The Value of Worker Cooperatives in Labor and Political Organizing

While the worker cooperative movement is not a silver bullet in challenging capital, cooperatives can be valuable institutional partners to labor and political organizing. Cooperative workers can be politicized by the very nature of their democratic work structure, which may remove a barrier in the path to unionization.

By Don J. and Phoebe W.

In the Left’s ongoing conversation on the relative merits of worker cooperatives, there exists a tendency to fall into one of two camps: the first, a hostility to worker co-ops on the grounds that they distract from labor organizing, that the good they can bring about affects a very small, typically historically less-exploited group of workers, and that they pose no real threat to capital. The second is characterized by an extreme boosterism of worker co-ops in the abstract, as a fundamentally radical alternative to market forces that can be created by anybody to solve basic needs outside of the capitalist system. A major problem with these perspectives is that they operate in an intellectual space that is detached from the concrete worlds of work, actual experience with co-ops, and on-the-ground experience with established, organizing unions. This binary is a mistaken framework. While the worker cooperative movement is by no means a silver bullet in challenging capital and is expressly not an alternative to market forces, co-ops throughout the arc of this fight can do several meaningful things. They can provide work to workers that is less exploitative and alienating in the day-to-day; they can serve as “bridge institutions” that could make the transition to a socialist economy more organic as seen in “Pink Tide” countries and elsewhere; and most importantly for DSA, they can be valuable institutional partners to labor and political organizing. Worker cooperatives should be viewed as a tool in our tool kit.

What are Worker Cooperatives?

In the Northwest Cooperative Federation and the Center for Cooperatives at the University of California’s “Steps to Starting a Worker Co-op” guide, authors Hansen, Coontz, and Malan define a cooperative as “an enterprise owned and controlled by the people who use it — its members,” and specify that it “is operated to meet the mutual needs of its members.” While consumer cooperatives (where the owners are the consumers — think Wheatsville here in Austin) and producer cooperatives (where the owners are people who produce similar types of goods or services, like Ace Hardware or many farming co-ops) have their merits, worker cooperatives are a type often considered the most compelling to socialists. Simply put, a worker cooperative is a business owned equally by the workers. These members “have a right and obligation to participate in the decision making that affects them,” and they “contribute equitably to and democratically control the capital of their cooperative. In a worker co-op, all worker co-op members gain or lose together. No single member benefits at the expense of other members.” Worker cooperatives in Austin include 4th Tap Brewing (beer brewing), Key Figures (financial management and bookkeeping), and Collective Campaigns (organizing & political services). Others across the country include Cooperative Home Care Associates in New York and Arizmendi co-ops (eight bakeries and construction companies) in the Bay area.

Criticisms of Worker Cooperatives

In Marxist sociologist Erik Olin Wright’s book How to Be An Anticapitalist he lists five different strategies used in anti-capitalist struggles: smashing capitalism, dismantling capitalism, taming capitalism, resisting capitalism, and escaping capitalism. Escaping capitalism, he says, means believing that “capitalism is too powerful a system to destroy” and “while we may not be able to change the world at large…we can remove ourselves as much as possible from its web of domination and create our own micro-alternative in which to live and flourish.” This idea forms the basis of the argument against worker cooperatives, and indeed, Wright mentions cooperatives in this category, but crucially, he acknowledges that they can “become elements of a broader challenge to capitalism and building blocks of an alternative form of economy.”

Other critics point out that we are a long way from creating businesses capable of challenging powerful corporations in the US, which is of course true. It’s difficult to try to create a worker co-op alternative that can take on the behemoths in the monopolistic industries of the world, but there are sectors where the strategic development of cooperatives can create valuable partners and instruments to help anchor labor and political organizing.

Strategic Sectors for Worker Cooperatives

While many companies do just get their surplus value from hyper-exploitation in a race to the bottom, others need to compete for work with better conditions and generate their competitive advantage by investing in technology and/or upskilling their workers. This is where worker cooperatives are resilient. Cooperative Home Care Associates has shown the potential of union-tied worker co-ops in home care, which depends on caring labor and in which workers have a great deal of on-the-job autonomy. Because of these characteristics this sector has low technology and capital requirements, and there is little advantage to strong managerial hierarchies. In the field of construction and trades, unions can directly cooperate with, or even seed, union worker co-ops to provide worker-friendly shops as a buttress against anti-union contractors. This is essentially how the backbone of the Italian worker cooperative sector was formed, with left-led labor unions working through socialist and communist city and regional governments to award public infrastructure projects to union-tied construction co-ops.

The fields of transportation and logistics also provide great opportunities for worker ownership. The growth of hyper-exploitative ridesharing companies (i.e. taxi services that rebrand so they can break the law and get away with it) has triggered in response the growth of worker co-op taxi and ride hailing services. Successful cooperative taxi cab companies operate in Denver and Madison, and the new platform-based drivers.coop has launched with great potential in New York. The technology and professional service sectors often have relatively low barriers to entry and low up-start capital requirements, and some of the fastest growth in worker cooperatives in the US has come from these sectors. They thrive on specialization and operate competitively across a range of firm sizes. They are also “strategic” in the sense that they provide infrastructural support for many other sectors.

How Worker Cooperatives Work to Preserve and Grow Quality Union Jobs

Many established unions are interested in utilizing worker cooperatives and other forms of employee ownership as tools to preserve and/or grow high quality union jobs. United Food and Commercial Workers, United Steelworkers, and the Service Employees International Union have all successfully used worker cooperatives or the related Employee Stock Ownership Plan (ESOP) model to merge worker ownership with labor organizing. The largest worker co-op in the United States, Cooperative Home Care Associates in New York, is also unionized through the SEIU. This has been effective for both the union and the co-op, as the union has helped support the internal rights and democracy of the large co-op organization and helped with accessing government contracts, while the co-op has provided a stable base of organized, politicized workers with a structural dedication to preserving and growing jobs sustainably. Together they have acted as leaders in state and federal advocacy for improving working conditions and increasing funding for home health aides across the board. In terms of internal operations, through back and forth engagement and negotiation they have functionally moved toward a level of workplace control similar to what you might see in Europe. (In the Emilia-Romagna region of Italy, two-thirds of the population are worker cooperative members, and 30% of the region’s GDP is created by co-ops across many sectors of the economy. You can read more about codetermination models in Sweden, France, and Germany over at the People’s Policy Project.) Union cooperatives are able to effectively negotiate a somewhat more socialist version of European codetermination: codetermination in the sense of union/labor comanagement, socialist in the sense that all profit that isn’t kept in the firm as retained earnings goes back to the workers as higher benefits, wages, or patronage dividends.

An example of worker cooperative and union strategic cooperation here in Austin happened during the 2020 election season. United Professional Organizers, a local union of campaign & nonprofit workers, conducted a pressure campaign aimed at the Travis County Democratic Party. The union circulated a pledge among candidates vying for County Chair of the Party, that promised their ratification of a labor peace agreement with the union should they prevail. In essence, a labor peace agreement typically ensures that an employer will not interfere in an organizing campaign & will voluntarily recognize the union should they secure a demonstrated majority of support on the shop floor (commonly referred to as ‘card check’). The union took to task any candidate that refused to sign the pledge. Worker cooperative Collective Campaigns, whose membership unionized through United Professional Organizers, was able to assist the effort by helping to recruit workers to TCDP. When nominee Katie Naranjo supported the labor peace agreement, she won the union’s support and subsequently, the nomination. Following the adoption of the labor peace agreement, United Professional Organizers was able to unionize the workers at Travis County Democratic Party, and negotiations on their inaugural collective bargaining agreement are underway.

What the Worker Cooperative Movement is Doing Right Now

Groups like the US Federation of Worker Cooperatives’ Union Co-ops Council and municipal co-op associations are expanding cooperative and union power across the country. Members of these groups are promoting the conversion of existing businesses to worker co-ops through employee buyouts. Tax incentives already exist to help employees do this, and lending and technical support is available through organizations like One Worker One Vote, the Democracy At Work Institute, the ICA Group, Shared Capital, and locally the Austin Cooperative Business Association. Many businesses, workers, and unions just don’t realize employee buyouts are an option.

The Capital for Cooperatives Act is a piece of legislation introduced this year that would ensure Small Business Administration-backed lending is accessible to worker co-ops. Bernie Sanders perennially promotes worker cooperative legislation, including the Worker-Ownership, Readiness, and Knowledge Act (WORK Act), which would fund worker ownership centers around the country, as well as the U.S. Employee Ownership Bank Act, which would create a federally chartered bank to support worker buy-outs.

Locally, the Austin Cooperative Business Association worked with the Texas Rural Cooperative Center and CHEA to win a contract with the City of Austin to provide co-op training, courses, and technical assistance this year. Finding the capital to start a business can be a challenge, and you might be thinking, “Why would capitalists finance businesses whose stated purpose is to eliminate them?” Generally speaking they don’t, so co-ops have to use other mechanisms, such as sector-focused banks and lenders, member investment, and crowdfunding. Those that want to start cooperatives should seize on philanthropic lending while it’s available, and if enough of a critical mass of cooperatives can be built up, the movement could self-fund the way the Italian worker co-op movement did in the 20th century. If you’re interested in starting a worker co-op, check out this workshop in October.

Concluding Thoughts

Minsun Ji is the Director of the Center for New Directions in Politics and Public Policy program at the University of Colorado-Denver. In her essay “With or without class: Resolving Marx’s Janus-faced interpretation of worker-owned cooperatives’’ she explains that Marx himself viewed cooperatives as a tool and encouraged several ways “to prevent degeneration of cooperatives into self-serving islands of socialism.” He emphasized the importance of “equal distribution of power and income among cooperative members to create a democratic management” and he urged cooperatives to join a national organization, which would create a “connecting bond” and “forge a broader national struggle.” He also proposed that cooperatives put aside funding to establish new cooperatives in their community. This last point is a less common feature of modern worker cooperative movements but a key feature of historically successful examples. Ji says that Lenin, too, saw cooperatives as a stepping stone, and “argued that truly ‘cultured cooperativists’ were forged in the fire of political struggle, and therefore had a broader view of class solidarity and a commitment to social transformation.” They could not be “just a community of individualistic cooperatives, each competing for business patronage and to advance the interests of their own small circle of owners.”

In DSA there are often conversations about how we can reach people who don’t have time outside of their jobs to commit to the work of political organizing, and sometimes it feels impossible. Cooperatives are a way to reach some of those who may not have the time or resources to engage in much political organizing outside of their workplace. Cooperative workers can be politicized by the very nature of their democratic work structure, which may remove a barrier in the path to unionization, and stronger unions can make significant changes in working conditions for workers across the industry, unionized or not. Worker cooperatives are not a silver bullet to ending capitalism, but they are an effective way to build union density and class consciousness together in the struggle against it.