School University in Manhattan, where Wolff lives. However, Wolff — who describes himself as “a critic of capitalism” — is not one of those apologist economists for the elite. Born in 1942 at Youngstown, Ohio, he’s the son of working class parents who were refugees from the Nazis. After his family moved around the Midwest they relocated to New York.

Today, Wolff has emerged as one of — if not the number one — most prominent leftist economist in America. In addition to teaching the Big Bad Wolff appears on Free Speech TV, Link TV, Pacifica Radio, does public speaking at the Brecht Forum and other venues, writes books such as Capitalism Hits the Fan, Occupy the Economy and Democracy at Work and has a substantial online presence, arguing there’s a better way to run the economy that’s in the interests of the 99%, instead of the 1%. In this interview, Wolff discusses his vision for changing the capitalist system. Fundamentally, he poses the question that if America has repeatedly gone to war abroad “to make the world safe for democracy,” isn’t it time that we brought the war home to make the American workplace safe for democracy, too? 

Ed Rampell: What is the definition of a cooperative and of a collective?product-page-image-democracy-at-work

Richard Wolff: The word “cooperative,” to define a business, is very old. Cooperatives have existed for many centuries, all around the world, as well as throughout the history of the U.S. It means a variety of things. Sometimes cooperative means a group of producers who make something will get together and share, cooperatively own one of their inputs. For example: A group of farmers, none of whom individually has enough money to buy the land they need to work, can sometimes form a cooperative so that they pool their money and then they can collectively afford to buy land… Then they agree to farm different portions of the land but to own the land cooperatively.

Another example is in winemaking. Around the world, particularly in Europe, it’s very common for wines to be produced and sold by a cooperative. The actual growing of the grapes and making of the wine is done by individual farmers, with or without employees. The word “co-op” doesn’t apply here to the actual work being done [but] the farmers get together and literally pool their wine. They pour the wine each of them has produced in their vats into one central vat and then cooperate to sell it. They can do better selling wine in larger quantities to larger buyers then they could doing it by themselves. This is sometimes called a marketing or sales co-op.

The word “collective” is not so often used because it has been basically used by socialists and communists and has a different history. The word cooperative, as I’m interested in it, and as people now in the U.S. and other parts of the world are becoming literally more interested by the day — the U.N. declared 2012 “the Year of the Cooperative” — what co-op means in this sense is when work is done cooperatively, the actual labor. The workplace itself is organized cooperatively, rather than in the conventional capitalistic, hierarchical form.

In most capitalist enterprises, and certainly most major corporations that dominate capitalist economies, the organization of work is highly stratified. At the top are the major shareholders, typically 10 to 20 people who own major blocks of shares in the company. Because of that they have the voting power of all those shares and that gives them the authority under the law to select the board of directors… between 15 and 20 people. Together, the major shareholders and the board, 30 to 40 people, make all of the decisive decisions in a corporation: What the company will produce; how; where; and finally what to do with the profit the enterprise generates. The vast majority of workers in a capitalist enterprise are required to live with the results of all of the decisions from which they are excluded… The vast mass of workers must accept, have no legal recourse to reject, most of the decisions made by a tiny minority.

A cooperative enterprise is the key, decisive alternative to a traditional capitalist enterprise… All the workers, whatever they do inside an enterprise, have to be able to participate in collectively arriving at the decisions what, how, where to produce, and what to do with the profits in a democratic way… One person, one vote in deciding how these things are done…

The reason why we’re interested in making a transition from the top down capitalist organization of enterprises to a radically different cooperative or democratic organization is simple: We believe the capitalist organization of production has now finished its period of usefulness in human history. It is now no longer able to deliver the goods. It’s bringing profits and prosperity to a tiny portion of the population, and delivering not the goods but the” bads” to most people. Jobs are steadily more insecure, unemployment is high and lastingly high, benefits are increasingly being reduced, the prospects for our children is even worse, as more of them go deeper and deeper in debt to get the degrees that do not provide them with the jobs and incomes to get out of that debt… as the world enters the sixth year of a severe crisis. It’s longer overdue that we face honestly that the crisis we endure is the product of an economic system whose organization is something we should question, debate and change.

ER: The hierarchical model may be true for privately held businesses but can’t employees and the public at large buy shares in publicly listed companies on the stock exchange and corporations and as shareholders vote for the board of directors and so on?

RW: You’re correct, but what you’re referring to is a “formal right,” but not a “substantive right.” Yes, you can buy a share of stock but that doesn’t have any real meaning for a corporation because: 1% of U.S. shareholders own 75% of all the shares… Participating in shareholding in any significant way is not something the mass of people in capitalist societies have ever, in fact, been able to do.

ER: What are examples of U.S. cooperatives?

RW: We’ve produced a website where a whole host of examples are given at: www.democracyatwork.info/ . The Arizmendi Bakeries — there are five of them all linked together in one parent corporation, located in the Bay Area… They’re completely run by the workers — those who bake the bread and pastries, make the coffee, do the buying, maintain the premises, etc… On many days they do the specific tasks in the division of labor they’ve created for themselves. But then periodically all of the workers get together and they don’t do their particular task — they collectively discuss and debate what to produce, how to produce, where to produce, whether to expand and so on. Those decisions are decided in a democratic way. They’re very conscious that they are choosing a different way of working and are very proud of it, very positive. If you ever visit you can arrange for them to show you around. They’re very conscious that they’re part of a movement to develop this kind of enterprise.

ER: What’s an overseas example of a cooperative?

RW: Yugoslavia is a very interesting example where cooperative enterprises were tried, experimented with. Other examples were the kibbutzim in Israel in the early years of Israel. Many lived and worked in a kibbutz; many were in effect worker or producer co-operatives.

The most successful example… is Mondragon, located in northern Spain in the Basque region. In the 1950s, because of the Spanish Civil War, this was a rural, backward area with huge unemployment and deep poverty. A local priest, Father José María Arizmendiarrieta, decided not to wait until some employer came in to provide work, but instead gathered six parishioners to form a cooperative enterprise. Basically, the idea was: We don’t need an employer. We can be our own employer, we can set up a collective or cooperative enterprise.

Let’s fast forward to 2013: What was once one co-op has mushroomed. It’s now an association of several hundred co-ops that are all subsidiaries of the Mondragon Cooperative Cor51tllcbzdllporation. In 60 years its total employment is in excess of over 100,000 workers. Mondragon Cooperative Corporation is the largest single corporation in northern Spain and the tenth largest corporation in all of Spain.

…In Mondragon, it’s the workers who hire the managers, the exact opposite of a capitalist corporation… The rule the workers adopted is the gap between the highest and lowest paid worker is not allowed not to be more than six and a half times. Compare that to the CEO of a major corporation who makes 340 times more than the average — not even the lowest paid — worker in America. What a radical difference you have with a place like Mondragon. And that shouldn’t surprise anyone. If all the workers in any office, store or factory, got together and had the power — which in a co-op they would — to decide what the wages and salaries of everybody are, do you think they’d give a handful of people at the top tens of millions of dollars, while everybody else is scrambling and unable to pay for their kids’ college education, etc.? That’s not going to happen. Even if you decide to pay some people more you’re not going to live in the world of extreme inequality the way that’s normal and typical for capitalism…

ER: Are you actually saying that under Generalissimo Franco workers were allowed to own their own enterprise, under fascism?

RW: Yup. The Basque region is very mountainous. The Basque people have a long history of independence, their own culture and language. I visited last May to see it myself… Basically, the Basques have fought, often militarily, for their independence and preservation of their culture, and because it was established by a Catholic priest and they would have encountered armed resistance by the Basques, the regime decided that it wasn’t a serious enough threat and the cost of repressing it was too high, so they let it be.

ER: So if workers could establish cooperatives under fascism, could they do so under a so-called representative form of government, like in the U.S.?

RW: Absolutely. It should be much easier. In fact, it is much easier. There are hundreds, perhaps thousands of these worker co-ops or producer co-ops… Many companies, including famous names like Apple computers, if you go back and look at the early days you may be surprised to find out that they were co-ops. The original founders were often workers dissatisfied by being mere employees in somebody’s company, so they got together with others, often at young ages, and pooled their enthusiasm and energy and setup a different kind of enterprise. Very common in Silicon Valley. Every year, hundreds, in some years thousands, of engineers quit their jobs in big companies like IBM, Oracle or Cisco, and get together with friends and say, “okay, we want to start a different kind of business. We’re all going to take our laptops and gather at Harry’s garage, and here’s what we want: We don’t want to come to work every day in a suit and tie or for some executive who doesn’t understand anything about computers telling us what to do. We don’t want any of the rigmarole; it’s stifling, it kills our creativity. We’d like to go to a place where there are no bosses, where we’re all equal. Where we can wear Hawaiian shirts and Bermuda shorts and bring our toddlers.”

And that’s what they’ve done. And in many cases they’ve been very strict: All decisions have to be made by consensus. Everybody is equal. No chiefs, no Indians, we’re all equal here… Nothing would more quickly and definitively reduce U.S. income inequality than allowing every worker in all businesses to participate in deciding the range of incomes from one worker to another. They would never — except in the most bizarre circumstances I can’t even imagine — do what is now a matter of normality, give one person millions, in some cases billions, while others have barely enough to make a living. Moving to a cooperatively organized enterprise is one of the best ways to really do something about unequal distribution of wealth.

In America we debate everything: Education, sexuality, etc. — except for asking critical questions about capitalism… If there’s an institution in your society that’s above criticism you’re giving it a free pass to indulge all of its weaknesses and darker tendencies. In part the crisis we’re in now has to do with the inability of our society to face up to the fact that capitalism has its strength, but it also has its weaknesses. It has its time of growth and its time of shriveling and dying. And an honest, healthy society would never shrink away from debating where we’re at with capitalism — can we do better? How might that work?

For more info:

http://rdwolff.com/

http://brechtforum.org/

www.mondragon-corporation.com/ENG.aspx

http://social.un.org/coopsyear/

www.arizmendibakery.org/

Ed Rampell is an L.A.-based film historian, critic and author who wrote Progressive Hollywood, A People’s Film History of the United States. Rampell’s new book, about Hawaii’s movies and TV shows since 1995, will be published in September 2013 by Honolulu’s Mutual Publishing.