This is Richard Wolff from Democracy at Work,
responding to another ask Prof. Wolff question from our very valued Patreon
community. This question comes from Marcus Allen. And it asks very straightforwardly:
how might we understand a socialist economy?- one that was based on worker co-ops as the basic
organization of production- the way we internally organized offices, factories and stores.
How would such an economy relate to capital? All these enterprises- worker co-ops, in this case,
need capital to start, to grow, to manage their day-to-day and year-to-year activities.
And how would that be organized? And what would the resulting organization do to the worker co-op
organization of the workplace,i.e. in the factory, the office and the store?
So, let me begin by making clear that we have to keep two things separate. One:
how you organize the workplace. And number two: how you acquire
the capital, the money- that is part of what a functioning workplace needs. So,
for example: in capitalism, it is one matter how you organize your enterprise,
and then you have a variety of alternative options for how to get the capital- to start, to develop,
to grow and so on. And if you're familiar with capitalism, you know that for example:
you can go to a bank and borrow and make a loan. Or you can issue shares of stock that people buy
and you acquire the capital when they buy the share of stock. But of course the share of stock
then entitles them to vote on the questions that come up at the annual meeting of shareholders,
because they're technically the owners of the company- because they own the shares of stock.
Well, now let's turn to a worker co-op- it could do the same thing. In other words,
we might have an economic system in which worker co-ops go to a bank,
or issue shares of stock, or even find yet other ways of raising money.
They could do that separate from how they run their business. For example, when a bank lends
money to a corporation: in most cases, it doesn't want to know more about running that business than
to know that it's reasonably secure that their loan will be repaid- and the interest as well.
Shareholders can be a bit more involved- depends usually on them; many aren't,
some are. Usually the bigger the share block that you own, the more likely you are to be
interested for fairly obvious reasons. But still the running of the corporation
is a separate matter. There can be overlap in the sense that the people who provide capital may
want to and be able to become involved in more and more of the activities;
they certainly have the leverage that comes from ownership. But you can very clear examples of when
there isn't much involvement: when you have what are called, “ESOP’s” (employee stock ownership
plan) enterprises. And that's a situation where the workers together buy the company
that they're working in, for example, become the shareholders, but they don't want to be involved
in running the enterprise beyond that. They'd like to get dividends as shareholders. They'd like the
value of their shares to rise and so they give the management of the company, the “running of
it” to a very traditional board of directors. They're the shareholders, so they elect them,
but the board of directors runs the company and doesn't do it all that differently in many cases
than a private board of directors would have- or maybe earlier did in fact run that company.
And it can be the same with worker co-ops.
We can even have a rule in a worker co-op based socialism: that whoever provides the capital does
so admitting and accepting that they will have no role in changing what that company does. They are
providing capital. They may get either an interest rate if it's a loan or a dividend, if it's a share
of the profits, but that's all. That will give them no authority; the law could be written that
way to do anything about the worker co-op nature of the enterprise- the workers will still be
both the employer, their own board of directors, and the employees- and the providers of capital
will be kept at a distance. But there's another way to look at this in the longer run.
Presumably, a worker co-op based economy will be distributing the profits, the gains,
the revenues any enterprise earns in a radically different way: much, much less inequality.
In other words, the profits will be distributed
to the workers in better salaries, to the local communities, to build a good relationship between
enterprises and communities. And it will not be given in billion dollar packages to
a handful of people the way modern American capitalism, for example, routinely does.
So, for example, we may develop a much less unequal system in which the profits, beside being
used to help average people, (workers, community residents and so on) will be put into funds
that will be administered democratically by say elected representatives of both the industries,
the enterprises, and the residential communities in an area. And they will together decide
what to do with those capital accumulations (who to lend it to, what enterprises to fund.)
In other words, we stop having what the question presumes, which is a relatively
small number of people with a lot of capital and a relatively large number of enterprises
coming to beg for that capital. We may reorganize all of that because of its fundamentally
inconsistent commitment to democracy compared to what worker co-ops are all about. Then the whole
reorganization of the enterprise would be followed by a reorganization of capital markets i.e where
surpluses and profits go, who presides over their distribution and what the criteria are
for distributing capital among the enterprises that would like to get some (capital) to develop
or to grow. That would be the socialization of the capital markets and that should be
part of the longer process of developing the socialist follow to the decline of capitalism.
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