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Democratic Worker Co-ops and the Struggle for Economic Democracy
by John W. Lawrence

I recently visited a number of co-ops in Europe to gage the strategic potential of democratic worker cooperative (DWC) development in the struggle for economic democracy in the U.S. I describe three of these co-ops herein, with the goal of answering the following questions:

  • How can DWCs not only survive but also thrive and grow in a capitalist context?

  • How does the capitalist context influence the structural organization, work processes and worker roles in these coops? What strategies can DWCs use to uphold democratic values in a capitalist context?

  • Can DWCs make a valuable contribution to the current movement against global capital? What organizational characteristics maximize the value of worker coops to the movement?

A Textile Coop

First, I visited a textile co-op in the lush province of Galicia, Spain. Galicia is noted for the success of its textile cooperatives. Maria del Mar Peruai, the director of the regional cooperative development association arranged the visit to one cooperative, Val de Barcalla.

Eight women own and operate Val de Barcalla. In addition, three women are wage- workers who have not yet decided to join the coop. The co-op’s president, Teresa Quintana Rial, stated that the enterprise is organized democratically and the women have regular meetings to discuss all aspects of business. There is a manager, not present the day of my visit, who handles the day-to-day business operations. Production is organized in an assembly line. The customer provides precut fabric and each person in the line sews a specific stitch or facet such as a button or zipper to create the garment. The coop is paid piecework for each completed garment. Teresa stated that there is wage solidarity, earnings are split equally among the workers, and the manager makes "a little more money."

The women expressed pride in their coop. Although it takes more effort than working for someone else, they enjoy the control they have over their work. In contrast to a privately owned textile manufacturer I visited in the same region, Val de Barcalla appeared to have a more amiable work environment despite the fact that both organized production in similar assembly lines.

One great limitation of Val de Barcalla is that it has only one customer, Zara, a women's apparel retail chain that can be found throughout Western Europe. In fact, Zara is the sole contractor for most of the textile coops and private firms in Galicia. Thus, the coop's opportunity to participate in the creative aspects of making clothes, such as design, is nonexistent. Also, since the corporate buyer controls the most lucrative aspect of the clothing business, retail sales, the coop's potential income is limited. Thus, the women earn about the equivalent to minimum wage in the United States. In addition, the piece rate pay forces the coop to put great emphasis on time efficiency, which hinders the workers' ability to experiment with production organization.

Machinist Coop

In Oviedo, Spain, in the province of Astoria, I visited the machinist coop, Sociedad Cooperativa Ovetense de Mecanization y Maquinaria (COVEMYM) Started 20 years ago when members bought the firm from their former employer, the business consists of making custom-designed machine parts for large corporate manufacturers. COVEMYM relies on the expertise and artistry of its coop members to out-compete high tech corporations (which make fabricated machine parts) in the customized parts market. Currently, there are a dozen worker-owners and four younger non-owner workers.

Historically, COVEMYM's struggle to survive shaped its internal organization. Agustin E. Gonzalez Prado and Luis F. Alonso Ibanez, the current and former managers, stated that originally they had difficulties generating business because the corporations they tried to solicit were suspicious of COVEMYM. They assumed coops were unreliable and could not make a quality product. Also, COVEMYM's non-hierarchical structure made it difficult for the coop to interact with hierarchical corporations. Business transactions are often based on personal relationships between people at the top of the hierarchies who speak for the entire organization. Due to this external demand, a management structure that specialized in the business of the coop gradually evolved. Luis stated that this painful process met great internal resistance but was necessary for survival.

COVEMYM is now financially successful and is currently focusing on how it will survive the retirement of the original members. It is bringing on younger men as wageworkers, and there is an internal debate about the matriculation of these younger people into the coop as members. The older members are trying to develop a plan to integrate the younger people into COVEMYM and permit access to some of the equity in the business for their retirement pensions.


Last, I visited a co-op within the Mondragon Corporacion Cooperativa (MCC) in the Basque region of Spain. The MCC is an organization of more than 170 cooperatives, which employs over 40,000 people. (See Detlev Holm-Kohler’s article in GEO # 50—eds. )The MCC started quietly as a manufacturer of small appliances in the wake of the devastating Spanish Civil War. The original co-op of the MCC was quite successful and used its capital to finance other cooperative ventures. A critical step in the development of the MCC was the creation of a cooperative bank, the Caja Laboral Popular. The bank made funds and expertise available for new cooperative development and sparked the creation of the cooperative network.

While retaining cooperative rhetoric, the MCC has made many changes in the last 20 years making it an odd hybrid corporate conglomerate/cooperative network. Proponents claim that the MCC had to make these changes to survive greater competition in the European Union and the global market. Baleren Bakaikoa, director of the cooperative research institution Gezki, stated that although the MCC maintains a representative democratic process, de facto power has become centralized and the MCC relies on technocratic business managers to manage its money and make major decisions. Many of the changes instituted by the MCC leadership violate coop principles. For example, 75% of capital of the Caja Laboral bank is now invested in noncooperative ventures. MCC cooperatives are entering into partnerships with transnational corporations and have opened non-cooperative factories in Third World nations. Also, the pay differential between managers and workers has steadily increased over the years.

I was unable to arrange an interview with the leadership of the MCC but I did shop at an Eroski hypermercado. Eroski is a retail grocery store, and it embodies many of the contradictions between MCC's corporate and coop values. Retail sales is the fastest growing sector of the MCC. There are now approximately 300 Eroski stores in Spain. They sell groceries and other consumer goods. Internally, Eroski stores looked like any other retail chain with no indication that they were organized as cooperatives. For example, there was no information distinguishing products made by cooperatives from others. There was no evidence of solidarity with other liberation movements. In fact, when I discussed the MCC with union and peace activists in Spain, not one person knew that Eroski or MCC were cooperatives. Eroski employees number almost 20,000 people but more than half are wageworkers. It is difficult to imagine that the high number of non-coop members and the top-down organization inherent in chain stores would not limit democratic governance.

As pointed out by Dr. Bakaikoa, the accomplishments of the MCC are great. They are now the largest private employer in a region plagued by unemployment for 50 years. There are still differences between the MCC and typical corporations. The MCC maintains a democratic process, and the discrepancy between the wages of management and workers is much less in comparison to a typical U.S. corporation. In addition, there is evidence that management takes social goals into consideration. Unlike capitalist corporations in the region, for instance, the MCC did not lay off workers during the recession of the 1980s. However, in regard to social priorities, the MCC appeared to give higher priority to regional Basque capital development than to modeling and propagating worker control.


Lessons for Democratic Coop Activists

Worker co-ops are realizing some of the norms of democratic work. In particular, all the coops I visited had a democratic decision making body, varying degrees of wage solidarity, an emphasis on job security, and higher morale than typical corporate firms do. On the other hand, to optimize the political and economic value of work coops to an anti-capitalist movement, there are five important issues coop activist must address.

1. Creating a Niche Market for DWC Goods

Both the textile and mechanic coops described above are parts of production chains ultimately controlled by much larger corporations. The structure and working norms of the coops were shaped by their relationship with the corporations. Though both coops created "democratic islands" in the production chain, their ability to experiment with alternative working norms, control surplus value (profits), and spawn other coops is limited by their ultimate dependence on corporate customers.

To achieve independence from capitalists, DWCs must emphasize direct sales to individuals sympathetic to the cause. Humane democratic production is the distinguishing feature of the product. Thus, "marketing" can be a way to educate people about democratic work and challenge current marketing norms that divorce consumer goods from the workers who create them. The goal is to create a moral market following the example of the "fair trade" movement. A niche democratic market would encourage the spontaneous development of democratic coops and create "productive space" in which to start to build a democratic economy. The Internet can be used to help facilitate the democratic market.

The realistic possibility for creating a niche market for democratically produced goods makes DWC development a more viable and potent organizing strategy than in previous eras… There is already a multibillion-dollar conscientious consumer market for environmentally safe goods, fair trade products, and organic food. These consumers have decided that how a product is made is an important consideration when buying goods. Second, in the last five years an extensive activist network opposing corporate globalization and sweatshop manufacturing has burgeoned. These activists are not only potential consumers but also promoters of DWC goods. DWCs can be a powerful rebuttal to "there is no alternative to capitalist production."

2. Manager Control vs. Worker Control

Although the coops I visited had democratic voting processes, they were manager-controlled, not worker-controlled … Managers did most of the conceptual and organizational work and made most decisions. In addition, managers earned more money, and in the Mondragon's case the wage differentials have grown over time. The capitalist context puts pressure on co-ops to adopt a managerial structure. In addition, de facto power in each co-op was centered in management. Democratic oversight of management appeared particularly weak in the very large MCC.

The cooperative development literature often emphasizes that strong management with entrepreneurial skills is an essential survival tactic for coops. One co-op I visited was on the brink of bankruptcy before hiring a new manager who instituted drastic changes including temporary layoffs. These changes saved the co-op.

Co-ops are thus faced with the paradox of the necessity of accepting class-based divisions of labor in order to realize equitable democratic work. Resolution of this paradox is essential if cooperative development is to be an effective strategy for challenging the corporate work organization.

The class structure embodied in the hierarchical division of work evolves out of a long process of class socialization. Products of radically different educational systems, white and blue-collar workers are prepared for radically different types of work. By design, white-collar managers are given the knowledge and connections to ensure them a monopoly on the process of organizing work.

Auto-socialization inside co-ops to counter class-based division of work cuts to the heart of developing a new society…To create coops that are really going to challenge the organizational norms of capitalist corporations, coop activists will have to make detailed plans on how to resist class roles. Strategies for countering hierarchy include pay solidarity based on effort (equal pay for number of hours worked), participatory decision-making, continual education on all aspects of the business, and the equitable distribution of intellectually stimulating tasks and drudge work.

Developing strategies for auto-socializing for non-hierarchical working norms is a very important goal, which warrants extensive experimentation. According to Robin Hahnel, there are now several worker coops self-consciously experimenting with "participatory working norms" including South End Press, a progressive publisher in the Boston area, and a network of collectives in Winnipeg, Canada. This network includes the Mondragon Bookstore & Coffee House, a bookstore and vegetarian restaurant, Arbeiter Ring Publishing, publisher of more than 10 titles, The G-7 Welcoming Committee, a recording collective that has released more than a dozen CDs/Tapes/Vinyl recordings, and Natural Cycle, a bicycle repair and courier company. A vital step in making experiments generalizable will be providing forums for DWCs to communicate with each other.

Tacit acceptance of a hierarchical class structure with the assumption that the managerial class can be held accountable by representative democratic procedures could be the Achilles' heel of a cooperative movement. If a cooperative network were to get off the ground in the U.S., the organizational structure and process would become more complex over time. Knowledge of the structure and process would accrue disproportionately to the managerial class. The centralization of knowledge would lead to the centralization of decision-making. The decisions of this cooperative network would likely reflect the interests of the managerial class.

3. Maintaining Democratic Norms in a Capitalist Society

In the capitalist economy, a co-op is forced to allocate its products via the market, which creates numerous challenges that threaten the cooperative ethos. A recurrent criticism of DWCs as a progressive organizing strategy is that the struggle to survive by making a profit will undermine the coop's value consciousness and solidarity with other workers. In the end, cooperative activists will develop a petit-bourgeois consciousness.

However, the problem of capitalism stratifying workers and undermining solidarity and egalitarianism is not unique to cooperatives. Relatively highly paid suburban transnational corporate workers in First World countries have little in common with service workers making minimum wage, no less 15-year-old girls working in a maquiladora. Until recently, traditional industrial unions in the United States have showed little interest in organizing low-paid service workers. Like unions, to be a value to a progressive movement DWCs will have to self-consciously refuse to compromise on core values and make strategic choices to limit the influence of the capitalist economy. For example, the distribution of cooperative goods through capitalist companies exposes the coop to a high level influence by capitalist norms. A DWC and the movement would be better off if the coop marketed and distributed goods through joint ventures with other progressive organizations. In the end, DWCs will have to develop within a larger movement with a participatory democratic ethos.

4. A Synergistic Relationship with Other Groups in the Anti-Capitalist Movement

Of the coops I visited, there were few coop members involved in other types of activism… In the past, many coops have chosen to be "neutral" on political and social issues… This policy has been a survival tactic. However, if the DWCs market their products as a moral alternative to capitalist production it will be impossible to be neutral. Moreover, cooperatives will need political support to thrive. For example, the extensive cooperative development in the Emilia-Romagna region of Italy developed while the Democratic Party of Left (formerly the Communist Party) dominated local politics.

The choice between being a co-op activist and grassroots or union activist is a false dichotomy. Co-op activism can complement other types of activism …

5. Access to Capital and DWC formation

The greatest barrier to cooperative development and experimentation is lack of capital. The MCC overcame this problem through the pooling of "profits" from various cooperatives into a bank, which in turn capitalized new coop ventures. A limitation to this strategy is that conventional capitalist financial practices encourage centralization of decision-making regarding investments into the hands of lawyers and bank managers. We need participatory norms for managing capital to develop truly democratic cooperative networks. Suggestions on how to do so from readers are welcomed.

In the meantime, cooperative activists need to focus on developing DWCs in industries with low entry costs and products that can be sold directly to conscientious consumers. For example, currently there is an undeveloped niche market for democratically produced clothing on an international scale. Given the fair trade, sweatshop, and anti-globalization movements, millions of people are aware of the horrendous working conditions in the apparel industry. People want a moral alternative to sweatshop clothes. A number of structural characteristics of the apparel industry optimize the possibility of success of an apparel cooperative. These include relatively low entry costs, the possibility of selling directly to conscientious consumers, and a competitive rather than an oligopolistic market. Furthermore, a new labor organizing strategy is desperately needed in the apparel industry. Transnational corporate retailers' ability to move manufacturing contracts from one country to another, almost on a whim, has undermined the traditional labor-organizing strategy of creating union shops in the United States. The Apparel Strategist, an industry newsletter, stated that employment in the apparel and textile industries in the United States has "plunged" more than 50% in the last 25 years.


The challenge for co-op activists is to create cooperatives that not only provide a decent living standard for their members and survive in a capitalist economy but also realize egalitarian and participatory values, serve as a catalyst for the development of cooperative networks, and link with and galvanize a broader progressive movement. The question whether DWC development can achieve these goals is as yet unresolved. In the context of the currently developing global anti-capitalist movement, experimentation is warranted. The pedagogic value of real-life examples of participatory workplaces could be enormous especially if they create a niche market for democratically produced goods. Only real life experiments will make the future realization of nonhierarchical democratic values a possibility.

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