Are worker-owned companies an alterative to capitalism?

Louis Proyect
September 29, 2009
This is a follow-up to my review of Michael Moore’s “Capitalism: a Love Story” where I neglected to discuss his proposals for an alternative to capitalism, which boil down to worker-owned firms or cooperatives. He interviews the top guy at the Alvarado Street Bakery in California, whose website describes a cooperative 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”. He also visits a robotics manufacturer in Wisconsin that operates on the same basis.

In an interview on Amy Goodman’s “Democracy Now” radio show, Juan Gonzalez asks a pointed question that gets to the heart of the matter: “Michael, you have obviously amassed a lot in terms of the indictment of capitalism as a system, but some would say the film doesn’t offer much in terms of the alternative.” Moore replies:

I do show in the film some very specific examples of workplace democracy, where a number of companies have decided to go down the road of having the company actually owned by the workers. And when I say “owned,” I’m not talking about some ding-dong stock options that make you feel like you’re an owner, when you’re nowhere near that. But I mean these companies really own it. And I’m not talking about, you know, the hippy-dippy food co-op, and I don’t mean that with any disrespect to the food co-ops who are listening or any hippies that are listening. But I go to an engineering firm in Madison, Wisconsin. These guys look like a bunch of Republicans. I mean, I didn’t ask them how they vote, but they didn’t necessarily look like they were from, you know, my side of the political fence. And here they all are equal owners of this company. The company does $15 million worth of business each year.

I go to this bakery. It’s not a bakery really; it’s a bread factory out in northern California, Alvarado Street Bakery. And they’re all paid. They all share the profits the same. They’re all shared equally, including the CEO. And they vote. They elect, you know, who’s going to be running this and how this is going to function. The average factory worker in this bread factory makes $65,000 to $70,000 a year, which, I point out, is about three times the starting pay of a pilot who works for American Eagle or Delta Connection. And that’s another harrowing scene in the movie, where I interview pilots who are on food stamps—pilots who are on food stamps because of how little they’re paid.

As someone who has paid fairly close attention to the airline industry over the years, I could not help but remember how worker ownership did little to stave off the race to the bottom in what was once a well-paying industry with excellent benefits. On July 7th, 1996 Louis Uchitelle informed his NY Times readers that worker ownership was no obstacle to the kind of downsizing that victimized the workers at Republic Window, whose sit-in was documented by Moore. Uchitelle reported:

Or take Kiwi Airlines, founded in 1992 by former Eastern Airlines pilots. It is 57 percent owned today by its 1,200 employees. But to cut costs, 60 owner-workers were laid off in January, many of them clerks whose jobs had been automated. “If we had done these layoffs earlier, there would have been revolution,” said Robert Kulat, a Kiwi spokesman. “We still had this concept of a happy family and of employees being bigger than the company. But big losses changed that. And people realized that to remain alive, to keep their own jobs, they had to change too.”

Interestingly enough, Uchitelle claimed that a strong union allowed United Airlines, another worker-owned firm, to avoid downsizing but only four years later economic reality caught up with the company, as the January 14, 2000 New York Times reported:

Faced with rising labor and fuel costs, the UAL Corporation, the parent company of United Airlines, said yesterday that its 2000 earnings were likely to be as much as 28 percent below expectations.

United Airlines, the world’s largest carrier, is being plagued by troubles that are common to the industry and by others that are singular to its operation. Jet fuel prices increased about 24 percent last year and United predicted further jumps this year.

Adding to the carnage, several of United’s unions were demanding large wage increases, in part to keep up with competitors and to replace money generated from the company’s expiring stock ownership plan.

“UAL gave a very sobering message yesterday,” said Kevin Murphy, an airlines analyst with Morgan Stanley Dean Witter. “No airline outperforms when you’re negotiating with labor. If United gives big wage boosts to its pilots and mechanics, the other carriers may have to catch up.

In 2001 United Airlines went bankrupt as a result of the impact of 9/11 on travel and rising fuel costs and was subsequently reorganized as a regular corporation. This had nothing to do with whether the company was “democratic” or not. Even if it was the most democratic institution in the world, it could not operate as a benign oasis in a toxic wasteland. Capitalism forces firms to be profitable. If they are not profitable, management takes action to make them more profitable, including slashing wages or laying workers off. The only way to eliminate these practices is to eliminate the profit motive, something that Moore is reluctant to advocate.

It is understandable that Naomi Klein would have referred to the notion of worker owned firms this way in an interview with Moore that appears in the latest Nation Magazine: “The thing that I found most exciting in the film is that you make a very convincing pitch for democratically run workplaces as the alternative to this kind of loot-and-leave capitalism.” Klein, like Moore, has extolled the virtues of worker ownership in her own documentary “The Take”. This was my take on her movie:

In the opening moments of Avi Lewis and Naomi Klein’s documentary about occupied factories in Argentina titled “The Take,” we see Klein being hectored by a rightwing TV host. If she is not for the capitalist system, then what is she *for*. This is obviously is a tough question for autonomists like Klein who resist being pinned down, but she and her partner decided to make an attempt in “The Take.” Despite their best intentions, the film poses more questions than it answers. Ultimately, the film succeeds not as a political statement but as a record of ordinary workers trying to maintain their dignity.

For non-Marxist radicals like Klein, coming up with a model means first of all rejecting the USSR or Cuba which are dismissed as verticalist nightmares at the beginning of the film. The attraction of occupied factories in Argentina is that they are exercises in direct democracy, but do not involve the messy business of government, with its distasteful cops, courts and bureaucracy, etc. Of course, if you do not evaluate such institutions through the prism of class, you will never be able to operate politically on the most basic level. In the final analysis, cops will either support factories run by workers or they will evict them. Class power is the ultimate determinant of that outcome.

The film focuses on the efforts of workers to keep three factories running on a cooperative basis: Forja San Martin, Zanon and Brukman. Although Brukman, a garment shop, has only 58 workers, it is by far the best-known of these experiments. For autonomists, it has achieved the kind of mythic proportions that the St. Petersburg Soviet has for some Marxists. (It should be mentioned that the sectarian Marxist left rallied around Brukman as well, not so much because it was a model but because it was seen as an apocalyptic struggle between society’s two main classes.)

There’s a certain cognitive dissonance at work with Moore’s treatment of cooperatives. If it is a virtual panacea for what ails American workers, it amounts to a rightwing conspiracy when it is advocated as a solution to the health care crisis by Obama’s adversaries (of course, Obama is open to the idea himself.) If you go to Moore’s website, you will find an article by Robert Reich that makes a rather effective case against health insurance cooperatives: “Don’t accept Kent Conrad’s ersatz public option masquerading as a ‘healthcare cooperative.’ Cooperatives won’t have the authority, scale, or leverage to negotiate low prices and keep private insurers honest.” The same thing applies to outfits like the Alvarado Street Bakery in California or the robotics plant in Wisconsin. They lack the power to transform the American economy, just as health insurance coops would lack the power to safeguard the health of American workers. They would be nothing but tokens in a vast system operating on the basis of profit