Economic Update: Socialism & Worker Co-Ops

Economic Update: Socialism & Worker Co-Ops

Welcome, friends, to another editor of Economic
Update, a weekly program devoted to the economic dimensions of our lives: jobs, incomes, debts—our
own, our children’s. I’m your host, Richard Wolff. I’m going to continue today with a program
that we have been developing over the last several months in which basic issues that
you’re concerned about, that you write to us about, become the subject for an entire
program. Today that subject is the relationship between
modern socialism, on the one hand, and the movement to create worker co-ops, on the other. The relationship between these two has become
very intimate, let’s call it—very close. I want to explain why and what the implications
of that are. First, socialism has been going through—particularly
over the last thirty to forty years—an intense period of self-criticism and transformation. And that’s as it should be. A healthy movement, a healthy system is one
that questions itself and changes itself when it finds flaws, failures and so forth. Every system has strengths and weaknesses. It is healthy to identify the latter, for
sure, and do something about them. And that’s what socialism has been doing. And socialism identified one of its weaknesses
as being an over-concentration of power in the hands of a state apparatus. It has asked itself—this movement of socialism—what
went wrong there. How do you deal with that problem? Are there forms of socialism that can make
sure, in some basic way, not to produce too much power in the hands of too few people
in a state apparatus. And worker co-ops, as I will show, are a way
to do that. But before I go on, I want to contrast a socialism
that is going through self-criticism with a global capitalism that is not doing that. And therein lies a big story. When capitalism is in a declining phase, which
I believe it currently is, it is perhaps not surprising that its chief spokesmen and women
are afraid to confront their failures and flaws. Afraid of self-criticism because their system—they
hope—will somehow last longer if they pretend it doesn’t have flaws and failures. Let me give you an example. The Trump administration, the Republican Party—and
a good bit of the Democratic Party too—currently act as though capitalism is the greatest thing
since sliced bread. And if you are going to admit that it has
problem, you locate them elsewhere. You know, immigrants are somehow causing whatever
difficulties we have or unfair trading partners in China or elsewhere are causing all the
trouble. If only we became more nationalistic, if we
had a pure American capitalism—well, then, there would be no problem. Because the capitalist system is always left
uncriticized, not found wanting and hence no exhaustive self-examination is really allowed. It’s celebration time, not criticism time. Socialism, for a whole host of historical
reasons, does not have that luxury and that’s a good thing for the development of socialism. So where does the critique go? It goes as follows. Socialism focused on what we might call the
macro level of society—the big picture. And in that process it decided that the problems
of capitalism that socialism would remedy were the following two basic ones. Number one, by leaving factories, stores,
farms, offices in the hands of a few people—the owners of businesses, the boards of directors
of big corporations, a tiny minority of our people—what would happen is that the economic
system would be controlled by them, for their own benefit, so that the people at the top
would become the most wealthy—which they kind of have—and the most powerful—which
they kind of have. And so the socialists reasoned that the way
to deal with this problem was to take the property in means of production—factories,
offices and all of that—and transfer it from private individuals, enriching themselves
because of their positions, and give it instead to the state to manage these properties, these
productive properties, in the interests of the whole society, hence the very name: socialism. And the second thing socialism would do would
stop using markets as the way to distribute things, and the reasoning of socialists there
was always very simple. Market allocate things that are produced or
resources to the people with the most money. And for socialists this made no sense at all,
since the rich at the top who own everything are the ones with most money, so once again
the system benefits them because they’re in a position in markets to dominate, just
like they’re in a position everywhere else—because they own the means of production—once again
to dominate. So the socialist said let’s not have markets,
let’s have the government distribute goods and services and resources in a democratic
way, rather than using the market which favors the rich. And socialists therefore focused this way. We’re going to take the property in means
of production from the private owners and make them state property and we’re going
to stop markets from distributing things and have government planning do it—that was
their idea. The problem turned out to be not that this
didn’t help economic development. As I like to remind viewers and readers, the
economic development of the two societies that went the furthest in this way—the Soviet
Union in the 20th century and the People’s Republic of China in the 21st century—were
able to achieve rates of economic growth far faster than societies who did not do this
including the United States, Western Europe and so on. So if that was the goal of this kind of socialism
it succeeded, even though it put way too much power in the hands of the government and that
had bad consequences as socialists are the first to understand and agree, having lived
through it. So what happened in the self-criticism of
socialism was to ask the question was there something missing, was there something wrong
in how that kind of socialism, which was successful in economic development but was unsuccessful
in the larger social questions of civil liberties, civil rights, cultural freedom and so on. And they came up with an answer. Yes, the problem—these self-critical socialists
have said to themselves and others—is this: that socialism addressed who owned the property
and socialism addressed how things got distributed. But what socialism didn’t address in the
twentieth century, at least not in any systematic way—neither in Russia nor in China nor in
the other societies that have experimented with socialism—what they didn’t do was
transform the workplace. The little workshop, the factory, the office,
the store, the farm. They didn’t understand that if socialism
is going to be established you don’t just transform who owns the property and you don’t
just transform markets into planning, for all the reasons socialists give, but you also
have to transform the workplace, that place where people spend all of their creative time,
or at least a large part of it, for their entire adult lives. Five days a week, all the rest of it. The workplace. And if you don’t transform the workplace—wow… You may set in motion a conflict, a contradiction
between the big changes you’ve made in property and markets and the unchanged workplace and
it may allow for that workplace, unchanged, to undo the changes you made at the higher
level and there’s evidence in Russia and China that precisely that happened. Well, what then is the difference between
a socialized workplace and the capitalist workplace we inherit? Well, I can begin by telling you the funny
story—or I hope you’ll find it funny. In many cities in the United States, and I’m
sure the same exist elsewhere, there’s a remarkable place a lot of workers visit when
they’re done with their day at the factory or the office or the store in capitalism. They pass by a local drinking establishment. You know, a bar. And in the window of the bar in big letters
they read the following words: happy hour. Why would they call it that? Well, my guess it is it has a lot to do with
underscoring that what you just finished, your work time, was unhappy hours and here’s
a chance with a little alcohol to offset the unhappiness with some happiness. People in capitalism feel oppressed, exhausted,
abused, misunderstood, mistreated, exploited and that language we have for that experience
is immense because the experience is virtually universal. The whole idea of worker co-ops is to change
that. To make the workplace democratic—that’s
right. To install democracy in the workplace where
it has been excluded for the entire history of capitalism. It’s as if the idea of being a place where
the decisions that impact you are decisions you have the right to participate in—that’s
what democracy means—it is as if that right, that commitment, which applies to where we
live somehow shouldn’t apply to where we work. The whole notion of worker co-ops runs against
that. Yes, it should apply. In fact, if you don’t have democracy in
the workplace, you don’t have it where most adults spend most of their lives and therefore
you are not a democratic society unless and until you include the workplace where democracy
ought to be installed. And indeed it’s an old dream of working
people—the majority—to have democracy in the workplace. That’s why slogans like freedom and democracy
and liberty got going, because people wanted something—not just outside of the workplace. They wanted liberty and freedom and democracy
in it, because they spend so much time there. That’s partly why they are unhappy and need
a happy hour after work. And people have been organizing worker co-ops
for centuries. It’s all over history if you know to look
for it. Today let me give you an example that many
of you have heard of: the Mondragon Corporation in Spain. Started out over fifty years ago as a little
worker co-op of six workers put together by a Roman Catholic priest, Father [Arizmendiarrieta]
in the north of Spain. Fast forward to now, Mondragon is a family
of about 250 worker co-ops, all run democratically within each co-op. It’s the seventh largest corporation within
all of Spain. It is a democracy of working people and it’s
not the only one, but it’s the biggest and most successful that has grown real well over
the last fifty years. So modern socialism, the one that emerges
from the self-criticism of 20th century, is a 21st century socialism that puts first and
foremost the transformation of the workplace finally to bring democracy to that central
part of our modern life. We’ve come to the end of the first half
of today’s program. We will continue, but before that I’d like
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appreciation to the Patreon community that is such an important source of support and
encouragement. We will be right back. Welcome back, friends, to the second half
of today’s Economic Update. This is a program devoted to the relationship
between socialism and worker co-ops. In the first half we talked briefly about
the worker co-ops as the democratization of the workplace and now I want to focus on what
that means, what that implies and what that enables so that people can understand why
a socialism would move in that direction. Let’s begin with the practicality, the immediacy,
the local nature of worker co-ops as a central feature of socialism. Transforming your workplace from a place where
you did the work somebody else told you to do and lived with the results of what somebody
else decided, but transforming it into a place where are part of the decision making apparatus,
where you participate in designing and directing and not just performing like a train seal. This is something that will transform people’s
lives, they will understand that. It will be a socialism that’s immediate
about our lives on a daily basis, not something done far away in some government office that’s
abstract in terms of how it functions. You—the working person, the majority—will
be at the core of such a concept of socialism. It also makes socialism something that is
democratic at the base. The power of the people will be focused on,
embodied in the fact that the people own the wealth—the productive wealth of society. That’s what’s hampered democracies so
far. You can have all the voting and everybody
voting that you want, but the power of money is concentrated in a tiny minority, they corrupt
that. They will have influence based on their wealth
and economic position that undermines the whole point and purpose of political democracy. What the worker co-op does is democratize
the power and the wealth by putting it in the hands of working people. If you want the economy to work for the people
you’ve gotta put them in charge. If you want democracy to be genuine and not
just a formality of voting, you’ve gotta put the people in charge and they have to
be in charge of the economy, otherwise the minority that in capitalism controls the economy
will also pervert the democracy and I present the United States and other countries like
it as prime examples. The second benefit, if you like, of a socialism
that includes and focuses on worker co-ops has to do with undermining the critiques of
socialism that have been developed over the last century by people who want to protect
capitalism—and are afraid of socialism—by denouncing socialism for its statism. That is, for the socialisms that were powerful
states, like Russia and China and others. By saying that socialism is inherently and
necessarily statist, which clearly is not the case, but which has been a very effective
critique of socialism by arguing that it’s a big powerful state that we don’t need
or want. One of the reasons you get interested in worker
co-ops is it’s a way of defining socialism that has to do with people’s immediate work
lives and has nothing to do with the state. But I want to stress that socialism has a
history, particularly here in the United States, that also suggests that if you define it in
a way that touches and means something to the mass of working people, you can get very
far indeed. It’s not a hypothetical, it’s the American
history that teaches that lesson and I want to make that really clear. To do that, I’m going to go back a hundred
years ago to the beginning of the twentieth century when there were three successive efforts
by socialists to run for president of the United States. Bernie is not the first one. And I want you to follow me in looking at
how they did to learn a basic lesson. The first time the socialists ran a candidate—a
man named Allan Benson—was in 1916. He ran for president, he got 600,000 votes
in the United States, which was approximately 3% of the total. Four years later, the next presidential election
1920, the candidate for the socialists was Eugene Victor Debs. He got 900,000 votes—that’s a 50% increase
over those four years—and that amounted to 4% of the total vote cast. Four years later, in 1924, the socialists
ran again but because of the beginning of an anti-socialist crush from the government
they didn’t call themselves socialists—they called themselves progressives, but it was
the same program basically. And the candidate in 1924 was Robert La Follette
of Wisconsin. He got—ready? Five million votes, a five time increase in
four years and that worked out to a whopping 17% of the total vote. In other words, across those years socialism
showed that it could and it would excite and engage the American people. The notion that socialism is somehow unable
to find footing in the United States is false. It has in the past and indeed the reaction
to the fast-growing power of socialism brought down the entire apparatus of repression in
this society, as businesses and capitalists were terrified and used the power of government—which
their position as the wealthiest and the most powerful business interests gave them—to
crush it. Indeed, the last century has been an unremitting
attack on everything having to do with socialism because if you hadn’t done that, what those
elections at the beginning of the twentieth century showed is that socialism finds indeed
a fertile soil in the United States. And a new self-critical socialism, allied
with the movement for worker co-ops, for the democratization of the workplace, is in a
position to repeat that history this time around and perhaps with less vulnerability
to what is now a tired old repression focused on the state, the power of the state, which
is associated with socialism but will have a much harder time associating with a socialism
that’s focused on worker co-ops that have nothing to do with the state. By the way, associating socialism with a big
state is a conceptual mistake, as well. One of the most famous arguments in favor
of a diminution of the role of the state, of getting rid of the state, was made—it
may surprise you—by Vladimir Lenin, the original leader of the Soviet Union, who coined
the phrase “the withering away of the state” which he advocated. Had he been leader longer—you know, he had
a brain aneurysm four, five years into the Revolution and died, leaving the economy to
others and the society to others who didn’t have that attitude—but the notion that in
socialism there’s some celebration of the state misunderstands that movement in a way
that is not exactly innocent. The next implication of worker co-ops in socialism
that I want to stress for you is to explain to you how they could be a very powerful,
mutually reinforcing alliance. Imagine a political party, a socialist party
in the United States, that advocated a transition from capitalist enterprises to worker co-ops. Here’s how that party would work. It would be the contradiction of—the difference
from, the opposition to Republicans and Democrats alike, because those are parties that depend
on capitalists for their donations by and large, do capitalists want, support the capitalist
system—I know that, because they both say so, over and over again. So the socialist party would be—no, no,
here’s where we’re different: we are for the democratization of the workplace. And they would, indeed, push for laws, regulations
enabling worker co-ops to grow and expand, and in turn the worker co-ops would be the
local basis for support for the socialist party, just the way the corporations across
America—capitalist corporations—are the supports for Republican and Democratic parties. We would begin to see a real political debate
in the United States. It would be remarkable and the symbiosis,
the relationship between a socialist party that did advocate something really difference
and the worker co-ops that would be in a sense its political base across the country is a
winning formula for changing this society. In office, here’s some of the things a socialist
party could do, and indeed the way is being shown by the Labour Party in England. One of the first things the Labour Party is
committed to do—and a socialist party in America would do the same—is to make a law
called the right of first refusal. No company can leave the country, sell itself
to another one, go public with stocks or simply cease to exist without first giving its own
workers the right of first refusal. That is, the workers can buy the company from
whoever owns it now and convert it into a worker co-op. And if you’re wondering where the workers
would get the money to do that, the government with a socialist leadership would lend them
the money, which is exactly what Mr. Corbyn and the Labour Party in England are proposing
to do. Finally, there’s this old argument of people
who love capitalism and fear socialism—that somehow capitalism is innovative. They like to point to high-tech companies
and say, “See? Capitalism is developing these big companies.” I like to answer that with a story. Years ago I was approached by engineers from
Silicon Valley in California and they asked me to come out there and talk, which I did. And here’s what happened. I had meetings and I learned the following,
that some of the most important breakthroughs in modern, high-tech technology—telecommunications,
computers, hardware, software and so on—were not made in big capitalist corporations. On the contrary, it turns out that every year
in Silicon Valley, high-paid engineers working in big companies—you know, Cisco and Apple
and IBM and all of them—quit. They can’t stand it anymore. That’s what they say. They don’t want to come to work in a tie
and a jacket. They don’t want to come to work to be told
by some sales person what they should be studying or not on their software platforms and so
forth and so on. They want to be creative—that’s their
word—they want to be innovative—that’s their word, and they can’t be in a capitalist
corporation. So here’s what they do. They take their laptops and they leave, often
leaving $200-, $300,000 a year jobs and they get together in a group of twenty and twenty-five
in somebody’s garage and they have a little rule: here we come to work in Bermuda shirts
and a Hawaiian shirt. Here we come to work feeling good about ourselves—no
bosses. Everybody’s an equal here, we all make our
decisions together. Monday through Thursday, we work on our software
programs and we work on our computers, and Friday we sit around making the decisions
of what to produce, how to produce, where to produce and what to do with the revenue
our creative efforts realize. It’s a democratic workplace. Wow! That’s where the creativity blossoms. That’s where many of the great breakthroughs
were achieved. Even some of those companies went back into
being capitalist companies—that can happen. But my point is the innovation credited to
capitalism is misunderstood. It often comes precisely from people who have
walked away from capitalism to create a worker co-op even if they don’t know the phrase
“worker co-op” to describe what they have done. A new socialism, connected to and embracing
worker co-ops as the transition from capitalism to a better system is a socialism that you’re
going to be hearing more and more about in the months and years to come. I hope you have found this conversation of
interest. The movement in the direction of socialism
is underway in the United States in a way it hasn’t been for a century and this time
it is going to do better. I look forward to speaking with you again
next week.

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