You can’t win without a fight: Why worker cooperatives are a bad strategy

Carmen Molinari, Lexi Owens, and Robert Fontana argue that worker cooperatives are not the institutions for fighting capitalism that many on the left take them to be. Illustration by Emé Bentancur.

In a recent episode of his podcast Democracy at Work, Marxist economist Richard Wolff argued that worker co-ops and unions should be working together to create better working conditions and prospects for worker liberation. Wolff contended that whereas labor unions bargain a better deal for workers from the employer, worker co-ops are the end goal because they are “the way in which workers don’t have to bargain with anybody else.” 

Worker co-ops have long been popular in left-leaning circles. The Democratic Socialists of America’s Libertarian Socialist Caucus’s platform statement from 2018 stated that “worker control over workplaces can only be advanced through the creation and support of worker-owned firms” in conjunction with unions and community councils. 

Workers collectively owning and operating a business removes the oppression and discipline imposed by the employer and puts the profits directly in the workers’ hands — or so the argument goes.

But we argue that worker cooperatives are often an off-ramp from organizing against the boss, and that even a mass cooperative movement can never pose a legitimate challenge to the employing class. 

The working class’ power comes from our ability to halt the flow of capitalists’ profits within their own companies. By withholding labor, workers can interfere with the capitalist logic of profit maximization and advance workers’ interests and demands. Worker cooperatives, on the other hand, retreat from the class struggle and actually entice workers into participating in the capitalist system. 

Peculiar bedfellows

One of the “success stories” often pointed to by proponents of coops is the Mondragon Corporation, based in the Basque Country of northeastern Spain. Mondragon is one of the largest worker cooperatives in the world, with over 80,000 members as of 2019. In 2009, Mondragon entered into an agreement with the United Steelworkers (USW) to found worker cooperatives in the United States.

Mondragon was first set up in the late 1950s as a small operation manufacturing paraffin heaters; today it has 257 companies in several countries. Spain in the 1950’s was still under the grip of General Francisco Franco, the fascist dictator installed by the European ruling class and Nazi Germany after the failed Spanish Revolution of 1936. Franco and his secret police were notoriously brutal anti-communists; labor organizers were regularly arrested, tortured, and murdered. Franco’s regime crushed unions — particularly the radical CNT — leading to a near complete collapse in class-struggle organizing. He was intolerant of anything that might pose a threat like the 1936 revolution had. 

And yet, it was during the Francoist period that Mondragon was founded and grew to a rather large size. Franco’s regime actually supported Mondragon’s development, more than happy to let a group of workers develop light industry in an underdeveloped region of Spain. In 1965, amidst an upswell of labor and student unrest, Franco’s Minister of Labor traveled to the Basque Country to award a “Gold Medal for Merit in Work” to the founder and then-director of the Mondragon Cooperative, José María Arizmendiarrieta (see The Myth of Mondragon by Sharryn Kasmir, p. 86). 

Decades later, in 2013, Mondragon was awarded for “Boldness in Business” by the Financial Times, joining Amazon, Apple, and FIAT. 

How is it that Marxist economists, leftist revolutionaries, unions, financial newspapers and the longest-reigning fascist in the 20th century can all support the same thing? 

Class struggle… or surrender

The idea of worker cooperatives is seductive to workers and radicals because we all believe on some level that our jobs would be better if we ran things ourselves. What is a cooperative if not having some control over our work and over the means of production? Isn’t building up worker ownership of capital a way of slowly building up socialism?

The problem is that cooperatives don’t and can’t organize the working class to fight the ruling class for wealth and power. Instead, they seek to build and develop a tiny slice of capital outside of the direct control of big industrialists. In other words, cooperatives retreat from the direct struggle between workers and owners to instead build worker-owners. 

This is precisely what made Mondragon palatable to General Franco. If anything, the development of Mondragon is a case study in the collapse and retreat of class struggle unionism. In fact, the founders of Mondragon started the coop after a failed attempt to improve working conditions at their previous employer. Instead of organizing the workers to fight and win, they became worker-owners, or petty capitalists.

This is a more common story than one might think. There are many recent examples of organizing campaigns devolving into crowdfunding campaigns to found worker cooperatives after a union drive collapses, especially in low-capital industries such as foodservice and retail.

Take the United Electricalworkers (UE) campaign at Augie’s, a small cafe chain in Southern California. In July of last year, the employer swiftly shuttered all five locations and laid off all workers after the nascent union “went public” to the employer by asking for voluntary recognition. The union then pivoted to a public shaming and social media campaign attacking the employer; this was quickly followed by a GoFundMe page to help replace wages and raise startup capital for what would become the “Slow Bloom Coffee Cooperative.” 

Former workers at House of Kava in Brooklyn pursued a similar strategy. After workers were fired in the course of their organizing campaign, they started a “cooperative pop-up kava bar” before combining with other veterans of barista organizing campaigns to try to fundraise for a permanent cooperative cafe.

Another example, again from the UE, is a print and copy shop called Collective Copy in Amherst, Massachusetts. A union drive and strike in the mid-1980s led to the employer closing the shop. The workers then solicited loans from “allies in the community” for startup capital for a six-member cooperative. 

In each of these cases, instead of workers going on to organize at other employers in the industry, they now operate a small business. This has been touted as a union victory. How is it that a union legendary for its history of class struggle unionism like the UE now sees founding worker cooperative small businesses as a way to “create union jobs” as opposed to “creating” union jobs by organizing non-union workers? 

The Lusty Lady campaign is often championed as an example of sex worker organizing. The workers at the San Francisco strip club initially formed a union with SEIU 790 in the late 1990s. After a strike in 2003, the owner shut the location down. Workers formed a cooperative and continued operating. However, they soon started competing against each other for customers, trying to drop heavier and nonwhite dancers from the shop because they brought in fewer customers and less money — the same issues they originally organized the union to tackle in the first place. The Lusty Lady closed in 2013 after a failed “community fundraising” drive to pay rents and debts.

With all of these examples, the pivot to a cooperative business happened after a decisive blow was dealt to the workers’ union by the employer. But this pattern of workers turning to operating as a cooperative represents a big missed opportunity for labor organizations. It effectively takes agitated and experienced worker-organizers, and removes them from the class struggle.

If each worker who got fired from a job for organizing were instead to go on to organize at another workplace, especially supported by union mentorship, they could do much more to shift an industry, if even on a local level, than they can by simply grinding out a living in a small business.

Fighting on the opponent’s turf

The dream of worker coops hinges on the idea that they can survive and compete with for-profit businesses owned by individuals or investors. Worker cooperatives “control production” in an immediate sense, but they’re subject to the same market discipline as capitalist enterprises.

Most cooperatives exist in the service industry, a relatively low-capital sector (it doesn’t take a lot of money or machinery to get a business up and running), but even then it is difficult to survive, even with investors, small business loans, and a reliable market niche. Many who seek to form coops don’t have the capital necessary to run a business at a loss for multiple years as they grow their client base or industry presence.

We might ask whether there will ever be a worker cooperative that can accrue enough capital to compete with something like Boeing in the commercial airliner market. But regardless, it would face the same reality that, through market discipline and pressure from their competitors, businesses under capitalism have to squeeze their worker-owners for increased productivity. This means downward wage pressure, unpaid overtime, and most other features of wage labor under capitalism. Workers at Mondragon have struck the company multiple times in the past few decades — one-third of the Mondragon workers (primarily its non-Spanish workforce) are outright employees, not member-owners.

At the core of it, the cooperative vision is to build something that will somehow eventually outcompete capitalist firms. But capitalism functions by leveraging worker exploitation. Coops have to survive in this same ecosystem. They may gain moral ground on capitalists by being less hierarchical, more fair, and more equitable in their ownership structures, but they actually give up political ground by avoiding the broader fight over where resources are allocated in our society.

A bigger base

Workers’ greatest power is the power to halt, slow, or otherwise affect production to extract concessions. A cooperative’s economic incentives discourage industrial action because the workers have an ownership stake in the business. But organized workers can bring a workplace to a grinding halt to win demands. If they are big enough, they can do the same with an entire industry — or economy. The base of potential union members who can take action is the entire working class, whose power is derived from their essential labor. 

After 65 years of development, the Mondragon Cooperative is slightly below the 100,000-member mark. It remains a minor player everywhere outside of southwestern France and northeastern Spain. And most worker cooperatives never reach a fraction of the size of Mondragon.

20 years before Mondragon’s founding, the two unions which led the Spanish Revolution, the CNT-FAI and the UGT, had 1.6 million and 1.5 million members respectively. In the preceding decades, these and other unions repeatedly carried out general strikes to improve working conditions and win political demands such as the abolition of the monarchy. During the revolution, workers collectivized private property en masse.

Cooperatives are seen as a kind of prefigurative experiment in running a socialist economy. But in a very real sense, businesses are already run “cooperatively” by workers every day: every construction crew, kitchen shift, and long-term care unit works in a coordinated way, on products or people or inputs that were produced or prepared by another team of workers elsewhere, and another team of workers takes over once they’re done. We already know how to run the economy because we do it every day; what we need to learn is how to fight against employers (private ownership) to run it for us and not for them. 

Unions are working-class organizations that introduce a completely different logic than the market’s logic of profit maximization. And they do so through power. The power struggle at the core of capitalism cannot be side-stepped by making the role of “worker” and “owner” coincide in a particular business inside of an economy that is still run for the sake of generating profits. The divide between “owner of productive capital” and “someone with no choice but to work for a wage” is a broader social antagonism that has to be fought head-on.

Carmen Molinari, Lexi Owens, and Robert Fontana are members of the Industrial Workers of the World.