Cooperative Enterprise and Market Economy

Cooperative Enterprise and Market Economy

By Luis Razeto Migliaro

Translated by Matt Noyes

Razeto Migliaro, L. (2017). Empresas Cooperativas Y Economía de Mercado, Tercera Edición, Univérsitas Nueva Civilización.

Introduction & Preface | Chapter 1 | Chapter 2 | Chapter 3 | Chapter 4 | Chapter 5 | Chapter 6

TRANSLATOR’S INTRODUCTION

Audre Lorde famously said, "the master's tools will never dismantle the master's house."

It is often observed that the Greek word oikos, the root of economics, means “house,” the implication being that economics is essentially a simple extension of home economics. The “master of the house” is the leader of the family unit, head of the household. In fact, oikos, as it was used in ancient times, is better understood as hacienda, estate, or plantation, and included not just the immediate family and their dwelling but all the property, including servants and slaves, in their control. The master’s house, indeed.1

At the same time, oikos has been understood more broadly, for example in the christian tradition, as a community of faith and action, or a people, as in “one’s people,” or by extension, all of humanity and even the Earth itself. The oikos of the 19th century “utopian socialists,” religious or secular, was typically a communal settlement, often with a central house, in which property was held in common and labor was cooperatively organized following an economic logic radically opposed to that of the dominant system.2 We can also find this altered concept of oikos in a different linguistic and cultural context: the Kimbuntu words mu-kambo (hideout) and kilombo (war camp), were used to describe autonomous communities of escaped slaves, indigenous people, and others, in Brazil and other countries.3 The point is that the concept of oikos that is relevant to economics should not be reduced to the suburban single family household, but opened up to include both the plantation with its Master and slaves, and the self-organized commune, rebel hideout, and free society.

And yet, while economic theories have evolved and expanded, they remain fixated on the development and perfecting of tools designed for understanding and managing the master’s house. The problem posed by Audre Lorde remains: where do we find the tools for cooperation and self-management we need to dismantle the Master’s house and build an alternative oikos, a mocambo of people and planet, based on solidarity, equality, and freedom?

In Cooperative Enterprise and Market Economy, Chilean theorist of solidarity economy Luis Razeto Migliaro takes analytical tools from the economist’s toolbox – the firm, the factors of production, the market – and subjects them to critique and correction, fashioning tools and theory capable of grasping and analyzing “the cooperative phenomenon.”4

First published in 1982, early in Luis Razeto Migliaro’s career, before his formulation of the concepts of solidarity economy and the “C Factor” that characterize his later work, this book arose out of the author’s work as a researcher and educator at the Economics of Work Program sponsored by the Archbishop of Santiago.5 Over the years Razeto has revised the text, most recently in 2017, taking pains to preserve much of its original character while introducing elements of his more recent theory and practice. In this way, the book embodies much of Razeto’s evolution and growth.

The practical problem addressed in Cooperative Enterprise and Market Economy is one familiar to anyone involved in co-op development or education. When thinking about cooperatives and other worker self-managed enterprises in economic terms, there is a tendency to analyze them using theoretical categories and tools developed for the analysis of capitalist economic relations. In the absence of a specific economic theory of cooperativism, and with the exception of a few idiosyncratic terms like surplus and patronage, when it comes to talking about cooperatives as businesses, we find ourselves using concepts and tools designed for capitalist enterprises and economies. So, other than the first session on Cooperative Principles, a “Cooperatives 101” course might sound a lot like any other “Business 101” course, with the same business plan, HR considerations, and performance indices.

The mere addition of a discussion of cooperative values, while it reflects the reality that cooperatives are explicitly more-than-economic entities – something a theory of cooperatives needs to address, Razeto points out – doesn’t solve the basic theoretical problem. In part this is because standard economic theory presumes the severance of economics from social and other concerns. Values are seen as subordinate or simply external to its concerns and method, excluded from the Master’s toolbox.

And yet, while cooperative values have played a central role in his life and work, Razeto found it indispensable to study economics, writing, in addition to this book, a four volume work titled Teoría Económica Comprensiva (A Comprehensive Theory of Economics, 1985-1992). He stresses the importance of a scientific approach to cooperativism and self-management both to illuminate the phenomenon and its historical development, and to guide and shape emerging cooperative movements so that they make the most of their potential to contribute to the creation of new economic, social, political, cultural and ecological relations. The reader will find in this book terms familiar to any student of Economics: factors of production, competition, prices, supply, demand, equilibrium, etc. At the same time new terms appear – the organizing factor, associative personal property, simple labor units – and familiar concepts like labor, property, and shares take on different meaning in what is a profoundly different theoretical framework. Perhaps most surprising, Razeto turns the quintessential neo-classical conceit of “perfect competition” on its head and uses it as a kind of template for a democratized market based on economic cooperation.

Readers will find some of Razeto’s proposed revisions to cooperative practice controversial: the use of weighted votes (as opposed to one-member, one-vote), and the issuance of formal ownership shares to members on the basis of patronage and other contributions. It is interesting that Mondragon founder Arizmendiarrieta, another heterodox thinker and practitioner of cooperativism, also proposed weighted voting.6

I have taken one major liberty, removing to an appendix much of the content of chapters 9, 10, and 11, in which Razeto presents a simplified model of equilibrium. The concepts and dynamics introduced in those chapters are crucial but readers may find the mode of presentation – complex graphs and mathematical symbols – more of an obstacle than a help, causing them to lose track or simply give up on the argument. This is a classic problem for economic theory of any kind, but Razeto’s narrative exposition of the theory is thorough and clear enough that I believe the reader will not miss the diagrams; those who do can turn to the appendix.

There are important limits to Razeto’s analysis here. Feminist economics, recent Marxist approaches, post-growth theories and alternatives to development, and the hybrid-indigenous social-ecological cosmologies of Buen Vivir or Sumak Kawsay are not taken into account.7 The impact of the multi-faceted crisis represented by “climate change” is not adequately addressed. Nor are the various new forms of cooperative organization, including Distributed Cooperative Organizations (DisCOs) and Platform Cooperatives, addressed. Razeto provides indispensable tools for critique and construction, but not a full toolbox. It is my hope that his approach will inspire others to fill it out or to appropriate the tools presented here for use in other theoretical and practical approaches.

Finally, readers of Luis Razeto’s theoretico-practical manual, How to Create a Solidarity Enterprise, will benefit from the deeper analysis here of key concepts such as market, production, and solidarity, and the various forms of property that cooperatives may adopt. Likewise, readers of Solidarity Economy Roads will find that the discussion of the economic logic of cooperation and markets fills in the picture of solidarity economics in important ways.

Once again, I want to thank Luis Razeto Migliaro for generously sharing his work.

-Matt Noyes

(PS - this is a "living" translation that will be corrected over time. Suggestions are welcome.)

PREFACE

We need a scientific theory of the cooperative phenomenon in order to do three things: grasp it in its present form, understand it as the product of a long and complex process of historical development and evolution, and plan its future, in the hopes of guiding its development under changing conditions. The elaboration of such a theory, then, comes as a response to a practical need.8

Over its two hundred years of history, cooperativism has achieved a global presence, organizing and inspiring multitudes in practically every country notwithstanding the diversity of political-economic systems in which they live. Cooperativism constitutes a significant economic force, mobilizing enormous quantities of human, productive, financial and commercial resources. In the course of its development, cooperation has grown into a complex and diversified reality, including organizations of heterogenous types operating at various levels. It is present in the various sectors of production, commerce, finance, and consumption, adopting different forms of association at every level, from small firms and consortia to regional, national, and global bodies. The norms and principles in accordance with which cooperatives act are variable and plural, as people constantly experiment with renewed structures and methods of action.

Notwithstanding this expansion and diversification, cooperativism retains the basic traits of a unitary phenomenon with its own personality as a social figure with historical continuity. It is this essential unity that makes one think that it might be possible to elaborate a theory of the cooperative phenomenon as such.

Repeatedly and in various formulations, thinkers and social reformers have proposed cooperativism as an alternative form of economic organization and a project of global social transformation. And yet, cooperativism has shown itself to be limited and has faced crises in its growth, failing to take center stage as an autonomous historical subject endowed with the effective capacity to lead economic and political change.

There are external factors that explain this limitation. On the level of politics, one can cite the clear theoretical and organizational choice made by the socialist workers movement – which, for decades, channeled a massive amount of social and intellectual energy towards the construction of a different society – in favor of party political forms of mass struggle under the slogan, “primacy of the political.” The goal was to conquer State power, which was understood to be the necessary first step in the process of transforming the economy or the market, and the model of society to which movements generally aspired was collectivist and statist. On the level of economics, a factor with a different political and intellectual history that has manifested itself in western societies with extraordinary force, especially since the “great crisis,” converged with the first, further limiting the space of action for cooperativism: the tendency to confront problems of productive growth, inequality and social marginalization through expanded public intervention in economic life and the development of the welfare State, which crowded out a possible grassroots response.9

In this difficult economic and political context, cooperativism has been criticized from one side because it bears the contradictory traces of capitalism and from the other because it proposes socialist forms of economic organization. Nonetheless it has continued to enjoy an elevated moral status and to grow, constituting itself as a real subject of economic, social, and cultural action. And yet, it remains relegated to a subordinate rank with respect to the larger tendencies in the market and in politics.

The crises which largely put an end to State Socialism and traditional conceptions of the workers movement and called into question the strategy of public sector intervention in the economy, draw our theoretical and political attention to cooperative forms of action and organization, self-management, and other associated phenomena.

In recent years, new organizing experiences, new ideological and political problems, and new theoretical questions have revived the themes of cooperation and self-management, amounting to a true intellectual and political offensive on the part of supporters of cooperativism. Multiple developments have provoked this response:

• growing unemployment in various economies, especially in the underdeveloped countries but not only there;

• marginalization and exclusion of populations, tendencies which have intensified and acquired a structural character;

• the development of so-called “informal or underground economies;”

• the emergence of other alternative economic forms based on solidarity and mutual aid;

• the ever more meaningful role assumed by foundations and non-governmental organizations seeking the development of the poorest sectors, which have channeled huge resources and promoted the emergence of new cooperative and self-managed organizations;

• the search for alternative economic forms based on new socially appropriate technologies.

By themselves, these elements and processes do not necessarily lead to cooperativism and self-management but they are very close to them and have revived old theoretical and practical discussions while raising many new questions.

On the other hand, the crisis of Socialism and statist responses to social problems led many who previously channeled their energies and desires for social justice and change into politics to look for new “spaces of hope,” organizing experiences based on values and principles of cooperation and solidarity, and acting primarily in civil society, particularly on the social-economic plane.

Faced with the crisis of our societies, more and more people and organizations embark on the search for alternatives. The breadth and depth of the crisis, which is leading to the breakdown of ecological, sociological, psychological and spiritual equilibria of contemporary humanity makes an “alternative” system or world (an ambiguous concept but one normally found alongside cooperation and self-management) appear to be not only an idea but a necessity.

Since the crisis affects these distinct dimensions of human life we need alternatives that enable us to overcome it in each area and in their interrelation; for this reason, organizational forms that postulate and experiment with new relations between the personal and the social, and among the economic, the political and the cultural awaken special interest. More specifically, the present crisis reveals to us the fact that it is not possible to prepare alternatives in the political sphere without also preparing them in the economic, technological, cultural, and other spheres.

In the same way, we are gaining consciousness of the fact that it is not possible to have an alternative for society in its totality without finding small scale alternatives to the firms, political organizations, cultural institutions, technical models, etc., that make it up. Is not a new phenomenon but today there is a marked tendency to distrust (because they are considered to be ideological) and undervalue (because they are illusory) proposals for global transformation that do not include concrete practical proposals in regards to the distinct and multiple elements of reality.

In this sense, understanding alternative – cooperative and self-managed – forms of enterprise has special meaning and importance. While the cultural, ideological, and political environment has changed to some degree in favor of cooperativism and self-management since the 1980s when the first edition of this book was in preparation, the revival of research related to cooperation and self-management has not dissolved earlier doubts and concerns. The diagnosis which held that there were limits to the economic expansion of alternative initiatives and identified their incapacity to assume direction of the economic and political transformation of contemporary societies remains valid.

The question arises with even more urgency than before and more people are asking it: how much potential to develop the forces needed to meet the demands of the economic-social crisis and carry out a historical-political transformation does cooperativism still have, as an organized subject?

This question raises a more specific concern: do the economic and political conditions which we have mentioned provide a sufficient explanation of the historical limitations of cooperativism and other alternative social-economic experiences, their difficulties in growing autonomously with relation to the State and the market, and their failure to play a leading and central role in processes of economic and political transformation? Or, must we also take into account internal contradictions and limits proper to these forms of economic organization: barriers to efficiency and growth that derive from rigidities in the way cooperativism treats the various economic factors, objective limits inherent to its specific logic of accumulation, ideological impediments to its better functioning, etc.?

2. The answer to these and other questions cannot be ideological, but must be elaborated scientifically. This means we need a theory of the cooperative phenomenon that examines first of all what cooperatives are in reality – that which they have come to be – and the place cooperation, self-management, and other related phenomena occupy, in fact, in the economic-political structure and experience of contemporary society as a whole. The theory must also analyze the specific ways in which cooperative and self-managed organizations participate in a given market, the impact they have in shaping the social structure, their political value in relation to the functioning of democracy and other forms of state organization, the significance they assume in the culture of the subaltern classes and in the general history of ideas, their potential and limits, the optimal conditions for their development, and so on. And above all, the specific rationality of cooperation and the operational logic of the distinct types of economic units that make up this economic reality must be identified, revealing forms which may be hidden or distorted behind a screen of ideology or doctrine.

Perhaps the theory will discover one or more new forms of “cooperative enterprise” that show potential for expansion and social-economic transformation, forms that, having gone underappreciated in the traditional forms of cooperativism could now be deployed on the basis of an internal renewal – or a more radical refoundation – of these organizations.

The scientific theory of the cooperative phenomenon is, then, something quite distinct from a simple collection of the principles, norms, and conceptions that have given birth to, cohered, and guided the cooperative movement itself. That body of doctrine constitutes the ideology of cooperativism, which the scientific theory certainly can not ignore insofar it is part of the object of study, but it should take pains to avoid confusion between cooperative theory and ideology. Theory necessarily comes after ideology, since it studies the cooperative experience as it exists and in its development, and is exterior to it, observing it with its own methodology: the principles, norms, and conceptions of science. Like any scientific work it should be carried out on the basis of experience in all its complexity.

In order to identify the type of analysis and the methodology needed to elaborate a theory of the cooperative phenomenon it is necessary to advance a number of propositions with respect to its object.

It is well known that cooperation is simultaneously an economic, social, political and cultural act. The cooperative phenomenon presents itself as set of businesses and associations of various kinds and sizes each organizing a particular economic activity – production, exchange, finance – and at the same time as a response to social problems, a meaningful process of assembly and formation of a collective will that can transform society in a democratic sense. Cooperativism also shows up as a specifically cultural movement, a molecular and methodical diffusion of the ideas, values, and norms that constitute what we can call the “cooperative style or way of being,” a particular mode of thinking, feeling, and behaving that is individual and collective.

What makes the reality introduced by cooperation distinctive and new is not its complexity as a phenomenon that is at once economic, socio-political, and ideologico-cultural, but the particular type of unity and internal articulation that it establishes among these different levels of action.

In contemporary society, organizations often intervene primarily in one or another sector of the social structure: businesses in the economy, parties in politics, schools in culture, etc., while playing a decidedly subordinate role in the other sectors. The national State is the only phenomenon among the institutions and organizations of modern and contemporary civilization that, like cooperatives, integrates and articulates these levels and constitutes itself simultaneously in each one as a system of action that integrates and fixes the substantive relations among economy, politics and culture within a determinate territorial dimension.

Cooperation presents itself, then, as a system and a moment of organization that introduces new relations among economy, politics, and culture into collective life and establishes a new relation proper to the cooperative form between conductors and conducted10 , in each area and between them.

We will revisit this later on; for now it is enough to note that this mode of being imposes specific demands on scientific analysis: research conducted along strictly “disciplinary” lines (political economy, sociology, political science, etc.) runs the risk of creating an artificial severance of the phenomenon into aspects whose isolated existence is never encountered in reality. For example, the economic variables of cooperation are full of social and moral elements and the economic functioning of cooperatives includes ideological elements to a greater degree than other types of social organization and activity. It is not a matter of claiming a superficially interdisciplinary focus, which, experience teaches us, still maintains the exteriority of the concepts and methods of the different disciplines. Rather, what is needed is more radical: a unitary science of history, economics, and politics. The necessity of such an approach is increasingly clear from the multitude of problems we face in understanding contemporary human practice.

At the same time, since the cooperative phenomenon is based on an economic activity (defining itself first of all in terms of economic technique, economic policy, economic ideology, etc.), its scientific analysis leads us naturally into economic theory. In other words: while a theory of the cooperative phenomenon should be global (examining its economic functioning and dynamism as well as its political orientations and potential, verifying its positions in the institutional and juridical terrain and in the ideological-cultural arena), it should begin by focusing on cooperativism’s economic elements. The interpenetration of the economic, political and cultural factors that characterize the cooperative phenomenon influences the economic analysis itself, placing particular demands on it.11

In a strictly economic analysis cooperative activity is characterized according to its role in circuits of production, circulation and consumption, and as a consequence cooperatives are evaluated in terms of their relations with the market. The objective of the analysis in this book is to understand the ways cooperative enterprises, and the cooperative system, intervene concretely in the economic circuit, their levels of participation, and their degree of living adaptation, efficiency and capacity for expansion. At the same time we aim to specify the conditions of their optimal development. Since the dynamics of cooperativism are interwoven with other forms of social action it is necessary to articulate this economic problematic with the other inseparable dimensions of the cooperative phenomenon. The criteria of economic evaluation, then, must be defined through the specific combination of the “automatic” dynamics and behaviors of the market, on the one hand, and the norms, juridical and political policies and projects, cultural and ideological tendencies, etc., that structure and define the life of a given society, on the other.

In other words, in this broad economic analysis cooperative enterprises are exposed to the general judgment of society, which is just the theoretical expression of the practical judgment to which they are constantly subjected by the people, organizations, social groups, cultural movements and various economic agents who decide whether to establish relations with cooperativism – labor relations, commercial or financial relations, relations of support and development, education, etc. – that is, whether to contribute to the growth of the cooperative phenomenon and shape its development.

This broad economic analysis is not, moreover, without implications for juridical doctrine that judges and evaluates cooperation from a legal standpoint, examining its institutional functions and operations with respect to the existing legal order. It also has implications for political evaluation and analysis that reveals the effect of the cooperative phenomenon on the correlation of forces and judges it according to its potential impact on particular historico-political projects. From the economic analysis one can derive important indicators for evaluating the degree of coherence of existing laws that regulate cooperative activities, for distinguishing authentic cooperation from “spurious” forms of associationism, for understanding the reach of the movement’s aims and its political potential, and for specifying the modes by which the cooperative system can come to be part of a program of economic-social reform linked to a project of ethico-political reform.

3. The undertaking of such a theoretical analysis, then, faces a preliminary difficulty: economic theory has not created conceptual and methodological instruments suited to the understanding of the behavior and functioning of an economic subject that is as diverse and unique as cooperativism in its variety and multiplicity of expressions.

The problem derives from the specific mode of abstraction and model construction that has come to characterize economics as a discipline, on the basis of which reality is presented as a system that functions through the interaction of formal variables and categories such as supply, demand, production, consumption, prices, investment, exports, amortization, etc. Proceeding in this way economic theory builds a rational, schematic, and easily understandable framework of processes of production, circulation and consumption that serves to explain phenomena, tendencies and empirical facts. This approach also guides the collection and systematization of information, offering instruments of control and corrective intervention in the economic process in general or in particular sectors. At the microeconomic level, this type of theoretical elaboration and economic analysis can orient business and individual actors in their decisions. But in the end it amounts to a very abstract and simplistic representation of the real economy and market. Simplistic because it does not take into account the full complexity and multiplicity of subjects, activities, and behaviors that make up concrete economic life, reducing the actual economy and the market to a handful of models in which a limited number of behaviors, sectors, and economic aspects are seen, and privileging those characteristics and tendencies that are most easily quantified, though not always the most important. Too abstract because the actual individual subjects, processes, and activities, with all their richness and differentiation, are converted into generic and formal variables whose interactions follow a predetermined logic, that of the supposedly rational behavior of owners, consumers, savers, etc., each of them an abstraction.

All of this is well known and is repeated in the preface to any textbook on Economics. This situation doesn’t create major problems when economic analysis is talking about phenomena, sectors, variables, and subjects defined explicitly in theoretical models. The problem arises when one seeks to examine the behavior and impact in the market of those subjects and activities, such as cooperativism, that have not been considered in a differentiated way in the models, but rather subsumed under more generic categories and variables, lumped together with other activities and subjects.

When it comes to alternative businesses and their organizing structures: one sees that the logic of the economic behavior of the consumer is not that of a person acting individually, with no particular associative connections. In a cooperative enterprise, equilibrium and expansion are not achieved according to the criteria that apply to private or publicly held businesses: investment, profits, competition, technical economies, factor productivity, etc. The forces of supply and demand in the solidarity sector do not intervene in the determination of prices in the same way as in the general market. The associative organization of demand and consumption, of production and supply, have a different impact on the cost structure, economies of scale, price and wage dynamics, etc., and the market for a given good or service reacts differently when there is a large cooperative sector than when it does not exist. And so on.

Given all of this, in order to carry out a scientific study of the cooperative phenomenon it is necessary, first, to elaborate a concrete economic theory of the phenomenon in question. The need for this new elaboration does not, of course, mean that existing micro and macroeconomic theories are useless, but that they must be corrected as necessary to apply to these cases.

The principle elaborations we have made concern two key economic concepts: the enterprise or firm12 and the market. We present the specific difference of the cooperative phenomenon in terms of its distinctive modes of operation, on the one hand, and the manner in which it interacts with and participates in the market on the other. Existing economic theory is manifestly insufficient for understanding these concepts.

In applying standard concepts and models to the particular case of cooperation, the most important correction to make is to always maintain a connection to the concrete reality to which the abstract forms and variables refer, such that one can verify in each case the degree of validity of concepts when they are applied to cooperative activities and not let oneself be carried away uncritically by the abstract logic of the general economic reasoning.

Well then, of all the theories and focii of economics, which are most pertinent, in the sense of providing the most plentiful and important elements for understanding the cooperative phenomenon? It is easy enough to observe that in the treatment of the problematic we can, at different moments, draw on different theories and make use of concepts from different sources. At first glance this would seem to be proof of an eclectic lack of definition or theoretical unity, so it is important clarify the theoretical choice we are making here.

We share Joan Robinson’s view that “theory is a tool-box,” the usefulness of the tools depending in each case on how they help people address the specific problems raised.13 As we shall see, this does not imply that theoretical and analytic unity are unnecessary, nor that we are under no obligation to make definite choices. A brief consideration of the evolution of economic theories will permit us to formulate some pertinent observations on this matter.

In the first place we observe that theories have changed in conformity with the historical evolution of the market and of real economies. Decisive innovations and meaningful structural transformations in the reality of economic processes have been accompanied by important theoretical changes. Classical political economy, the critique of political economy, neo-classical theories, Keynesian analysis, post-Keynesian efforts to find a new paradigm, neo-liberal positions, etc. are all associated with distinct projects of economic organization and arise in specific economic-political contexts. There is, then, no single permanent economic truth. This is not to say that we are proposing a theoretical relativism, but that we are recognizing the historicity of science as a function of the history of its object.

In the second place, we find that a fundamental element that distinguishes theories is the level of reality on which they focus and that they analyze. For example, classical economics and the Marxist critique study the relations of production and consumption at the level of basic structures, while neo-classical and marginalist theories examine the function and operation of firms and markets. Theories are also distinguished by their conceptual structure and their intention. Some are fundamentally expressions of a particular political economic project; others are basically conceived as a critique of what which exists, with a focus on describing empirical reality. Still others are shaped by the intention to reform a particular concrete reality and to serve as guides to a process of development. In any case, to one extent or another, every theory contains and contributes cognitive elements which are organized in different ways in combination with specific intentions.

With respect to the use of different theoretical tools in the analysis of the cooperative phenomenon, some definitions can be drawn from these general observations. The comprehension, analysis, and planning of cooperativism require special theoretical development because we are dealing with a determinate historical phenomenon which unfolds in particular ways throughout the whole modern and contemporary economic process, and yet is structurally distinct from economic forms studied by the successive theories. Being a specific and limited phenomenon it cannot give rise, on its own, to a general economic theory but only to what we can consider a special theory, linked in various ways to the complex development of economics as a science. At the same time, being a phenomenon which demands and aspires to autonomy, its theorization can not be accomplished by the simple application of received concepts and elements of standard theory, but requires its own conceptualization. The autonomous economic rationality of this conceptualization, in which existing concepts and theories are critiqued while some elements, once corrected, are incorporated, must be recognized.

In this dialectical way, the cooperative phenomenon interacts with different economic theories based on its own needs and intentions, such that, when cooperativism is investigated at the level of structure or when it is analyzed in its functioning and operation, or when the intention is to understand, critique, describe, plan or guide cooperative practice, the scientific researcher will seek their instruments first in those theoretical sources which offer specialized tools, suited to the particular levels and intentions of the study of cooperativism.

Some final considerations to frame the theme:

In the economic analysis of the cooperative phenomenon it is necessary to distinguish between three levels. On the first level, we consider cooperative or self-managed companies as units of coordination of economic activities. This analysis can be considered microeconomic, aimed at identifying the distinctive characteristics of the cooperative firm, its internal organization, its operational and financial functioning, its systems of coordination and management, etc.

On the second level, we look at the system of cooperation and self-management as the combination of all the cooperatives and affiliated economic units that constitute a particular sector or a relatively integrated subsystem of the economy of a country. This analysis can be considered sectoral, aimed at understanding the relations between cooperatives, the organization and coordination of the cooperative movement as an organic whole, and regional and national cooperative structures in the subsectors of production, consumption, finance, etc.

On the third level of analysis we study the relations between cooperatives and the cooperative sector, on the one hand, and the other sectors of the economy, and the market as a whole, on the other. This macroeconomic analysis is aimed at understanding how cooperation fits into and participates in the global system of production and finance, or a particular market.

These three planes of economic analysis do not exhaust the reality that a theory of the cooperative phenomenon should address. As we have said, cooperativism is not only economic but articulates social, political and cultural dimensions in its own mode of being, activities, and forms of economic organization. The extra-economic dimensions of cooperativism become more explicit as the analysis moves towards the macroeconomic level. The theoretical process proceeds from the simple to the complex, progressively integrating new and broader elements.

Cooperation is simultaneously a reality and a project, the two so intimately joined that in its study it is not easy to distinguish the analysis of structural relations from the postulation of a “should be.” Science resolves this tension to some extent through the formulation of theory, which expounds the specific logic or particular rationality of a phenomenon. In effect, the identification of the essential rationality of the cooperative phenomenon permits us to critically assess its concrete implementations, which are always partial and limited, and, at the same time perceive its designs and transformative potential, that is, the historical-concrete unfolding of its rationality.

Theory offers itself, then, as an instrument for analysis and planning. The analysis of concrete experiences of cooperation and self-management in particular societies, however, and their potential for transformative impact, lies beyond the reach of this study. Such an analysis would imply examining the degree of development and types of social relations in a given country, the forms in which cooperativism has developed and structured itself there, the character of the national culture and the degree of solidarity and association present in it. One would have to consider the theoretical and practical choices that drive, impede, and condition cooperativism, choices made by the different social agents motivated by different and opposed purposes: some seeing in cooperation the possibility of creating an island of solidarity or a protected and autonomous world apart from the dominant system of productivity, competition, and consumerism, others wishing to make of it an integrated and subordinate element in a given economic model; some seeing cooperatives as a global political instrument for economic and political transformation, others thinking more in terms of building a specific cooperative area of the economy in an organic relation to the private and public sector. This does not cover the full range of aims and aspects that would need to be taken into account when passing to the level of more concrete analysis. Keeping these limits in mind, we turn to theory because without it our capacity to understand the broad assemblage of elements and problems the constitute cooperativism would be compromised.

Translated by Matt Noyes
Header image by Jeff Warren and Caroline Woolard. CC BY-SA 3.0

• 1A phrase that inevitably calls up Malcolm X’s comments on the House Negro and the Field Negro: “When the master's house caught afire, [the house negro] would try and put the fire out. He didn't want his master's house burned. He never wanted his master's property threatened. And he was more defensive of it than the masterwas…But then you had some field Negroes, who lived in huts, had nothing to lose… They hated their master. Oh yes, they did…If the master's house caught afire, they'd pray for a strong wind to come along. This was the difference between the two.” http://www.brothermalcolm.net/mxwords/whathesaid7.html
• 2See J.H. Noyes, A History of American Socialisms (1966, Dover).
• 3For the liberatory meaning of the terms mocambo and quilombo see Reis and Gomes (2016) Freedom by a Thread: The History of Quilombos in Brazil. Diasporic African Press.
• 4He later came to use the terms “solidarity and labor economy,” or just “solidarity economy.”
• 5See the Translator’s Introduction to Solidarity Economy Roads for a short biography of Razeto’s life and work. https://geo.coop/story/solidarity-economy-roads-chapter-1 For a brief explanation of the C Factor, see How to Create a Solidarity Enterprise, Reading #1. https://geo.coop/articles/how-create-solidarity-enterprise
• 6See Cheney, Noyes, Do, Vieta, Azkarraga and Michel, Cooperatives at Work, (forthcoming, Emerald Publishing) chapter 2. Interestingly, Arizmendiarrieta and Razeto have similar biographies, both having grown up in the countryside, studied for the priesthood, been drawn into fights against fascism, narrowly escaped execution, and dedicated their lives to social-economic, cultural and political transformation.
• 7See, for example, J.K. Gibson-Graham’s A Postcapitalist Politics (2006, Minnesota); Anwar Shaikh’s Capitalism: Competition, Conflict, Crises (2016, Oxford); and Alberto Acosta’s Buen Vivir Sumak Kawasy. (2012 Abya).
• 8Under the term “cooperative phenomenon” we include not only the set of experiences and ideas explicitly related to cooperativism and already recognized as expressions of economic cooperation, but also other forms of business and social movement organization that, while they may not identify as cooperatives, have essential characteristics that are best understood as signs of cooperative modes of economic functioning. While worker self-managed enterprises, associative and community businesses, and other forms of alternative economic organization based on solidarity are considered here as instances of the “cooperative phenomenon,” we appreciate the heterogeneity of these various experiences, and will duly take them into account. It was the search for a sufficiently broad concept that could encompass all of these economic forms that led us to formulate – in the second and third editions of this book – the concept of solidarity economy (“economía de solidaridad y trabajo”). In this new edition, corrected and expanded, we chose to maintain the old expression, “cooperative phenomenon,” because notwithstanding the thematic and conceptual evolution of the text, the specific problematic of cooperativism remains its focus and emphasis.
• 9Razeto refers here to the economic crisis of the 1920s and 30s. - MN
• 10In Spanish, “dirigentes y dirigidos.” I borrow these terms from Michael Lebowitz’s The Contradictions of "Real Socialism": The Conductor and the Conducted. 2012. Monthly Review Press. - MN
• 11Since the first edition we have deepened our analysis of the conceptual renovation and broadening of the science of economics that is required in order to respond to the questions posed by alternative, solidarity-based, forms of economic activity. This led us to formulate a complex theoretical construction that we call “comprehensive economic theory.” Neither the forms, subjects, and economic relations of cooperativism, nor their place in the market and in the economy as a whole has been understood scientifically or considered adequately by the conventional discipline of Economics. Such elaborations, presented in Economía Solidaria y Mercado Democrático [Solidarity Economy and the Democratic Market] Programa de Economía del Trabajo. Academia de Humanismo Cristiano. (1985), have led us to make numerous modifications and expansions to the present book; modifications that we have reduced to a minimum in the interests of preserving the coherence of the work as a whole and the identity of this first product of that research.
• 12We have generally translated empresa as enterprise, since that term suggests a broader range of organizations that can include cooperatives and other forms of economic organization, except where a specific economic concept is being used, e.g., the firm. - MN
• 13Robinson borrowed the tool-box metaphor from her colleague A.C. Pigou (See Aslanbeigui, N. and Oakes, G. (2009). The Provocative Joan Robinson: The Making of a Cambridge Economist. Duke University Press). Foucault similarly described his work as a box of “tools, utensils, [and] weapons.” (Foucault, M. (1974). “Prisons et asiles dans le mécanisme du pouvoir.” Dits et Écrits, t. II. Paris: Gallimard.) - MN