Vistas

Rescue co-operatives exist where failing conventional firms are sold or granted, sometimes through state intervention, to their workforces, in order to preserve jobs. This was particularly salient in the industrially-focused British economy of the 1970s where individual firms could be the only major employer in an area, responsible for the livelihoods of thousands of people, and represented by strong union. They are perhaps best treated as a specific historical case rather than as a current expression of the co-operative movement, but they can still yield some interesting insights into the nature of co-operative working.

Tynan and Thomas (1984) undertook research into the experience of democratic work at the Kirkby Manufacturing and Engineering Company (KME) in 1974-79 based on a series of interviews with members. KME was a rescue co-operative organised by the Department of Industry under Tony Benn following a series of industrial action involving sit-ins and work-ins in the early 1970s (Oliver & Thomas 1990). It was never profitable as a co-operative and relied on grants and subsidies until its collapse in 1979

when state support was withdrawn completely following the election of Thatcher. The study aims to compare the experiences of work during the democratic experiment of co-operation, focussing on the effect on individual within the firm. Partly due to the history of the firm, the study found significant tensions between different groups with conflicts of interest, and between the contradictory roles of the co-operative, such as the need for profitability and the need to maintain and sustain employment. They were not resolved by co-operation due to “first...the unrealisable expectation that they should be solved, and, second, because the co-operative promise is to all so that a solution has to be open and not be seen to disadvantage any particular group” (1984:86). There were clashes of ideas, particularly between union stewards who were threatened by the democratisation of the workplace (1984:87). There was a genuine attempt by activists to democratise the workplace and realise co-operative ideals, but these were made more difficult by the sheer size of the enterprise and the need to politically organise and educate the workforce, the hierarchical union structure which restricted democratisation, and a lack of management skills (Tynan & Thomas 1984). The democratic council was never able to achieve much legitimacy since it challenged established power relationships from both shop-floor unions and the management team (Oliver & Thomas 1990:353). In particular the rigid trade union structure combined with attempts by stewards to place themselves in a managerial role, led some to argue that the co-operative was not really a co-operative at all given that there appeared to still be hierarchical management by some workers (Tynan & Thomas 1984:89). However, KME would always struggle at first and demonstrates the need for co-operative processes to develop over time. The possibility of this happening at KME was limited by external market constraints and other specific external factors. Writing before the collapse of KME, Eccles (1976:167-168) highlighted the issues of a lack of management skills, particularly given the unwillingness of some members to become involved in the management of the firm, and the problem of market constraints – principally a slump in demand for KME's products.

In accounting for the failure of KME, poor management was “one of the principal causes” (Young & Rigge 1983:35) due to a lack of discipline in the workforce.

Fundamentally the issues at KME were seen as a clash between the old conditions of work (based on workers being controlled by management and represented by a union) and the potential for the new ones which created expectations which generally were not met (Tynan & Thomas 1984). The lack of a strong co-operative consciousness means

that members of co-operatives, especially those for whom co-operation is pushed onto them rather than coming from the workers themselves, creates a set of contradictory expectations amongst different people, and there is a need to negotiate to make the objectives and potential of the co-operative clear to all (Tynan & Thomas 1984:91, Eccles 1976:168). Without such a model of co-operation, co-operatives are likely to degenerate when expectations are not met and contradictions become apparent, resulting in a recentralisation of power. (Tynan & Thomas 1984:92). It could be added that a commitment to co-operative values is fostered within the co-operative itself through the shared experience of forming and managing the firm. Carter (1990:337) suggests that the “issue of ownership and authorship is important; people will possess a feeling of ownership for what they create...” with reference to a co-operative conversion which was imposed on, rather than created by, its workers. In this case, there was limited scope for members to develop a commitment to the values of the co-operative and to share and develop their ideas about what the firm was about. Where members recognise the impact of their control and are able to exercise it at various levels of the organisation, they may be more likely to adopt a co-operative approach to their work and start to value co-operation.

Bate and Carter (1986:61-66) studied a small shoe-making co-operative in the UK which was in essence a rescue co-operative formed after a factory closure due to a drop in demand for the product. The co-operative was capitalised at first by the original company offering a free lease on the machinery and premises of the factory, and through an initial bond paid by each member. However, the lease on the machinery was created with certain terms which meant that the small co-operative was producing a product which it was not suited for – a low end, cheap product which required mass production rather than an expensive one. The co-operative also had trouble getting loans from banks who did not accept the business model and stayed in business by not paying wages for the first year, and in trading with suppliers and retailers who did not trust the co-operative model either. The early struggle for survival meant that it was over a year before the co-operative could begin to develop its own identity and establish real worker control due to the constraints of the external market. For example, there began to be an emphasis on job rotation once the struggle for immediate survival was diminished.

Workers experienced much higher levels of control and job satisfaction than they did in the old factory, especially when assets became operatively owned, and as the

co-operative became more successful it was able to secure loans, albeit with strict terms, from commercial lenders. However, the dependence on producing shoes under contract for the original owners of the factory limited the flexibility of working patterns that the co-operative could offer its members. Part of this dependence on contract work was due to the inability of the small co-operative to markets its own goods, demonstrating one difficulty that co-operatives face compared to larger rivals. Bate and Carter also note the dependency of a rescue co-operative on larger firms – since the factory which closed down was not running at a loss, but merely at a low level of profit, the formation of the co-operative to save it has created a weak trading partner for the larger firm which is then free from the risks of failure in the co-operative whilst exploiting its need for work.

Thornley (1982:98) also highlights the risks of dependency where co-operatives become cheap outsourcing options for larger conventional firms rather than creating and marketing their own products.

Alongside this issue of dependency, the details of which are perhaps unique to this example where the co-operative rescued one factory rather than an entire failing firm and continued to have a relationship with the original firm, the study demonstrates three particularly salient points. The first is the issue of dealing with external actors in the liberal economy. The co-operative was unable for some time to convince banks and other firms that it was reliable and dependable. Secondly, the issue of competing with other firms is also raised. The co-operative was unable to market its products (the authors do not elaborate on why) outside of the co-operative community which bought the products out of support for the business. Therefore it was difficult for the co-operative factory to get work which was not exploitative contract work. Finally, the study demonstrates the importance of time in the co-operative, through identifying the problems faced in terms of the first 18 months of start up, followed by a period of self-discovery and some meeting of co-operative principles before struggling again to get work as the co-operative developed.

4.2.1 Worker-Owned Factories in the Argentinian Crisis

Some similar observations can be seen from a more recent case study which was carried out in the worker-occupied factories of Argentina at the start of the 21st century (Atzeni

& Ghigliani 2007). In 2006 around 160 factories had been taken over by workers in

order to defend against potential closure and job losses (Atzeni & Ghigliani 2007) as a result of both neoliberal reforms and the later 2001-2002 crisis with the current number of occupied factories standing at around 205 (Rossi 2015:99). Although these could be seen as 'rescue' co-operatives, they are particularly radical as the workers concerned generally did not own the factories that they occupied, and forced evictions by police occurred in some cases. Occupation usually lasted around a year (Rossi 2015:101).

Generally, Atzeni and Ghigliani's (2007) work puts forward the idea that the operation of liberal markets is a barrier to co-operative modes of production within them, as mentioned in the theoretical work above.

The case study, which took place in 2006, employed participant observation techniques in four factories, ranging from 30 to 110 workers in size. Workers interviewed placed emphasis on their freedom from direct control, and valued egalitarian attitudes to income, work and democratic participation (Atenzi & Ghigliani 2007). It should be noted the majority of workers received the same salary regardless of their position (Rebón 2005:36 as cited in Rossi 2015:105). With regards to the latter, the factories tended to have a constitutional statue book which outlined their governance structures, consisting of an assembly of all workers and an elected management council. The chief decision-making body of the co-operatives is the assembly, which has its agenda set by the elected council. The evaluation of this structure was mixed. Meetings of the assembly were difficult to organise regularly due to work pressures in factories with continuous production, and although this could be to some extent resolved by good representation, there was a tension between decision making in the assembly and by elected representatives in the council. Workers tended to value the “democracy from below” within this system such as the ability to force a meeting of the assembly (Atenzi

& Ghigliani 2007:661).

The operation of the co-operative as a business interacting in a market economy also posed challenges for collective decision making. The need for urgency in business discussions, for example, “establishes an a priori agenda interfering with the democratic decision-making process” (Atenzi & Ghigliani 2007:662). Workers are forced to do more than just produce – in the absence of the former management of the factory, they must take over the commercial side of the business also. This reinforces the old distinction between those who are involved in production and those who are involved in

management, creating a two-tier system and reintroducing skill division, job delegation and market logic to the co-operative. Those who work in management generally are less sympathetic to the aims of the co-operative as it is they who experience the interactions between the co-operative and the market. However, capitalist production is not reproduced totally in these firms since although the elected management council and a small group of workers oversee the operation of the business through administration and management, they can still be held to account by the rest of the workforce (Atenzi &

Ghigliani 2007). Rossi highlights the emergence of a “new logic of control based on the moral responsibility of each worker and the assembly's punishment of those who violate a consensus-based system of rules and regulations” (2015:106).

The co-operatives being studied did not generally pursue technical job rotation. This is partly due to the problems of getting credit to buy new machinery in order to pursue more inventive ways of dividing labour, especially since many of these factories still had fairly outdated technology at the time of takeover. (Atenzi & Ghigliani 2007). Some credit was supplied by other occupied factories, or by contracting use of the factory to a sole provider of materials and buyer of the manufactured goods (Rossi 2015:102).

Again, the market can be seen to constrain the freedom of the co-operative . However, most workers interviewed did want to learn new skills to be able to take on different roles in the factory, and there is some anecdotal evidence of this actually happening (Atenzi & Ghigliani 2007:664). The changes in the nature of authority at the factories could be responsible for changes in work modes, such as individuals working together to meet deadlines or taking over each others jobs for short periods to allow more flexible working times and breaks. Furthermore, tensions between skilled and unskilled workers hinder job rotation – co-operatives are forced to either pay more for these type of workers, who generally get a higher wage in capitalist factories than the co-operatives, or offer them substantial benefits within the workplace in order to retain them. Here again we see the labour market conditions governing the freedom of the co-operative.

The empirical work by Atenzi and Ghigliani (2007) offers a comprehensive account of the conditions in these factories and the extent to which the spaces of control represented by the co-operative are limited by its interactions with the market. Later work by Rossi (2015) highlights the political role of the occupations. The occupied

factories became a major political issue and lobbied for changes in the bankruptcy law to favour worker ownership over asset-stripping to satisfy debts, with some occupations even receiving state support (2015:104). This was made possible to some extent by linking political parties, social movements and trade unions with the occupying workers in order to increase their political support.

4.2.2 Conclusions on Rescue Co-operatives

The application of the analysis of rescue co-operative in the UK today is quite limited.

Such organisations were typically a product of the 1970s and were hailed as a method of re-energising Britain's struggling industrial sector whilst empowering the workforce.

Generally it is fair to say that the project was not particularly successful. Rescue co-operatives start from the worst possible position in a situation of economic crisis (Young & Rigge 1983:61) and have to set up co-operative institutions very quickly amongst a divided workforce, already hierarchically managed under both the management and the trade unionism of the time. None of the co-operatives in this study is a rescue co-operative⁵, and in the 21^st century such a form, in the UK at least, appears to be extremely rare.

However, there are some important lessons we can take from these studies of rescue co-operatives and worker occupations. Firstly, they demonstrate the difficulties in establishing co-operative norms and values amongst otherwise conventionally organised workforces. The need to establish a common project and agree on goals mutually seems to be a core requirement for the formation of a successful co-operative and demonstrates the need for a set of shared values and the adoption of these by new members. It also demonstrates the problem of conflicting hierarchies and the potential issues raised by parallel systems of control such as trade unions.

All three case studies illustrate the difficult position of the co-operative as it relates to the market. Both British cases found themselves limited by access to credit – KME relied on the state in order to allow it to survive, whilst the shoe co-operative was not seen as a credible business by banks, which placed it at the mercy of its trading partners 5 More detail about the cases is given in Chapter 4: Methods, but in Thornley's (1981)

categorisation they could be referred to as “collectives”.

who had gifted the physical capital of the firm.

Issues of organisation common to most co-operative are also raised, and there is little reason to think that rescue co-operatives would not suffer from the same internal and structural issues as other co-operatives, as already explained above. The case of KME in particular demonstrates the potential for poor management, but the constraints on action in KME, including under-capitalisation despite state intervention (Oliver & Thomas 1990) and the backdrop of trade unionism make it a less than universal case.

4.3 US Co-operatives

Co-operatives in the US are fairly rare, as in the UK, but as another LME the US offers some interesting insights into co-operation. Worker co-operatives seem to be linked to either alternative communities (Gupta 2014), as in the two cases presented below; or to the plywood co-operatives of the Pacific Northwest.

Gupta (2014) examines the Cheese Board Collective (CBC), a large US co-operative of 55 members⁶, engaging in qualitative interviews with members to establish how it had remained successful. The co-operative was formed in 1971 as the philanthropic conversion of a firm established in 1967. Gupta engages with the main economic critiques of co-operatives – free riding, underinvestment, lack of access to capital, degeneration and poor management, and found little evidence to suggest that they were valid criticisms of the co-operative model. Strong bonds of responsibility to one another, and to future generations, were present at the co-operative, which allowed for sacrifices to be made for investment and a strong work ethic to emerge (2013:103).

Motivation based on ownership was an important factor in creating this sense of responsibility (2013:104). The commitment to co-operative principles, even amongst new members, was also an effective barrier against degeneration, in particular with regards to equal pay (2013:104). Some criticisms of co-operatives were shown to have validity, with participants suggesting that some co-operatives had trouble accessing credit, but due to the success of CBC this has not been a problem, and it has also been able to reinvest surplus successfully and with regards to the future profitability of the 6 Gupta (2014:105) refers to the CBC as a “small organization” in light of comparisons with

Mondragón.

firm (2013:103-104). An inquiry into the ability of co-operatives to make democratic decisions effectively was inconclusive, with participants finding the experience both valuable and “frustrating” but that decisions made were generally good due to many voices being present, although most participants did not feel they personally had much control over the firm, since decisions were made collectively (2014:104-105). In this respect, the case study highlights the issues of size. It is suggested that the large number of members makes democratic decision-making more difficult - “the larger the

firm (2013:103-104). An inquiry into the ability of co-operatives to make democratic decisions effectively was inconclusive, with participants finding the experience both valuable and “frustrating” but that decisions made were generally good due to many voices being present, although most participants did not feel they personally had much control over the firm, since decisions were made collectively (2014:104-105). In this respect, the case study highlights the issues of size. It is suggested that the large number of members makes democratic decision-making more difficult - “the larger the