The Political Economy of Cooperatives and Socialism

239 Pages·2019·3.941 MB·English

by  Bruno Jossa

The Political Economy of
Cooperatives and Socialism
This book argues that capitalism cannot be said to be truly democratic and
that a system of producer cooperatives, or democratically managed enter-
prises, is needed to give rise to a new mode of production that is genuinely
socialist and fully consistent with the ultimate rationale underlying Marx’s
theoretical approach. The proposition that firms should be run by the workers
on their own was endorsed by John Dewey, the greatest social thinker of the
twentieth century, but is also shared by Marxists such as Anton Pannekoek,
Karl Korsch, Angelo Tasca, Antonio Gramsci and Richard Wolff. This book
explores the history of this argument, taking into account concepts from eco-
nomic and political thought including historical materialism, cooperation,
utopianism and economic democracy. The book will be of significant interest
to scholars and students of political economy, Marxism, socialism, history of
economic thought and political theory.
Bruno Jossa has held teaching posts at the Universities of Pescara, Messina,
Venice and Naples. He is a co-founder of the Associazione Italiana Per Lo
Studio Dei Sistemi Economici Comparati, an association which he chaired
in 1992–1993.
Routledge Frontiers of Political Economy
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260 Cognitive Capitalism, Welfare and Labour
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Andrea Fumagalli, Alfonso Giuliani, Stefano Lucarelli and Carlo Vercellone
261 Political Economy for Human Rights
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262 Alternative Approaches to Economic Theory
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263 The Dark Side of Nudges
Maria Alejandra Caporale Madi
264 Inequality and Governance
Andreas P. Kyriacou
265 A New Approach to the Economics of Public Goods
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266 Marx’s Capital after 150 Years
Critique and Alternative to Capitalism
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267 The Political Economy of Cooperatives and Socialism
Bruno Jossa
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The Political Economy of
Cooperatives and Socialism
Bruno Jossa
First published 2020
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© 2020 Bruno Jossa
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ISBN: 978-0-367-35987-4 (hbk)
ISBN: 978-0-429-34307-0 (ebk)
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Contents
Introduction 1
1 A tentative assessment of the importance of the
materialistic conception of history 14
Introduction 14
Alchian and Demsetz’s theory of the firm 15
Is Alchian and Demsetz’s approach fully convincing? 17
The transition to socialism and the power of capital 19
Why is the materialistic conception of history so important? 22
Does socialism still exist in today’s world? 22
Socialism from utopia to scientific producer cooperative economics 23
2 Is historical materialism a deterministic approach?
The democratic firm and the transition to socialism 28
Introduction 28
Does Marxism imply the assumption that history is heading in a
given direction? 30
Further reflections on the notion of history in Marx and Marxism 33
Possible transition scenarios against the backdrop of market socialism 37
Is the capital-labour contradiction systematically escalating? 39
Is the transition to socialism a certainty or a conjecture? 43
Conclusion 45
3 Cooperation in the history of economic thought 49
Marx’s approach to producer cooperatives 49
The cooperative movement in the estimation of Marshall 51
Gramsci’s theory of factory councils 52
The separation of ‘the economic’ from ‘the social’ in Polanyi’s approach 53
Polanyi’s theory of the influence of ‘the economic’ on human feelings 55
Polanyi’s model of socialism 57
vi Contents
4 Socialism today 60
Introduction 60
Is the rise of a new mode of production a realistic assumption? 62
Producer cooperatives as a new production mode 64
The scientific core of socialism 66
Remote bankruptcy risks in democratic firms 68
5 Reform versus revolution: Struve’s critique of Marx 73
Introduction 73
The transition to socialism 74
Struve’s idea of social evolution 76
The roots of Marx’s revolutionary vision 78
The basic contradiction of capitalism and the Hegelian
matrix of Marxism 81
A comment on Struve’s approach 82
The notion of modes of production in Marx 86
Further reflections on the notion of production modes 87
Criticisms of reformism 89
Conclusion 92
6 Competition in a democratic firm system: failures
and constraints 96
Introduction 96
Solidarity in a system of democratic firms 97
Marshall’s idea of cooperation as a character-moulding agent 100
Income distribution in market socialism 100
Self-management and the ‘challenge of Minerva’ 103
Conclusion 106
7 On dialectics and the basic contradiction in capitalism 107
Introduction 107
A few introductory notes on dialectics 108
Dialectics as the analysis of a totality with real oppositions 110
Dialectics as a method and a system of thought 112
Defining the basic contradiction of capitalism 113
The basic contradiction of capitalism from the perspective
of orthodox Marxists 115
Conclusion 117
Contents vii
8 Is socialism a utopian dream? 119
Introduction 119
The selfish gene 120
Marx and Engels on human nature 121
A materialistic analysis of human nature in different
economic systems 123
The revolt of elites against the backdrop of self-management theory 125
A summary analysis of Social Darwinism 127
Additional notes on the relevance of the selfish gene theory to socialism 129
Conclusion 132
9 Schweickart’s approach to economic democracy 135
Introduction 135
A workable form of socialism 135
Public investment funding 137
Investment control and publicly owned means of production 140
Is per capita allocation an efficient investment fund
management method? 141
The unemployment issue 143
More criticisms of Schweickart’s model 145
Conclusion 147
10 Richard Wolff’s democracy at work; a cure for capitalism 150
Introduction 150
Wolff’s WSDE 150
The way WSDEs work 151
Ownership rights, markets and planning 152
Conclusion 153
11 Critical perspectives on self-management theory 154
Introduction 154
Obstacles to the establishment of producer cooperatives 157
The funding difficulties of producer cooperatives 159
Possible solutions to the funding problems of LMFs 159
Equity financing 160
Non-distributable reserves 163
Risk diversification in democratically managed firms 163
Further reflections on the financing difficulties of LMFs 164
viii Contents
12 Marxist criticisms of democratic firm management 167
Introduction 167
Early Marxist criticisms of democratic firm management 169
Further Marxist criticisms of democratic firm management 173
Peter Marcuse’s approach to producer cooperatives 177
Conclusion 179
Bibliography 187
Index 223
Introduction
Two major ideas have been the preferential focus points of my speculation
over the past forty and more years. One is my firm belief that capitalism
is an evil, since it offers ample scope for the pursuit of personal interests
and vests all power in the hands of a single class; the second is my convic-
tion that the market, far from being an evil, is in many respects a beneficial
mechanism. Based on the teachings of the known twentieth-century Scottish
economists, it is a fact that just as we work towards advancing our individual
interests, competition in the market simultaneously generates benefits for our
fellow-beings as well.
However, for a market to produce its benefits, it must be organised in
keeping with fully democratic criteria. Moreover, since man-made decisions
will be prioritised over market-imposed processes, even in a system of demo-
cratic firms of the type suggested in this book, it is possible to argue that the
benefit-generating potential of a democratic market is strictly dependent on
the extent to which collective human will take precedence over the individ-
ual choices made in markets.
Crouch’s statement that ‘democracy thrives when there are major oppor-
tunities for the mass of ordinary people actively to participate, through dis-
cussion and autonomous organizations, in shaping the agenda of public life’
(see Crouch 2003, p. 6) seems to foreshadow the situation that would arise
following the creation of a system of worker-controlled firms.
According to Honneth (2015, pp. 77–78), ‘the precondition for impressing
fresh momentum on the socialist tradition is refuting Marx’s definition of
a market economy as a necessarily capitalistic model of society and fleshing
out alternative hypotheses on the functions of markets.’ Marx – he argues –
adopted the conceptual strategy specific to Hegelian totalising thought in order
to contend that all the multiple aspects of markets were inextricably associated
with capitalism, and this may explain why the movement proved unable to
frame a market-friendly socialist model even after his death (see idem, p. 77).1
Hence, Lasch is right in arguing that any philosophical speculations de-
signed to define the twenty-first century-concept of ‘public interest’ should
give priority to the demands of the community over the right of individ-
uals to make their personal decisions, i.e. that emphasis should be laid on