Cooperative Enterprise and Market Economy: Chapter 12

Introduction & Preface | Chapter 1 | Chapter 2 | Chapter 3 | Chapter 4 | Chapter 5 | Chapter 6 | Chapter 7 | Chapter 8 | Chapter 9 | Chapter 10 | Chapter 11

Translator’s note:

In this chapter, we emerge from the microeconomic analysis of equilibrium in the cooperative firm into a scene peopled with “extra-economic” figures like ethics, society, and politics. (From the start, Razeto has emphasized that cooperativism necessarily includes such elements, which standard economic theory excludes or ignores.)

The analysis of cooperatives as a group, network, and sector, and the impact of a renewed cooperativism based on Razeto’s “new model” starts with philosophical reflections on the relation of property to labor. The author, who initially trained for the Catholic priesthood, quotes extensively from the 1981 encyclical Laborem Exercens, which, like Rerum Novarum before it, seeks a third way between Communism (and Socialism) and Capitalism, based on the concepts of subordination of capital to labor and labor itself as co-creation with God.1 Razeto draws on this argument, locating the source problem of cooperativism, and the basis for worker solidarity, at a level deeper than that of ownership and property, whether collective or private: the level of labor and co-creation.

As theoretical as the argument gets, the orientation here is ultimately practical, as are many of the insights, taking people as they are, not as they should be, and yet, is for that reason all the more hopeful.

- Matt Noyes

SECTION III – The Transformative Force of a Renewed Cooperativism

Chapter 12

Extra-economic Reflections on Work and Property

Analysis of the operational logic of the different worker cooperative structures has shown that not all are equally viable economically in the context of a market economy. We have also identified a notable level of efficiency, higher than that in traditional cooperatives, in workers’ enterprises which practice shared ownership or associative personal property, adequate remuneration for the “capital” contributed by each member, pro rata distributions of surplus based on quantity and quality of labor, and recovery of “capital” accumulated by worker-members upon retirement from the cooperative.

Nonetheless, it is to be expected that at this point in our analysis a worry might arise, especially among people who have lived intensely and profoundly the extraordinary human and community experience of cooperatives, self-directed enterprises, and worker collectives founded on property in common and traditional cooperative values. The question is unavoidable: doesn’t the model of enterprise that we have proposed, with its system of shares and its criteria of economic efficiency, concede too much to the “spirit of capitalism”? Do the gains in realism and adaptation to the conditions of the modern economy outweigh the loss of consciousness and weakening of practices of solidarity and participation? Doesn’t accentuating the economic rigor and rationality of cooperative operations undermine the transformative cultural and political dimensions that the cooperative movement brings to a society poisoned by egoism, economism, and the obsessive search for wealth?

These concerns are surely legitimate; we must pause to reflect on the social and ethical questions they raise.

In Chapter 5, we analyzed the question of “cooperative ownership,” concluding that there is no single structure that is most rational and appropriate, but rather a range of valid alternatives. We stressed that their differences depend on many conditions, the first and most important being the organizing category of the enterprise. Other considerations include the particular factors which form the equity of the enterprise, the degree of separability of those factors from the people who contribute them, the degree of constitution of the titular owner, and all the connections (cognitive, affective, juridical, managerial-administrative, etc.) that are part of the process of the subject’s progressive appropriation of the object.2

We take up this theme again in this chapter, but at a different level of reflection that brings in the ideological and ethical debate with respect to the question of property that has been seen to lie at the heart of the cooperative movement and the search for social justice. As that debate has focused exclusively on ownership of “the means of production” or “capital,” we limit our argument to those terms, centering our analysis on the particular concern that workers might have about distributed or associated personal property, which we propose as an alternative to other modes of “social” ownership which have spread throughout the cooperative movement.

In the course of our analysis we have demonstrated that there is a profound difference – at the level of content, with significant implications for the form – between an enterprise founded, organized, and directed by labor and one based on and controlled by capital.

This fundamental and decisive fact implies radical differences with respect to the social sectors uplifted by each type of enterprise, and the historical social projects with which each is aligned. Enterprises founded on labor are in their very essence anticapitalist, directly benefiting the social classes which are subordinated and dominated in modern society.

But by itself this does not amount to a superior ethical criterion of justice and solidarity. The principal movements for social advancement for workers and for social justice that we have seen in modern history have been based on the concept social ownership of the means of production. Setting aside the real results – in many ways questionable – of projects carried out for these ends, one must ask the theoretical question: are such projects, generally associated with socialism, ethically and socially superior to the path opened by our approach? (It is worth noting that other, more isolated historical projects, have sustained themselves on the basis of an elevated moral conception, also based on a concept of social ownership, in the form of small communities in a framework of economic decentralization.3)

Having introduced these themes, the decisive question is how are the concepts of “labor” and “property” related to the problem of social justice; more precisely, which of these concepts will be decisive in the last instance, as the foundation of the edifice of a human society?

This is a crucial question. Just posing it reveals the possibility of a new path, of an escape from the rigid binary that has come to frame contemporary economic and political debate. The predominant forms of economic organization in contemporary society are based on property: private property as the foundation of capitalist economy and society, and social or state property as the basis of socialist economy and society. (This includes other, intermediary, approaches: mixed ownership, community ownership, combinations of economic areas with different property relations, etc.)

So, is the center or base of all social structures to be found in the problem of ownership, and the different forms of property? Are the decisive choices ultimately about the question of property, or is there another, more radical problem at work?

The problem of ownership refers to having, to possessing, whether by an individual, collective, or an entity; and it is on the basis of these different modes of having that the various forms of management, administration, and control are defined. Thus, the debate which pits justice against modes and quantities of ownership, is principally framed in terms of “distributive justice” and is essentially linked to the concept and value of equality.

There is no doubt that this debate touches on a key element of the problem, in response to which, drawing on their common sense and ethical conscience, people have spontaneously identified two unjust scenarios: on the one hand, expanding inequality in wealth; on the other, the institution of absolute equality of all members of society, independent of their contribution to collective equity and the common good. It is between these two extremes that we will find an ownership structure, a form of property and some degree of particular differentiation, that can be recognized as just and human.

From a more philosophical perspective, the problem presents its own complexities: the concept of the human being – a being that is simultaneously individual, communal, and social – opens up different lines of reasoning with respect to “human” modes of ownership. In other words: we can not abstractly deduce from the consideration of human nature one particular “natural” form of property, without reference to historical circumstances. Or, at least, in order to arrive at such a definition we would have to proceed through a series of mediations and considerations of other, implied, values.

The theoretical and practical difficulties that arise when we attempt to identify the “just” form and distribution of property lead us to doubt that the concept of property is the primary and autonomous concept on which to found a coherent and transparent project of social justice. Property, in effect, is not an originary fact but a historical result.

Property is the result of work, of labor, and as such is always, in essence, accumulated labor. Logically and in general, labor is prior to property, and, as a specifically human activity, belongs to the very essence of human beings.4

On reflection, I am reminded of some central concepts of the encyclical Laborem Exercens, by his Holiness John Paul II, which I quote not by way of appeal to authority, but for the high moral value and intrinsic strength of the argument.5 That document represents a true theoretical revolution with regards to the “social question,” to the extent that it situates and redefines the problem of justice on the basis of labor as the foundational and originary concept, subordinating property to labor, and consequently reformulating the problem of ownership of the means of production.

“...human work is a key, probably the essential key, to the whole social question, if we try to see that question really from the point of view of man's good.” [This is so because] “work bears a particular mark of man and of humanity, the mark of a person operating within a community of persons. And this mark decides its interior characteristics; in a sense it constitutes its very nature.

“From the beginning there is also linked with work the question of ownership, for the only means that man has for causing the resources hidden in nature to serve himself and others is his work. And to be able through his work to make these resources bear fruit, man takes over ownership of small parts of the various riches of nature: those beneath the ground, those in the sea, on land, or in space. He takes all these things over by making them his workbench. He takes them over through work and for work.

“Further consideration of this question should confirm our conviction of the priority of human labour over what in the course of time we have grown accustomed to calling capital. Since the concept of capital includes not only the natural resources placed at man's disposal but also the whole collection of means by which man appropriates natural resources and transforms them in accordance with his needs (and thus in a sense humanizes them), it must immediately be noted that all these means are the result of the historical heritage of human labour. All the means of production, from the most primitive to the ultramodern ones-it is man that has gradually developed them … Thus everything that is at the service of work, everything that in the present state of technology constitutes its ever more highly perfected "instrument", is the result of work. This gigantic and powerful instrument - the whole collection of means of production that in a sense are considered synonymous with "capital" - is the result of work and bears the signs of human labour.

“Everything contained in the concept of capital in the strict sense is only a collection of things. Man, as the subject of work, and independently of the work that he does-man alone is a person. … As mentioned above, property is acquired first of all through work in order that it may serve work. This concerns in a special way ownership of the means of production.”

Labor’s priority over property and the understanding that property and labor are interconnected because property, as the fruit of labor, is acquired through labor, is the central concept on which our model of workers’ enterprise is based. It is exactly this point that distinguishes this model from the familiar schemes of state enterprises and traditional cooperatives, in which it is the specific owenership regime that shapes and structures the corresponding labor regime. If we follow this thread, we will find that, in a certain sense, these familiar socialist or cooperative forms remain bound to a property-labor relation belonging to capitalism, in which labor is maintained as a subordinate category.

As we have noted, our model is characterized by distributed personal property, the remuneration of cooperative “capital,” the allocation of surplus in proportion to the quantity and quality of labor carried out, and the possibility of recovery of “capital” accumulated by each worker upon retirement (and not before, because “property is acquired through labor, in order to serve labor”), all of which flow from the internal economic logic of an enterprise that places labor at the center, as the preeminent factor.

“This truth...[the encyclical continues]... has important and decisive consequences… In the light of the above truth we see clearly, first of all, that capital cannot be separated from labour; in no way can labour be opposed to capital or capital to labour, and still less can the actual people behind these concepts be opposed to each other, as will be explained later. A labour system can be right, in the sense of being in conformity with the very essence of the issue, and in the sense of being intrinsically true and also morally legitimate, if in its very basis it overcomes the opposition between labour and capital through an effort at being shaped in accordance with the principle put forward above: the principle of the substantial and real priority of labour, of the subjectivity of human labour and its effective participation in the whole production process, independently of the nature of the services provided by the worker.

“Opposition between labour and capital does not spring from the structure of the production process or from the structure of the economic process. In general the latter process demonstrates that labour and what we are accustomed to call capital are intermingled; it shows that they are inseparably linked...

“This consistent image, in which the principle of the primacy of person over things is strictly preserved, was broken up in human thought, sometimes after a long period of incubation in practical living. The break occurred in such a way that labour was separated from capital and set in opposition to it, and capital was set in opposition to labour, as though they were two impersonal forces, two production factors juxtaposed in the same "economistic" perspective…

“...it is obvious that materialism, including its dialectical form, is incapable of providing sufficient and definitive bases for thinking about human work, in order that the primacy of man over the capital instrument, the primacy of the person over things, may find in it adequate and irrefutable confirmation and support. In dialectical materialism too man is not first and foremost the subject of work and the efficient cause of the production process, but continues to be understood and treated, in dependence on what is material, as a kind of "resultant" of the economic or production relations prevailing at a given period...

“The only chance there seems to be for radically overcoming this error is through adequate changes both in theory and in practice, changes in line with the definite conviction of the primacy of the person over things, and of human labour over capital as a whole collection of means of production.”

Placing labor at the root and center of economic organizations logically leads – as we have seen – to a regime of distributed personal property, which implies use in common of the necessary means of production, which the collective of workers know and feel to be their own. Following the reasoning of Laborem Exercens, and in light of various ethical-social considerations, we can appreciate why an ownership structure founded on labor and indissolubly linked to labor, should show itself to be profoundly human and socially just.

One can carry this argument further: a property regime of this type enables us to seed relations of fraternity and solidarity among people at an even deeper level than that reached by social or common ownership. To base human relations on labor is to base them on human beings, on their subjectivity and creative activity, that is, at the level of the very foundation of human groups and relations. This goes deeper than founding human relations on shared ownership of the material means of production. What’s more, the common use of these means of production functions, in various ways, as an ever present stimulus to the creation of the necessary conditions for the development of solidarity and fraternity among workers.

At this point in our extra-economic considerations, another reflection is opportune. Organizing projects and models are valid when they are practicable, and they are practicable when they start from taking people as they are and not as they should be. This is the essential difference between a utopian project and one that is realistic, that has been tested in practice. Contemporary humans – the common person – are the historical-concrete result of the combined experiences and relations that they have lived and in which they find themselves immersed. They have configured themselves – in their mode of being, feeling, thinking, and behaving – in conformity with the “homo economicus” that the dominant capitalist mode of production requires. Even in working people, we find at work a certain economic rationality based on calculation, on a kind of individualism, on attachment to property and the resulting hunger for personal and family security.

An enterprise that operates with distributed personal property, adequate remuneration of “capital” contributed by each member, allocation of surplus pro rata according to the quantity and quality of work performed, participatory management with a range of authority reflecting one’s share of the risk, and the possibility of recovering accumulated “capital” upon retirement, neither requires nor forces its members to be highly altruistic and disinterested. This new model of enterprise itself, which, in its mode of operation, allows for the satisfaction of a minimal level of needs, can also imply the development of new and profound human and communitarian values among the common worker.

The traditional experience of cooperativism, on the other hand, has made it clear that stable successful results generally occur when the labor collective is made up of especially generous people, with exceptional personal and social ethics, and that many experiences dissolve or fail to prosper precisely due to “human weaknesses” in the members. Many cooperatives owe their endurance to external financial help, or motivational support from political or religious groups. The model of workers’ enterprise proposed here does not require either. It can be created by groups of workers who assemble the material conditions necessary to initiate operations, but also by existing economic enterprises of other types – traditional cooperatives, public enterprises, or private businesses – through adaptation and transformation of their structures and relations.

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

• 1

  For biographical sketch of Luis Razeto Migliaro, see the Translator’s Introduction to Solidarity Economy Roads: https://geo.coop/story/solidarity-economy-roads-chapter-1

• 2

  See Chapter Five. “Taking into account both the subject (the owner) and the various forms it can take, we come to understand that the forms of ownership correspond to the degree of constitution of the subject. Thus, in order for communal property to exist it is necessary that a real community, constituted as a subject, exist. If not, we are dealing with a fiction. … There can no collective ownership by workers in an enterprise in which the group of workers has not yet formed the collective consciousness and will required in order for them to function and be recognized as a collective subject. And so forth in many cases.” - https://geo.coop/articles/cooperative-enterprise-and-market-economy-chapter-5 --MN

• 3

  In his History of American Socialisms. Oneida Community founder John H. Noyes identified this “elevated moral conception” – which he called “afflatus” – as the key to survival and success of “utopian” communities in the United States in the early 1800s. Internet Archive, 2010. https://archive.org/details/historyofamerica00innoye/page/n7/mode/2up - MN

• 4

  This does not deny the role of nature in producing wealth, a point taken up by Kohei Saito in his recent book Marx in the Anthropocene (Cambridge, 2022). - MN

• 5

  Laborem Exercens, 1981. Ioannes Paulus PP. II https://www.vatican.va/content/john-paul-ii/en/encyclicals/documents/hf_jp-ii_enc_14091981_laborem-exercens.html