Self-Managed Capitalism: Criticism of Richard Wolff and Workers Cooperatives

Discussing the economic crisis, austerity, and his advocacy of worker cooperatives, Richard Wolff has been getting a boost of attention with recent appearances on Democracy Now!, NPR and with Bill Moyer. But does Wolff represent an anti-capitalist perspective that those who believe in revolutionary social change can get excited about? My take is that while his views represents an important shift in public discourse there are some major weaknesses and in what he presents and which I hope to explore briefly.

I’ll start by saying that I think it’s great that Wolff is getting a fair amount of public exposure and is very open and explicit in his criticism of capitalism as an economic system, rather than just its symptoms (corporations, money in politics, etc). Further, in discussing worker cooperatives he raises the issue of democracy in the workplace and calls into question core ideas of capitalism– namely why bosses manage and control workplaces and the potential that workers have the ability to do this themselves through a democratic and horizontal alternative to the top down control of capitalism. Much as when Nader entered the public imagination in the 2000 elections with his anti-corporate populism, Wolff’s discourse expands the floor for discussion and debate with his radical questions and makes easier the work of organizers on the radical left.

That said there are several contradictions and problems though that should be apparent right off the bat. I’m confused when he calls for alternatives to capitalism, challenging capitalism and then curing capitalism. This immediately strikes me as contradictory as I see these as important distinctions politically at least from my perspective.

I support the idea that workers should run the economy, but I think it needs to go way beyond what Wolff puts forward. A key problem with what he advocates is that worker cooperatives (or his invented term, Worker Self Directed Enterprises or WSDEs) is that they exist within the context of capitalism, ie the pressures of the market competition, and context of wage labor. Now I do think that worker cooperatives can provide a good example that alternative and democratic social relations within a workplace are possible. Worker cooperatives can also act as a resource to larger movements by providing resources and a source of employment- for instance many cooperatives in Latin American began when union militants were black listed from their industry for organizing or are created when workers seized the workplace after abandonment by the owner. But Wolff leaves unaddressed the classic criticisms of worker cooperatives, which aren’t just theoretical but based on real problems that cooperatives have encountered in practice.

First, is the idea that you can’t “out compete” capitalism. Corporations will always have larger capital to invest in research, technology, machinery and their willingness to cut costs through lower wages, less environmentally sounds practices, outsourcing, etc, will give them an advantage. Second, is that cooperatives are subject to market pressures to compete just the same as capitalist enterprises and this lends itself to pressures to create the same practices of corporations. For instances, in the same Mondragon cooperatives that Wolff upholds as models there have been labor strikes in the past, outsourcing and low wages in production sites opened developing countries, as well as a trend towards unelected management that is more like a typical capitalist corporation. Other entities such as the well known sex toy company, Good Vibrations, which became a cooperative in 1992 when the owner sold the company to the workers, eventually developed a structured four-tier hierarchy of decision making that began to take on the character of management.[1] In 2006 workers voted to become a shareholder corporation which was later bought by a larger corporation. Strangely, these not surprising pitfalls of workers cooperatives are missing from Wolff’s discussion.[2]

Third, is that many cooperatives face the same issues as small business owners face. Often worker cooperatives are in the service, food or other specialty industries with lower profit margins and because they are smaller and do not have the advantages of scale which larger companies do, workers are often are forced to work long hours at lower wages to stay afloat. I’ve heard this called by some “self-managed exploitation.” As well, many cooperatives such as these in part remain afloat because they produce niche products like radical books or vegan/specialty food products that don’t really compete with the major corporations that dominate their industry. Don’t get me wrong though, I’m really glad worker cooperatives like the radical/anarchist publisher AK Press exist, as they are a service to the movement and no one else will publish those books, but there is no possibility that they would or could compete with publishers like Routledge or with sellers like Amazon or Barnes & Nobles. In a 2012 interview with CounterPunch Noam Chomsky discusses these issues:

“Worker ownership within a state capitalist, semi-market system is better than private ownership but it has inherent problems. Markets have well-known inherent inefficiencies. They’re very destructive. … [what is needed is to] dismantle the system of production for profit rather than production for use. That means dismantling at least large parts of market systems. Take the most advanced case: Mondragon. It’s worker owned, it’s not worker managed, although the management does come from the workforce often, but it’s in a market system and they still exploit workers in South America, and they do things that are harmful to the society as a whole and they have no choice. If you’re in a system where you must make profit in order to survive. You are compelled to ignore negative externalities, effects on others.”

Lastly is the tendency of worker cooperatives to see their needs and interests as an entity apart from and/or above other workers. After all, as cooperatives exist within a market system, their interests are to compete with other companies and expand their market share. This is a key and important difference between workers cooperatives, where the means of producing goods and services are owned by a specific group of workers competing with other cooperatives and capitalist companies through a market system and the deeper and post-capitalist goal of a socialized economy whereby all the means of producing goods and services (or at least the vast majority) are seen as belonging to society as a whole and while directly operated and run by the workers at each entity would be federated and coordinated in a horizontal manner to produce products and services based on need.

This contradiction of whether Wolff poses an actual alternative to capitalism can be seen in a piece by Wolff called ‘A New Strategy for Labor and the Left’ where he says:

“Labor’s and the left’s implicit strategy for the micro level of the enterprise thus reduced to improving the terms of the employer-employee relation for the workers. There was no strategy to eliminate that relation in favor of something better. It was the modern equivalent of struggles during the time of slavery that aimed for better food, clothing, housing, etc. for slaves rather than demanding the end of slavery.”

This is a great analogy but the problem is that a strategy of advocating worker cooperatives is akin to allowing small groups of slaves on a small number of plantations to self-manage themselves. It makes life better for some, but it doesn’t end the system of exploitation. Early labor radicals in the US often in fact drew an explicit analogy between slavery and capitalism with the term “wage slavery.” What they meant by this is that workers under capitalism are not ‘slaves’ to a particular boss, but through the system of wages they are compelled to work for bosses as a class in order to survive. This is why anti-capitalist labor radical such as the founders of the IWW believe that an end to capitalism required a struggle to organize workers eventually leading to workers to taking control of their workplaces and what they called the “abolition of the wage system.” This is I feel that while worker cooperatives can have some uses, I don’t feel Wolff offers perspective or strategy that can be call anti-capitalist in a meaningful sense.

[1] There are no public sources I could find on the four tier hierarchy that emerged at Good Vibrations, but my knowledge of this comes through my organizing experience with the IWW when a worker contacted the union wanting to organize.

[2] It has come to my attention that Wolff addresses some of these issues in his weekly radio podcast, though these are not addressed in any of his recent radio or television appearances.