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Worker Owned, Democratically Managed

In time, we hope to provide a selection of links and materials on collectives and collective organizing, to help explain and inform about this extremely useful and democratic idea. Until that time, we are pleased to be able to reprint here a recent article by Baltimore author Andrew Smith on collective labor. Feel free to reprint, but please let us know first! (email:

You might also want to check out our online archive of No Boss news, a now-defunct California-based journal about worker self-management.

Read No Boss News

Collective Labor is Direct Action
an introduction to worker owned collectives
Andrew W. Smith, 2003

1. Towards Workplace Democracy

Like it or not, most of us spend at least half our waking life at work. The working world is the cornerstone of our society, having a far more direct and profound effect on our lives than the world of politics. Unfortunately, for most of us the workplace is an undemocratic and conflict filled environment.

Stress and conflict are inevitable because business owners have different interests than the people who actually work in the business. To the workers, their labor is their main asset, to be sold at the highest price possible; to the owners, labor is an expense, to be reduced to the lowest cost possible. Under the prevalent forms of business organization, be it private, corporate, or state ownership, the tension between owners and workers is a basic and integral feature.

There are, however, alternative ways of organizing enterprises which seek to resolve this tension through worker ownership and democratic management. They seek to make labor and management (and sometimes customers) the same, thus removing conflicting interests.

There are tens of thousands of these enterprises in North America alone, referred to by a variety of names, including collectives, cooperatives, or worker owned businesses.

A worker owned business is simply any business where employees own at least a 51% share. This implies nothing as to the form of management, and such enterprises are not necessarily run in a democratic manner. Many of them have nothing about employee ownership in their by-laws, and are at risk of becoming mere shareholder owned corporations at the whim of the market. In recent years the popularity of Employee Stock Ownership Programs (ESOPs), often in deals with unions to save faltering firms, have led to an increase of businesses which are at least partly worker owned.

A collective can be any cooperative unit or organization. When used in the context of a business it usually refers to a democratically run enterprise with each member having one vote (as opposed to 1 share 1 vote). But virtually any type of enterprise could call itself "collectively owned," or "collectively operated."

A cooperative is an enterprise or organization owned by and operated for the benefit of those using its services. Thus a cooperative (or a collective) could be owned and operated by consumers as well as producers.

Buyers cooperatives that achieve an economy of scale by combining the purchasing power of their members are widely popular around the world. These co-ops are found in every sector of the economy from food to housing to banking, child care and healthcare.

Other cooperatives are organized by workers to provide various goods and services. These businesses are owned by the workers, who become members of the cooperative, with decisions made on a one member, one vote basis. In these businesses the workers are also the owners and managers, making decisions on a democratic basis.

Often consumer cooperatives are called .cooperatives. or .co-ops. while worker cooperatives are referred to as .collectives.. In some cases, such as farmers co-ops, the cooperative serves as both a collective buyer and a collective seller.

Although these workplaces are clearly not stress free, in these co-ops at least the tensions between workers and owners have been reduced, if not eliminated.

There are over 47,000 co-ops serving over 120 million people in the United States alone, with over 700 million members of co-ops worldwide. One of the single most impressive cooperative ventures began in Mondragon, in the Basque region of Spain. Starting with 23 people in a single venture in 1956, it has grown to over 120 firms employing over 20,000 people and doing business measured in the billions of dollars.

There are three main ways of starting worker owned collectives: startups, conversions, and plant closings. Many of the worker owned businesses unions are involved with are reactions to plant closings. To prevent the threatened closing of a plant, the workers, usually through their union, accept partial or total ownership of the company in return for short term concessions in wages and benefits. Although these can become successful enterprises, they are really a reflection of union weakness, not strength. Often plant closings are averted by weak Employee Stock Ownership Programs granting little democracy in the workplace and demanding huge concessions from the workers in wages and benefits.

Conversions are often a much happier affair, as they usually take place as a proactive decision by workers to increase workplace democracy instead of reactionary attempts to save disappearing jobs. The conversion of an existing traditional business to a worker owned cooperative can be an empowering experience for workers not only sharing in day to day decision making, but the profits those decisions make.

And for the more entrepreneurial there are startups. The startup co-ops run the greatest risk of devolving into capitalist businesses as the original members become tempted to sell out to investors.

To ensure democracy in any co-op some rules of organization are essential. Decisions should be based on one member one vote, not one share one vote. While shares of the business can be distributed any way appropriate, no one fulfilling membership requirements should have any more vote than anyone else. All employees should be members, even if they own no shares. Likewise, there should be no non-member share holders. There should be open access to records for all members. And, to protect the collective, there should be a significant entrance requirement, be it a fee to buy in or some amount of labor.

Whether the cooperative serves workers or consumers, the fundamental reason for its existence is different than, and a challenge to capitalist modes of organization. The cooperative serves to provide goods and services for its members in proportion to the use they make of the enterprise, rather than producing profits for shareholders.

2.Workers Collectives and Organized Labor</p>

Workers collectives and the organized labor movement have had a long and varied relationship. In the 1870s and 1880s, the Knights of Labor advocated the forming of workers collectives as a natural part of labor organizing for its own interests. Yet for many years unions have often viewed collectives with suspicion, if not hostility. If the workers organize as worker-owners, the reasoning went, don.t they run the risk of becoming small-capitalists, with interests that may run counter to those of labor? The hope is that the workers will retain their union ties, as well as creating ties to other collectives, building industry wide solidarity and class consciousness.

More recently, the AFL-CIO has come to embrace worker ownership (if not necessarily workplace democracy), often in an effort to save jobs from moving abroad. In 1990 the AFL-CIO initiated the Employee Partnership Investment Fund to assist member unions involvement in ESOPs. Some of the unions involved in worker owned enterprises include: United Steel Workers of America, Independent Steel Union, Amalgamated Clothing & Textile Workers, United Auto Workers, United Textile Workers, International Union of Electrical Workers, United Food and Commercial Workers and the International Association of Machinists, among others.

One union with a somewhat different orientation towards collectives and co-ops is the Industrial Workers of the World (IWW), popularly known as the Wobblies. With a historic antipathy not just towards bosses, but the entire wage system of capitalism, the union adopted a radically pro-cooperative clause into their constitution. Article II, section 4 (b) reads:

To encourage workers' self-management of the means of production and the abolition of the wage system, the IWW shall allow non-wage producer cooperatives to join as chartered IWW co-ops having the right to use the IWW label on their products. IWW co-ops shall consist of at least three members. Any elected co-op office shall be subject to recall election if one is called by the membership. The recompense of the members in IWW co-ops shall not undermine wages in the Industry. IWW co-ops will honor all unions' boycotts and strikes. IWW co-ops will use union products and services whenever possible and recycle as feasible.

3. Collectives and Social Struggles

With their emphasis on community and democracy instead of profit, it is not surprising that worker collectives have often been involved in environmental and social justice movements. Many of today's worker collectives have roots in the social movements of the 1960s and 1970s. Often they are .green. or politically motivated businesses such as recycling centers or community bookstores. Sometimes their progressive principles are enshrined in their bylaws, dedicating the business to working towards social justice. The people involved in these enterprises often have a larger social agenda in mind even as they engage in the everyday activity of the collective.

Because worker owned collectives are owned by members of the local community, their relationship with the community is often more socially responsible than those of large corporate businesses. For instance, they may choose not to buy from non-union contractors or only buy locally produced materials, even if it hurts their bottom line. Additionally, in communities where there are multiple collectives, they can practice cross industry solidarity. In the San Francisco bay area, for instance, there is the Network of Bay Area Worker Collectives (NoBAWC, pronounced "No Boss"), whose worker-owners receive discounts from fellow member collectives.

Members of these collectives see their businesses not just as an alternative to capitalism, but a challenge to it. By creating their enterprises, they seek to build institutions that can replace the corrupt, profit driven institutions of capitalism with lively, community oriented cooperatives providing for the needs of people, not the profits of shareholders. Many see their co-ops as the seed of a new society growing within the shell of the old.

The worker owned collective can be not only a resource for the community, but also a living example of a more humane economy. Although collectives risk becoming nothing more than associations of small capitalists, effective workplace democracy remains a potent force in the reorganization of society. When workers make the decisions, the decisions companies make are radically different than when Wall Street calls the shots. Workplaces are safer, pollute less, and jobs are not sent across the border. When worker owners are union members they lend an extra dimension to industry wide solidarity, eroding the power of the bosses. When union members are collective members, they lend an extra dimension to social struggles, with solidarity among different workers collectives extending beyond industrial lines. Collectives, co-ops and organized labor can join together on a number of issues important to all workers and consumers, from jobs to education to housing to healthcare. The combination of collective enterprise and cooperative economics provides a powerful alternative to the capitalist marketplace as a fundamental way of organizing society.

4. Beyond Capitalism: Collectives and a New Economy

Although the worker owned collective is not an inherently revolutionary organization, there is clearly revolutionary potential in the form and function of collectives.

Unlike capitalist businesses, the worker owned collective is a democratic institution. This simple, but fundamental, transformation of the everyday life of the working world has a profound effect not only upon the business, but on the workers as well.

Functionally, the collective exists to provide goods or services for the members, not profits for shareholders. This, too, is a very simple yet basic reversal of a basic fact of capitalist economics which transforms the relationship between the workers and the work they do.

Taken together, the two ideas are the workplace embodiment of free association and mutual aid, two of the most basic principles of anarchism.

On an individual level, the experience for both workers and consumers of participating in a democratic cooperative is an education in thinking about the workplace and the marketplace in a new way. As business owners, workers, and consumers become the same people, workplace and marketplace relationships change. The line between worker and customer is blurred in the cooperative where both can be members.

In the workplace keeping prices low or providing benefits to workers such as vacations and child care might take precedence over profits; in the marketplace, trading between various producer and consumer collectives could be a means of preventing the accumulation of stagnant goods and labor that brings crisis after crisis upon capitalism.

In a post capitalist economy, federations of collectives engaged in the production and distribution of goods and services could ensure that society's needs are met with all of the efficiencies that economies of global scale provide. Such federations could also provide for the welfare of workers and the protection of the environment.

Worker owned collectives will not be the sole engine of social transformation, but they are an important part of the anarcho-communist alternative to capitalism. Forming or joining worker owned collectives is not a socially transforming venture without further activity on behalf of the working class, be that within unions, or community or political groups. However, in this context the worker owned collective becomes a powerful force in the community, a living example of the new world right within our midst.

© Andrew Smith, 2003
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