Are co-operatives the answer to businesses failing to provide a decent standard of living?
Productive, democratic and community based; why isn’t the co-operative being promoted in Jersey?
Where do you spend most of your waking life? Not in your home, not in your car, not out enjoying yourself. No — unless you have a disability, or are under the age of 18, it’s very likely that you spend most of your life at work.
We in the West are lucky to live in a political democracy. Yet, the vast majority of people spend most of their lives in a place where they have no democratic control over goings-on. Has your workplace ever held a common vote on a matter of company policy? Have you ever been asked to elect a delegate to represent you on the company’s board? If you think about it, does your workplace contain any means at all where you and your colleagues can genuinely influence the direction?
These democratic mechanisms are, in the best of workplaces, uncommon — in most, they are unheard of. And yet, the fight for democracy has a long history. Most of the nineteenth century was spent fighting for more democratic control over our work and social positions. For a very long time, universal suffrage was considered to be the mechanism to achieve this. Alienation and deprivation caused many people to look to more radical alternatives in the 1920s and 1930s and yet again, in the 1960s, the question of democracy was posed by thousands of young people, babyboomers who had grown up in a post-war world full of inequalities. Today, with economic inequality back to Victorian levels, issues of economic democratisation are once again at the heart of new movements and struggles.
Enter the worker co-operative. Under this system, the position of “the boss” has been abolished. The workplace is structured non-hierarchically — all workers have an equal say on company decisions, managers are elected and can be re-called and company boards are made up of elected delegates rather than shareholders.
Decisions are no longer made by a far-off CEO, encouraged by profit-minded shareholders — the people on the shop floor are their own masters, creating and directing the future of their own workplace in a truly democratic system. Far from being a Utopian dream, this is a growing reality in Europe and elsewhere, and new research suggests that this could be a superior way of doing business, outperforming the more traditional, hierarchical systems.
The co-operative element of the Bolivarian Revolution in Venezuela is a good example — spearheaded by the leftist Fifth Republic Movement, and its successor the Partido Socialista Unido de Venezuela, the Venezuelan government has funneled part of its oil revenues into investing into the co-operative economy, with much funding going to SUNACOOP, the national co-operative supervision institute, in its campaign of education about co-operatives and assisting in the legal registration of such organisations. The Co-Operative Law of 2001, written by co-operative experts, requires the government to give precedence to co-ops in the awarding of contracts, and the national job-training program, Mission Vuelvan Caras, included education on co-operatives and encouraged trainees to form one.
Benefits for Jersey
Jersey, and to a greater extent the UK, suffers from a productivity problem — output, per unit of input, is lower than it could be. According to Virginie Perotin of Leeds University Business School, co-operatives are “more productive than conventional businesses,” staff work “better and smarter” and “production is organised more efficiently,” highlighting that “in several industries conventional firms would produce more with their current levels of employment and capital if they adopted the employee-owned firms’ way of organizing.”
This can happen because a worker-driven structure avoids the usual disputes between workers and bosses, meaning that less time has to be spent training and keeping an eye on the workers. As noted by Professor Perotin, co-ops can also provide more certainty than a hierarchical organisation could — instead of simply cutting jobs to keep their head above water if the company runs into trouble, they prefer to plan for the long-term and come up with more advanced solutions that can preserve jobs.
The idea of co-operative enterprise is even more enticing when you look at some of the depressingly lukewarm reactions from Jersey’s businesses to proposals such as mandatory disabled access to businesses, longer maternity leave and a living wage. Every time such propositions come around, they are met with a chorus of horror from the business community, aghast at having to provide for something that might damage their profit margin. Gerard Voisin, the owner of Voisins department store, recently claimed that improving disabled access laws had the potential to “bankrupt small firms”. Also, Jersey’s number of living wage employers is tiny, despite substantial evidence of ever widening equality on the island, making Jersey one of the most unequal societies in Europe.
A co-operative economy would not only combat this problem, but solve it forever. Allow me to explain. A typical, hierarchical business profits from the extraction of “surplus value”. Lets say a pizza is sold for £10. If the restaurant with 6 employees sells 200 pizzas in an eight-hour day, then they have £2000. Say that ingredients cost £2 per pizza, and running the ovens and other equipment costs £50 per hour. At the end of the day, the restaurant has £1200 (8x200 = 1600 50x8 = 400 1600–400= 1200). Splitting this six ways gives you £200 for an eight-hour day, or £25 per hour. However, in a hierarchical restaurant, these workers are paid a wage of £8 an hour, meaning that £17 per hour per employee is being extracted by the boss — this is the “surplus value”. This means that the combined workers only receive £384 of the £1200 value they produced — only 32%. Meanwhile, the boss pockets £816–68% of the value of the pizzas.
Think about that — over 2/3rds of the value of the employees’’ labour has effectively been taken from them.
The employees are the ones that put in the labour — the boss couldn’t produce anything without them — yet they receive less than 1/3rd of the value they produced. The 2/3rds that has been taken from them is the “surplus value”.
This relationship — employers extracting surplus value — is at the root of all society’s problems about wages. This was recognised by David Ricardo and later expanded on by Karl Marx. Since our society’s economy is largely based on employer-employee relationships (relationships that are inherently unfair — an employer can never pay an employee their full worth, otherwise the employer gains nothing from the relationship), no-one is ever paid their full worth. Creating cooperatives — the putting of workplaces into the hands of their workers — could solve the minimum wage issue outright, as surplus value would no longer be extracted by an exploiting boss, putting the profits previously pocketed by shareholders back into the hands of working people.
A co-operative economy has the opportunity to introduce a radical new form of democracy in an island which sorely lacks it, as well as the ability to deliver productivity growth and boost our economy. Incentivising these kinds of businesses could be the new direction Jersey’s economic system needs — my question is, what is the government waiting for? Or, would this issue have to be taken up by a revitalised labour movement? Either way: this new form of economy could be the shot in the arm this Island needs. What’s to lose from trying it?
