Cooperative Enterprise and Market Economy: Chapter 20

Introduction & Preface | Chapter 1 | Chapter 2 | Chapter 3 | Chapter 4 | Chapter 5 | Chapter 6 | Chapter 7 | Chapter 8 | Chapter 9 | Chapter 10 | Chapter 11 | Chapter 12 | Chapter 13 | Chapter 14 | Chapter 15 | Chapter 16 | Chapter 17 | Chapter 18 | Chapter 19

Translator’s note:

“I have never been in this place before: breathing works differently, and a star shines next to the sun, more dazzlingly still.” - Kafka1

This is an odd book. Its central proposition – that the market is to be “perfected” – looks like some kind of Chicago School fantasy but turns out to be a call for radical social, economic, political and cultural transformation. What appears to be a proof of the economic viability of the cooperative enterprise, turns out to be an argument for the potential of cooperativism, as part of a larger movement of movements, to constitute a force capable of overcoming the crisis of the State by re-founding political democracy on new, distributed and democratic foundations.

Cooperative Enterprise and Market Economy is is at heart a traversata, a crossing over from one way of understanding and practicing economics to another. In keeping with Luis Razeto’s larger mission to contribute to the creation of a new civilization by transforming theory and practice, the book starts with the critique of familiar concepts from the economist’s toolbox, like the enterprise and the market, which are opened up and reworked to allow for analysis of the cooperative enterprise and the larger cooperative phenomenon. In the course of that analysis, assumptions held by theorists and practitioners of mainstream economics and alternative cooperative economics alike are questioned. As we have seen, the turning point, which brings theory into relation with practice, is the introduction of Gramsci’s concept of the “defined market,” a concept that allows Razeto to incorporate historical social dynamics and relations of force into the analysis.

And yet, we end at a starting point. The critique of cooperative enterprise and the market has enabled Razeto only to suggest what he calls “general observations” about the other side of the traversata, which remain to be deepened and fleshed out by others in theory as in practice. Is the critique of economic theory presented here convincing? Is it sufficient? Will readers respond to the call to reorient cooperative theory and practice? How do these ideas relate to ongoing debates about social and political movements? The answers readers give will determine whether this book has indeed established the groundwork for a new way forward.

- Matt Noyes
 

Chapter 20

Individual Freedom, Cooperation, and the State

1. - The different forms of market organization, shaped by distinct correlations of social force in relation to economic processes, have an impact not only on the efficiency of production and distribution of good and services but also on political and cultural processes and structures. A predominantly capitalist market and a centrally planned market with property largely owned by the State will have a very distinct impact on political life, values and ideologies, social organization, and the forms and contents of the State itself. Likewise, the struggle to structure the economy (production and the market) along capitalist or socialist lines (or other forms in between) is preceded and accompanied by different theoretical-political conceptions and by different State projects.

So, the development of cooperative economic forms by an integrated and self-directed movement and sector, through a process of democratization of the market, will necessarily have cultural and political implications. This is particularly relevant considering that cooperativism is itself simultaneously economic-social and political-cultural and carries with it new relations between economy and politics and between the conductors and the conducted.2

The problematic here is very broad and complex, and its global analysis exceeds the reach and ambition of this work. Thus, in this last chapter we will limit ourselves to proposing some general reflections.

One of the central aspects of the contemporary debate around this problematic has to do with the value of personal liberty, its content and limits, and the forms in which it is secured and developed. Intimately related to this is the question of the functions and scale of the State, of the meaning of democracy and the way it is organized.

The problem of economic liberty and the State has been, in effect, one of the central axes of the intellectual debate of our epoch. The fact that the problem continues to be posed and is always current, demanding new solutions, suggest that we are not comfortable with the existing theoretical elaborations and practical answers. Nonetheless, the positions that have been defined in this debate continue to attract and motivate multitudes who organize themselves politically all over the world, inspiring powerful passions and leading to confrontations between them. The positions taken have defined the principal directions of history and influenced the destiny of every person.

One outstanding characteristic of this theoretical discussion has been an accentuated and growing recourse to abstraction, the counter-position of totalizing ideologies that frame the problem in terms that are practically metaphysical, proposing generic projects for realities that are very distinct.

In this debate, the individual and the collective tend to be presented as two poles of a contradiction; not in the sense of one term versus the other, which would be too simplistic, but in in terms of different articulations of the relation. While for some the individual and their liberty are the bases of a collective good that is precisely the result of the fact that each person freely deploys their initiative with an eye to their benefit and self-interest, for others the individual good is the product of collective liberation and egalitarian organization based on society and its demands. This contraposition is not purely conceptual or theoretical but defines in practice different spaces of legitimate individual action and the boundaries of specific fields of State operation.

In its extreme form, the first conception embraces private initiative unconditionally and allows the State only the role of guaranteeing the rules of the game. In its extreme version, the second conception takes planned State action as the foundation of all development and limits the individual’s role to applying and fulfilling its general directives in conformity with established norms and specifications.

It would be too easy to criticize these extreme positions from a conceptual angle and suggest moderate alternatives, but if the matter is not understood in its historicity this would be of little practical value and importance. The real and actual problem does not present itself as a logical concatenation of arguments but as a succession of historical-political processes.

It is not our purpose here to discuss the problem on the theoretical terrain, much less to seek or propose new solutions on this basis. The problem can not be scientifically confronted on the general and abstract level on which it is often discussed; it is necessary to consider it historically in terms of concrete theory.

In effect, the two elements that configure the relation (or, if you prefer, the two “poles of the contradiction”), the individual and the State, are not given realities but processes that develop over time and space assuming different contents and forms, such that their relation can only exist, and be understood, as something in flux. The individual from two centuries ago, to whom the classics of liberalism refer, is very different from the individual of today, just as individuals from the United States, Angola, or India also differ.

The State that confronted Montesquieu and Ricardo was not the same as that which confronted Marx, and both were much smaller and simpler that contemporary European or Latin-American states. How, then, can it be affirmed that in Victorian England and Chile today the same scheme of relations between economic liberty and state activity will lead to maximization of production and the optimal allocation of resources? Consider the State as it now exists in any developed society, does it make sense to argue that its only function is to perform fiscal functions and provide subsidies? Given the current dimensions of enterprises and multinational economic organizations, what does it mean to postulate development based on individual private initiative? In the context of contemporary internationalization of the market, is economic planning on a national level a proportionate response?

Questions like these lead us to attempt to reformulate the problem in light of a reconsideration of its history. We hope it will enable us to better pose the problem in its real and actual content, free of the thin ideological veils that frame most discussions. Of course, we must limit ourselves here to tracing the broad features of what is a much more complex process, centering our attention only on the evolutionary line that has been predominant in the Occident.

2. – Modern society emerges in a space in which individuals demand a set of freedoms: freedom of thought and expression, of association and political action, of labor and economic initiative. The traditional (medieval) linkages between people and social groups, which depended on the adhesion of all to a common system of ideas and beliefs – their willingness to perform predefined productive and economic functions, passed on from parent to child, and the stable organization of groups of people in hierarchically ordered castes – began dissolving as a result of the affirmation of the individual and individual rights, including the freedom to conduct commerce and initiate production activities, to define their own beliefs and develop their knowledge of reality, and to organize and act in pursuit of political and other power.

This process of expansion of individual liberties amounted to a true anthropological revolution from which emerged a new type of human, or more precisely, new human figures: the homo economicus, the homo politicus, and the modern intellectual. The medieval person was “individual” to the extent their radical free will in the face of good and evil was recognized, that is, they were identified by their moral consciousness. The social order was thus constructed on the level of conscience, through the injection of values and ethical norms common to all. Modern humans are “individuals” insofar as they are subjects of interests and rights, due to their liberty of thought, association, and labor; the modern social order tended to be built on the level of behavior, through the demarcation of external juridical norms.

Individual liberty is an accomplishment of the modern world that has been extended to the point of assuming the character of a universal value. With it society acquired an unprecedented mobility and dynamism. We can attribute the immense development, profoundly revolutionary in its contents and forms, experienced by sciences and technologies, politics, production, and commerce in modern societies Ito the explosion of energies represented by the affirmation of freedom of thought, association, and labor. But these liberties have also led to growing social, cultural and political inequalities and the concomitant diffusion of a spirit of individualism has affected solidarity among people. For all the values it has achieved and the energies it has deployed, the modern individual has serious limits: for it, society is not a place of encounter but a battlefield, a system of relations of force.

With the recognition of freedoms and the growth of inequalities, the problem of the social order became immensely more complex, requiring the organization of particularly difficult types of people.

The freedoms permitted the rise of different and opposing forms of thought and ideology, as well as economic interests, on the individual level and in the form of opposing groups, people organized along the lines of ideological affinities and interests who created multiple associations proposing conflicting objectives. How to unify individuals around shared objectives, in such conditions? How to articulate their different interests in a shared project? How to functionally integrate the different political organizations in a coherent institutional system? How to make individual freedom and social order compatible, avoiding an excess of order that would suppress freedoms or the dissolution of general order through the liberation of human activities?

In the traditional social order, there was some organic connection between the system of direction and power (“political society” as Hegel called it) and the system of economic, social and cultural activities (“civil society” in Hegel’s terms): a hierarchical order, in which each social group and each type of activity kept to its own vital space, and where the leaders and the led had similar beliefs and had to comport themselves in conformity with a similar morality of a fundamentally religious character, that bound them together and tied them to a higher loyalty. (A gap emerged between the theoretical “model” of the medieval social order and its practical realization: society increasingly presented itself as a “mechanical” superposition of hierarchically separated groups.)

The dissolution of the medieval order and the spread of individual liberties provoked a separation between civil and political society, between the system of private activities, collective demands, and the public authorities.

On one side, civil society was transformed completely by a series of changes: the development of sciences and of rationalism and empiricism; the expansion of new methods of production and industrial organization and of commerce, transport and communications; the formation of the bourgeoisie and new social classes; and the florescence of ideologies and political parties. Civil society transformed itself, gaining autonomy with respect to the traditional powers and constituting itself as a space in which human activities could freely unfold.

The historical phenomena through which this process unfolded are well known: the renaissance, religious reforms, positive sciences, lay ideologies and associations, political clubs and organizations, industrialism, mercantilism, etc. On the other side, the government reacted in an authoritarian way to conserve and restore the old order, trying to secure for itself at least the monopoly on violence and bureaucratic administration. Through processes equally well known, political society sought to reinforce its position by configuring itself as a “separate body” above civil society: formation of permanent armies, development of centralized bureaucracy, counter-reform, absolutism, etc.

In this way, the first form of what we can consider the modern State arose on the basis of a territorial unit with national dimensions: the absolutist State. The first figure of the modern State is, then, that of an authoritarian power that imposes itself by force and is structurally restrictive of individual liberties. The counter-position of individual liberty and the State is a product of the constitutive process through which the modern individual and State emerged, and it marks all of the successive history of the problem.

It was in this historical context that a series of political thinkers – from Montesquieu to Hegel – posed a series of problems: how to build a new organic relation? How to overcome the separation between civil society and political society? How to elaborate a new unity between the conductors and the conducted, in a new social order that does not deny the recently acquired individual liberties and takes into account the enormous differentiation that was producing itself on every level in the social life?

The answer that those intellectuals proposed was the project of the modern democratic State. The “model” of State that they elaborated, built first in Europe and, through long and complex historical processes, extended to other regions of the world, is based on the following fundamental principles, that define that which today is known as representative democracy:

Autonomy of civil society with respect to political society. Civil society provides space for the free development of cultural, religious, scientific, political, and economic activities, without State interference. The State limits itself to fixing the “rules of the game,” that is, the general and impersonal norms that are common to all, guaranteeing private property and the rights of citizens. The autonomy of civil society is guaranteed by the subjection of the Government to a constitutional order that establishes limits to its power.

The representational character of political society and of political powers. Political power should be representative of civil society in its multiple expressions and not structure itself as a “separate body.” The legitimacy of power is constructed in civil society and manifested in the form of consensus expressed by the sovereign will of the people. The individual vote, universal and by secret ballot, is the instrument for selection of those who govern, and, in the same way, the people delegate legislative powers in an Assembly in which all the interests, currents of thought, and political tendencies that have significant presence in civil society have proportional expression.

Majority rule, with recognition of minority rights. As an institution, the State is not monolithic but has a dual structure that contemplates a majority government with the legitimate opposition of minorities.

Non-ideological and neutral character of the State. The State does not have a permanent official ideology; it is institutionally and formally neutral with respect to ideologies and forms of thought that are developed in civil society (including religious conceptions). These ideologically empty State forms are filled with the intellectual and moral contents that are developed in civil society, the State being oriented by the conceptions that are majoritarian or hegemonic at a given time. It is only this way that the State protects freedom of thought and expression, and groups with distinct cultural and political orientations can feel that the State does not exclude them a priori, and trust that their expansion in civil society can bring enable them to take on leading functions in politics. The neutrality of the State is not only ideological but also economic and juridical. All citizens are equal before the law, and the State does not intervene in private contracts nor in market relations, but sets norms of general validity. In conflicts of interests, the State acts as a mediator.

Separation of powers. With the object of preventing the concentration of power and self-perpetuation of rule by a particular group which is in a position to direct all the decisive instruments of State power, the legislative, executive, and judiciary powers are institutionally separate and independent in their functioning, with instances of coordination and reciprocal control.

The central idea of this democratic ideal is that political society should be representative of civil society, subordinate to and dependent on an evolving civil society, with a constitutionally limited margin of power. Modern democracy arises, then, as a tendency toward limitation of the State and affirms itself historically in the struggle against absolutism, which, as we saw, characterized the first version of the modern national State.

This theoretical-political model of the democratic State was assumed and adopted by emerging social groups in the context of the development of capitalism and industrialism, in particular by those sectors that had in practice achieved the individual liberty to which they aspired, and that were true subjects of economic, political and intellectual initiative: the bourgeoisie and the modern intellectuals produced by the dynamism of a civil society in formation.

With the ascent of the new bourgeois “block” to State power and with the affirmation of the cultural hegemony of modern political ideologies organically tied to the new capitalist systems of production and exchange, the initial bridge of the separation of civil society from political society is accomplished. The new human type born by the emerging social and intellectual groups and proposed by them as the model for society as a whole – the free individual subject of economic, political, and cultural rights – spread progressively, such that over time more and more people assimilated themselves to this group and individual form of being.

Nonetheless, the process of economic, political and cultural universalization of the bourgeois class and the diffusion of the human type that forms it, soon encounters a structural and historical limit. The status of individual subject of economic and entrepreneurial initiative is achieved by only a very small portion of the population, because that status assumes the possession of capital and property. Structurally, the capitalist enterprise implies a mass social labor force that is not individuated. Large, social majorities remain on the margin of economic freedom, subordinated to capital, constituted as a dependent mass of proletarians who are not differentiated as free individuals. The individual, as the subject of freedom of thought and creative activity, remains a figure limited to the ruling intellectual groups, while great masses remain on the margins of scientific development and modern culture, and fail to achieve the freedom of expression that presupposes the possession of economic means.

A time comes when, as Gramsci puts it, “the bourgeois class is ‘saturated’: it has not only stopped growing, it is breaking down; not only has it stopped assimilating new elements, but it is losing a part of itself (or at least the losses are much more numerous than the assimilations).”3

The liberal economic-political project begins to reveal its contradictions, its utopianism, the lack of correspondence between its theoretical assumptions and the data drawn from social reality; a political model intended to organize free humans, in reality the humans in question are only a small minority of society.

There was in this sense a kind of aristocratic political realism in the installation of “restricted democracies” that recognized the rights of citizens only for certain classes or on the condition of meeting specific economic and cultural requirements. But the pretensions of the model were universal, and it can be affirmed that such partial democratic forms do not constitute a stage in the realization of the project; rather they reveal how, before the liberal democratic project reaches its fullest form historically, it begins to deteriorate. The process is very complex and varied in its manifestations, but, essentially, we see civil society and political society enter a new period of separation. And in this context, many turn to the concept of the State as pure force.

3. – Two principal problems confronted the liberal model, as a consequence of the corresponding processes witnessed in civil society and political society, neither of which was foreseen in theory. We can call them “the problem of representation” and “the problem of efficiency.”

Representation of civil society in the State is a simple principle, but making it concrete in practice is an extremely complex matter. The complexity derives from two interrelated problems. First, civil society comprises not just free individuals in possession of rights, bu also groups of people connected through shared interest and affinity of ideas. Depending on the spot they occupy in production and the technical and social division of labor, great social classes and numerous minor categories and groups emerge, each with particular functions and interests, and with very different amounts of economic and social power. The relatively free circulation of ideas has given rise to the formation of different types of groups: ideological, religious, cultural, and political, each of them offering its own project for social change and its own response or solution to the problems of historical development. The representation of this complex civil society in a unitary State poses, then, more complicated problems than those that the theoretical founders of democracy believed themselves to be definitively resolving through the establishment the universal individual vote.

Second, the representation of particular ideas and interests (individual and group) in a coherent and integrated State whose objectives are not those of any particular individual or group but those of society as a whole (the common good), poses the necessity that each of the particular interests and conceptions, upon becoming a part of the representative State, mutate (as Hegel says) in the general interest, that is that they transform themselves through a process of universalization; which means that such interests and ideas, insofar as they are present in political society are not identical with the ways they express themselves in civil society.4

Both aspects of the problem – the necessity of representing groups of interests and ideas, and the necessity of universalization of particular interests and ideas – set the stage for an organizing response with the installation of the system of political parties.

The primordial function of parties in a pluralist democratic system is, in effect, political representation – in the heart of the State – of the interests and conceptions of the social groups and currents of thought that have formed in civil society. This representation does not imply the simple affirmation of particular interests and ideas in the interior of the State and its institutions, but their transformation, their elevation to the level of the general interest, their becoming compatible with the common good. In a correctly functioning democratic State this is how political activity is assumed to unfold: as a unifying, representative, mediating, and universalizing activity.

The other problem, which we called the “problem of efficiency,” also has a specific complexity. Classical liberal doctrine assumed that the free play of the capitalist market would determine the optimal allocation of resources and the just distribution of income, the efficiency of the whole guaranteed by its operation free of government interference; but historical reality came to contradict this belief, leading the State to assume more and more functions and activities. Moreover, there is a specific problem of government efficiency in the exercise of its political, executive, legislative and administrative functions that can not be ignored, and in regards to which the system of representation is manifestly insufficient: the mutation of civil society is more rapid than the pure representative system’s capacity of composition, coordination, mediation and direction.

The problem of efficiency of democracies has found a response – first theorized by Hegel and then Weber – in the configuration of a State that has two parallel and complementary principles of organization, and consequently two interrelated structures in a complex system of power and leadership. Together with the principle and system of representation (whose principal organs are the political parties, the parliament, the means of communication, etc.) there is a bureaucratic principle and system, whose organs, relatively independent from public opinion, are all the apparatuses of civil and military bureaucracy.

While the representative side of the State is legitimated through the political expressions of the will of the citizens, the bureaucratic side obtains its legitimacy from the technical competencies that it demonstrates and the efficiency it shows in the exercise of its functions.

All the forms of the modern State are in fact a combination of representation and bureaucracy, the subordination of the bureaucratic bodies and powers to the representative bodies and powers being characteristic of State. Thus, modern democracies assume in fact the form of a representative-bureaucratic State in which the representative element dominates, while authoritarian regimes take the form of States where the bureaucratic element predominates and the representative element is subordinated and diminished.

In this new form of democracy, the State presents itself as a combination of force and consensus, of hegemony and control, and simultaneously fulfills functions of intellectual and moral leadership and political domination and coercion.

In this way, before the model of the democratic State reaches its full form, in its historical development, it begins to break down. The process is very complex and varied in its manifestations, but in essence civil and political society initiate a process of separation. On the one hand, some sectors of intellectuals and the bourgeoisie, and above all growing parts of the subaltern masses, tend to organize politically in opposition to the State and to the dominant economic structures. Civil society is divided, and one part does not integrate into the given state system but begins a struggle for hegemony and a new economic-political model. On the other hand, facing the breakdown of consensus and hegemony, political society also tends to disintegrate and the mediating, universalizing, and unifying capacity of politics diminishes considerably. The maintenance of social order requires more and more force and bureaucracy (civil and military), that is, a political power that tends to separate itself as a body that becomes ever more independent from the popular will and consciousness.

Public bureaucracy has developed notably in modern States, with the consolidation of groups of permanent functionaries who escape the control of representative mechanisms and develop their own interests that contradict the supposed neutrality of political power. Facing social movements opposed to governments and to the State itself, the bureaucracy reacts, deploying coercion and expanding the police apparatus. In the context of wars and permanent conflicts with other States, we see an unprecedented expansion of the permanent national military forces.

From the representative-bureaucratic State we pass to another, the bureaucratic-representative. In this new configuration of modern democratic States, relations between economy and politics, and more generally, between civil and political society, and between conductors and conducted, become more complex, more dense, less “organic” and more “mechanical.” This is due to a true crisis of the liberal model, which has its origin in, and at the same time gives rise to, social, cultural, and political processes of vast proportions. As a response to this crisis and as a result of these processes, States evolve in differentiated forms.

In some cases, the social and political energy of the subordinated masses overflows the channels of the established State order leading to a global reconstruction of society. Thus the socialist phenomenon arises from the historical defeat of the bourgeoisie and from the democratic movement in societies which had achieved lower levels of development and consistency, leading to a restructuring of the economic-political system with civil society completely absorbed by the State and subordinated to political society.

In other cases the plutocratic sectors impose their power with the use of force and technically excellent propaganda, while dismantling institutional democracy. The fascist phenomenon is, in essence, the structuring of an authoritarian State guarantees the bourgeois power imposed against instances of political and cultural autonomy, and where are large part of “private” activities tend to be controlled by, or incorporated in, the State sphere.

In other cases, finally, where the democratic structures had achieved greater consistency and where civil society was more homogeneous and cohesive, combinations were achieved in which important elements of the liberal democratic model were preserved alongside the growth in size and development of the economic, political and cultural functions of the State. We see many examples of this diversification; perhaps the most important are the North American phenomenon and the social democratic phenomenon.

The North American phenomenon is, in essence, a State that maintains democratic structures and forms and the dominance of the bourgeois class, but in which hegemony and power are exercised fundamentally through the bureaucratization and functional technification of the very instruments of representation: the bureaucratic side of the State has surreptitiously penetrated the representative element. While the autonomy of civil society is not denied, its nexus to political society is more “technical” than “political.”

The social democratic phenomenon consists of a structuring of a State in which the representative side and bureaucratic side are democratically balanced, but the autonomy of civil society has been diminished; the system carries out a large part of its own activity in the private sphere, but is subject as a whole to the control of a notably enlarged political society.

All these restructurings imply a new notable expansion of the State, and with it an accentuation of the primacy of the political above other ambits of social activity. In the economic aspect, the Great Depression of the 1930s and the resulting policy of expansion of State intervention in the regulation of the marker and the control of certain fundamental means of production, have substantially altered the relations between economy and politics.

The accentuation of the public role in the economy is usually understood as a way of handling the critical disequilibria of the market and an enabling factor for the redistribution of income. It is defined from a certain perspective as “State monopoly capitalism” and from another as the “welfare State.” Its most notable aspects are: the expansion of public demand in order to support production, the rescue of failing enterprises through financing provided on privileged conditions, state employment policies, support for consumption and services used by workers and employees, stimulus for particular depressed economic sectors, etc.

But there is something deeper at work, which makes it into a true “development model.” The State, in effect, not only reestablishes equilibria and redistributes income, but also liberates, mobilizes and organizes new economic energies that found no space for action in a pure capitalist market, beyond the private initiatives that liberalism used for the benefit of only one social class. The State and the public bureaucracy develop new entrepreneurial energies; government calls on the multitudes to join national development projects, mobilizing social energies that it then channels into its own programs. Through planning of certain economic activities, individual and collective forces are rationalized. In many societies that are latecomers to the modern world, it has been the combination of these energies, more than the awakening of individual liberties, that has constituted the principal motor of modernization and development.

Throughout this process, and in this new context, civil society has also experienced profound transformations. It presents itself not so much as the space in which free individuals and inorganic masses act, as the ambit of operations of organizations in which each individual fulfills a defined function and where the destiny of each individual is tied to that of their organization, in the economic as well as the political and cultural realms. In a certain sense, civil society itself has become bureaucratized.

There is also an anthropological transformation, less obvious, perhaps, but no less intense, of that which gave rise to the modern world. The most striking characteristic of this new human type is specialization, and with it a kind of loss of the interior unity of the conscious mind. Insofar as the individual belongs to various organizations – economic, political, religious, cultural – in which they perform particular predefined functions, they think and act in them in conformity with the expectations and demands of the group. Thus, the problem of the social order no longer consists so much of organizing free individuals and controlling inorganic masses, but in functional articulation of organizations in a larger general organization.

The reorganization of the democratic States in accordance with the new equilibria between the representative and bureaucratic elements, and the model of mixed development that combines market mechanisms with State intervention, have produced important successful results in industrialized societies and also in various countries on the path of development. As a result, many societies have experienced decades of considerable political stability combined with accelerated economic growth. And yet, the problem of democracy has not been radically resolved in any of these cases, as the fundamental solution – the creation of an organic nexus between an autonomous civil society in which individuals freely undertake economic, political, and cultural activity, and a representative political society that integrates the different individual and group consciousnesses and wills in a superior unity – has never been fully and stably achieved.

The crisis of democracy presents itself again today, revealing the persistence of the problems and the insufficiency of the organizational responses given.

4. – Let us sum up the most relevant elements of this crisis – which reveal it to be the result of the intensification of already existing dysfunctions – so as to examine the possibilities of overcoming it and the potential contributions that the cooperative phenomenon might make to that task.

– A first element of the crisis, already noted by Gramsci (among others) fifty years ago, consists of the fact that while economic life has moved ever more rapidly toward cosmopolitanism and internationalism, political life has developed in the direction of nationalism. On the one hand, we see transnationalization of enterprises and internationalization of markets, on the other, protectionist policies, arms races between States, and obstacles to commerce and the free circulation of resources, all of it leading to monetary disequilibria and fluctuations in relations of exchange, unresolvable maladjustment with policies adopted for national contexts, attempts to transfer the problems of some nations to others, etc. None of these is a new thing, but all of them have been exacerbated.

It should be noted that this first element of the crisis is not specific to democracies but occurs in all contemporary state forms. Still, this contradiction has had particular effect on democracies given that its has been in democracies that the tendency to cosmopolitanism (not only in the economy but in all of civil society: sciences, culture, ideologies, industry, commerce, etc.) has reached its highest development.

- A second element of the crisis is the massification of the practices of the social groups that have not acceded to the economic, cultural, and political conditions that permit the expansion of individual liberties.

The limited affirmation of these liberties among certain sectors of the elite, who have moreover fomented individualism while disregarding the necessary complement of solidarity and a sense of social justice, has led to a distortion in the processes of socialization, giving rise to the massification of great multitudes of people in various fields of practice: mass consumption, mass recreation and communication, mass politics, mass ideologies, etc.

As the State has confronted, in multiple ways, the pressures brought to bear by the inorganic multitudes, it has come to shape itself in response to one of its principal challenges: the control of the masses. Here, too, the problem is not exclusive to democracies, but its effects have been more relevant in them since democracy is a model of political organization that was elaborated not to direct a society of masses but to organize a society of free humans and associations.

- A third element of the crisis lies in the great social inequalities, including of power, generated by industrial economy and the capitalist market, both of which serve to concentrate immense quantities of resources. Very large subaltern social groups see that their interests, aspirations, and cultures are very poorly represented in the State. This has given rise to the development of broad and powerful social movements and political associations that reject representative democracy, which they consider to be purely formal, and struggle for alternative state projects, especially those of the socialist type. The resulting division in civil society is so profound that it has overwhelmed the State’s capacity to politically integrate the different interests and projects: the State achieves its unity and coherence – precarious, to be sure – by recurring more and more to transactions, compromises, demagogy, and coercion.

- A fourth element of the crisis consists of the growing conflict between the representative and bureaucratic sides of the State. The root of this conflict is structural, insofar as both systems of authority legitimate their power in conformity with different principles and by different paths, engendering a permanent struggle over the spaces of competency assigned to each. The bureaucratic side denounces the inefficiency of the representative side, while the latter calls out the non-representative character of the bureaucratic side, leading to reciprocal devaluation and disdain and preventing collaboration in favor of mutual improvement.

But the principal problem lies elsewhere, and consists of the fact that while the (civil and military) bureaucracy manifests a tendency to set itself apart as a stand alone social body, the representative bodies tend to stick to the interests and ideas articulated by civil society groups, not adequately fulfilling the necessary function of providing intellectual elaboration of those positions. In this way, the two mechanisms that the democratic State has for connecting civil and political society, and the relation between the governed and those who govern, struggle to fulfill their connecting functions: the bureaucracy closes itself off and sets itself up as a body internal to political society, the representative bodies remain tied to the interests of particular social groups and operate within the limits elaborated in civil society.

– A fifth element of the crisis, that we will distinguish analytically but that in reality rather constitutes a specific dimension of the previously underlined elements, is the tendentially expanding separation between leaders and led. That separation is profound because it implies the erection of a true cultural barrier between the two groups: leadership is converted into an intellectual and technically specialized career with its own particular culture and a theoretical language and instrumentation that is accessible only to the leaders, to the point that the led cease to be in a position to exercise authentic control over leadership as a practice. The separation between leaders and led is manifested not only on the level of the State and its institutions but also within political associations and economic organizations in civil society, which makes the problem more grave.

As can be appreciated, most of the elements of the crisis of democracy are associated with the undemocratic conformation of the market, whether because the dominance of capital has blocked the universalization of individual liberties and generated concentration of power, or because the State has widened its sphere of action, restricting the autonomy of civil society and the spread of some individual liberties.

It appears, then, at this level of analysis, that stability in a democratic State depends on the democratic conformation of the market; if this is so, the democratic significance of cooperativism, in the economic and political spheres, is apparent. But we should examine this aspect of the cooperative phenomenon in more specific terms.

5. – The crisis of the modern democratic State, as we have defined it in view of its outstanding characteristics, appears as an epochal process and problem. Consequently, it is not amenable to a simple conjunctural solution. Democracy is the highest form of State organization that has ever existed, and it contains elements of universal value and validity not tied to historically determined situations. Analysis of its crisis does not lead us to try to discard it, or replace it with authoritarian alternatives, but rather to rethink it, renew it, correct and adapt it to the new conditions of contemporary society. The theoretical model of the State proposed by the intellectual founders of the modern democracies is based on essential values of permanent validity insofar as they are universal, but it is not the only possible form of State organization in which to embody them in practice.

To tackle the crisis from the roots, we need to return to the historical-political problem that the democratic State was intended to resolve but which has come to take on different forms, with other contents, in different historical conditions: the problem of making individual liberty compatible with social order, avoiding an excessive order that represses freedoms, on the one hand, and a liberation of individuals that dissolves the general order, on the other.

The classical liberal model approached the problem through the search for an appropriate form of state organization, that is, it approached it from the side of social order, emphasizing specific organizational actions. The other pole of the tension, the individual, was the object of attention only insofar as it was a subject of rights and a protagonist of liberty. The type of individual that emerged and thrived in the dominant system of production and markets is the competitor, a person focused on increasing their wealth and power who sees other free individuals as adversaries in a system of relations of force, and conceives of people in subordinated social sectors as masses to be used instrumentally. The individual that the liberal system is supposed to integrate is self-centered and lacks a consciousness of solidarity and concern for the common good. It is, in that sense, a particularly intractable subject from the point of view of the State and its political functions and tasks.

In a capitalist market, it is not just the individual, but the structure of civil society as a whole, that makes the democratic political composition of society difficult or virtually impossible. A society of classes with opposing interests living in a state of perpetual conflict does not seem to be the most apt foundation for a representative democratic State. In conditions of irreducible social conflict, politics tends to unfold as the prolongation and continuation of the economic-social struggle by other means.

The development of cooperative economic forms founded on labor has clear democratic political potential because it transforms both civil society and the individual from within.

The cooperative way of production implies the exercise of individual liberty and private economic initiative as much as capitalism does; in the form of cooperative enterprise and the integrated cooperative sector that we have hypothesized, individual responsibility and risk are the basis of benefits and compensation that, too, are individual.

This is not the basis of an egoistic individualism but perhaps something that we can call personalism or a new individualism: private initiative in the framework of association and solidarity.5 In this framework, economic activity has an ineradicable political and cultural dimension; personal decisions are made through shared decision-making in community, and individual benefits are distributed equitably.

In addition, because all of the members form part of the leadership of the organization, they are in a position to act as free individuals with their own initiative. Here the liberty of some does not imply the submission of the others, but is enhanced by their liberty.

Cooperative economic organization creates, then, free individuals with a sense of social bonds and solidarity and provides opportunities for their growth. The bourgeois economic schema, in contrast, has a limited capacity for assimilation of free individuals, and, once saturated, expels more individuals than it integrates.

The individual recruited and educated by a cooperative organization responds to the requirements of a democratic social order, as does the social structure that results from this mode of production and exchange.

In a democratic market, power is molecularly distributed among all the members of society, and social groups that differ according to the function they fulfill in the different spheres of society do not enter into antagonistic conflicts but relate to each other functionally in a complex system of cooperation. As a result, the representation of these different groups in the heart of the State is notably facilitated and their interests and points of view are made universal and compatible; these are decisive functions that democratic politics must fulfill.

The diffusion of cooperative forms and methods favors the recomposition of the organic relations between civil and political society, acting on both. To defend and expand individual liberty in the face of attacks, and overcome the crisis of democracy, it is necessary to reduce the scale and power of the State, something the development of cooperativism and solidarity economy themselves assumes and implies.

The reduction in size of the State and the containment of political power are prerequisites for the autonomy of civil society, or, in other words, the existence of a space for truly free economic, political and cultural initiative. But if the reduction in size and power of the State are understood only in the sense of freeing the oligarchic market and capitalist business activities from all social or public control, or as the simple reaffirmation of the liberal postulate on the basis of which modern representative States were founded – ignoring the powerful structural and historical reasons that led precisely to the expansion of the State – it is all but certain that the result will be an accentuation of the crisis that we want to confront and not an effective process of overcoming it.

The shrinking of political society will have a truly democratic meaning only if it is part of a global process of economic, political and cultural transformation. The power concentrated in political society must not be transferred to powerful economic groups in civil society but redistributed throughout the population with distinct methods and criteria.

In any case, it is evident that we need to overcome the statolatry which has characterized the thought of most 20^th century intellectuals and political leaders.6

Since the first decades of the 20^th century, the solutions proposed to address the various manifestations of the separation between civil and political society have been dominated by one overarching tendency: the absorption of civil society into political society, with the consequent hypertrophy of the State and its bureaucracies, and the super-politicization of human activity.

The construction of a new society “on a human scale” requires an inverse process, a progressive reabsorption of political society into civil society; a process through which individuals and intermediate organizations reassume initiative and control over activities, rights, and decisions that have become concentrated in the State and excessively politicized. Such a process does not imply a depoliticization of people and associations but rather a socialization of the political.7 Concentration of the practices of political power and politics in a central organ – the State – and their domination by organizations and professional political specialists (in the Weberian sense), must end.8

It is not only a question of the size and power of the State but also of its internal structure. Overcoming the crisis of democracy requires a profound reform of the State. The principal outlines of this reform can not be other than a process of de-bureaucratization (restriction of the field of action of the bureaucracy and its subordination to the representative instances) on the one hand, and a vigorous and profound renovation of the procedures and the bodies of representation, on the other. Cooperative organizations and the cooperative movement are fertile ground for discovering new forms of organization and leadership, a terrain for experimentation in new types of representative procedures and bodies, as much from the point of view of the relations between the leaders and the led as of the relations between the criteria of representation and technical efficiency.

Insofar as cooperation introduces new relations between leaders and led it contributes directly to the overcoming of other elements of the crisis of democracy. Together with the development of individual liberty in the heart of the great subordinated social groups, it exercises a specifically de-massifying function in that it leads to self-managed forms of control over consumption, labor, communication, entertainment, etc.. Through self-management and collective leadership technical competencies are diffused, thus eliminating one of the foundations of bureaucracy in decision-making processes.

The democratization of the market and the development of the cooperative method and movement offer a way out of the tendential contradiction between the cosmopolitanism of economic life and the nationalism of political life. A perfectly competitive market is inherently open to the exterior, while protectionist policies usually are nothing more than instruments to defend and reproduce monopolistic conditions.

For the most part, exaggerated nationalism is a means of social and cultural integration used by the State to overcome an absence of real ties of solidarity among the members of a national community, in situations in which individualist interests and social differences and conflicts are hypertrophied. In that sense, cooperativism acts on the causes of the problem. Unlike the processes of transnationalization of capital, the cooperative movement creates economic, political and cultural links between peoples without generating relations of dependency between nations.

These general observations on the implications of cooperativism for the refoundation of political democracy, which I have barely sketched out here, should be deepened through other, broader, studies.

In conclusion, let us only reiterate that we will likely never see a democratic market and a democratic State in a complete form or a pure state. Certain imperfections can not be definitively removed; this is true of every human institution. But the fact that social perfection can not be achieved does not reduce one bit the dignity and validity of transformational activity that constantly seeks to approximate the situation that theory identifies as ideal.

• 1

  The Aphorisms of Franz Kafka, Trans. Shelley Frisch, Princeton University Press, 2022

• 2

  “Dirigentes y dirigidos” – I borrow the English terms from Michael Lebowitz’s The Contradictions of “Real Socialism”: the Conductor and the Conducted (Monthly Review Press, 2012). using “leaders and led” where the meaning is more specifically political-organizational. – MN

• 3

  Antonio Gramsci, Prison Notebooks, Volume III, Notebook 8, #2, p234. Columbia University Press, 2011.

• 4

  An apparent reference to the Philosophy of Right, 3:3, The State, though the word “mutate” does not appear. – MN

• 5

  Personalism played an important role in the thought of theorists and practitioner of cooperativism José María Arizmendiarrieta, as explained in Joxe Azurmendi’s The Cooperative Man, GEO.Coop, https://geo.coop/gleanings/cooperative-man-translators-introduction. See also Jacques Maritain’s The Person and the Common Good, Scribners, 1947. An early Japanese cooperativist, Nakanishi Goshu, centered his analysis on a similar concept, shujinko, or protagonism. – MN

• 6

  See A. Gramsci, Prison Notebooks, Vol. III, Notes 130, 142, Columbia University Press, 2011. – MN

• 7

  See for example Jérôme Baschet’s account of Zapatista political organization in Adios al Capitalismo: Autonomia, socieded del buen vivir, y multiplicidad de mundos, Futuro Anterior Ediciones, 2015. – MN

• 8

  See Max Weber, Politics as a Vocation, Oxford University Press, 1946. P 8. – MN