Worker cooperatives make the world better

Chapter One: Humanity and its Horrors Part VI

“Liverpool Co-operative Society, Branch128, Pilch Lane, Liverpool. 1955.“ by harrypope is licensed under CC BY-NC-ND 2.0.

Witnessing humanisation in action

I have been a witness to how worker ownership tends towards humanisation. In the lead up to Christmas 2014, Ingham Poultry announced that it was planning to shut its turkey processing facility near the town of McLaren Vale just outside of Adelaide on the Fleurieu Peninsula. The plant was represented by my union at the time — the National Union of Workers (NUW).

The local manufacturing workforce, with the recently announced shut down of the Australian car manufacturing industry that hit South Australia particularly hard, did not have many other options. The local turkey and poultry farmers, meanwhile, did not have any other accessible processing facilities in the area. A group of workers and farmers got together to campaign to re-open the factory under the operation of a joint worker-farmer cooperative.

The combined pressure of the workers, and farmers with support of the wider community won feasibility study funding from the South Australian government to work up a realistic business plan for the venture. One NUW member who was a turkey boner at the factory, Rick, stepped forward to act as the project officer. Rick cut up turkeys day in and day out for a living. He was not even the union delegate but it turned out that he was a leader.

Rick helped to shepherd the project from just an idea to being feasible.

He worked with business development consultants to assist them in completing the study. He liaised with farmers, workers and the community to keep everyone up to date with the project. He lined up exporters, distributors and customers, including a major national buyer. Rick helped put in place most of the ingredients for a thriving enterprise that would keep secure jobs in the community and provide a quality product that could add to the gourmet produce of the McLaren Vale region.

Investment capital, however, remained a missing piece of the puzzle. As it was not a corporation, the cooperative venture could not, at the time, qualify for more substantial industry funding from the South Australian Labor government. This was despite the then South Australian government being highly proactive investing in other locally-based manufacturing enterprises as the state reeled from the impending closure of the General Motors-owned plant in Elizabeth.

No private bank or even industry superfund would lend to the fledgling enterprise without government guarantee or security. The cooperative enterprise development infrastructure was just not in place to nurture the project in Australia. There was nothing more that could be done at the time, as the closed factory was being progressively gutted of machinery the starting capital required for the project grew and grew, and so the realisation of a joint worker-farmer cooperative grew ever out of reach.

There was nothing more that could have been done. Rick had to go and find casual labour picking grapes in order to support his family.

One thing that has forever remained with me is how even the promise of a cooperative model of working allowed one worker to bloom—unlocking skills, creativity and vision in Rick that his previous employer would not even have been aware of.

There are Ricks everywhere you look in this world, and the right structure of democratic input for hundreds if not thousands of Ricks could provide the cooperative edge for a thriving network of Labour Managed Firms (LMFs) even within the constraints of capitalism. Then beyond the constraints of capitalism, the right structure to allow millions if not billions of Ricks to bloom more permanently will unlock possibilities that are today barely even conceivable. We simply have no experience of what an advanced society where everyone can be fully human is even capable of.

The data on worker ownership’s impact

Evidence for how worker ownership helps workers better realise their full humanity can be indirectly read in the economic data. In 2023, the independent think tank, Ownership at Work, conducted an ambitious research analysis of Employee-Owned Businesses (EOB) in the UK called the EO Knowledge Programme 2023, and compared their performance to non-EOBs.

An EOB for the purposes of the research includes both worker cooperatives and employee ownership trusts, and the survey was based on a representative sample of both EOBs and non-EOBs in the UK economy.¹ The research found that EOBs are 8%-12% more productive than non-EOBs (calculated on a Gross Value Added per employee basis), invest more in research and development, that EOBs are 50% more likely to be expanding their workforce, and spend 12% more on staff training.

These research results are consistent with Virginie Pérotin’s 2017 report, What do we really know about worker co-operatives?² Pérotin’s study was the most comprehensive comparison of the economic performance of worker-owned and run businesses and conventional businesses to date. Pérotin found that worker cooperatives specifically “are more productive than conventional businesses, with staff working “better and smarter” and production organised more efficiently”.

Critically, Pérotin further found that worker cooperatives, at a minimum, last as long as a conventional business with more stable employment outcomes, that they are more likely to retain and reinvest their profits, and that there is a lower wage differential between the lowest and highest paid employees.

This accords with the EO Knowledge Programmes that also found that EOBs do more to look after the financial wellbeing of their workforce and share more of the value they generate with the workforce. Moreover, cooperative and mutual enterprises are a business model that generally invests in more jobs and more secure jobs at an equivalent revenue level than traditional corporations.³

Crisis management, problem solving and worker ownership

Given capitalism’s tendency to produce ever accumulating crises, such as global warming, how worker ownership supports a person’s humanity in such circumstances is relevant. Worker ownership and management provides for a greater level of solidarity within an enterprise, and this solidarity facilitates better crisis management. It provides an additional layer of security that means more workers are in a position to act with proactive solidarity. Given society is a web of human relationships even a few thousand additional workers who are better prepared to offer solidarity in a crisis can radiate out to millions of other people.

Take an economic recession as an example of a crisis. The standard response of a corporation in the face of declining revenue and sales is some combination of cutting its casual workforce or making permanent workers redundant. Worker-owners, however, do not throw fellow workers onto the scrap heap unless there is no other viable pathway to enterprise survival. Moreover, where groups of LMFs act in a federation, they will actively facilitate new jobs in other growing LMFs as a next step. Indeed, the EO Knowledge Programme 2023 found that LMFs are five times less likely to have made their employees redundant in the proceeding three years.

This is because as a first option worker-owners in an LMF will generally agree to a fair reduction in work hours for all concerned, like reducing everyone’s paid hours by a day or half a day per week. By spreading the cost of a downturn more evenly across a workforce this reduces the social cost of a downturn—there is less of a call on social infrastructure from designating whole lives as necessary sacrifices to the dark vampire gods of capital.

Of course, this is a limited measure. It does not change the overall distribution of risk between capital and labour in a crisis, however, it can materially impact worker confidence in the face of such a crisis. In other words, worker ownership within a broader capitalist economy does not resolve the exploitation of workers generally but it can assist in the struggle.

In addition, when demand picks up worker-owners are able to quickly meet such renewed demand through ramping up working hours once more. As Pérotin wrote in her 2017 report, “in a downturn worker co-operatives drop wages rather than reducing their workforce. When business picks up they are ready to respond and can make up for lost pay because employees enjoy a share of profit.” Corporations can only achieve this degree of adaptation through the extreme adoption of insecure work, which itself comes at a considerable social cost, thereby undermining the very social benefit of improved crisis management.

Such crisis response goes beyond economic cycles of boom and bust. The enhanced social solidarity within LMFs acts as a glue holding people together to problem solve through all manner of issues.

For instance, worker cooperatives were reliable partners in public health responses to COVID-19. The Spanish government turned to the Mondragon Federation, and one of its healthcare manufacturing affiliates, Bexen Medical, to produce 10 million masks in the early weeks of the pandemic to supply Spain.⁴ This stands in marked contrast to Australia’s relative shortage of face masks, that included the necessity of drafting in Defence Force personnel to operate production lines in Australia’s only remaining factory capable of turning out masks.⁵

Moreover, Mondragon cooperatives were better able to fund workers placed into furlough as the Spanish government ordered the temporary shutting of factories deemed non-essential prior to the relevant social supports coming into place. This is but one example of LMFs stepping up quickly to play a social role in the early weeks of the pandemic while traditional corporations were playing to maximise their profits—whether from co-opting or undermining public health initiatives. Reducing the degree to which crisis response is dependent on the security apparatus of the state or appeasing corporate balance sheets also builds the trust necessary to face the next crisis.

It is my belief that a world where LMFs predominated would have had the social cooperation and resources necessary to pull off a global lockdown necessary to successfully interrupt the spread of COVID-19.

LMFs provide an institutional framework for the level of solidarity required for adaptation to a (hopefully temporary) heated world. LMFs, however, are not only better suited to coping with crises but also problem solving through crises.

When it comes to the climate this means mitigation. The roll out of an expanding field of worker sovereignty over capital will hasten the technological transition that must happen. The transition by necessity has two sides from a purely technical perspective—the roll out of a whole new energy infrastructure, and the dismantling of the fossil fuel complex. Private capital, given the right support from the state, can possibly achieve the former but most definitely not the latter. Capital, when it can freely act on its coding, will act to inflate value in renewables and fossil fuels simultaneously. For it is this arrangement which in the short-term maximises profits.

The difference between how workers approach the problem, and how global corporations do it is illustrated by ExxonMobil’s approach to the now closed Altona refinery and the transition plan local site delegates formulate themselves.

In 2020, in the midst of the COVID-lockdowns, oil companies such as ExxonMobil faced a temporary crisis of profitability as demand for liquid fuel fell off a cliff. This was especially acute for the Altona refinery (in Melbourne’s western suburbs) as one of its major product lines was jet fuel. This came at a time when the refinery required millions of dollars in investment to keep running for an approximately further ten years. ExxonMobil’s plan, which only became clear in retrospect, was under the guise of fuel security to get the then Morrison government to provide public funding to increase total storage capacity (including expanding what is deemed Australia’s strategic reserves in the United States) as a cover to close Altona and increase the viability of its larger Singapore refining facility.

This plan did nothing to lessen social dependence on petroleum as a liquid fuel in Australia but it did help ExxonMobil’s bottom line. The site delegates, however, had another plan. For them what was required was a bridging mechanism through any technological transition. This bridging mechanism was a domestic quota on the refining of oil and downstream products. The idea being that local manufacturing jobs would be protected through a planned and orderly shift to new energy technologies. As demand for oil fell then the quota could be lifted over time so that domestic refineries only closed as the new energy infrastructure was already in place.

From a transition perspective it opened up space for a more rapid shift from dependence on oil and related commodities while protecting jobs. First, by protecting skills and expertise in advanced energy manufacturing, it provides for more rapid deployment and training of additional workers in related renewable and refining sectors such as green hydrogen. Second, through protecting local supply-chains it decreased social vulnerability to the complex interactions of crises of capital, climate and technological change. This social protection is vital for the rapid shift. Third, it could send a social message that job security can be part of the transition.

Of course, the organic conditions of the time meant that the path of increased corporate dependence won out. The point of the case study, however, is to draw out the relative social utility of the problem solving approaches that prevail under conditions of capital sovereignty and labour sovereignty.

The Altona refinery case study is not a mere one off. Time and time again where workers have had the chance to formulate transition alternatives they have come up with more effective climate mitigation and emission reduction strategies.

Even going back nearly fifty years ago, workers in 1976 at British engineering and defence manufacturing firm Lucas Aerospace, in the face of imminent redundancies, came up with a detailed plan for socially useful production. Their thinking was given that so much of their work was dependent on public defence spending it could be redirected to more pressing social needs. The delegates, together with thousands of shop floor workers and the support of the broader Left, came up with an alternative to redundancies known as the Lucas Plan.

The plan detailed the manufacture of 150 products including groundbreaking proposals (for the time) for hybrid cars, wind turbines, heat pumps and energy efficient housing. It was a plan so advanced that it could have provided a means to resolve the climate crisis before it had even begun. It was a plan that was effectively marginalised by the UK Labour government of the time, and perhaps a last opportunity for an alternative before the election of Margaret Thatcher as Prime Minister.

Thinking of the world we inhabit today (riven as it by the rampant state murdering of children and genocide) one cannot help but observe that this plan would have made for a far safer society than yet more guns, ammunition and war machines.

This change in social organisation goes not only to the development of new goods but also to the speed of infrastructure development. The rate at which solar and wind must be deployed is a pressing question for climate mitigation. The shift in the forces of climate reaction from focusing on outright denial to opposition to specific renewable projects further highlights the issue.

As an example, the roll out of renewable projects in Belgium under Ecopower, a locally-based consumer cooperative electricity provider, comes with far fewer objections and social protests than corporate-owned projects. Ecopower, for instance, is subject to ten times fewer complaints than proposed corporate renewable assets.⁶ Ecopower is itself an inspiration for the Australian energy cooperative, CoPower (full disclosure I co-founded this democratic project).

The cooperative way to achieve greater social support for renewable infrastructure is simple enough—when Ecopower builds a new wind turbine or other piece of infrastructure in a community then it negotiates a benefit from the asset with that same community, and this comes with trust because community members know its their neighbours who own the organisation. This in turn becomes a visible representation of one of the key values of a cooperative—concern for community. In the fires of the climate crisis, the additional speed facilitated by active social support can make all the difference.

What these case studies highlight is that the biggest barrier to effectively resolving the climate crisis is not further technical advancement nor the supposed conservatism of the working classes but rather social organisation, and particularly the relative lack of worker power generally as well as production under the sovereignty of labour.

The free cooperation of workers in unions and LMFs is not only relevant to the decency and humanity of society but the flowering of problem solving ability and creativity that originates from this cooperation. This has significant ramifications for increasing society’s capacity to tackle existential threats such as global warming.

This stems, in part, from the limitation of knowledge and capacity of corporate bosses and their political lackeys. Like the absolute monarchs of the eighteenth century, this arrogant and undeserving elite are a brake on necessary human progress. Workers acting in union and owning their labour is necessary for any sort of future for a free and decent society. The elite owners of capital, however, regard threats to their privilege as an existential threat. What is required, therefore, is an effective strategy to make this necessity for broad worker ownership a possibility.

This post is located within the first chapter within the first of three parts for the overall project. Part One is Solidarity as Strategy and takes a broader view of solidarity and how it can still emerge within and against a fundamentally inhumane system. Use the about page to locate where you are in this broader project.

1. See https://ownershipatwork.org/wp-content/uploads/2023/10/People-Powered-Growth.pdf

2. See https://www.uk.coop/sites/default/files/2020-10/worker_co-op_report.pdf

3. See D’Rosario, M., (2024), Co-operative Employment Economics: Sustaining Employment and Community Prosperity, BCCM, Per Capita Australia (accessible here: https://percapita.org.au/our_work/co-operative-employment-economics-sustaining-employment-and-community-prosperity/)

4. See https://coopseurope.coop/news_article/covid-19-coop-response/

5. See https://www.abc.net.au/news/2020-01-24/face-mask-shortage-brisbane-bushfire-smoke-coronavirus-fears

6. See https://www.spiegel.de/international/europe/more-affordable-and-sustainable-how-towns-in-belgium-are-producing-their-own-green-power-a-a8b14196-3fb3-4b16-82a3-15b5b726afbb