Cooperatives and Socialism

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We have been looking at the way work and pay are organized in our society. In this section we shift our focus somewhat from what “is” to look at alternative “caves”, different ways of organizing work and pay based on different assumptions about what’s True/truths. The readings for these two sessions also look outside the U.S.

Cooperatives are a form of organization that challenges the assumption that owners and workers are two distinct categories of organizational actors. For a good summary of the history of coopearatives in the United States, check out this website from the University of Wisconsin, Madison. Also check out the seven minute set of slides (great, clear), “How Worker Cooperatives Work”, and the website of the National Cooperative Business Association, including their “Co-op Principles” page.

In the U.S. cooperatives have been a major part of life in rural areas to the present day, for the purchase of inputs, the marketing of goods and finance. The height of the agricultural cooperative movement occurred in the 1920s-30s (again, see the University of Wisconsin site. Today, while cooperatives continue to be very important in agricultural areas they also function in many other sectors. According to the National Cooperative Business Association there are now 48,000 cooperatives in the U.S., including student-owned cooperatives such as those at UMASS Amherst.

The Benello reading describes the history of the Mondragon cooperative. Mondragon is (probably? I’m not sure) the largest private cooperative in the world. It is notable not only for its size and financial success but also for its conglomerate-like organizational structure. One of the major challenges facing a cooperative business in the U.S. is getting financing. Most bank officers do not have much experience dealing with cooperatives (which seem to be operating outside of “normal”) and may be skeptical about their viability. Mondragon dealt with this problem by creating its own bank! (In the U.S. cooperatives are trying to create similar financing bodies).

The website for Mondragon is in English. You can find a variety of statistics and graphs that suggest their success. Take a look at the website for an update to the Benello reading.

Socialism is a form of organizing the economy and society that is very unfamiliar to most of us. In this course we don’t have the opportunity to examine it in depth. Consider this a very small and superficial taste of one experience in socialism. Note: As you read this material, please try to consider the ideas with as few preconceptions as possible. Some of us are accustomed to running a “socialism = communism = dictatorships = anti-Americanism” kind of tape in our heads. Our goal is to look at as many different ways of understanding business and its environment as possible. We are not well-served if we assume that we already understand other people’s ideas.

Throughout the 19th and the first half of the 20th century, Cuba had very strong ties to the U.S. In fact, it was occupied by the Marines twice. The Cuban economy was a monoculture based on the production of sugar cane. There was also a very strong casino and nightclub culture in Havana, which was frequented by people from the U.S. (think Ricky Ricardo in I Love Lucy… you’ve got to watch him sing!) The vast majority of Cubans lived in desperate poverty, without access to healthcare or education. The government was controlled by the U.S. backed President, Fulgencio Batista, who took power from the elected president in a military coup. For much of the 1950s, Batista exercised absolute control over the political system, promoted U.S. investment interests and had close ties to U.S. organized crime. U.S. and other foreign investors controlled the economy, owning about 75 percent of the arable land, 90 percent of the essential services, and 40 percent of the sugar production.

The Cuban Revolution came to power in 1959 (see this 4-minute video from the History channel for a short summary of the Revolutionary war). One of the key leaders of the Revolutionary war was Che Guevara, an Argentine medical doctor. See the Wikipedia link for more biographical information on Che

After Batista was overthrown Che became the chief of the Industrial Department of the National Institute of Agrarian Reform, president of the National Bank of Cuba, and Minister of Industry. In those capacities he designed and promoted systems that were meant to move Cuba from monoculture and underdevelopment to a diversified economy that also provided a higher standard of living for the majority of people. Che was very clear that the ultimate goal of the Revolution was socialism and then communism, in which markets (especially markets for labor) would be unnecessary. Part of the goal was the establishment of new norms of behavior (a new “normal”), and of a “New Man”. However, Che was equally clear that this was a long term goal, that new organizing patterns (I’m substituting in our class’ vocabulary here) required different cultures, and that new cultures developed slowly and only with great effort.

The Mallott article on voluntary work describes some of the systems for organizing work and pay that Che instituted in Cuba. These systems were designed to eliminate what Che saw as gross inefficiencies of the existing systems as well as to promote the kinds of behaviors and norms that were deemed necessary to the development of the new society, including voluntary work (see 30 second clip) of Che himself describing the role of voluntary work in the “new society”.

As you consider these systems, it is important to remember that under socialism – and even in the nascent socialism of Cuba in the early 1960s – the state is responsible for providing basic goods and services such as health care and education. This is an important assumption underlying Che’s vision: that individual salaries would not have to be dedicated to purchasing much of what we consider market goods.

In 1966, Che left Cuba and went to Bolivia to help mobilize an armed revolutionary movement in that country. On Oct. 8, 1967, the group was almost annihilated by a special detachment of the Bolivian Army that included members of the C.I.A. Guevara was captured after being wounded and was shot soon afterward………

Please respond to the following: 1) What are the characteristics of the Mondragon cooperatives that you find most different from businesses with more familiar organizational forms? 2) What assumptions seem to underlie the Mondragon? 3) What do you think about these characteristics and assumptions?

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