MANY socialists are members of co-operatives — from choosing to shop in their local Co-op supermarket or banking with the Nationwide Building Society, to playing a more active part in housing or other co-operatives.

For many, whatever their view of the quality of the goods and services, their membership provides the satisfaction of engaging with a body that is not solely concerned with making a profit for its shareholders.

But what role can co-operatives play beyond this, for example helping to secure a better, socialist, future?

Karl Marx attached great significance to the role that combined, social labour plays in the development of capitalism’s productive forces, helping, he argued, to create the conditions and lay the foundations for the new, communist mode of production.

How could or should workers freed from capitalist relations of production continue to work in association with one another in the new sets of relations?

Unfortunately, many would-be followers of Marx have allowed his critique of “utopian socialism” in the Manifesto of the Communist Party (1848) to lead them to ignore or undervalue his subsequent remarks about producers’ and consumers’ co-operatives.

For instance, in Volume I of Capital, Marx refers to Robert Owen’s co-operative factories and stores as “isolated elements of transformation” — they demonstrated how significant elements of capitalist production and exchange could be remodelled.

They were “isolated” in that they were separate from the working-class movement which alone could and would lead the struggle to overcome the capitalist mode of production.

This last point was something, Marx believed, that Owen — but not his followers — had come to understand.

That’s why, in an earlier footnote, he referred to co-operatives “being used as a cloak for reactionary humbug,” presumably by capitalism’s apologists.

In Volume III, Marx points out that just as capitalist owners in their joint stock companies no longer directly supervise production themselves, hiring managers instead, so “co-operative factories furnish proof that the capitalist has become no less redundant as a functionary in production as he himself, looking down from his high perch, finds the big landowner redundant.”

Marx goes on to argue that “in a co-operative factory the antagonistic nature of the labour of supervision disappears, because the manager is paid by the labourers instead of representing capital counterposed to them… The capitalist disappears, as superfluous from the production process.”

Both co-operatives and joint stock companies expose the reality that the capitalists’ wealth does not accrue from any input to the production process, but from profit and interest derived from surplus value created by the workers.

Whereas co-operatives demonstrate that enterprises can thrive without any necessity for private ownership, they also must function within a capitalist market economy.

Subject to that economy’s rules and pressures, their own collectivist outlook may go no further than the enterprise and its local community, while other enterprises are unavoidably regarded and treated as competitors.

The Mondragon Co-operative Corporation (MCC) in the Spanish Basque country exhibits the contradictions of co-operatives in a capitalist society on an extensive scale.

Established in 1956, it comprises 250 enterprises employing 74,000 workers (around half of them members) in the manufacturing, retail, financial and technology sectors together with 125 production subsidiaries in China, India, the US, Mexico and Brazil. The MCC has weathered recessions more successfully than many of its capitalist competitors.

Yet Mondragon has its negative features. While the co-operative members are protected, the same does not apply to the 35,000 or so non-member contract workers and employees — many of them temporary — in MCC subsidiaries.

Levels of member participation in key decision-making are low; there is a significant degree of misunderstanding, even antagonism, between workers and management (despite far lower income differentials than in a typical capitalist enterprise) and between members and non-members.

The extent of solidarity with workers outside the locality is lower than in neighbouring towns, as is involvement in left-wing political activity (Mondragon was until recently a bastion of support for the right-wing Basque National Party).

Out of the internal conflicts of recent years, which have included strikes and occupations against co-operative managers, initiatives have arisen to build trade unions within the corporation.

Efforts to reconcile co-operatism and trade unionism have produced interesting developments elsewhere, including Latin America and France, where unions have rescued threatened enterprises, turning them into co-operatives governed by a unionised workforce.

The United Steelworkers in the US and Canada have been working with Mondragon to develop a unionised co-operative model for workers’ buyouts of failing companies.

However, the history of co-operatives, in general, indicates that shorn of any political or ideological orientation, they are unlikely to play any significant role in the struggle to overthrow capitalist state power so that a better, co-operative mode of production can be built.

Under capitalism, co-operatives must compete and survive in a market economy dominated by monopolies. The contradiction between social ownership and competition cannot be resolved within a capitalist system.

Even within a socialist planned economy (in a number of the former socialist countries and in Cuba today, co-operative enterprises exist and function within and alongside state-owned enterprises) there are contradictions to be overcome.

Contradictions between collective planning at national, regional and local levels on the one hand and co-operative autonomy on the other; between the goal of full employment and the freedom of co-operatives to retrench, lay off workers or go into voluntary liquidation; and between the collectivist outlook of a politicised working class and more localised interests, preferences and objectives.

Notwithstanding their limitations, Marx saw in workers’ co-operatives glimpses of the future mode of production “within the old form the first sprouts of the new” in which co-operative labour could continue and flourish without capitalist ownership. In Capital Volume III he wrote:

“[A]lthough they naturally reproduce, and must reproduce, everywhere in their actual organisation all the shortcomings of the prevailing system, [they] show how a new mode of production naturally grows out of an old one, when the development of the material forces of production and of the corresponding forms of social production have reached a particular stage.”

Later, in Socialism: Utopian and Scientific (1880) Friedrich Engels paid fulsome tribute to many of Owen’s ideas and activities, stating that Owen had “given practical proof that the merchant and the manufacturer are socially quite unnecessary,” their internal economy suggesting “a first step towards a much more radical revolution of society.”

Lenin, too, grasped the potential value of co-operatives in the transition to socialism once state power had been achieved. They would no longer be the stuff of “ridiculously fantastic” dreams of those who saw them as an alternative to the revolutionary class struggle for political power.

Near the end of his life, in 1923, Lenin believed that state power, state control of all large-scale means of production and state supervision of private enterprise, would be all that is needed to “build a complete socialist society” out of co-operatives alone.

So: what role — if any — can co-operatives play in helping to secure a transition to socialism? Co-operatives may (or may not) embody some socialist principles but however widely they might spread they will never be even islands of socialism within a capitalist society: that’s a utopian dream.

The collapse of the Co-operative Bank (not in itself a co-operative, but owned by the Co-operative Group) and its conversion to a private bank in 2013 shows how vulnerable they may be when mismanaged.

Co-operatives are not an alternative to class struggle. But they could play a greater role in demonstrating how socialism could be, though on a small scale, and how they can survive — and thrive, albeit with compromises — in a capitalist society.

And once we are rid of that system and its stranglehold, they could come into their own as a key element of a new, socialist, future.

The Marx Memorial Library’s (MML) rich programme of on site and online events continues on Thursday April 27 at 7pm with the launch of Radhika Desai’s book Capitalism, Coronavirus and War.

Next Monday May 1 is International Workers’ Day with a rally starting at midday on Clerkenwell Green, the site of the MML — if you arrive earlier you can enjoy tea and cakes and a guided tour of Marx House. Details are on www.marx-memorial-library.org.uk where you can also find links to earlier Full Marx columns.

This answer, number 95, gratefully acknowledges permission to include material from Rob Griffiths’s Marx's Das Kapital and Capitalism Today (pp 72-78) which can be obtained from Manifesto Press at www.manifestopress.org.uk.