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Catalyzing worker co-ops & the solidarity economy

Co-ops, Market Economics, and Marx

August 8, 2014
Carl Ratner
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by Carl Ratner

The cooperative movement, in general, seems to associate co-ops with non-capitalist market economics. This is articulated by J. Restakis (2010) in his popular book Humanizing the economy: Co-operatives in the age of capital. British Columbia: New Society Publishers.

While non-capitalist markets are free from many of the exploitive problems that are endemic to capitalist markets, they still may contain problems that impede cooperation. For the cooperative movement to realize cooperation, these problems must be avoided. In my view, the clearest description (and explanation) of market economics is provided by Karl Marx. While he is best known for his powerful critique of capitalist economics, he probed its precapitalist roots to discover many problems that arose there. I’d like to summarize Marx’s critique of simple commodity production so that the cooperative community can discuss whether C-M-C is a viable basis for cooperatives, or whether an alternative economic model is needed.

(Marx and Engels believed that the cooperative movement was a progressive one. Marx, for example, said, “there was in store a still greater victory of the political economy of labor over the political economy of property. We speak of the co-operative movement, especially the co-operative factories raised by the unassisted efforts of a few bold "hands". The value of these great social experiments cannot be overrated. They have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labor need not be monopolized as a means of dominion over, and of extortion against, the laboring man himself; and that, like slave labor, like serf labor, hired labor is but a transitory and inferior form, destined to disappear before associated labor plying its toil with a willing hand, a ready mind, and a joyous heart” cited in Ratner, 2013, Cooperation, Co-ops, and Community in A Global Age. Springer, p. 98. Given this positive assessment, it is curious that Marx has been excluded from the contemporary cooperative movement.)

Marx called the pre-capitalist market “simple commodity production.” He depicted it as exchanging commodities via the mediation of money: commodity-money-commodity (C-M-C). In contrast, capitalist production is depicted as money-commodity-money (M-C-M’) where investment in commodities (especially labor power) is used instrumentally to increase the value of money. Simple commodity production is exchange of equivalent values via money.

Exchange of products on a market presupposes that manufacturer and consumer are separate and independent. This is why the products are exchanged from one party to another. Exchange by independent producers and consumers makes products commodities. They have exchange value that determines the amount in which they are exchanged for another product, or money.

In simple commodity production, the default position of producer and consumer -- from which they begin and return from each transaction -- is separation. Isolation is interrupted by temporary transactions across the barrier of a sales counter. As soon as the transaction is completed/terminated, the individuals revert back to their solitary state and await the next temporary, impersonal transaction. Isolated individuals are brought together on a temporary, contractual basis by business transactions. Social interactions hinge on exchanging commodities. And the exchange involves each individual (producer and consumer) pursuing his own self interest (selling as expensively as possible, or buying as inexpensively as possible) on opposite sides of the sales counter.

In simple commodity production, the buyer and seller are instrumental means for the other's happiness. I produce things for you so that I can earn money. Conversely, you give me money so that you can acquire my product and be happy. Monetary exchange replaces personal relationships. Neither side is interested in the other person; their interest is in obtaining some object from the person (product or money) that will make oneself happy.

Even in simple commodity markets you don’t give someone what they need because they need it. You only give them products according to how much money they give you. The personal relation is interrupted by the money relation. In fact, the money relation dominates the human relation. You lose interest in the buyer’s need, you are only interested in their money. If she has no money, you do not provide her with your product.

In addition, simple commodity production, as well as capitalist production of commodities, operates on the principle of supply and demand. This means that times of great need are precisely the times when prices rise to make needed goods difficult to obtain. This principle of supply and demand contradicts altruistic behavior. It leads to kicking someone when they are down.

Marx elucidates another problem with commodities and markets. We don’t simply acquire products based on their use value for us, we acquire them because of their exchange value as well, i.e., how much money they are worth. This changes our appreciation of products from their intrinsic properties that we use, to their external monetary property.

Furthermore, because the commodity market is a system of separate, independent individuals, when you sell your product, you lose all contact with it. It no longer belongs to you, but belongs to another person who can do anything he wishes with it. Your product has become alienated from you. Marx says that commodity circulation requires appropriation (of products) through alienation. The human contact/continuity with the product he makes -- the realization of the producer’s thinking, effort, creativity, involvement, and devotion -- is broken in the commercial sales act. The buyer appropriates the fruits of the producer for herself and divests the producer of them. The market thus disrupts contact/continuity of the producer and product just as it disrupts contact/continuity of producer and consumer. This is the antithesis of integrated, cooperative relations between people and products.

Furthermore, the fact that I have to sell my product in order to earn money means that my product has become a means for me to earn money. This further disrupts my organic relation with my product, it further disrupts the extent to which I can realize myself in my product -- since I ultimately must dispose of it for money. How much, then, can I involve myself in it, express and develop myself in it?

Yet another irony of the simple commodity market is the fact that it is an alien entity to the participants and limits their freedom. This may sound paradoxical because the market is composed of independent individuals who “truck and barter” and negotiate and select and agree and refuse. Doesn’t this mean that the market is a product of their individual agencies? How can the market be alien to people if it is their product?

In The Grundrisse Marx explains that fragmented, alienated individuals in the commercial market do not control the market. The reason is that they are isolated from each other as independent producers and consumers. Each makes independent decisions without knowledge about, or influence on, other peoples’ secluded actions -- will they buy my product, how many others will produce it and compete with me, will others produce the product I want? Each one’s fate depends on the others’ actions over which one has little predictability or influence. This is alienation and unfreedom to control one’s social life.

Marx said, “There can therefore be nothing more erroneous and absurd than to postulate the control by the united individuals of their total production, on the basis of exchange value, of money,... The private exchange of all products of labour, all activities and all wealth stands in antithesis ... to free exchange among individuals who are associated on the basis of common appropriation and control of the means of production.”

Engels explains how market exchange contradicts collectivism-cooperativism.

At all earlier stages [before market exchange arose] production was essentially collective, just as consumption proceeded by direct distribution of the products within larger or smaller communistic communities. This collective production was very limited; but inherent in it was the producers’ control over their process of production and their product.. They knew what became of their product: they consumed it; it did not leave their hands…With commodity production, production is no longer for use by the producers, but for exchange, the products necessarily change hands….the producers have lost control over the total production within their own spheres…(all citations may be found in Ratner, 2013, pp. 114-117).

This analysis of simple market economics raises the question of whether they inherently impede full cooperation and therefore must be replaced by an alternative, or whether contemporary co-ops can overcome their problems and flourish with simple commodity production.






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