Criticism of worker coops

"Dear Richard,

Hi, this is Zoe Sherman's dad. I introduced myself to you after one of your recent Judson Memorial Church talks.

My brother Len is a retired corporate consultant who now works part time as an adjunct professor teaching a course for MBA students at Columbia. He recently published a book on business strategies. (See lsherman.com) He sent me an email in response to your Nov. 11 WBAI program. If you respond to what he wrote on a future Economic Update, please send me advance notice so that I can be sure to listen to it.

Here's Len's email:

I actually listened to Prof. Wolff's program (for the first time). As you might expect, I have a profoundly different world view. During the program, he asked his guest, "why do you think there are so few examples of successful worker cooperatives in the world?"

The guest's answer was pretty lame, but let me posit a stronger response (that Wolff would probably agree with): because the capitalists would never allow socialist structures to thrive, and thus they'd use their financial and political power to crush resistance.

My response would be quite different: it's because socialist worker cooperatives are inherently inefficient, and therefore can't effectively compete with capitalist enterprises. For example, let's look at the trucking industry. There are 3.5 million professional truck drivers in the country -- one of the largest single categories of employment. Suppose a segment of the industry was operated as a worker's cooperative, committed to the welfare and safety of its drivers. As such, wages and benefits would be maintained at industry-leading levels, and perhaps more importantly, there would be tight caps on allowable driving hours per day to promote safety. Now suppose an entrepreneur invests her time and energy in perfecting the technology enabling fully automated truck driving operations. Because of her invention, trucks could operate nearly 24 hours per day; the industry would need fewer trucks, and of course they would no longer need most of the current 3.5 million truck drivers. As a result, the net cost of operating a trucking companies would go way down (while the patent-holder would earn a fortune). What do you think would happen to the trucking company cooperative whose objective is not to maximize efficiency, but to maintain the welfare of its worker/owners? Would Professor Wolff say, we can't allow such technology advances to happen? Or would he say, we have to expropriate 90+% of the wealth created by the new technology owners to share with the dislodged workers?

We face a serious problem in a world grappling with how to adapt to the relentless advance of automation and artificial intelligence. Trump tried to pin the blame for sluggish growth and income inequality on the Mexicans and Chinese, but of course they're not the problem. If there's any good to come out of this election (and the rightward shift in Europe), it's that there's a global political uprising against the relentless growth in income inequality. But I don't accept Wolff's prescription any more than I do Trump's. We will probably have to endure even more pain (as a result of the disastrous failure Trump is about to engender) before we can move towards a more enlightened debate on how technology, productivity and society can peacefully co-exist. The artisanal monks were really opposed to Gutenberg's printing press, and farmers rioted in the wake of the invention of the thresher and combine. So this isn't a new problem. The world 50 years from now will look very different from today, but it won't be Wolff's world. Getting to there will be the challenge of lifetime.

Len"

Official response from submitted

Dear Joe,

In response to Len - and I shall try to be polite - I would NOT agree that worker coops dont exist more widely because capitalists would crush them. First of all, the old canard that worker coops cannot compete with capitalist enterprises surprises by its longevity. Really? Mondragon Cooperative Corporations 200 member coops have been successfully outcompeting capitalist competitors since 1956. That's how the MCC became the 7th largest corporation in Spain. That's why the Arizmendi enterprises in the Bay Area of California have grown and multiplied, likewise the Alvarado street bakery etc. Nor is the theory at all a problem. Worker coops have fewer expenses than capitalist enterprises (usually no dividends, no bloated management salary packages, fewer supervisory expenses since workers, being owners and directors themselves, need less paid supervision/supervisors than in the internally antagonistic capitalist organization of enterprises, and finally get greater productivity because workers have their own "skin in the game", and so on). Len really should know all this. A Univ of Leeds professor has catalogued the many studies affirming the greater profitability, longevity and much else of worker coops when compared with capitalist enterprises. Do some worker coops fail? Of course, but that does not distinguish them from capitalist enterprises.

Bottom line: mostly the ideological domination of capitalism has led to laws, regulations, business school curricula, media treatments etc that treat capitalism as tho it were the best possible enterprise organization and as tho alternatives were either unthinkable, impracticable or proven unviable. None of that was or is true, any more than the medieval teachers's notion (mostly religious folks) that lords and serfs on feudal manors were the only conceivable mode of organizing enterprises. The failures and collapses of capitalism will fuel the search for and experiments with alternative enterprise organization; out of them will come the movement for transition beyond capitalism. Argentina's experiments (see the film "The Take") show one such route; others are emerging.

Please give my best to Zoe.


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  • responded with submitted 2016-11-21 10:09:24 -0500
  • commented 2016-11-20 23:43:28 -0500
    Scratch my comment of 8 minutes ago. I got an email from the website that gave me a link to go back and edit my post. Thus I was able to reinstate the paragraph breaks.
  • commented 2016-11-20 23:35:09 -0500
    I’m sorry to see that when I posted this it came out as a block of text with no paragraph spacings. That’s not the way I typed it. I hope that glitch in the website mechanics can be fixed.
  • published this page in Ask Prof. Wolff 2016-11-20 23:31:40 -0500

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