The Case for the Workers' Cooperative

by Joe Hargrave - June 18, 2008

Reprinted with permission.

Catholic social teaching has consistently held as its core principle that economic activity is to be subordinated to the common good, which the Catechism defines as "the sum total of social conditions which allow people, either as groups or as individuals, to reach their fulfillment more fully and more easily." Debate over precisely how the common good should be served by the economy has seen the promotion of different economic theories, ranging from liberal approaches that tend to focus on regulation and intervention in the market, to conservative theories that advocate open markets and private property rights free from government interference.

But both sides in this debate have overlooked important alternatives, some of which have already been explored by previous pontiffs and implemented by lay and clerical Catholics. It is possible to combine regulated markets and even command economies with private property, and social forms of ownership with free markets. It is the latter model that is best aligned with both Catholic social teaching as well as sound economics.

In his encyclical Laborem Exercens, Pope John Paul II rejected the idea that "private ownership of the means of production" should remain an "untouchable dogma" of economic life. He also rejects a mere conversion of private property into state property and the creation of a command economy. His vision of an alternative is captured in the following lines:

Merely converting the means of production into State property in the collectivist system is by no means equivalent to "socializing" that property. We can speak of socializing only when the subject character of society is ensured, that is to say, when on the basis of his work each person is fully entitled to consider himself a part-owner of the great workbench at which he is working with every one else… the members of each body would be looked upon and treated as persons and encouraged to take an active part in the life of the body.

There is little said here about markets – in fact, the word "market" does not appear even once throughout the entire encyclical. Thus the "socializing" of the economy is evidently a task that can take place without excessive and ultimately harmful interference in the market. Instead, it can come about through the proliferation of organizations wherein the "subject character of society is ensured," where "each person is fully entitled to consider himself a part-owner" of his place of work, and where the members are "encouraged to take an active part in the life of the body." These are the underlying principles of workers' cooperatives.

One example of the cooperative principle in action is the Mondragón, a cluster of cooperatives in the Basque region of Spain. It can't be mere coincidence that this organization, which is the largest and most successful cooperative in the world, was founded by a Catholic priest by the name of José María Arizmendiarrieta. To me it suggests that there is something in the Catholic view of society and justice that is naturally hospitable to the idea of the workers' cooperative.

From a social and economic standpoint, it shouldn't be hard to understand the benefits of worker ownership and control of economic firms. The workers' cooperative is proof positive that workers can participate in making decisions, erroneously thought to be the privileged domain of a handful of executive officers. They will be just as concerned with meeting the needs of the consumer as a traditional capitalist firm. Their incentive to do so will be far greater, in fact, since they will reap greater rewards as owners than they ever would as mere wage laborers. While Pope Leo XIII may have been condemning an onerous form of state socialism in Rerum Novarum, he also argued that ownership of property should be diffused as widely as possible for just these reasons. He wrote,

If working people can be encouraged to look forward to obtaining a share in the land, the consequence will be that the gulf between vast wealth and sheer poverty will be bridged over, and the respective classes will be brought nearer to one another. A further consequence will result in the great abundance of the fruits of the earth. Men always work harder and more readily when they work on that which belongs to them; nay, they learn to love the very soil that yields in response to the labor of their hands, not only food to eat, but an abundance of good things for themselves and those that are dear to them.

What Leo recognizes as true for agriculture is also true for modern industries and services.

There are also political benefits. As political philosopher Robert Dahl argues in his work A Preface to Economic Democracy, it seems rather strange that we should expect a healthy political democracy to emerge from what is essentially an autocratic or oligarchic economic framework. Most workers spend at least a third of their day in an undemocratic environment, having no opportunities to participate in making the decisions that affect their very livelihoods. The workers' cooperative improves the health of our political democracy by bringing it into an important and unavoidable area of life: our economic activity.

Important for those who wish to avoid unnecessary tampering with the market, workers' cooperatives can exist and thrive in a competitive marketplace. Historically they have had a hard time competing against traditional capitalist firms, and there is considerable academic debate as to why this has been the case. The Mondragón is a good example of what can happen when several such firms band together, and it remains a competitive enterprise today. It cites on its Web site one of the many reasons for its success: "a decidedly business-like approach to the co-operative phenomenon, in which company profitability and planned, rigorous and demanding management efficiency are seen as basic principles."

Most importantly, however, the cooperative form restores human dignity to labor. The separation of the workers from the means of production and the decision-making process can be spiritually demoralizing and alienating. To the extent that labor is viewed by its purchasers as a mere "production cost," it can become faceless and dehumanized. A workers' cooperative has the potential to become a genuine community, where each member is valued as something more than a repository of labor power.

In addition to serving the common good, the Church now calls us to build a culture of life. A culture can neither be imposed from above by the state, nor can it simply be a matter of leaving everyone to their individual conscience. It is by its nature a collective task, and it cannot be accomplished apart from an effort to reshape economic structures that have contributed to the prevailing culture of death. The traditional capitalist firm, like the market, is not evil in and of itself. But we do have a responsibility to seek out and implement alternatives that would be more conducive to our spiritual aims. Because the cooperative form emphasizes the importance of community, as well as the humanity and dignity of the individual laborer, it is an obvious complement to the tasks facing those who would build a lasting culture of life.

Joe Hargrave lives in Orange County, CA, and blogs for The American Catholic and his personal blog, Non Nobis.