WikiTribune interviewed economist Richard Wolff on Wednesday September 18 as part of the community’s reporting on “worker cooperatives,” a business model where employees own and manage companies.
The New York Times once referred to Richard Wolff as “…probably America’s most prominent Marxist economist.” Wolff opposes the centrally controlled systems that acted as a foil to Western capitalism during the Cold War. Instead, he believes democracy can deliver a system where workers control all aspects of production.
Wolff is an advocate of using cooperatives as a path to a more equitable economy, as laid out in his book Democracy at Work: A Cure for Capitalism.
This interview has been edited for clarity. Audio of full 20 minute interview is available below.
WikiTribune: Why have worker cooperatives failed to catch on in the United States, despite centuries of history in the country?
Richard Wolff: We don’t have anything remotely to a level playing field. If you go to a bank in the United States with a group of workers who want to collectively own and operate a business, the banker typically stares at you quizzically, not aware of what you’re talking about.
The same thing with investing. There is no stock market for cooperatives. There is no curriculum neither in business schools nor in public schools about this alternative. The irony is not that there aren’t more cooperatives, it’s actually the opposite. That despite a society which thinks about business as something done by an owner, worker co-ops have still managed to exist.
WT: Workplaces are very hierarchical arenas, but that’s also championed as a good thing. President Donald J. Trump promoted himself as a businessman who can get the job done. Are hierarchical structures inherently more efficient and nimble?
RW: No, I don’t think so. It has been a classic excuse of people who dominate others to suggest that what they’re doing is necessary for the economy, and even for the wellbeing of those who they dominate. When we had slavery here in the United States, or anywhere in the world, nothing was more common than to hear the master explain to his slaves how there were two kinds of people in the world: master types and slave types… We don’t believe that anymore, but for hundreds of years, millions of people did. The same thing applies to lords and serfs in the period of feudalism.
So, I’m not surprised when employers say they are there because of their greater knowledge, management skill or entrepreneurialism, or that a employee should be glad to be subordinated because this subordination is the royal road to efficiency. I don’t believe any of it, but we don’t have to argue it in the abstract. Let me give you a concrete example…
The greatest worker co-op in the world is the Mondragon Cooperative Corporation in Spain… Over the intervening 60 to 70 years of its existence, it has successfully out-competed countless capitalist enterprises in the same industries.
Two American corporations were so impressed by the Mondragon Cooperative Corporation that they pay Mondragon fees to allow their scientists to work alongside the Mondragon scientists because of their advanced technology.
These two American corporations I’m referring to are General Motors and Microsoft. They have the confidence that this is a proven experiment, that these worker co-ops can and did out-compete the capitalists they were in competition with. I haven’t the slightest doubt in my mind that given even a minimally level playing field, worker co-ops can succeed.
(Background: Mondragon facilities produce General Motor products, in 1991 the cooperative company was named GM’s best European supplier. Microsoft and Mondragon established development centers in Spain in 2008).
WT: Corporate America refers to the term “psychological ownership,” the idea being that people work harder and are happier if they feel agency over their jobs. Do you think that the feeling of influence and democracy in the workplace is just as effective as actually having real control over decision making?
RW: No. Workers by now have figured out that no matter how many gimmicks are thought up in MBA programs whether it’s meetings with supervisors, or suggestion boxes, there is no substitute for exactly what it is that corporations are so fearful particularly in America, of doing, which is giving workers genuine participation.
In Germany, which is very much a capitalist economy, there’s a law which enforces all enterprises with 2,000 or more workers to give workers just under half the seats on the board of directors (Codetermination).
This doesn’t give workers control, which is what they want. But it certainly gives them a lot more knowledge of what’s going on, a lot more ways of preparing for, and thereby influencing what these corporations do.
The irony is German industry has been more successful, particularly over the last decade, than American industry. Here, in America we’re so backward on these subjects. We don’t even know about other countries enough to even experiment with or study what the benefits might be.
WT: Where would you classify cooperatives on the political spectrum? Research indicates cooperative have roots in anarchism. Where do you place them now?
RW: Co-ops vary. There are co-ops that see themselves as nothing more than, and I quote, “entrepreneurial innovation.” They don’t want to be seen as anti-capitalist. They just think there’s something good and worth preserving about a democratic workplace, and so they pursue it.
Then you have at the other end of the spectrum, worker co-ops who see themselves precisely as an alternative to capitalism. They criticize the hierarchical top-down undemocratic nature of most capitalist businesses, and offer the worker coop as a socialist transformation of a society.
Some folks even argue that early efforts at socialism, whether in the Soviet Union, eastern Europe, or China, made a mistake by never changing life in the factory, or in the office, to not be a top-down hierarchy, but instead a bottom-up democratic institution. Had they done that, they argue the Soviet Union wouldn’t have collapsed and these societies would have been better off.
WT: Do you think a society free of hierarchy is possible?
RW: We have a long way to go before we undo the kinds of hierarchies that have been so traditional in societies that I know of, including my own here in the United States.
But the assault on verticality, and the effort at more egalitarian structures has been going on for a long time. Even the American revolution begins with the Declaration of Independence, “The truth that we all hold equal is that all men are created equal.” That is an amazing statement to make way back then, let alone now. That says we aren’t unequal. We aren’t some of us born masters and others of us slaves. It’s been a long struggle ever since, slow and with many reverses.
I would argue that Black Lives Matter or the #MeToo movement are efforts to diminish inequality and move towards egalitarian or, if you like, less vertical hierarchy. Again, this has been going on for a long time.
WT: What can elected officials in government learn from cooperatives about how to manage a healthy democracy?
RW: The first thing they might learn is how to work in a genuinely democratic institution. We have this peculiar situation in the United States where, and I’ll be generous, where we have politicians trying to have a democratic political process – voting, writing laws, executing those laws, and so on, and finding it terribly difficult. Why?
Because the unequal economic system we have corrupts it. People who are rich use their money to shape, to control, to manipulate our political democracy, making it a hollow shell of what it claims to be.
However, imagine a different economy, one in which the majority of enterprises were run democratically by all the workers. Then, we wouldn’t have an economy that clashed with our attempt at political democracy. As of now, our economy undermines our political democracy all the time.
In society as economically unequal as the United States, which looks like the ancient Egyptian pyramid societies, you can’t be surprised when the rich are frightened of any real democracy in politics. The majority of people are middle and poor, and might one day use their vote to undo the inequality produced by the economy.They’re not stupid, (the rich) have decided to use their money to protect their wealth.
Politicians who are honestly democratic, would get an enormous assist if the economy were democratized by means of worker co-ops. For those who have “lost their way,” again I’m being generous, would be reminded of what a democracy is when they could see it in action in the enterprises within their districts. It would be a new experience for many of them, and would shift society’s politics in a much better direction.
WikiTribune did not have time to ask every question. Below are a developing list of answers for the remaining questions offered by the community.
- Often, people in a cooperative endeavor will turn on each other and cause a tragedy of the commons, not because any of them are individually “greedy” or because they do not agree with the previously set-out rules, but because they do not trust the others to agree to said rules or to not abuse the system. Do you have a proposed solution to this game-theoretical problem that sows discord in groups of otherwise reasonable people?
- Can worker cooperatives directly create socialism or are they a tool, a means to enable class consciousness of the working class?
- How do unions differ from worker cooperatives?
- Unions are outside organizations that accept the difference between “employees” and “owners,” and act as representatives for the former. Worker cooperatives are businesses where the employees are owners. There is no distinction between these categories, only employees who have yet to become owners – whether this is a personal choice, or because they are not yet eligible. Co-ops typically require an employee to work at the company for some amount of time before they can apply. Roy Messing, Director of the Ohio Employee Ownership Center, told WikiTribune he believes unions and cooperatives should coordinate more with each other. In his opinion, unions could negotiate better benefits for cooperatives, which tend to have a small pool of workers, and unable to access the same rates to insurance and retirement funds as large corporations.
- If an individual creates a business then decides to add more workers as well as turn the business into a worker cooperative where those workers are now worker-owners, how is that individual compensated for the initial labor value of starting the business?
- This varies greatly between cooperatives. Almost always, new member-owners must pay for their shares into the company. Blake Jones, member-owner of Namaste Solar told WikiTribune that employees can purchase ownership stake for $5,000 after working at the company for a year. If the owner leaves the company, workers can purchase it in what is known as a “conversion” to a cooperative. Though the workers will only take this option if the company is profitable and thus worth acquiring (Transcript of Jones interview below).
- What stops worker-owners from using majority rule to abuse other worker-owners?
- What sort of democracy is a worker-cooperative, are they strictly representative or participatory democracies, or something else?
- Every worker cooperative is different. Large and successful models tend to use a committee system where a small group of experts can make recommendations on company policies. These committees are beholden to all member-owners. Read more WikiTribune coverage on this topic.
Tell us what should be in the storyTalk