Pathways to a cooperative market economy Erik Olin Wright University of Wisconsin – Madison June 2017 Cooperatives as a piece of an alternative to capitalism rather than just an element in a capitalist economy. The fundamental issue in play here: democracy. Framework: thinking about economic systems in terms of structures of power relations. Central problem: democratizing the economy. This is the fundamental meaning of socialism.
Four Tasks Normative foundations Diagnosis and critique of capitalism Alternatives Transformation: how to get form here to there. Three tasks to resolve this problem A few comments: Diagnosis and critique: this is where the main effort of critical social science has gone. Alternatives Transformation. I am going to focus on the third of these here.
Analytical strategy I The economy as an ecosystem of loosely articulated structural forms: capitalist, cooperativist, statist, domestic, etc. Three tasks to resolve this problem A few comments: Diagnosis and critique: this is where the main effort of critical social science has gone. Alternatives Transformation. I am going to focus on the third of these here.
Analytical strategy II The game Rules of the game Moves in the game Three tasks to resolve this problem A few comments: Diagnosis and critique: this is where the main effort of critical social science has gone. Alternatives Transformation. I am going to focus on the third of these here.
Logic of transformation Change rules of the game so as to allow new moves in the game which have the character of expanding alternative economic structures which endogenously generate further changes in rules of the game. Longterm trajectory: erosion (and potential displacement )of the dominance of capitalism Three tasks to resolve this problem A few comments: Diagnosis and critique: this is where the main effort of critical social science has gone. Alternatives Transformation. I am going to focus on the third of these here.
Task 3 Alternatives
Democratize the economy Democratize the state Introduction Democracy as the central principle of institutional design for transcending capitalism: Democratize the economy Democratize the state Democratize civil society
Introduction Do workers cooperatives really contribute to creating a democratic economy?
Introduction Basic problem: Cooperatives remain privately owned, profit-oriented firms competing in markets. Competition creates cost-cutting pressures and neglect of negative externalities. Private ownership by their members generates insider-biases. Private appropriation of profits gives advantages to high skill, high tech cooperatives.
Introduction Basic problem: Cooperatives remain privately owned, profit-oriented firms competing in markets. Competition creates cost-cutting pressures and neglect of negative externalities. Private ownership by their members generates insider-biases. Private appropriation of profits gives advantages to high skill, high tech cooperatives.
Introduction Basic problem: Cooperatives remain privately owned, profit-oriented firms competing in markets. Competition creates cost-cutting pressures and neglect of negative externalities. Private ownership by their members generates insider-biases. Private appropriation of profits gives advantages to high skill, high tech cooperatives.
Introduction Basic problem: Cooperatives remain privately owned, profit-oriented firms competing in markets. Competition creates cost-cutting pressures and neglect of negative externalities. Private ownership by their members generates insider-biases. Private appropriation of profits gives advantages to high skill, high tech cooperatives.
Introduction Response Worker cooperatives directly eliminate one aspect of the democratic deficit in capitalism: workplace dictatorship. Worker cooperatives foster a more democratic culture. Worker cooperatives are geographically rooted and thus easier to regulate by a democratic state.
Introduction Response Worker cooperatives directly eliminate one aspect of the democratic deficit in capitalism: workplace dictatorship. Worker cooperatives foster a more democratic culture. Worker cooperatives are geographically rooted and thus easier to regulate by a democratic state.
Introduction Response Worker cooperatives directly eliminate one aspect of the democratic deficit in capitalism: workplace dictatorship. Worker cooperatives foster a more democratic culture. Worker cooperatives are geographically rooted and thus easier to regulate by a democratic state.
Introduction Response Worker cooperatives directly eliminate one aspect of the democratic deficit in capitalism: workplace dictatorship. Worker cooperatives foster a more democratic culture. Worker cooperatives are geographically rooted and thus potentially easier to regulate by a democratic state.
13 pathways to a expanding worker cooperatives
Autonomous startups Worker-cooperative startups in which a group of people come together to form a cooperative from scratch, getting loans from banks or through social networks. Messy survival strategies of people in desperate conditions who form improvised quasi-cooperatives without a long-term model. Sometimes these adaptations consolidate into cooperatives; sometimes not. Cooperatives develop in a regional economy out of artisanal production and gradually develop networks and other institutions to sustain cooperative firms over time.
Autonomous startups Worker-cooperative startups in which a group of people come together to form a cooperative from scratch, getting loans from banks or through social networks. Messy survival strategies of people in desperate conditions who form improvised quasi-cooperatives without a long-term model. Sometimes these adaptations consolidate into cooperatives; sometimes not. Cooperatives develop in a regional economy out of artisanal production and gradually develop networks and other institutions to sustain cooperative firms over time.
Autonomous startups Worker-cooperative startups in which a group of people come together to form a cooperative from scratch, getting loans from banks or through social networks. Messy survival strategies of people in desperate conditions who form improvised quasi-cooperatives without a long-term model. Sometimes these adaptations consolidate into cooperatives; sometimes not. Cooperatives develop in a regional economy out of artisanal production and gradually develop networks and other institutions to sustain cooperative firms over time.
Incubated startups Coops breeding coops 4. Cooperatives are incubated (and perhaps subsidized) by the state or NGOs Labor union incubation of cooperatives: the incipient “union-CO-OP model” in the United States Coops breeding coops 6. An existing cooperative or group of cooperatives incubates a new cooperative 7. An existing cooperative splits into two distinct cooperatives
Incubated startups Coops breeding coops 4. Cooperatives are incubated (and perhaps subsidized) by the state or NGOs Labor union incubation of cooperatives: the incipient “union-CO-OP model” in the United States Coops breeding coops 6. An existing cooperative or group of cooperatives incubates a new cooperative 7. An existing cooperative splits into two distinct cooperatives
Incubated startups Coops breeding coops 4. Cooperatives are incubated (and perhaps subsidized) by the state or NGOs Labor union incubation of cooperatives: the incipient “union-CO-OP model” in the United States Coops breeding coops 6. An existing cooperative or group of cooperatives incubates a new cooperative 7. An existing cooperative splits into two distinct cooperatives
Incubated startups Coops breeding coops 4. Cooperatives are incubated (and perhaps subsidized) by the state or NGOs Labor union incubation of cooperatives: the incipient “union-CO-OP model” in the United States Coops breeding coops 6. An existing cooperative or group of cooperatives incubates a new cooperative 7. An existing cooperative splits into two distinct cooperatives
Conversions 8. Conversion of partnerships or small private firms into cooperatives 9. Conversions of privately-owned firms into worker cooperatives in the context of worker-buyouts when the owners retire (ownership succession conversions). 10. The gradual increase in employee ownership through an ESOP (Employee Stock Ownership Plan) and then, eventually, the introduction of democratic governance and conversion to a more cooperative form. 11. The seizure of bankrupt firms by workers – empresas recuperadas – and running them as de facto cooperatives 12. Worker takeover of bankrupt firm leading to state ownership + leasing to worker self-managed cooperative. 13. Worker buyouts of bankrupt firms with state subsidizes for transitional conversion to worker-owned cooperative.
Conversions 8. Conversion of partnerships or small private firms into cooperatives 9. Conversions of privately-owned firms into worker cooperatives in the context of worker-buyouts when the owners retire (ownership succession conversions). 10. The gradual increase in employee ownership through an ESOP (Employee Stock Ownership Plan) and then, eventually, the introduction of democratic governance and conversion to a more cooperative form. 11. The seizure of bankrupt firms by workers – empresas recuperadas – and running them as de facto cooperatives 12. Worker takeover of bankrupt firm leading to state ownership + leasing to worker self-managed cooperative. 13. Worker buyouts of bankrupt firms with state subsidizes for transitional conversion to worker-owned cooperative.
Conversions 8. Conversion of partnerships or small private firms into cooperatives 9. Conversions of privately-owned firms into worker cooperatives in the context of worker-buyouts when the owners retire (ownership succession conversions). 10. The gradual increase in employee ownership through an ESOP (Employee Stock Ownership Plan) and then, eventually, the introduction of democratic governance and conversion to a more cooperative form. 11. The seizure of bankrupt firms by workers – empresas recuperadas – and running them as de facto cooperatives 12. Worker takeover of bankrupt firm leading to state ownership + leasing to worker self-managed cooperative. 13. Worker buyouts of bankrupt firms with state subsidizes for transitional conversion to worker-owned cooperative.
Conversions 8. Conversion of partnerships or small private firms into cooperatives 9. Conversions of privately-owned firms into worker cooperatives in the context of worker-buyouts when the owners retire (ownership succession conversions). 10. The gradual increase in employee ownership through an ESOP (Employee Stock Ownership Plan) and then, eventually, the introduction of democratic governance and conversion to a more cooperative form. 11. The seizure of bankrupt firms by workers – empresas recuperadas – and running them as de facto cooperatives 12. Worker takeover of bankrupt firm leading to state ownership + leasing to worker self-managed cooperative. 13. Worker buyouts of bankrupt firms with state subsidizes for transitional conversion to worker-owned cooperative.
Conversions 8. Conversion of partnerships or small private firms into cooperatives 9. Conversions of privately-owned firms into worker cooperatives in the context of worker-buyouts when the owners retire (ownership succession conversions). 10. The gradual increase in employee ownership through an ESOP (Employee Stock Ownership Plan) and then, eventually, the introduction of democratic governance and conversion to a more cooperative form. 11. The seizure of bankrupt firms by workers – empresas recuperadas – and running them as de facto cooperatives 12. Worker takeover of bankrupt firm leading to state ownership + leasing to worker self-managed cooperative. 13. Worker buyouts of bankrupt firms with state subsidizes for transitional conversion to worker-owned cooperative.
Conversions 8. Conversion of partnerships or small private firms into cooperatives 9. Conversions of privately-owned firms into worker cooperatives in the context of worker-buyouts when the owners retire (ownership succession conversions). 10. The gradual increase in employee ownership through an ESOP (Employee Stock Ownership Plan) and then, eventually, the introduction of democratic governance and conversion to a more cooperative form. 11. The seizure of bankrupt firms by workers – empresas recuperadas – and running them as de facto cooperatives 12. Worker takeover of bankrupt firm leading to state ownership + leasing to worker self-managed cooperative. 13. Worker buyouts of bankrupt firms with state subsidizes for transitional conversion to worker-owned cooperative.
Public Policies to overcome obstacles to worker cooperatives
Unconditional Basic Income Government-funded cooperative training Cooperative development banks Cooperative leasing of publicly owned capital (buildings, land, capital equipment)
Unconditional Basic Income Government-funded cooperative training Cooperative development banks Cooperative leasing of publicly owned capital (buildings, land, capital equipment)
Unconditional Basic Income Government-funded cooperative training Cooperative development banks Cooperative leasing of publicly owned capital (buildings, land, capital equipment)
Unconditional Basic Income Government-funded cooperative training Cooperative development banks Cooperative leasing of publicly- owned capital (buildings, land, capital equipment, etc.)
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