Economic Democracy and 21st Century Socialist Strategy

By Carl Davidson

January 2016

Strategy is best done by taking the ‘big picture’ as a starting point, one that includes an array of all forces in all arenas in the terrain, friends, foes, and everyone in between. It includes politics and culture, public and private life, political parties and social movements, military forces, and the mass insurgencies of class and democratic struggles. And, naturally, economics, modes of production, and productive forces.

This is why economic democracy is best viewed as only one piece of the puzzle of strategy, although not a simple one. The term itself suggests not simply economic projects but those where working-class politics are at the center of these endeavors and how they intersect with other actors.

A good way to unfold all the parameter problems is to start concretely, with a living example, on the micro level. By examining the practice and principles laid down, we can build wider working hypotheses.

The Mondragon Cooperative Corporation (MCC) based in Spain’s Basque country serves as an excellent case in point. Thriving for more than 50 years, this inter-woven network of more than 120 firms involving more than 85,000 worker-owners was not widely known even five years ago. But now their successes, as well as its ups and downs, are discussed widely in the business press, the mass media, and in the journals of the left.

MCC sprang from the vision in a Catholic priest, a radical democrat, in the harsh years at the end of WW2. Its beginnings were modest—a small technical school, a small credit union and a simple factory producing a small stove direly needed by the local population for heat and cooking. MCC today , of course, is vastly different—hundreds of factories producing for auto and aerospace, as well as households, a network of hundreds of supermarkets and convenience stores, a large bank with hundreds of branches, a university connected to seven research and development centers, and a social service network for healthcare and transitioning between jobs.

But one thing hasn’t changed. MCC remains committed to the same core values of economic democracy embedded in its beginnings: one worker, one share, one vote. And it still understands no firm can stand alone; it needs the three-in-one combination of factory, school and bank, all of which are worker-owned and controlled. And every thriving firm will require ready access to both sources of credit and innovation. This is the anchor of economic democracy in the realm of work and production.

Father Arizmendi, MCC’s founder and guiding spirit, called this the principle of the ‘sovereignty of labor,’ which he tightly combined with a second principle, ‘capital is the instrument of labor’ (not the other way around). These guaranteed two things:  MCC was entirely under the control of its worker-owners, or cooperatively associated producers, to use a more Marxist term. A coop member could quit or retire and ‘cash in’ his or her share, but it could not be resold to anyone except a new incoming worker.  Second, there was no one apart from these associated producers who got a portion of the surplus value they created, save for taxes paid to the state. This give the MCC worker-owners a key point of organizational hegemony, even if on a micro level, from which to widen its impact in others areas. It becomes a ‘strong point’ in the ‘war of position,’ one important element of strategy.

There are eight other ‘principles MCC is organized around—‘open admission,’ meaning anyone can apply, what every nationality or religion, male or female; ‘democratic  organization ‘and ‘self-management’,  meaning one worker, one vote, whether on the shop floor or in the form of delegated representatives; ‘pay solidarity,’ meaning the workers themselves set the spread of remuneration rate from new hires to older skilled workers (technically, MCC workers, or 85% of them in any coop at least, are not wage labor. Their monthly pay envelope is a draw against anticipated profits, and then adjusted, up or down, at the end of the fiscal year); ‘inter-cooperation,’ meaning if one coop’s orders are low, workers can be shifted to another coop where orders are high, i.e., no layoffs, with the exception of new hires still in their 90-day or 180-day trial period before gaining full member status; ‘universal solidarity,’ meaning MCC workers will help in the battles of workers in the region not in coops; an finally ‘socially transformation’ and ‘education,’ meaning the coops are not simply businesses, but instruments for changing consciousness and changing society.

The Wider Solidarity Economy

MCC thus represents the most advanced outpost in a much wider ‘solidarity economy.’ To be precise, it is a good example of what the solidarity economy looks like in the manufacturing sector and others areas directly tied to it. But the solidarity economy as practiced around the world has many other components that bring both participatory and representative democracy into economic life. Here are a few of them:

·        Participatory budgeting. This is where grassroots residents of a given political district, small or large, are encouraged to form local councils to meet, discuss and then decide on how to deploy public funds in ways that serve their needs well, whether by improving transportation, child care, farmer’s markets or schools.

·        Urban agriculture. This is the takeover and reclamation of vacant land or dilapidated structures in urban areas to grow fresh food, bringing both work and healthy vegetables in areas known as ‘food deserts’ for lack of access to decent supermarkets. It can be small scale, or quite large, as in the case of the Evergreen major farm coop in Cleveland, Ohio.

·        Public Banks and Coop Credit Unions. The solidary economy, like any form of economic activity, requires access to credit, especially on decent terms and where the interest payments can be recycled back as a public good and resource. Every level of government, for example, collects money from taxes or other revenue streams. But why deposit it in a private bank? Why not in a bank or credit union owned as a public utility by the community concerned? Then community representation of these boards can deploy them as loans for endeavors serving the public good, along with the banking usual services made available to the working class. The prime living example is the Bank of North Dakota, but there are many smaller coop credit unions as well. 

·        Land Trusts and Coop Housing. This is a way to take public control of unused or neglected land in tax areas, and re-deed it as a public trust. And structurally sound housing can be rehabbed, or new low-to-medium income housing coops can be but, where every resident has a stake and no land speculator and take over the area.