Workers' Co-Operatives

Red Aegis wrote:It is my opinion that workers' co-ops are one of the best steps to building socialism in the shell of the current bourgeois system.

Though these co-ops are capitalistic in nature, they are democratic, non-exploitative of co-op members, and manage to avoid becoming reclusive while doing so.

These organizations will, as they increase in size and number, show that workplace democracy is a viable option for managing industry, opposing the traditional views of lazy workers in need of an iron hand. If all industries were arranged in a co-operative model there would be much less to do in a revolution, and presumably a revolution would not be nearly as opposed.

It is for this reason that I decided to start this thread so that we can compile different resources and analysis of workers' co-operatives in order to assist anyone interested in organizing one. I hope to make the process easier and faster through the compilation of these resources and hope to encourage workers to work together!

Even writers from the New York Times: Business Day section seem to think of workers' co-operatives in a positive light.

GREEK HOSPITAL NOW UNDER WORKERS’ CONTROL

Health workers in Kilkis, Greece have occupied their local hospital and have issued a statement saying it is now fully under workers control.

The general hospital of Kilkis in Greece is now under workers control. The workers at the hospital have declared that the long-lasting problems of the National Health System (ESY) cannot be resolved. The workers have responded to the regime's acceleration of fascism by occupying the hospital and putting it under direct and complete control by the workers. All decisions will be made by a 'workers general assembly.'

The hospital has stated that, "The government is not acquitted of its financial responsibilities," and if their demands are not met, they will "turn to the local and wider community for support in every possible way to save the hospital, defend free public healthcare, overthrow the government and every neo-liberal policy."

MARINALEDA - WHERE A BETTER WORLD EXISTS

Around 100km east of Seville in Spain lies a small town of 2,700 people called Marinaleda. It's one of many agriculture-based towns and villages in the province of Seville, surrounded by mile upon mile of flat, agricultural plains.

What makes Marinaleda different, indeed from anywhere else in Spain and possibly Europe too, is that for the past 30 years it has been a centre of continuing labour struggle and a place where a living, developing and actual form of socialism has emerged.

...

Marinaleda hit the news when its workers successfully expropriated a 3,000-acre estate from the Duke of Infantado in 1991. El Humoso, as the estate is known, was turned over to local people and now comprises eight agricultural co-operatives where the majority of local people work. The co-operatives concentrate on labour intensive crop production such as artichokes, peppers, beans and also wheat and olives. Every worker gets paid the same wage - €47 for a six-and-a-half-hour working day.

According to official statistics there are 130 registered unemployed in the town of 2,700, which, during a time of deep economic crisis and unemployment in Spain, must be the lowest in the country.

Marinaleda has also developed a unique form of truly socialist housing provision. In contrast to the rampant speculation that has ruined the Spanish housing market, much of the high-quality housing in Marinaleda has been built on municipal land by local people themselves. They subsequently become the owners of the houses paying just €15 a month while contributing an agreed number of working hours each month to constructing more. There's a clear agreement that they cannot sell the houses at any time in the future. The system means that house owners do not have mortgages and there is no possibility of financial speculation.

As an example of Marinaleda's socialist principles and believing that power has to be in the hands of local people, the local council has created general assemblies where around 400 to 600 local people meet 25 to 30 times a year to voice their concerns and vote on issues from festivals, town planning and sport to ecology and peace. A further example of the council's form of local democracy is the use of "participatory budgets" whereby each year the council's proposed investments and expenditures are taken to local areas for discussion. On "Red Sundays" local people do voluntary work in the community.

Another example of the town's radical socialist policies is that they have disbanded the local police force, saving €260,000 (£214,000) per year. This must be unique not only in Spain but also the rest of Europe.

At a time when many are disillusioned with big banks and big business, and growing inequity in our country, employee ownership offers a real solution for workers and communities. Shift Change is a new documentary (to be released in July, 2012) that highlights worker-owned enterprises in North America and in Mondragon, Spain. The film couldn't be more timely, as 2012 has been declared by the U.N. as the "International Year of the Cooperative."

Almost instantly upon arriving in Cuba in late June of 2011 I noticed the wherewithal of its people, especially their tenacity to get by on little. In many ways, I discovered, Cubans have already been forging an alternative socio-economic reality for decades now. For instance, we can think of how they revolutionised their agricultural sector during and after the Special Period, making Cuba the first nation to adopt a predominantly organic farming sector rooted in agricultural co-ops and the notion of subsidiarity (i.e., economic activity with a strong focus on the local and managed by local people).

The two conferences I presented at in June 2011 were exceptional, if ultimately a bit surprising for me in ways. First, I participated in the “Corporate Social Responsibility, Cooperatives, and Local Development” conference on June 21 with a diverse group of co-op practitioners, social entrepreneurs, and social and solidarity economy researchers from different parts of Latin America and Canada. Organised in part by the University of Havana's Centre for Studies on the Cuban Economy, a Latin American NGO called Fundación AVINA, and a US social entrepreneur Eric Leenson. At this first conference I presented some of the results of my ethnographic and political economic work with Argentina's empresas recuperadas por sus trabajadores (worker-recuperated enterprises, or ERTs).

Many Cuban academics and officials working with co-ops and local development initiatives in attendance seemed to be fascinated with the experiences of workers taking over businesses in trouble in Argentina, based on their comments to me afterwards. They were interested to know more about how to make autogestión (self-management) work in a country that has had no real experience with co-operatives in general outside of agriculture, a sector where they have engaged in promising experiments with Cooperativas de Crédito y Servicio and Cooperativas de Producción Agropecuarias (producer and consumer co-ops in the farming sector also known as CCS and CCP respectively) and Unidades Básicas de Producción Cooperativa (worker-run and state-owned co-operatives that service the agricultural sector, known also as UBPC) (Piñeiro Harnecker, 2011a).

These Cuban academics and officials I spoke with looked at the experiences of Argentina's workers starting co-ops from scratch as similar to what many Cubans might have to embark on in the next months and years. This is especially the case, they shared with me, given that hundreds of thousands of Cuban workers will be transitioned from empleo estatal (“state employment”) to empleo no-estatal (“non-state employment”) over the next few years.

Indeed, the vision of the nuevos lineamientos of the Cuban Communist Party is to increase the non-state employment sector from 16 per cent of Cuba's workforce (2010 figures) to 35 per cent of Cuban workers by 2015. This would mean that in three years, if this projection holds, Cuba will have 1.8 million non-state workers employed either as cuentapropistas (the self-employed), trabajadores asalariados (salaried workers) or cooperativistas (cooperators) (Piñeiro Harnecker, 2011a).

While many of these new, non-state workers have the potential of eventually working in an expanded, non-rural co-operative sector, they could equally be employed in an expanding private sector. There is room in the economic reforms for a boom in private businesses, as well (sections 11 to 24 of the lineamientos), together with a continuation of “state-funded entities” (sections 30 to 34). Regardless, it is also undeniable that sections 25 to 29 of the lineamientos leave ample room for the potential mushrooming of the co-operative movement. “Grade 1 co-operatives”, section 25 begins:

“shall be established as a socialist form of joint ownership in various sectors. A co-operative is a business organization that owns its estate and represents a distinct legal person. Its members are individuals who contribute assets or labour and its purpose is to supply useful goods and services to society and its costs are covered with its own income.”

While there are, as yet, no guarantees that a boom in “Grade 1 co-operatives” will necessarily emerge, there is growing interest afoot in Cuba to encourage such a new, non-agricultural co-operative sector. The strong language on co-ops in the lineamientos is offering much inspiration to some in this regard. But the interest in co-ops extends far beyond the decrees of the lineamientos. One Cuban professor suggested to me that co-operatives could take over the economy in sectors such as food provisioning, consumer services, housing and sanitation. Another group of Cuban researchers I spoke with believe that worker co-operatives of all stripes could particularly blossom in areas such as tourism, public transportation, manufacturing and community services. “In the short term”, reads section 217 of the lineamientos, “the industrial productions shall be re-oriented to meet the demands from different forms of production (particularly co-operatives and self-employees)”.

What are some of the lingering concerns among some Cubans that aspire to expand the co-operative sector, then? The general answer given to me by co-op developers and researchers was that Cubans lack knowledge in co-operative organising and values. Yes, they underscored, many Cubans do indeed have experience with agricultural co-ops or urban agricultural co-ops (organopónicos), and most have been involved in “popular power” initiatives, or with community-based committee experiences for some time. But most of these experiences, I was told, have been, up till now, top-down or party led.

The Cubans I talked with during my first visit in June 2011 wanted mostly to know how to co-operatively organise and practically manage themselves bottom up, and how to start teaching each other the ins and outs of forming co-operatives “from below”, from out of their own initiatives. From Cubans who I spoke with, there is, on the one hand, a pragmatic sense that they must know how to manage themselves better and produce adequately without government quotas and such. At the same time, we discussed and debated how exactly the “non-state” sector might emerge in Cuba, as well as the virtues of co-operatives and the risks of opening up their economy to free markets and outright capital-based and investor-owned firms.

During these conversations, I tried to focus on my observation that, given what I know of the explosion of the social and solidarity economy in other parts of Latin America in recent years, Cubans too could make a go of a non-state enterprise sector that still respects key aspects of their socialist project by thinking about “co-operativising” their economy. This would include co-operative production, co-operative service delivery, co-operative exchange or “markets” and co-operative banks or credit unions. Moreover, we agreed, this would allow Cubans to hold on to much of the social values and collaborative spirit they already have within their existing version of socialism.

The potential for a social and solidarity economy

The second conference I presented was at the Centre for Studies on the Cuban Economy (CEEC in Spanish). It was its annual conference of mostly Cuban economists, government officials and municipal development officials. This conference was a slightly different but equally rewarding experience. There, I gave what I thought was a straightforward conceptual definition of the “social and solidarity economy”. In this presentation, I made an effort to bridge Canadian, European and Latin American conceptualisations while connecting notions of the social and solidarity economy to actual on-the-ground experiences in Latin America. Drawing from these traditions, in this presentation I defined the social and solidarity economy as:

“...social and economic practices and organisations that are not investor-owned or for-profit entities (although its organisations can make and draw on surpluses), nor government-owned or controlled (although its organisations may receive government funding), and that operate with the values of provisioning, first and foremost, for the socioeconomic needs of members. Known also loosely as the ‘third sector,’ social and solidarity economy organisations tend to have social objectives (such as sustaining and creating jobs, provisioning less expensive or environmentally sound consumer goods and services, facilitating the social or economic capacities of individuals and communities, etc.) and are usually organised in some sort of democratic fashion where each member has a vote or say in the operation, governance, and goals of the firm.”

The Cubans who listened to my presentation were very interested to know more about the social and solidarity economy but seemed not to be as familiar on the whole with a working definition of the concept. This was the case, as some Cuban academics told me, because they haven't needed such a concept until now with a Cuban state and economy that is already “socialist” and “socialised”. This was surprising to me at first, especially given Cuba's already-existing social economic practices that in many ways have been part of their daily reality for decades now. Think, for example, of their mostly do-it-yourself and community-based car parts manufacturing and repair shops, or the common practice throughout Cuba of sharing scarce commodities and products among neighbours.

Here some rich debates emerged amongst us concerning the terms socialised, social and socialist; how a social and solidarity economy is different or similar to what Cubans have been practicing under state socialism; and how such conceptualisations of the social and solidarity economy could help Cubans think about a new socialism that connects the broad economic reforms the Communist Party is proposing with the everyday practices of Cuban people. Conceiving of the “non-state” sector as a social and solidarity economy could also prove to be a softer landing for the hundreds of thousands of state workers that are expected to become (without a clear transition plan so far, it seems to me) cooperativistas andcuentapropistas.

Challenges, tensions and possibilities for a co-operative economy in Cuba

The release of the “Draft Guidelines” of the economic reforms in the fall of 2010, and the promising public consultations that were had between December 2010 and February 2011 with over 1 million Cubans in the process of developing thelineamientos, has, most certainly, committed Cuba to a massive reform of the economy such as it has never seen before. Cuba is, in a word, at a crossroads right now. There will definitely be room for a new kind of economy where “non-state enterprises” will be a reality sooner rather than later over the next three to five years. This will include a new Cuban entrepreneurial class, a larger class of cuentapropistas, a much larger class of salaried workers, and – potentially – a substantial social and solidarity economic sector populated by many co-operatives.

Whether a new private sector will dominate the new Cuban economy, or whether Cuba turns primarily to a new socialised economy rooted in co-operatives, remains to be seen. Certainly, Section 1 of the lineamientos (concerning Cuba's new “Economic Management Model”) leaves interpretive room for either, although the preamble to the lineamientos could arguably align more easily with a social economy made up of co-operatives:

“The economic system that shall prevail will continue to be based on the people's socialist ownership over the fundamental means of production, governed by the socialist principle of distribution: ‘from each according to his/her capacity to each according to his/her contribution.’”

Whichever way Cuba heads, and based on the open way these economic reforms are being discussed in Cuba right now (including in the daily Granma newspaper by the Communist Party), these reforms will potentially be broader and more transformative than the reforms that emerged during and immediately after the Special Period in the early 1990s.

Some economists that presented at the CEEC conference, for example, are pushing for the quick introduction of these reforms and talk liberally of increasing the space for cuentapropistas (the self-employed, which also includes entrepreneurs and employers) and allowing for a Cuban-owned and run private sector that will be able to hire employees other than family members. Indeed, this view is in line with sections 11 to 24 of the lineamientos.

Some of the economists I heard, inspired by the Chinese model of economic growth, talk as if some sort of a broader private sector is an unavoidable reality, necessary for the increased productivity and innovation needed in Cuba, they argue, in order to lift it out of its developing country status. The major indicators being used by these economists is economic growth, GDP, investment-to-profit ratios and so on. This can be straight-up neoclassical stuff and risks putting Cuba on the path of yet one more former socialist country that opens up its economy to unbridled markets. Moreover, the Cuban government is, as I write, also expanding its list of permissible private sector firms.

But, on the whole, opening up the Cuban economy more and more to straight up capital-labour relations and free markets is, I believe, the most perilous part of the suggested reforms and what might very well put Cuba's many socialist gains (i.e., free health care, excellent public education, low poverty rates, low crime rates, virtually no unemployment, subsidised housing, public transportation ...) at most risk of eventually evaporating into a market-driven system.

The degree of inter-firm competition that this new economy could involve is particularly unclear. And what of the characteristics of a new wage-based labour market that will be needed to supply employees to private firms, where the labour-power of a new class of “productive” workers would become one of Cuba's newest commodities and where out-and-out surplus-value extraction and capital accumulation would be the prime mover for more and more privatised firms and economic sectors? Surprisingly, there is very little mention of such basic socialist concepts and critiques from some of the Cuban economists I have heard and read in the past year.

Another set of issues posed by some Cuban economists and co-operative developers is how production inputs will be provisioned in a non-state sector. They realise that some sort of wholesale market will be needed, for instance, but are not clear about its make-up. This has been traditionally handled by state quotas in Cuba. How will the non-state sector adapt to supply and demand constraints? Will a production input and supplies market be driven and regulated by price-indicators for new non-state businesses to capitalise, or will state planning still be maintained there? Both of these scenarios have their downsides for a potential co-operative economy.

And what is the role of foreign businesses and suppliers? The issue of what type of consumer markets will emerge is equally vague still. Finally, if the Cuban government's plan is to transition former state employees to the new “non-state” economic sector and, in so doing, increase the country's non-state workers by as much as a fifth by 2015, how exactly will this transition happen and how will the Cuban state guarantee the lineamientos’ and Raul Castro's repeated assurances that “no one will be left unprotected” in the process?

All of these questions remain without clear answers to most Cubans I spoke with. But what is clear is that co-operatives will surely be allowed to emerge outside of the agricultural sector as service, consumer, housing and worker co-operatives. There is, moreover, a pending law of co-operatives that is being written right now, set to be released sometime this year, that should clarify to what degree the government is expecting co-operatives to take a leading role in the new non-state economic sector (Piñeiro Harnecker, 2012).

In sum, from the countless conversations I had while in Cuba with academics, government workers, co-operators and people on the street, many Cubans are very willing to contemplate and consider the role of a larger co-operative sector. There is no doubt that many Cubans are working hard to make this a reality in the coming months and years.

My sense is that many – perhaps the majority – of Cubans know that they have too much to lose to go down the neoliberal path, a distinct possibility given the trajectory of other "socialist" command economies, and the structural reforms that are unfolding. The co-operative path to economic sustainability would, I think, be a viable alternative development model for many key sectors of the Cuban economy. Such a development model would keep social wealth within the country and expand the capacities of Cuban workers in self-management. Such activism and participation among workers can also be a key spur to the nature of reforms in crucial areas where large state enterprises will remain, whether fully state owned or in joint enterprises. The co-operative road to reforms, most importantly, could help conserve the successes of Cuba's brand of socialism, notably its egalitarian education, cultural and health sectors, which remain quite unique across South America and the Caribbean. At the same time, such co-operative-based reforms could help Cuba move along a new path toward 21st century socialism.

Marcelo Vieta recently completed his Ph.D. from York University's Program in Social and Political Thought with a dissertation looking at the innovations, challenges and political economic conjunctures of Argentina's empresas recuperadas por sus trabajadores (worker-recuperated enterprises). He is currently a post-doctoral research fellow at the University of Trento's European Research Institute on Cooperative and Social Enterprises (EURICSE) in Trento, Italy. Marcelo can be reached at: marcelo.vieta@euricse.eu or marcelo@vieta.ca.

Additional References on Cuba's new co-operatives:

Holm, Wendy. (2011). “Report on the outcomes of an informal Havana dialogue between co-op thought leaders from Cuba, Canada, the United States, and Scotland,” 12-16 December.
Piñeiro Harnecker, Camila. (2011a). Empresas no estatales en la economía cubana: potencialidades, requerimientos y riesgos. Working Paper, Centro de Estudios de la Economía Cubana.
Piñeiro Harnecker, Camila. (2011b). Y las cooperatives, cuando? Potencialidades de las cooperativas para la actualización del modelo económico cubano, Palabra Nueva, October.
Piñeiro Harnecker, Camila. (2011c). (Ed.), Cooperativas y socialismo: Una Mirada desde cuba. Havana: Editorial Caminos. [The Spanish preface to the book can be found here. An English preface can be found here. An English translation of the book is forthcoming.]
Piñeiro Harnecker, Camila. (2012). Ahora que sí van las cooperativas, vamos a hacerlo bien. Rebelión, 2 March.
Sixth Congress of the Communist Party of Cuba. (2011). Resolution on the Guidelines of the Economic and Social Policy of the Party and the Revolution, 18 April. [The new social and economic lineamientos (guidelines) of the Sixth Party Congress of Cuba.]

Red Aegis wrote:http://www.zcommunications.org/cubas-coming-co-operative-economy-by-marcelo-vieta

The United States Federation of Worker Cooperatives is a national grassroots membership organization of and for worker cooperatives, democratic workplaces, and organizations that support the growth and development of worker cooperatives. We were founded in 2004, the result of several years of organizing on the part of worker cooperatives and regional groups from around the country. We provide support to our members and educational outreach to the public through conferences and events, resource referrals, and networking and training opportunities. Check out the various sections of our site to connect to resources and see what's happening in the dynamic and growing world of worker cooperatives!

SOURCES OF THE DEMOCRATIC DEFICIT IN THE YUGOSLAV SYSTEM OF "SELF-GOVERNMENT"

The Yugoslav experiment is a gold mine of experiences. As it is useful to learn about the positive aspects of this experience, it is also good to learn from Yugoslav mistakes and limitations.

Professor Stipe Šuvar humorously depicted the Yugoslav experience, in accordance with its underdeveloped material and cultural reality, as a form of "shepherds' self-government." About 75% of the Yugoslav population were peasants prior to the Second World War. A leading communist and perhaps the single most important architect of the Yugoslav system of "self-government," Edvard Kardelj, noted that Yugoslav pre-war electricity production was 59 times below the European average.

In terms of the weakness of "subjective" forces, the Communist Party of Yugoslavia was illegal and underground for more than twenty years, since 1920 to 1945. This reinforced undemocratic, hyper-centralist and hierarchical patterns and precluded the open development of the Yugoslav labour movement. The population did not have sufficient experience in the struggle for self-emancipation. It lacked the necessary self-confidence, class consciousness, the required educational level and democratic political culture. The Stalinist practices of the Communist Party, particularly before its split with Stalin, certainly didn't help in this respect.

THE PATH TO INNOVATION

Some have identified the origins of Yugoslav participatory development in the anti-fascist committees during the war itself. These were formed in 1941 as organs of dual power and an expression of an autonomous anti-fascist initiative in Yugoslavia. Leading communists like Kardelj and Moša Pijade later reinterpreted these anti-fascist committees as the first nascent forms of the Yugoslav independent, non-Stalinist course.

In reality, it was only after the historic split with the Soviet Union in 1948 that a truly anti-Stalinist alternative road began to be paved. The Yugoslav leaders had to legitimise their shift in ideological terms. It appears that they looked back to earlier attempts to institute self-management (like the Paris Commune), as well as Lenin's State and Revolution and the like. This period of retrospection, introspection and innovation led to the abandonment of the forced collectivisation programme, and culminated in the first laws (in 1950) which led to the socialisation of most nationalised industries. This was preceded by the establishment of the first workers' council in 1949 in the Croatian city of Solin.

In addition to workers' councils, attempts to institute a dose of self-management extended to local committees, and also partially to administrative committees in educational, cultural, scientific, health and other social institutions. This isn't the place to discuss all these institutional forms in detail, but a few words on so-called "workers' self-management" are in order. Workers' councils consisted of workers' delegates, but they did not exist on their own. They were supposed to co-manage with specialists and company managers, who were—in the normative division of labour—supposed to execute the decisions of the workers' council, and to deal with day-to-day functioning of the company.

In these new conditions, Yugoslavia began its reconstruction and soon achieved a fantastic level of growth and development, a transformation from a poor, rural semi-colony into a strongly independent, medium-developed industrialised country (although with acute regional inequalities and disparities). Still, a massive increase in the living standard was achieved in the fields like education, health care, workers' rights and social security, etc. Social welfare, socialised health care and socialised housing were on a world-class level. In fact, Yugoslavia had the highest level of workers' rights in the world, though of course not the highest standard of living.

It is very important to note that Yugoslav development illustrates the possibility of achieving a very high level of productivity in a post-capitalist system. For a time in the 1960s, Yugoslavia had the highest level of GDP growth after Japan. This is obviously a very good argument against those who claim that industrial democracy or workers' participation are somehow "ineffective."

LIMITATIONS ON DEMOCRACY

I already mentioned some objective and subjective factors which preclude a more consistent self-managing system. Now I will consider them in more concrete terms.

Firstly, a relatively participatory, democratic economy on the company level functioned in a wider authoritarian system of political monopoly. This was the fundamental contradiction of the Yugoslav system, and the reason why the demand for more direct political democratisation was central. However, this class conceptualisation of democratisation was eventually replaced by a nationalist, bureaucratic decentralisation which did not question the position of the political and bureaucratic elites. Despite some dubious attempts, the party and the state machinery weren't self-liquidating, and there was no other force in society which was allowed or able to do this job for them.

Secondly, and connected with this, social inventions and economic democratisation were envisaged and directed from above, not by a direct-democratic movement from below. The unfortunate truth is that—considering the low level of class consciousness and popular self-organisation—nobody else but the Communist Party could have done it. Paternalistic implications of this made the development of a self-governing democratic consciousness more difficult. A very important aspect of this problem was the fact that trade unions did not have an independent, combative activist role, but were conceived as a kind of "transmission belt" for the party and the regime. There was actually no serious socialist opposition and pluralism in political, social and cultural life, no (conventionally) free media—let alone participatory democratic forms of media production and regulation. A concomitant problem was that workers very often weren't aware of—or for other reasons failed to use—those rights they did have, so that for instance one study of local committee decision-making found out that about 98% of the proposals put forward by the bureaucracy were accepted by so-called "self-managers." Similarly, citizens had a right of recall of elected officials, but they never used it!

Thirdly, the underdeveloped character of objective and subjective productive forces strenghtened the position of bureaucrats and directors in companies, who de facto led companies instead of workers' councils, which only had a controlling function. This state of affairs was reinforced by a situation in which specialists were more closely connected with stable managerial layers—often strongly supported by the party—and these specialists were not really controlled by the rotating, often changing workers' councils. Thus workers' councils were rarely in the position to suggest alternative economic plans in opposition to the plans put forward by the managers and their specialists. Concomitantly, state bureaucracy and the managerial layers continued to hold a monopoly over extended reproduction, so that the rate of exploitation actually grew in the 70s and 80s. In his research, Professor Josip Obradovic concluded (through a set of empirical indicators) that the power and influence of the managerial layer was 200 times greater than that of the workers in production. This power disparity became even more acute on higher levels of decision-making. The vast majority of representatives in the national parliaments and the Federal Assembly were party members, under strict guidance from the top echelon in the party bureaucracy. Company managers and local politicians, even if not always formally party members, were also manipulated behind the scenes by the Communist Party machinery, even though the party was supposed to be self-abolish as an administrative body, and was renamed as the "League of Communists" in 1952. It retained its leading position in society, and an underlying homogeneity of bureaucratic interests, while the masses remained largely disorganised, fragmented and manipulated through the supposedly "self-governing" (but in reality bureaucratically controlled) structures of economic, social and political decision-making.

Fourthly, a rural, patriarchal mentality also limited the development of a democratic political culture. Partly as a manifestation of this, student and pupil participation in decision-making was never seriously contemplated for elementary and secondary schools. It was foolish to expect that pupils, who haven't been educated in the school of democracy, would somehow become self-governing individuals after being reared for obedience for many years in the most formative period of their personal and social development.

Fifth, a great part of the population was effectively excluded from self-managing processes. This was clearly the case with the rural population. The sole exception was a very basic kind of cooperative decision-making in local village committees. Furthermore, the army and the party were also excluded from democratic processes, or even any kind of democratic control from below. Somewhat paradoxically, the hierarchical nature of the party's internal relations—and of its relationship towards society—discredited the idea of self-government in the eyes of the population. It also made it easier for bureaucrats and nationalists like Milosevich to monopolise these institutions.

Insufficient attention (partly understandable considering the rush to accumulate wealth and raise the basic material standard of living) was also given to the creation of a new humanist culture, and to the creation of cultural self-management. I am referring both to "culture" as it is commonly understood and especially in the broader Gramscian sense of "integrated culture" and civiltá. Culture is central to the break-up of the rigid class division of labour in two fundamental ways. Firstly, because it raises workers' and citizens' educational level, needs and aspirations. Secondly, because self-government is unsustainable unless it extends to the democratic reproduction of a new socialist, self-governing cultural hegemony.

However, as nationalist concerns came to the fore, the burden of violent past came back with a vengeance. By fighting fascism through fascist methods (as especially evidenced in the post-war mass court martials and executions), and Stalinism through Stalinist methods (e.g. the Goli otok concentration camp), the new Yugoslav regime created hidden, underground (and of course initially minoritarian) subcultures of hatred and distrust. This nationalist and pro-capitalist backlash increasingly eroded the position of humanistic values in society.

An additional set of problems had to do with the issue of the market. On the one hand, companies often lacked market autonomy. There was a lot of paternalistic political control over companies, and the government was in the risky habit of socialising losses made by the unproductive companies. This meant that the workers often didn't directly depend on their "self-managing" decisions, which eroded their responsibility and consequently their intrinsic motivation and interest in helping themselves—i.e. it diminished their commitment to freedom through self-government. On the other hand, speedy marketisation and lack of cohesion between different "self-managing" economic units (especially since the late 1960s) led to new inequalities, a huge foreign debt through imprudent loans, inflation, shortages of goods, of housing etc. Market principles also encouraged self-interest and competition between firms, consumerism and spread of Western economic, political and ideological influence, in addition to destabilising IMF blackmails. Combined with the growing problem of "xenomania" (in the form of increasingly uncritical adoration and emulation of the developed capitalist West), these economic difficulties strongly restated the problems of "socialism in one country." Concerning the market debate, some authors (like Catherine Samary) have charted out the possibility that a "higher synthesis" of planning and initiative could be achieved through decentralised, participatory democratic planning. Yugoslavia even established some forms of decentralised planning through the continual economic communication and co-planning between (professional managerial) delegates of economic and social organisations, which enabled quicker and less damaging supply and demand information gathering than the market could ever provide. Such and other decentralised forms of planning could offer many of the advantages that the market system holds over bureaucratic, central planning, but minus the frequent slaps on the face that the economy and society are given by its "invisible hand."

This third road between central planning and conventional "market socialism" remained only an abstract possibility, as did the prospect for democratic socialism in general. Genuine democratisation through social struggle from below wasn't too realistic considering the absence of organised progressive political and trade union opposition to the regime and the existing system. The Yugoslav communists and socialists failed to valorise that internal systemic dynamism through political, social and cultural pluralism is the crucial precondition for progress and long-term sustainability of the new post-capitalist order. The practice of genuine participatory democratic pluralism is actually the most consonant path for achieving egalitarian social development.

To sum up, the Yugoslav "self-managing" experiment was neither sufficiently integral nor sufficiently organically tied to the masses. Still, it was the most comprehensive long-term attempt to establish popular self-government in history. As such, its analysis is a very useful starting point for the future.

presseurop.eu wrote:Unemployment is non-existent in Marinaleda, an Andalusian village in southern Spain that is prosperous thanks to its farming cooperative. In a country in the grip of austerity, the village mayor, Juan Manuel Sánchez Gordillo, heads a grassroots resistance movement. . . .

There, thanks to the participation and support of the local population, he launched a unique political and economic experiment which turned the village into a kind of socialist stronghold in the midst of the Andalusian countryside. . . .

Its current rate of unemployment is zero per cent. A good part of the residents are employed by the Cooperativa Humar-Marinaleda, created by the farm workers themselves after years of struggle. . . .

They work a 35-hour work week over six days and earn a monthly salary of €1,128, at a time when the minimum wage in Spain is €641 per month. In high season, the cooperative employs about 400 people and never less than one hundred. But positions are not attributed to a specific person. They are done on a rotation basis so as to insure a revenue for all. "To work less so that all may work," that is the basic principal. In addition, some people work their own small land parcels. The rest of economic life is made of shops, basic services and sporting activities. In practice, all of the residents of the village earn as much as a worker at the cooperative. . . .

In Marinaleda, there is no police force and political decisions are taken by an assembly in which all citizens are asked to participate. As for the "action squad", it deals with "all urgent questions, on a day-to-day basis," explains Sancho, adding, "It is not a group of elected officials. It is people who, together, decide how to allocate tasks and what needs to be done in the best interest of the village."

John E. Peck wrote:Are You Feeling Cooperative Yet?
By John E. Peck

The United Nations has declared 2012 to be the Year of the Co-op and around the globe people are celebrating. In fact, with 800 million members, cooperatives now employ more people than corporations worldwide. According to the UN, a co-op is defined as: “An autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations, through a jointly owned and democratically controlled enterprise.” The International Cooperative Alliance (ICA) estimates that the top 300 co-ops in the world account for over $1 trillion in economic activity annually. For instance, there are 49,000 credit unions in 96 countries, and in the U.S. over 100 million people have now opted to place their money in credit unions rather than banks. In 2008 at the height of the financial meltdown, U.S. credit unions actually increased their lending by $35 billion, while banks reduced theirs by $31 billion. Better yet, no credit union required any taxpayer bailout.

According to the 2009 UN Secretary General’s report titled “Cooperatives in Social Development, cooperatives “offer a model of enterprise that is particularly relevant in difficult economic times and instances of market failure. As a self-help group, a cooperative organization is widely accessible, especially for the impoverished and the marginalized. Where private enterprise or government is weak, particularly in remote rural areas, cooperatives enable local people to organize and improve their conditions.”

Humanity has come a long way since 1228 when Gruyere cheese makers in Switzerland organized the first producers’ cooperative. Porters in Aberdeen, Scotland formed the first workers’ co-op in 1498, and the first consumer co-op emerged in 1761 in Fenwick, England when weavers pooled their pennies to procure bulk oatmeal. The Rochdale Principles of International Cooperation, which appeared in 1844 in England, still guide the worldwide co-op movement today.

Cooperatives have historically dominated agriculture in many parts of the world and are becoming an even more popular economic alternative today. For instance, the largest farmer co-op in West Africa—Kuapa Kokoo in Ghana—boasts over 45,000 members in 1,100 villages, and is a leading force in fair trade through its well-known Divine Chocolate. In India, the world’s largest dairy producer, over 100,000 co-ops collect milk from 12 million farmer members each day. According to the International Labor Organization (ILO), cooperatives account for 70 percent of the fish caught in South Korea and 75 percent of coffee production in Ethiopia. In Denmark, co-ops control 86 percent of all wind energy, while in the U.S. co-ops market 80 percent of fluid milk. Worldwide, over half of all agricultural production passes through the hands of a co-op on its way to market.

The first producer co-ops in the U.S. were founded by dairy farmers in Connecticut and New York in 1810 and by 1820 farmers in Ohio had established the first marketing co-op. Farmer-owned co-op breweries, grain elevators, and irrigation systems soon followed. When the National Grange was formed in 1867, it included “cooperation in all things” as part of its mission to restore friendship between the North and South after the Civil War and membership in the Grange soared during the economic downturns of the 1870s and 1880s when rural people saw the tangible value in the mutual aid that co-ops offered. By the end of the 19th century, the Grange was operating 500 consumer co-ops nationwide. Co-ops were also promoted as part of FDR’s New Deal to rebuild rural America after the Great Depression and by 1935 there were 10,500 farmer-owned co-ops across the country.

Co-ops are part of the economic bedrock sustaining many people. For instance, in Wisconsin there are 844 co-ops statewide serving 2.7 million members and generating $5.6 billion in sales annually. Madison alone has many longtime worker co-ops—from Community Pharmacy, Lakeside Press, and Nature’s Bakery to Just Coffee, Isthmus Engineering, and Union Cab.

Through cooperatives, farmers can achieve economies of scale, reducing cost for inputs and services, and also help level the playing field in commodity markets that are often dominated by corporate cartels. Farmers are stuck as “price takers,” but co-ops give them a better chance at receiving a parity price and a living wage for their efforts. Pooling one’s economic power with others is always a good strategy to leverage fresh assets, reach new markets, and ultimately alleviate poverty. As the picket signs proudly carried by Union Cab drivers during the 2011 Wisconsin uprising proclaimed, cooperatives also have principles. Being member-owned and member-controlled, the primary purpose of co-ops is to provide benefits to their own members—their goal is not to simply generate more profit for outside investors. Democratic decision-making, financial transparency, environmental stewardship, and social responsibility are other hallmarks of cooperation.

Of course, these ideals are not always reflected in practice, which is why it is so important to hold cooperatives accountable for their behavior. Members bear the biggest burden when it comes to defending co-op integrity. As the 2009 UN report notes, “A vigilant membership base, bound by the democratic one member/one vote principle, is essential to addressing weak or unethical management.... The sound governance of cooperatives depends upon a well informed and active membership base.” In the case of the U.S., there are also federal and state laws that bolster certain cooperative principles.

In the early 20th century many co-ops were attacked by corporate competitors under the 1890 Sherman Anti-Trust Act, claiming that “marketing in common” was an illegal form of trade restraint. Farmers and their allies mobilized and soon won passage of the Capper Volstead Act in 1922—the Magna Carta for co-ops—that basically gave them the same right to collectively bargain enjoyed by private companies and labor unions. Under Capper Volstead, though, there are some specific rules cooperatives must fulfill in order to enjoy their exemption from anti-trust enforcement, including that the co-op must produce agriculture products (not just process them), that the majority of revenue must stem from production by the co-op’s own members, that the co-op must operate for the mutual benefit of its own members (not just be serving the interest of others), and that the co-op cannot conspire with other non-member entities to engage in illegal market activities (like price fixing).

Unfortunately, as most farmers can tell you, there are co-ops in the U.S. that don’t know about the Rochdale Principles and routinely violate Capper Volstead. For example, Dairy Farmers of America (DFA)—along with two of its top executives—was fined $12 million in 2008 by the Commodity Futures Trading Commission (CFTC) for illegal manipulation of the Class III milk market at the Chicago Mercantile Exchange (CME). In 2010, the U.S. Department of Justice blocked a bid by Deans Food to buy out Foremost Farms, another “corporate” co-op, which would have created a quasi-monopoly on fluid milk in parts of the Midwest. Land O’ Lakes’ website gushes with feel-good rhetoric about the UN Year of the Co-op, yet some question its true commitment to cooperation, especially when it prefers to import milk protein concentrate (MPC) from abroad rather than pay its own farmers a fair price, while also promoting dangerous biotechnologies like rBGH and RR alfalfa that jeopardize the marketability of its own products.

Similarly, Crystal Sugar has crawled into bed with Monsanto with its heavy-handed lobbying for RR sugar beets and is now engaged in a vicious union busting campaign, having locked out 1,300 workers at 5 processing plants in the Red River Valley. Apparently, some co-op managers and shareholders have forgotten that farmers and workers joined together long ago to win the very same collective bargaining rights.

There are other serious challenges facing today’s co-ops. One threat is demutualization, a fancy term for basically opening the doors for a takeover of a co-op (and its assets). This happened to Minnesota Corn Processors, lauded as part of a new wave of farmer co-ops, but then sold out and gobbled up by ADM in 2002. Governments, corporations, and multilateral institutions like the IMF often see co-ops as “cash cows” for liquidation and/or privatization. Another problem comes with the profit-driven corporate mentality that can pervade co-op managers. Rather than looking out for their own members, they prefer to grant themselves bloated compensation packages and guarantee hefty dividends for their outside investor friends. Other countries have rules limiting such abuses. For instance, within the Mondragon co-op federation in Spain the salary/wage ratio between the highest and lowest paid employee is set at 5:1. In Italy, co-op law stipulates that at least 80 percent of any surplus must be reinvested and not given away to either members or non members.

A true spirit of cooperation valorizes a deeper belief in the human capacity to care about others and there are all sorts of reasons to be part of growing the cooperative movement. For example, you’ll save more as a consumer and earn more as a worker, since there is no middleperson siphoning off the surplus. Being a member of a co-op also makes you an owner and that gives you a democratic voice in determining its future trajectory. Your chances of falling victim to such capitalist “market failures” as overseas outsourcing, environmental contamination, and workplace exploitation are much less. Many people also appreciate the opportunity to foster social change as part of a broader cooperative community. When you join a co-op, you’re not just a hapless farmer, mindless consumer, or throwaway worker anymore—you’re part of a living breathing vibrant alternative to business as usual.

In 1844, the Rochdale Pioneers in England created a set of principles intended to guide the activity of cooperatives throughout the world. In 1966, the International Cooperative Alliance modified the original Rochdale Principles, identifying six central co-operative principles and in 1995 a seventh principle was added.

1st Principle – Voluntary and Open Membership. Cooperatives are voluntary organizations open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.

2nd Principle – Democratic Member Control. Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. Cooperative members have equal voting rights (one member/one vote) and cooperatives at other levels are also organized in a democratic manner.

3rd Principle - Member Economic Participation. Members contribute equitably to, and democratically control, the capital of their cooperative. Part of that capital is the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their cooperative, possibly setting up reserves, part of which would be indivisible; benefiting members in proportion to their transactions with the cooperative and supporting activities approved by the membership.

4th Principle - Autonomy and Independence. Cooperatives are autonomous, self-help organizations, controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.

5th Principle - Education, Training and Information. Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives. They inform the general public—particularly young people and opinion leaders—about the nature and benefits of cooperation.

6th Principle - Cooperation. Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional, and international structures.

7th Principle - Concern for Community. Cooperatives work for the sustainable development of their communities through policies approved by their members.

Cooperative vs. WSDE
by Professor Richard D. Wolff

I’d like to take this blog to expand a bit on what is in my mind in thinking about the relation between what we are talking about at Democracy at Work: Workers’ Self-Directed Enterprises (WSDE’s) in relation to other kinds of cooperatives.

Cooperative is a term with a long, complex history that has given it multiple meanings. Sometimes it refers to a situation where the workers in an enterprise all collectively/cooperatively own its assets. Sometimes it refers to separate enterprises collectively or cooperatively purchasing inputs and/or marketing their products. Sometimes it refers to work arrangements in which the management functions are performed collectively, say by the workers themselves (workers’ self-management).

WSDEs refer to something else, to another meaning of the term coop. In WSDE’s what is done collectively/cooperatively is the appropriation and distribution of the surpluses produced in and by the enterprise; moreover it is done by those workers who produce the surplus: the surplus-producing workers. The key word here is “director.” Surplus-producing workers are to self-direct the enterprise in the precise sense of such workers replacing the typical capitalist corporation’s board of directors.

To be clear, we need to distinguish surplus-producing workers from the other kind of workers typically found in enterprises. Examples will help here: consider enterprises that make, say, cars, software programs, and cut hair. In each case the surplus-producing workers are those who literally work (use their brains and muscles) to fashion the final product (cars, software programs, haircuts) using raw materials and tools. The other kind of workers are those whose labor provides the conditions which enable the surplus-producing workers to function. Examples include clerks who keep records, purchasing managers who secure inputs, sales personnel who find buyers for the final products, security personnel who prevent thefts. None of these workers actually produce the commodities sold by the enterprise. We might call these other workers – whose labor is every bit as important as the surplus-producers, but important in a different way – “enablers” or “enabler-workers” to differentiate them from surplus-producing workers.

The surplus-producer is the kind of worker whose labor adds to the value of the raw materials and tools/equipment used up in producing the enterprise’s output. So, for example, if a worker’s 8 hour working day adds $8 to the raw materials and tools used up in production (say, for example, worth $4 of raw materials and tools), then the value of the day’s physical output is $12, the sum of $8 + $4. If the employer pays the worker in this example a daily wage of $4, then the surplus value produced by this worker is $4 per day.

In corporate capitalist enterprises, this surplus value is received by the board of directors when they sell the day’s output (at $12) and subtract their costs ($4 for the used-up raw materials and tools + $4 wage paid to the worker). The board of directors receives $4 in surplus value per day per worker. In capitalist enterprises, this surplus value is the fund that the corporation’s board uses to pay all the enabler workers it hires (from clerks to top managers), to pay dividends to shareholders, to pay for additional workers, tools, and raw materials (for enterprise growth), to pay taxes and so on.

WSDEs are then an alternative social organization of the surplus inside enterprises. Instead of a board of directors (selected by the major shareholders), in a WSDE, the surplus producing workers themselves cooperatively function as the board of directors. These workers themselves appropriate and distribute the surplus their labor produces – the excess of the value added by their labor over the value paid to them individually as their wage income.

The reasoning here – the rationale for WSDEs – is basic and drawn from the same analysis of production inside enterprises that we used above. It is taken from Karl Marx’s surplus-focused analysis. In capitalism the surplus-producing workers are excluded from appropriating and distributing that surplus. Other people, not themselves engaged directly in producing the surplus, take it and distribute it. This is damaging to workers in countless ways that Marx catalogs in his work.

The key problem is what Marx calls exploitation: the fact that the producers of surplus are different people from those who appropriate and distribute it. Exploitation creates division, opposition, tension, and conflict at the core of capitalist production (from where it infects the rest of capitalist society with inequality and many other social costs and problems. WSDE’s represent the end of exploitation which means (1) the end of excluding the surplus-producing workers from appropriating and distributing the surpluses they produce and (2) end of allowing persons (e.g., capitalist boards of directors) other than surplus producers to appropriate and distribute surpluses.

The social transition from capitalism to WSDE’s represents the abolition of/emancipation from the institution of exploitation. It thus historically parallels the transition from slavery to capitalism whose central component was the abolition of/emancipation from the institution of slavery.

In capitalist corporations, once the board of directors has appropriated the surplus produced by the surplus-producing workers, multiple influences shape how the appropriated surplus is distributed: to whom, in what amounts, and for what purposes. Thus, for example, the major shareholders can and do weigh in (they may push, for example, to receive larger dividends), so do other lesser shareholders, government officials wanting higher taxes, managers demanding larger operating budgets, clerks demanding raises, and so on. Even workers can demand that a portion of the surplus be used for day-care services for workers’ children, for pension benefits, and so on. Indeed, all those who do or who might get distributions of capitalists’ appropriated surpluses – including all the enabler workers inside the enterprise – may be expected to use what influence they have to help shape how the board of directors distributes the various portions of the surplus they have appropriated.

In WSDE’s, once the surplus-producing workers have appropriated their own surplus collectively/cooperatively, their commitment to democracy requires them to share equally with two key groups the power to decide how the surplus-producing workers will distribute the surplus. Those two groups are the enabler workers and the communities (local, regional and national) with whom the enterprise interacts. Together, these three groups will (1) democratically co-determine the size of the surplus in production and its division among enablers and among the communities that interact with the enterprise, and (2) democratically co-determine those directorial decisions of enterprises and of communities that most impact them both.

The productive workers together with the enabler workers will democratically direct the enterprise. They will together decide what, how, and where the enterprise will produce. When their decisions impact the communities they interact with, the final decisions will have to be reached democratically by all three groups. And the same applies to the three groups’ participation in those community-directing decisions that significantly impact enterprises.

Some folks wonder why only surplus-producing workers appropriate and distributed surpluses in WSDEs. Part of the answer is the goal of ending exploitation as explained above. Another part of the explanation has to do with respecting surplus-producing workers’ autonomy and freedom.

To show this, consider how democracy handles the individual. On the one hand, since what an individuals does always impacts the community in which he/she exists, one could interpret democracy to mean that everything an individual does must be codetermined by and with the community. Yet to do that would remove the individual’s autonomy and freedom.

Hence, modern democracies develop limits on the community’s influence over individual behavior (via historical understandings, rules, and laws) in order to leave him/her a certain autonomy and freedom deemed to be more or less an “inalienable right.”

In the same spirit, WSDE’s respect surplus-producing workers basic entitlement not to be exploited, not to see their surplus appropriated by persons other than themselves. And just as democracies constantly debate, renegotiate and change the individual-community relation, so too would WSDE-based societies constantly debate, renegotiate, and change the surplus-producer relation to enabler workers and surrounding communities.

Economics, Cooperation, and Employee Ownership: The Emilia Romagna model - in more detail by John Logue wrote:There are at least two European models for employee ownership that demand American attention. The one is the Mondragon cooperative group in the Basque region of Spain which has been frequently discussed in American employee ownership circles (see, for instance, “Lessons of Mondragon’s Employee-Owned Network,”Owners at Work XII:1, 5-9 and “From Mondragon to Ohio,” Owners at Work XIII:1, 16-17). The other is the much less well known complex of employee-owned companies in the Emilia Romagna region in Northern Italy around Bologna.

I had the good fortune to take a week’s study trip to the employee-owned sector in Northern Italy this last summer with a delegation from the Boston-based Cooperative Charitable Trust to see the Emilian model first hand.

In some ways, Emilia Romagna and the Basque co-ops are very different. In the Basque region, the Mondragon employee cooperatives grew out of Catholic social teaching and Basque nationalism in the 1950s and 1960s. In Emilia Romagna, by contrast, the co-ops grew up with the 19th century labor movement but split into three different partisan political federations -- Catholic, Socialist/Communist, and Social Democratic/Republican -- in the 20th century. They have no link to ethnic or linguistic minorities.

In other ways, they are very similar. Both appear to owe their success today to a combination of small scale, flexible employee-owned firms which achieve economies of scale to compete globally through collaborative research and development strategies, cooperative export efforts, their own financial institutions, and other forms of collaboration and cooperation that are largely or completely missing in the employee-owned sector in the US.

There’s a great deal we can learn in Ohio from what this one small region in Northern Italy has achieved over the last fifty years.

At the core of the Emilian Romagna success story is the regional government’s focus on support small businesses – employee-owned and co-op owned alike.

Emilia Romagna with its seven provinces (of 103 in Italy) is roughly comparable to Northeast Ohio in population: 3.9 million vs. 3.8 million. Unlike Northeast Ohio, it has its own regional government (of 20 in Italy) with significant power.

By Ohio standards, firms are very small scale. Emilia Romagna has 420,000 firms – one for every 9 men, women and children -- vs. 110,000 in Northeastern Ohio. More than half the population are co-op members. Coops -- including employee-owned businesses -- employ 10% of the workforce and generate, according to University of Bologna economist Stefano Zamagni, about 30% of the GDP in the region and up to 60% of the GDP in some cities like Imola. In Bologna itself, 15 of the 50 largest businesses are coops, and coops employ 25,000, or 10% of the labor force. Housing co-ops and consumer co-ops are so numerous that they hold down prices, and most privatized social services are provided by employee co-ops (including 60% of home health care services). Flavio del Bono, the regional finance minister, tells foreign visitors point blank that “the massive presence of cooperative firms is a stabilizing factor in the regional economy.” . . . “Emilia Romagna has 7% of the population of Italy,” says del Bono. “But we account for 9% of the Italian GDP, 12% of Italy’s exports, and 30% of Italy’s patents.” Unemployment is an enviable 3%.

It wasn’t always this way. Emilia Romagna moved from among the poorest of Italy’s industrial regions in 1950 to the richest in 2005. Today it’s among the 10 richest of the European Union’s 122 regions.

After [World War II] it became part of Italy’s so-called “Red Belt,” the part of Italy that was in the front line of the Cold War because the Communists and Socialists won the elections there. The CIA poured money into the region to split the labor and co-operative movements. But lacking the large-scale industrial base of a Milan or a Turin, a funny thing happened: The left-wing government in Emilia Romagna embarked on a strategy of promoting small business for economic development. It encouraged employee ownership, consumer cooperatives, and agricultural cooperatives, and it encouraged the development of cooperative institutions for all small businesses – co-ops and family-owned firms alike. It was, as Alberto Alberani of the left-wing Legacoop federation characterized it, a policy of “tortellini Communism.”

It also paid off politically for the left. Ironically from an American perspective, the CNA, the umbrella interest organization for family businesses, is Communist led. While all its member businesses are privately owned, the CNA provides a range of joint services for them that parallels the services provided for the cooperatives by their central organizations.

The regional government’s economic development agency ERVET.created publicly funded small business “industrial sector service centers” that have supported small business clustering in the region. They provide shared services in research and development, purchasing, education and training, workplace safety, technology transfer, marketing and distribution, exporting and more for scores or hundreds of small businesses in industrial sectors like ceramics, textiles, footwear, construction, and agricultural machinery.

These service centers combine the economies of scale with the advantages and flexibility of small business. They have supported the so-called “flexible manufacturing” of the region in which small businesses in the same industry collaborate in joint bids for major contracts. The region is home to some very high value-added producers, including companies widely known in the United States like Ferrari, Lamborghini, Maserati, and Ducati, which use networks of small businesses to supply their inputs.

The result is thousands of small and medium-sized enterprises, perhaps the densest concentrations of small businesses in the industrial world.

That support for local ownership forms the context for Emilia Romagna’s cooperatives.

Employee Ownership and the Law

Employee-owned companies in Italy fall under the general cooperative law that covers agricultural cooperatives, fishing co-ops, housing co-ops, consumer co-ops, and credit unions as well as employee-owned businesses.

The Italian cooperative movement had its origin in 1850s and flourished in Northern Italy before Mussolini came to power. Unlike most of the rest of Europe where consumer co-ops predominated, in Italy employee-owned co-ops played a major role. In1921, there were 3600 consumer co-ops and 2700 production co-ops in Emilia Romagna. But the co-ops fell on hard times about Mussolini’s fascists marched on Rome in 1922, and, beginning in 1926, Mussolini’s government systematically crushed them as independent organizations .

With the restoration of democracy in Italy after World War II, parliament gave formal recognition to the role of cooperatives. Article 45 of the Italian Constitution (1947) states: “The Republic recognizes the social function of cooperation characterized by mutual aid and not private profit. The law promotes and favors the growth of these structures using the most appropriate means and guarantees that their character and purpose will be inspected accordingly.”

The Basevi Law of 1947 -- Italy’s basic co-op law -- fleshed out this constitutional recognition. It provided co-ops with special tax treatment to encourage their self-capitalization by creating the concept of “indivisible reserves” for the benefit of all (i.e., future generations of employees and the community). Earnings could be contributed to indivisible reserves tax free (saving 40% in taxes), but if the co-op dissolved or sold, its reserves by law went to another cooperative or to a cooperative federation, rather than being distributed among the members. Members received their returns in annual interest payments on their membership fees and in patronage dividends.

Curiously, the law extended the same advantages to co-ops in which all employees were members and those in which only a minority of employees were members provided members owned 100% of the business. As a consequence, some employee co-ops have a very low level of inclusion of employees as members

Cooperatives provided for members’ control through an annual meeting that reviews financial results, approves the budget, and makes decisions on distributions; and through an election of the board every third year.

There have been three major changes in co-op laws since 1947. In 1991, “social cooperatives” were formally recognized with special goals and special tax advantages. Those are discussed below.

In 1992, co-op law was changed to require all cooperatives to contribute 3% of their profits to co-op development funds run by the various federations of cooperatives. [1] These funds are earmarked for starting new cooperatives or growing existing cooperatives. The law generalized the previous practice of the largest co-op federation, the left-leaning Legacoop.

Contrast this to the status of Sub-S corporation ESOPs in the United States. They are tax free, but all the benefits go to the current generation of employees, rather than benefitting employees in the future. If the employees sell or dissolve the ESOP, they can take the profits and run. Often they do. There isn’t even any contribution to helping to establish new employee-owned firms, like the 3% cooperative development fund fee in Italy.

In 2001, the right-wing Berlusconi government in Rome staged a frontal legislative assault on the co-ops which all the co-op federations fought. The result was a compromise: tax advantages for co-ops were reduced and scaled to the proportion of employees or consumers who belonged as members. Contributions to indivisible reserves are now 70% tax exempt for co-ops that do at least 50% of their business with members; those that do less are now only 30% tax exempt. Not surprisingly, this has encouraged employee co-ops to enroll at least 50% of their employees as members.

Recognizing the handwriting on the wall, the National Alliance party, which supported Berlusconi’s attack on the co-ops, set up its own, right-wing cooperative federation.

In short, employee-owned firms are governed by the same law as consumer and agricultural co-ops. They are membership associations in which members own 100% of the business. But members do not necessarily all have to belong to the same category. Some co-ops in the service sector mix employee and consumer ownership. Further, there is some overlap, especially among social co-ops, with what would be non-profit organizations in the US, and these include supporting as well as employee members.

In the last fifteen years, co-ops of all sorts have doubled their importance in the Italian economy. Today 121 of the 1400 largest Italian firms are cooperatives or 9%, up from 4%, and employment have doubled from ½ million to 1 million. Employee-owned co-ops play a major role, especially in Emilia Romagna. Because of the organization of the co-ops in three federations that combine all sorts of co-ops, it’s a bit difficult to separate the employee-owned sector from the rest of the co-op sector. In the Catholic Confcooperativa federation in Emlia Romagna, 750 employee-owned firms account for 40% of the firms, just under 20% of membership, 60% of co-op employment and 12% of turnover. There are two basic kinds of employee-owned cooperatives: the traditional employee co-ops in crafts, manufacturing, construction and services that operate much like American employee-owned firms, and the new social service co-ops. Between the two groups there are perhaps 2,700 employee-owned businesses in the region, employing about 6% of the labor force. Most of them are social co-ops, but most of the employment is in the more traditional sector.

Employee cooperatives

The traditional employee-owned cooperative in Emilia Romagna is the artisan-style production cooperative that has consolidated and grown. Some were established to deal with shutdowns; others, with lockouts; others, from artisans pooling their assets; and others, by benevolent management. The oldest we visited was set up in 1874; the newest was from the 1980s.

These employee co-ops have succeeded first in the local or regional market, then the national, and now the global market largely because of their focus on competitiveness and innovation. As in American employee-owned firms, competitiveness frequently stems from a niche – varying from short run, quick set up at Zappettificio Muzzi, an agricultural implement part producer, to design and quality excellence at Cooperativa Ceramiche d’Imola, Italy’s 5th largest ceramics company, to technological leadership at Societa Cooperative Bilanciai, one of Europe’s leading scale producers which plows a remarkable 7% of revenues back into R& D in an otherwise mature industry. Occasionally, the competitive strategy is one of size and economies of scale, as it is for some of the Italian consumer co-ops like Coopitalia, Italy’s largest retailer; this is the strategy of employee-owned CIR Foods, the country’s third largest food service provider.

Employee ownership is itself seen as a competitive advantage. “The gift of the cooperative is to create a sense of collective entrepreneurship. Membership requires thinking about the business. Workers are more committed than in private firms,” says Stefano Bolognesi, president of Cooperativa Ceramiche d’Imola,. “If that weren’t true, I wouldn’t have accepted the presidency.”

The employee co-ops are 100% membership owned and operate with a membership-elected board that serves a three year term. The law requires a membership meeting reviews the annual financial report and next year’s budget, but the co-ops we visited had quarterly or monthly membership meetings, and one provided small group meetings to review the financial report and budget before the membership meeting.

On the other hand, co-ops vary tremendously requirements for membership. The four we visited varied from six months’ service and a $3000 membership fee paid over three years to a five year minimum service requirement and a $112,000 membership fee. Not surprisingly, the proportion of employees who are members varies as well – from 172 members of 1350 employees at Cooperativa Ceramiche d’Imola to 230 of 265 at Bilanciai.

While Italian co-op experts describe employee co-ops as being “by definition undercapitalized,” in fact the legally required “indivisible reserves” build over time into substantial permanent equity that dwarfs membership fees. Bilanciai, which became a co-op in 1963, for instance, has membership fee accounts of $1 million and indivisible reserves of $12 million. The indivisible reserves were universally seen as an advantage, guaranteeing employment for multiple generations, rather than “collective property” to be “privatized” by the current group of members.

Here’s how Bolognesi from Cooperativa Ceramiche d’Imola, and a third generation co-op member, summed it up: “Part of our mission is intergenerational mutuality. What we see here is the fruit of generations of work. We receive wealth from past generations, and we create it for future generations of members. Our objective isn’t just to generate jobs for this generation but also for future generations.”

Some of the older and better financially consolidated co-ops have expanded internationally through setting up holding companies in which the co-op owns a majority share with financial partners owning minority positions. The holding companies then owns the foreign subsidiaries and, sometimes, Italian non-cooperative subsidiaries as well. Bilanciai has become a major European player in this way, winning 34% of the European Union’s truck scale market. Occasionally the employee co-op controls a public company; for example, the 8,000-employee Manutencoop, a facilities management and janitorial group, has spun off its three core areas of business into three companies, listed them on the stock exchange while retaining a controlling 70% stake in each, and used funds raised on the stock exchange to finance these businesses.

Curiously, there seems little pressure from the co-op membership to convert subsidiaries outside Italy into co-ops. . . .

. . . Managers, [compared to employees which make industry standard wages], make less than the market - typically 75-80% of what they would make in comparable private sector jobs. There was a period in the 1980s when co-ops were modernizing that they turned generally to the market for management, but that led to major value conflicts between managers and members. Consequently today, 80-90% are said to be recruited from within. “You earn less money,” says Bilanciai’s elected president Luciano Diacci, who came from the company’s engineering staff, “but have more satisfaction, more job security, and a real sense of belonging.”

Social cooperatives

The rapid growth in employee ownership in Italy in the last twenty years has been in the social cooperative sector, which provide a variety of social services. Like most of the rest of the West, Italy has undergone an extensive debate about the role of government in providing public services. While the rapid Italian recovery and economic growth after World War II was driven by a very large state sector, in recent years Italy has moved farther than most other Western countries in seeking to privatize public services. Unlike most of the rest of the West, however, Italy has done it with cooperatives. In Bologna, depending on whom you talk to, 60 - 85% of privatized social services are provided by social co-ops. Throughout Italy social co-ops employ 60,000 and account for 13% of social service expenditures. Their goal: to promote the public interest outside state sector.

There are two basic types of social co-ops. Type A is owned by the employees and provides social services to the usual social clients. Type B is owned by the members and also provides gainful employment for the marginalized, who must comprise at least 30% of members. Type B co-ops are similar to American non-profits which provide sheltered employment for the hard-to-employ – handicapped, former substance abusers, etc. The difference is, in the Italian case, that the hard-to-employ have an ownership share in the business. They have additional tax advantages as well.

Social co-ops have low membership fees, typically $1000 or so, and short probationary periods. Wages meet private sector standards because of the industry-wide bargaining agreements, but are typically below wages paid previously to public sector employees to perform the same work – even after patronage dividends are added in. They are often more political than the traditional employee co-ops. The strongest ideological motivation we heard was at CADIAI, a Type A, 800 employee (including 420 members) diversified social care provider of home care, child care, residential care, and nursing home care services to 4,000. CADIAI’s goals are to “improve and ensure the quality of personal care, and affirm the professional content and social value of care workers.” Its founders specifically sought to legalize their grey-market jobs, supported women’s rights including that to divorce (then contested in Italy), were strongly anti-clerical, and overtly “red” in their politics.

Similarly a Type A research cooperative, Centro di Ricerca sul Cancro (Center for Research on Cancer), which is incongruously located in a 16th century castle, did pathbreaking work on the industrial carcinogin benzine forty years ago. Now its researchers -- 35 employee members -- are analyzing the impact of electro magnetic fields and cell phones on health.

“You can wish to have a better world, but it’s hard to build one,” says CRC scientific director Dr. Morando Soffritti. “Our cooperative form gives us real freedom as a research institute: It allows us to be genuinely independent, to research freely and to speak freely.”

Economies of scale

Unlike the United States where the traditional cooperatives – agricultural cooperatives like Land of Lakes, mutual insurance companies like Nationwide, rural electric cooperatives, and credit unions – are completely separate from the employee-owned sector, in Italy the agricultural, financial, and consumer co-ops and the employee-owned companies are organized in the same associations at the national, regional, and local levels. While co-op federations are separated by party politics, their unity across sectoral lines is immensely useful for strengthening second-tier cooperative structures and building the whole cooperative sector. The strength of the Italian co-ops stems largely from their creation of secondary co-ops, or “cooperation among co-ops.” Like the Mondragon co-ops in Spain, they have set up financial institutions; insurance companies; and joint training, research, and development centers.

Co-op federation services. The three main cooperative federations provide many services to their members. The Legacoop, for example, provides tax preparation, accounting, payroll and legal services; training and development; occupational health and safety consulting; collective bargaining; waste disposal; and lending and equity investment from its development fund. It also charges a hefty 4/10 of 1% of sales for membership. Because the Federations have regional and provincial associations, these services are provided locally but with real economies of scale.

Financial services. We visited Unipol, the insurance company, which was set it up in 1963 by a group of Bologna co-ops to insure their members. Today it is Italy’s 3rd largest insurance company and employs 5400. It had a growth crisis in the 1970s, but was rescued by the German Metalworkers’ insurance company injecting an equity stake. Today its ownership has broadened to include cooperatives, labor unions, and the left-leaning farmers and family business organizations. Together they own 51% while 49% is publicly traded. Of the 51% held by organizations, 30 Lega co-ops hold more than half. Unipol was a pioneer of social accounting in Italy, which it has been doing for a decade. Its “social balance sheet” is as glossy as a Fortune 500 annual corporate report. But the content is very different. Still, “we are a business, not a charitable organization,” says Franco Malagrino, Unipol’s social accountability director. The company is more profitable than the average for private insurers in Italy. As a consequence of its business success, Unipol has become a major source of investment in the cooperative sector through the placement of its reserves, which are largely placed in there. It has recently expanded its financial services: The Unipol bank grew from 9 branches in 1998 to 273 branches today, and Unipol set up a merchant bank in 2003.

Collaboration on specific projects. Employee cooperatives collaborate extensively on specific business projects. Thus, for example, CADIAI is partnering with CIR, the food service co-op, and several other co-ops to build day care centers – managed by CADIAI with food provided by CIR. And CIR is backing the opening of Colors, the co-op restaurant set up by the employee survivors of Windows on the World in the World Trade Center. The co-ops even use the stock market -- generating a downright messy situation by purist standards. As mentioned above, the 8000-employee Manutencoop, a facilities management and janitorial cooperative, owns 70% of each of three public companies in its field. Similarly dairy co-ops own 65% of Granarolo, the 2nd largest dairy company in Italy.

Co-op development funds. Since 1992, 3% of profits of co-ops have been allocated to cooperative development fund to finance starting new cooperatives, conversion of existing businesses to co-ops, and the expansion of current cooperatives. Each of the three big co-op association has its own fund. We visited with the management of Legacoop’s fund – Coopfond. As of 2004, it had raised about $290 million and had invested about $340 million. Additionally, Coopfond has 14 regional funds. The other two national cooperative associations have smaller funds. Unaffiliated coops’ contributions go into a government fund for the same purpose.

The Legacoop’s Coopfond can:

place up to $1.5 million into either equity or debt with a 5-7 year term,

take up to 50% equity in new co-ops,

provide 30% equity in conversions of existing businesses to cooperatives, and

lend 50% of the costs of expansion projects for existing coops.

Additionally, the Coopfond can create loan guarantee pools to support the sorts of projects listed above and can support education on co-ops and social economy.

Between 1994 and 2001, Coopfond supported 109 co-op start ups with $48 million in equity and $17 million in loans leveraging $288 million in investment and creating 4640 new jobs. It also supported 82 expansion projects with $53 million in loans, leveraging $370 million in co-op investments and creating 2690 new jobs. That’s 7300 jobs for $101 million invested or about $14,000 per job. By comparison, $280 million in Ohio public sector investment preserved 3,800 jobs at the Toledo Jeep plant, or about $74,000 per job. Furthermore, the Coopfond tries to strengthen Southern Italy which has the same relation economically to Northern Italy as Alabama has to Ohio. Of Coopfond’s current revenue, 76% comes from Northern Italy, 21% from Central Italy, and 3% from South Italy. By contrast investments and lending are 52% in Northern Italy, 21% in Central and 27% Southern Italy.

Imagine, if you will, the implications in Ohio if each employee-owned firm paid 3% of its profits into a fund to encourage the development of additional employee-owned firms in the state.

Unions, collective bargaining, and employee co-ops

We met with representatives of the three labor federations – the communist/socialist CGIL, the Catholic CSIL, and the Republican/Social Democratic UIL – in Reggio Emilia where 150,000 of the province’s 450,000 inhabitants (from elderly to babes in arms) are union members -- the highest union density in Italy – and with the dominant CGIL Bologna. Here are their views on the relations between the employee co-ops and the unions.

There isn’t a special relationship today between the co-ops and the unions, despite the fact that they may share the same partisan political coloration and historically have been closely associated. Today the co-ops are simply slotted into the general structure of modern Italian collective bargaining. The three federations bargain in common nationally with the private sector, and the co-op sector mirrors the resulting national contracts. In the co-ops, unions represent co-op members as workers, not in their roles as co-op members, as well as representing employees who aren’t co-op members.

Basic contracts are negotiated at the national level, covering entire labor market within that area nationally. (We were told that there are about 450 national agreements.) These national contracts set minimum standards. The national contracts are then fleshed out at the sectoral and – in larger enterprises – at the enterprise level. Thirty to thirty-five percent of firms have enterprise level agreements. Co-ops may have a slightly higher wage scale (apart from patronage dividends) in these larger firms. In the absence of enterprise level agreements, the sectoral or national agreements pertain.

In smaller firms without enterprise-level contracts, wages are higher and working conditions better in co-ops than private firms, according to the union spokesmen. Less positively, the social co-ops have lower wages and benefits than the public employees that they replaced, perhaps 20-30% lower. It was suggested that co-ops have tried to ignore national standards in favor of local standards, which represented a modest threat to the national standard-setting process.

The relations of unions with co-ops are weaker today than thirty years ago. In part, this is a consequence of the fact that many co-ops were historically set up to provide employment for blacklisted unionists – a practice that has come to an end with the end of blacklisting. Further, in the past, many co-ops were managed by former union officers; today, because of increased global competition, co-ops have by necessity turned to more professional management. The erosion in the relationship also stems, in part, from the fact that political ties are weaker today between party-political unions and party-political co-op federations: unions are more focused on representing members as employees and less on their party affiliation.

However, there are still numerous areas in which unions and co-ops can make common cause, according to the union officials we met. One is employment creation for marginalized young people. A second is challenging the shutdowns of viable firms. A third is to create labor-co-op-community coalitions to challenge finance capital.

Coops, social capital, and quality of life

Emilia Romagna frequently tops European measures of quality of life. Why?

The answer, we were told, lies in the fact that Emilia Romagna ranks high in Italy and Europe on measures of “social capital’ or trust. “Social capital” is the set of attitudes around neighborliness -- around trust and collaboration -- which enable people to work together more easily. There is no question that the region’s system of “flexible manufacturing” in which small firms collaborate to win big contracts is related to the high level of social trust.

“Social capital is highly associated with quality of life everywhere,” says University of Bologna economics professor Stefano Zamagni, who comes out of the Catholic social tradition, which stresses community. “It seems that the co-operatives’ emphasis on fairness and respect contribute to the accumulation of social capital here.”

The goal of “creating businesses that last across generations” and which provide employment for the next generation as well as the current one is clearly rooted in those attitudes.

“Co-ops also reduce inequality,” Zamagni continues. “We know internationally that lower inequality is correlated with higher quality of life. The quality of our social services is higher here too – though Milan is richer than we are, our social services are better – and again that is because of social capital.”

(In fact the whole American discussion of social capital, popularized by Harvard’s Robert Putnam and his book Bowling Alone, draws on Emilia Romagna. Putnam, who is an Italian politics expert, spent so much research time in the region that Bologna claims him as a native son.)

Some years ago, David Erdal analyzed various indicators of health status, crime, sense of personal security, participation in community life and the like in Emilia Romagna, comparing communities with high employee co-op employment, medium co-op employment, and low co-op employment. He found a strong correlation between the importance of employee cooperatives as employers and positive ranking on his indicators. (See “Is Employee Ownership Better for Your Health?” Owners at Work, 13:2, 1-3.)

Even co-op advertising seems to support the formation of social capital. In the words of Vera Zamagni, an economic historian at the University of Bologna, the co-ops have had “a civilizing role” as Italian society has become richer. Consumer co-ops, for example, have changed emphasis from low prices to high quality to environmental concerns and fair trade. Agricultural co-ops have slashed pesticide use for their current “produced with love” slogan.

Again the contrast with the Wal-Martization of America seems striking.

The co-ops grow out of the context of social trust and have nourished it on a daily basis.

What can we learn?

There are a number of lessons for Ohio policy makers and the employee-ownership community in Emilia Romagna that we should take to heart.

. . .

Access to capital. Much of the strength of the Emilia Romagna model stems from access to capital from large pools dedicated to cooperative development. Consider the insurance company Unipol. Established and controlled by other cooperatives, Unipol has strengthened the cooperative sector through its investment policies, and through its pioneering work in social accounting as well as through underwriting insurance for cooperatives and their members. Or consider the co-op development fund structure which “taxes” otherwise tax-advantaged co-ops to develop new co-ops seems to be an effective mechanism both to create new co-ops and new jobs.

Not least, the Italian co-operatives’ “indivisible reserves” – which revert to the co-operative development funds at the sale or liquidation of cooperatives -- give them a staying power that American cooperatives and employee-owned businesses lack. They pay out part of the profits to members, but not their tax-advantaged retained earnings which guarantee that the capital created with tax advantages benefit future generations and the community. We basically turn those tax advantages into pensions for the current generation of employees.

. . .

Imagine that capital was pooled for starting and expanding employee-owned companies and that mutual insurance companies put a substantial portion of their placements back into growing the employee-owned and cooperative sectors. Imagine that employee-owners’ investment of sweat and capital were anchored in the community for a longer term. And imagine cross-sectoral collaboration between farm co-ops, credit unions, mutual insurance companies like Nationwide, and employee-owned companies that strengthened them all. Imagine, in short, that employee-owned companies in Ohio were not individually islands unto themselves but part of a larger whole.

Pere Rusinol and Kaos En La Red, translated by Clayton Conn wrote:At least 40 struggling companies have been converted into cooperatives with workers assuming management. In some cases, the former owner of the company has joined the initiative.

Daniel Martinez, 33, was fired from the company where he worked in Mazarron (Murcia), like so many others who have been crushed by the crisis. Half a year later, he is once again onboard - and is an owner.

The economic crisis has led to scores of workers in Spain taking over and directly managing declining enterprises. Instead of just being content with a strike, they have dismissed owners and are trying to keep their companies-turned-cooperatives afloat.

The situation in Spain is not as dramatic and sudden as it was in Argentina a decade ago, when the crash of 2002 left thousands of workers in charge of their factories as their bosses fled. Their struggle was captured on camera by Naomi Klein and Avis Lewis in "The Take." However, the flow in Spain is constant: last April, Daniel Martinez and six colleagues created the Akami Tuna Cooperative, where they work in the same factory, and with the same machinery, that once belonged to the company that had fired them; the metal workers of Metalva joined with those of Alcaniz (Teruel), who went to work one day to find that the owner had fled; the cooperative of Zero-Pro in Porriño (Pontevedra) is developing robotics projects that were previously prepared for their boss.

The Confederation of Labor Unions (COCETA by its Spanish initials) estimates that within the last two years, there have been some 40 companies taken over in Spain, something that has not been seen in the last two decades.

Sometimes, although rarely, even the owners join in the takeover. This occurred, for example, with Francisco Javier Jimenez, 40, who was the owner of the Cuin Factory, a small producer and marketer of kitchen furniture from Vilanova i la Geltrú (Barcelona). At the beginning of the year, the books were showing a crisis, and Jimenez told the workers that the company was to be closed. After the collective shock wore off, one worker suggested that they all pitch in together in order to continue as a cooperative. Since June, Jimenez has ceased to be an owner - he is now just one more worker, part of the assembly, and the factory continues on.

"Today, the person who signs my paycheck, used to be my secretary. It seems as if the world was turned upside down, but I am very pleased with the steps taken: before everything fell on my back; now, I have fellow workers," says Jimenez. Since the economic situation presents something like a wartime economy, the six co-ops have self-assigned a salary of just 900 euros a month. "We are all leaders and we all make the same. I hope we can give ourselves a raise as we get past the crisis," says Jimenez, who jokes about his former employees: "Now they will realize how hard it can be to be an entrepreneur."

Catalunya is probably the community with the majority of these kinds of experiences, to the extent that the local government set up in June a specific support hotline to transform an enterprise into a cooperative business. There is also a cooperative called Aracoop which specializes in helping with the transformation process. In this past year, requests for information from Aracoop have increased by 50 percent.

The phenomenon of worker takeovers has crept throughout Spain, encouraged not just by the unemployment situation, but also by the rich experiences gained in the crisis of late 1970s, when many workers occupied their factories and converted them into cooperatives. Some of these companies, like the Catalan Mol-Matric, continue to operate through workers' assemblies and generate profit some 30 years later.

"The problem, sometimes, is with the owner directly," said Enrique Emsoleaga, co-owner of Metalya metalworks, created by five workers who were tired of not being paid by the owner. "Before we had work, but never money. Now we do the same, but with much more freedom and are able to make a living," he adds.

Are the assemblies a nuisance when making decisions? "Not at all," replies Emsoleaga with a touch of irony. "The agreements are always unanimous: work, work and work," he says. The assemblies occur on Saturdays in the factory, while they eat breakfast with the whole family.

The reasons for the decision to occupy factories are often not ideological, but practical - although many partners refuse to believe it. "The head of a bank whom we were asking for money closed the portfolio after hearing the word cooperative. He must have thought that he was in front of Lenin himself!" explains a laughing Marcos Jalda of Zero-Pro.

Red Aegis wrote:I cannot embed this but it was a fantastic documentary that everyone needs to watch. I know that you all will enjoy it.

RIGHT HERE IS THE VIDEO

David Mekeel wrote:With poverty high in Reading, city officials are willing to try just about anything to create decent-paying jobs.

Friday afternoon, they heard a pitch for an idea that has worked elsewhere and might be just right in Reading.

Seattle-based filmmakers Melissa Young and Mark Dworkin, in town for the Berks Arts Council's seventh annual Greater Reading Film Festival, were the featured guests at a lunchtime roundtable session focused on employee-owned businesses.

Young and Dworkin have created a documentary on the subject titled, "Shift Change: Putting Democracy to Work," which will be screened during the festival.

The film, and Friday's discussion, centered around the concept of community-first businesses, in which employees have a real stake in the company.

"If the business does well, they do well," Dworkin said. "There's an incentive to work hard, not to shirk off."

Employee-owned businesses can take many forms, Dworkin and Young said.

Some have no management structure at all, with decisions being made by consensus. Others have professional management, with an elected board of employees overseeing their decisions.

But in every case, the employees have a voice in how things operate.

"The bottom line is, it's democratic," Dworkin said.

Young said businesses also can be diverse in how they're created, ranging from startups by entrepreneurs to restructuring of a current business to efforts by a local foundation, nonprofit or government entity.

Reading officials and community members who took part in the discussion seemed receptive to the idea, saying that the city needs to look at all its options.

"We're trying every possible innovation for development," said Eron Lloyd, special assistant to the mayor.

Mayor Vaughn D. Spencer said finding a way to establish well-paying, steady jobs in Reading is one of his biggest priorities.

"It's no secret that when I ran for mayor I wanted to address economic development and job creation," he said.

Businesses that are owned by local employees who work there, he said, could offer just those types of jobs.

The next step in creating those jobs, those in attendance agreed, would be to form some sort of committee or foundation that would offer education on how to create and manage employee-owned businesses.

"It does take training to make a business like that work," Young said.