Let us take an industrial town of only medium size, say Augsburg, Barmen, Dortmund, Hanau, Mannheim. Is anyone so foolish as to imagine that the communes there could, in a political crisis or at some other occasion, take over all the different manufacturing and commercial businesses of these places into their own management and carry them on with success? They would either have to leave them in the hands of the former proprietors, or, if they wanted to expropriate these absolutely, they would be obliged to give them over to associa- tions of workmen on some leasing conditions.
The question in all these cases would resolve log itself into the question of the economic power of associations — i.e., of co-operation.
(b) The Economic Capacities of Co-operative Associations.
The question of the capabilities of associa- tions has hitherto been treated very curiously in the Marxist literature. If one leaves out of the question the literature of the 'sixties, one will find in it, with the exception of very general, mostly negative, observations, very little about the co-operative movement. The reasons for this negligence are not far to seek.
First, the Marxist practice is predominantly political, and is directed towards the conquest of political power and attributes, and gives importance almost solely to the trade union movement, as a direct form of the class struggle of the workers. But with respect to the co- operative societies, the conviction was forced on Marx that on a small scale it was fruitless, and would, moreover, have at the most only a very limited experimental value. Only through the community could something be begun. Marx expresses himself in this sense on the associations of workmen in the 18 Brumaire.* Later he somewhat modifies his judgment of co-operative societies to which the resolutions on the system of co-operation moved by the * " It (the proletariat) partly throws itself into doctrinaire experiments, Exchange Banks, and Work- men's Associations, thus into a movement wherein it renounces the overthrowing of the old world with its own great massed-up resources."
no General Council of the International at the Congress at Geneva and Lausanne bear wit- ness, as well as the passage apparently originating from Marx, at all events approved by him in G. Eccarius' A Workman's Refuta- tion of John Stuart Mill, where the same significance is applied to the associations as forerunners of the future, as the guilds had held in Rome and the early middle ages, and, further, the passage already alluded to in the third volume of Capital, which, written at the same time as those resolutions and Eccarius' work, brings into prominence the importance of industrial associations of the workers as a transition form to socialist produc- tion. But the letter on the draft scheme of the Gotha programme (1875) again sounds much more sceptical as regards these associations, and this scepticism reigns from the middle of the 'seventies over the whole Marxist literature. This may partly be the result of the reaction which set in after the Paris Commune, and which gave the whole working-class movement another character almost exclusively directed towards politics. But it is also the result of the sad experiences which had been undergone everywhere with co-operative societies. The high-flown expectations to which the advance of the English co-operative movement had given occasion were not fulfilled. For all socialists of the 'sixties, societies for production had been the chief consideration, the co-operative stores were minor. The opinion prevailed — to which even Engels in his essays on the housing Ill question gave expression — that as soon as co-operative stores everywhere included the mass of the workers they would certainly have as a consequence a reduction of wages.* The resolution drawn up by Marx for the Geneva Congress runs: — 11 We recommend workmen to embark on co-operative production rather than on co- operative stores. The latter touch only the surface of the economic system of to-day, the first strikes at its foundations...To stop the co-operative societies from degenerating into ordinary bourgeois companies all workers employed by them, whether share- holders or not, should receive the same share. As a merely temporary expedient it may be agreed that the shareholders should besides receive a moderate interest. " But it was just the productive societies formed in the 'sixties which failed nearly everywhere. They had either been obliged to dissolve alto- gether or had dwindled into small company businesses, which, if they did not employ men for wages quite in the same way as other busi- nesses, were weakly dying away. On the other side the societies of consumers were, or appeared to be, really turned into mere ' Philis- tine " retail shops. No wonder that people in socialist circles turned their backs more and more on the whole co-operative movement.
Two circumstances are answerable for the * Housing Question, new edition, pp. 34-35.
12 fact that a comprehensive criticism on co- operation is wanting in Marx. First, at the time he wrote sufficient experience of the different forms of co-operation was wanting to formulate a judgment on that basis. The ex- change bazaars which belonged to an earlier period had proved absolute failures. But, secondly, Marx did not meet the co-operative societies with that freedom from preconception which would have allowed his faculty for keen observation to penetrate further than the average socialist's. Here the already formed doctrine — or, if I may be allowed the expres- sion, the formula — of expropriation stood in the way of his great power of analysis. The co-operative society was acceptable to him in that form in which it represented the most direct contrast to the capitalist undertaking. Hence the recommendation to workmen to take up co- operative societies for production because these attacked the existing economic system "at its foundation. " That is quite in the spirit of dialectics and corresponds formally throughout with the theory of society which starts from production as, in the last instance, the decisive factor of the form of society. It corresponds also, apparently, with the conception which perceives in the antagonism between already socialised labour and private appropriation the fundamental contradiction in the modern mode of production which is pressing for a solution. Productive co-operation appears as the practical solution of this antagonism. In this sense Marx thinks of it — that is, that kind of society where the " workers as an association are their own capitalist,"* so that, if it necessarily reproduced all the faults of the present system, yet it did away in fact with the antagonism between capital and labour and thus proved the superfluousness of the capitalist employer. Yet experience has since taught that industrial co-operation constituted in just that kind of way was not, and is not, in a position to produce this proof; that it is the most unfortunate form of associated labour; and that Proudhon was actually in the right when, in regard to it, he maintained against Louis Blanc that the associations were " no economic force, "t The social democratic critic has sought hitherto the causes of the economic failure of the purely productive co-operative societies simply in their want of capital, credit, and sale, and has explained the decay of the associations that have not failed economically by the corrupt- ing influence of the capitalistic or individualistic world surrounding them. All that is to the point as far as it goes. But it does not exhaust the question. Of quite a series of productive associations that have failed financially, it is quite certain that they had sufficient capital for f If Proudhon appears sometimes as a decided opponent and sometimes as a supporter of co-operation, this con- tradiction is explained by his having at one time quite a different form of co-operation in his mind than at another. He refuses to the essentially monopolist asso- ciation what he admits to the mutualistic association, that is to the association working a system of reciprocity. His criticism is, however, more intuitive than scientific, and full of exaggerations.
ii4 ii4 their work and no greater difficulties in selling than the average manufacturer. If the produc- tive association of the kind depicted had been a force superior to the capitalistic undertaking or even of the same economic power, then it should at least have continued and risen in the same ratio as the many private enterprises begun with most modest means, and it would not have succumbed so pitiably to the " moral M influence of the capitalist world surrounding it, as it has done continually again and again. The history of the productive co-operative societies that have not failed financially speaks almost more loudly still against this form of 11 republican factory M than that of the bankrupt ones. For it says that, regarding the first, the further development means exclusiveness and privilege. Far from attacking the foundation of the present economic system they have much more given a proof of its relative strength.
On the other hand, the co-operative stores on which the socialists of the 'sixties looked so disparagingly, in the course of time have really proved to be an economic power — i.e., as an organism fit to perform its work and capable of a high degree of development. Against the pitiable figures which the statistics of the purely productive co-operative societies offer, the figures of workmen's co-operative stores show up like the budget of a world-embracing empire to that of a little country town. And the work- shops erected and conducted on account of such co-operative stores have already produced many times the amount of goods which have been "5 made by purely, or nearly purely, productive co-operative societies.* The deeper reasons for the economic as well as the moral failures of purely productive associations have been excellently presented by Mrs. Beatrice Webbt in her work on the British Co-operative Movement, even if here and there, perhaps, a few exaggerations are found. For Mrs. Webb, as for the great majority of English co-operators, the society belonging to the workmen engaged in it is not socialistic or democratic but "individualistic. " One can take offence at the selection of this word, but the line of thought is quite correct. This association is not socialistic, as Robertus, indeed, has already shown. When the workmen employed are the exclusive proprietors, its constitution is a living contradiction in itself. It supposes equality in the workshop, a complete democracy, a republic.
* The figures for the latter kind of productive co-opera- tive societies are extremely difficult to ascertain as the official statistics of production by associations do not distinguish between them and the much more numerous and large workmen's share associations (companies) for objects of production. According to the returns of the British Board of Trade in 1897 and 1905, the value of the year's production of those associations for which the Board issued returns was: — Of Co-operative Stores in their own workshops ^6,100,730 ^12,525,104 Of Associations of Millers' trades 1,264,402 1,128,328 Of Irish Dairy Farming Associations 353>247) Of Workmen's Associations for objects of Pro- v 3,683,699 Against this the registered British Co-operative Societies had in the years — I Published under her maiden name, "Potter."
u6 But as soon as it has attained a certain size — which may be relatively very modest — equality breaks down because differentiation of functions is necessary, and with it subordination. If equality is given up, the corner-stone of the building is removed, and the other stones follow in the course of time, and decay and conversion into ordinary business concerns step in. But if equality is maintained, then the possibility of extension is cut off and it remains of the small kind. That is the alternative for all purely pro- ductive associations. In this conflict they have all broken down or languished. Far from being a suitable form for removing the capitalist from the field of modern large industries they are much more a return to pre-capitalist production. That is so very much the case that the few instances where they have had relative success occurred in artisan trades, the majority of them not in England, where the spirit of large indus- tries dominates the workers, but in strongly " small bourgeois " France. Psychologists of nations like to set England up as the land where the people seek equality in freedom, France as the land where they seek freedom in equality. The history of the French productive associations includes, indeed, many pages where the greatest sacrifices were undergone with touching devotion for the maintenance of formal equality. But it shows not one purely produc- tive association of the modern large industry type, although the latter is nevertheless fairly widely spread in France.
Dr. Franz Oppenheimer, in his book, Die «7 Siedlungsgenossenschaft,* has earned the merit of materially extending and making more thorough the investigation of Mrs. Webb. He offers in the first chapters, in a very clearly arranged classification, an analysis of the differ- ent forms of association which in certain parts can scarcely be exceeded in critical clearness. Oppenheimer brings into the classification of associations the separation in principle between associations for purchase and sale, the import- ance of which, in our opinion, he somewhat over-estimates on single points, but which, on the whole, must be noted as very useful and on the basis of which a truly scientific explana- tion is possible of the financial and moral failure of the purely productive associations — an ex- planation in which personal faults, want of means, etc., for the first time move into the second place, as accidental factors, which explain the exception but not the rule. Only to the extent to which the association is sub- stantially an association of purchasers do its general aims and its peculiar interests make its extension desirable. But the more the associa- tion is one for sellers, and the more it is one for the sale of products manufactured by itself (the matter is somewhat modified in the case of peasant associations), the greater is the internal opposition. Its difficulties grow with its growth. The risk becomes greater, the struggle for sales more difficult; the same is true regarding the procuring of credit, and the * Colonising Co-operative Societies. Leipzig: Duncker and Humblot.
n8 fight for the profit rate or the dividends of the individual members in the general mass of profit, becomes more severe. It is therefore forced again into exclusiveness. Its interest in profit is opposed not only to that of the buyers, but also to that of all the other sellers. The associa- tion of purchasers, on the other hand, gains with growth; its interest as regards profit, if opposed to that of the sellers, is in agreement with that of all the other buyers; it strives after the keeping down of the profit rate, after cheapening of products — a pursuit of all pur- chasers as such, as well as of the community as a whole.
Out of this difference in the economic nature of the two kinds arises the difference in their management so clearly laid down by Mrs. Webb: the essentially democratic character of all genuine associations of purchasers, and the tendency towards an oligarchy in the character of all associations purely for sale.
The differentiation of the associations into those of purchasers and those of sellers is of value to the theory of the nature of associations because it is, in turn, connected with socialistic theory. He who objects to the terms " pur- chase " and " sale " as formed too specially for capitalistic production of commodities and sub- stitutes for them the conceptions M provision M and " exchange," will then recognise all the more clearly what a much greater importance the former has for the community than has the latter. The provision of goods is the funda- mental general interest. With respect to it all ii9 the members are associates in principle. All consume but all do not produce. Even the best productive association, as long as it is only an association for sale and exchange, will always stand in latent opposition to the community, will have separate interests as opposed to it. With a productive association which carries on any branch of production or public service on its own account, the community would have the same points of difference as with a capitalist undertaking, and it depends altogether on circumstances whether the arrangement with it is an easier one.
But to return to the starting-point which has led us to this discussion in the domain of the theory of associations, sufficient has been shown to prove that it is quite a mistake to believe that the modern factory produces in itself a considerable disposition for associated work. And likewise the republic in the workshop becomes a more difficult problem as the under- taking becomes greater and more complicated. For exceptional objects it may answer for men themselves to name their immediate leaders and to have the right to remove them. But for the tasks which the management of a great factory brings with it, where day by day and hour by hour prosaic decisions are to be taken which always give an opportunity for friction, it is simply impossible that the manager should be the employee of those he manages, that he should be dependent for his position on their favour and their bad temper. It has always proved impossible to continue this, and in all cases it has led to a change in the forms of the associated factory. The desire of the workers to take in hand new undertakings where they are employed as an associated manufactory and are bearing corresponding responsibilities and risks, stands in an inverse ratio to the size of their undertaking. But the difficulties grow at an increasing rate.
Let any one only for once look at the thing in the concrete and examine any large industrial undertaking, a great establishment for building machines, large electricity works, a great chemical factory, or a modern publishing busi- ness. All these and similar large industrial undertakings can certainly be quite well carried on by co-operative associations, to which also all the employees may belong, but they are absolutely unfit for the associated management of the employees themselves. It would then be shown, in the clearest way possible, what Cunow contends — viz., that the feeling of solidarity between groups of workers, different as to degree of education, manner of life, etc., is only very moderate in amount. What one usually understands by associated labour is only a mis- taken rendering of the very simple forms of co-operative work as they are practised by groups, gangs, etc., of undifferentiated workers, and which, at the bottom, is only piece- work by groups.* * " The thing was not easy. People like the cotton workers do not easily range themselves in the ranks of equality which are demanded for the successful conduct of a society " (Sketch of the History of the Burnley Self-help Association in Co-operative Workshops in Great Britain, p. 20).
What the community itself cannot take in hand, whether by the state, the district, or the municipality, it would do very well, especially in stormy times, to leave alone for the time being. The apparently more radical action would very soon prove to be the most in- expedient. Co-operative associations capable of living do not allow themselves to be produced by magic or to be set up by order; they must grow up. But they grow up where the soil is prepared for them.
The British co-operative societies are in possession to-day of the ^15,000,000* which Lassalle considered sufficient as state credit for carrying out his association scheme. In proportion to the British national wealth that is only a small fraction; after one subtracts the capital invested abroad and the twice-reckoned capital, it is not the hundredth part of the national capital. But it does not exhaust by a great deal the British workman's capital power, and it is also steadily growing. It has nearly doubled itself in the ten years from 1887 to 1897, and has grown faster than the number of members. These rose from 851,211 to 1,468,955, the capital from 11.5 million pounds sterling to 20.4. The production of the societies has increased latterly still more quickly. Its value in 1894 ran only into ^4,950,000 alto- gether, and in 1897 it was already almost double the amount, namely, ^9,350,000. f I [In 1906 the membership was 2,334,641; the capital, ^39>898>000 5 the value of production, ^13,953,828.]
These are such astonishing figures that when one reads them one asks oneself involuntarily: where are the limits of this growth? Enthu- siasts on the system of co-operation have reckoned that if the British societies accumu- lated their profits instead of distributing them, in the course of about twenty years they would be in a position to buy the whole land of the country with all the houses and factories. That is, of course, a calculation after the manner of the wonderful calculation of compound interest on the celebrated penny invested in the year one. It forgets that there is such a thing as ground rent and assumes an increase of growth which is a physical impossibility. It overlooks the fact that it is almost impossible to win over the poorest classes to a co-operative society or that they can be won over to it only very gradually at best. It overlooks the fact that in the agricul- tural districts only a very limited sphere is open to a co-operative society and that it can lessen but cannot annihilate the expenses of the retail trade, so that possibilities will always spring up for the private undertakers to fit themselves into the changed conditions, and thus a retarda- tion of its growth from a certain point of time becomes nearly a mathematical necessity. It forgets above all things, or leaves out of con- sideration, that without a distribution of divi- dends the co-operative movement would generally be at a standstill, that for large classes of the population it is just the dividend, that cursed apple of sin of the idealists of the co-operative system, which forms the chief attraction of a co-operative society. If what is often maintained to-day is very much exagger- ated, namely, that the dividend of a co-operative society is no measure of the greater cheapness of its goods, that the single business sells most goods just as cheaply, on the average, as the co-operative store so that the dividend only represents the sum of small, unnoticed rises in the price of certain articles, still, the exaggera- tion is not altogether unfounded. The work- men's co-operative store is just as much a kind of savings bank as a means of fighting the exploitation which the parasitic retail trade means for the working classes.
But as with many persons the impulse to save is by no means very deep seated, they follow the convenience of buying at the nearest shop rather than put themselves to some trouble for the sake of the dividend. Moreover, it would be quite a mistake to say that England was originally a particularly favourable soil for co-operative societies. Quite the contrary. The habits of the working classes, the great exten- sion in area of the towns which the cottage system brings with it, counterbalance in this respect the influence of better wages. What has been attained in England is the fruit of the hard, unflinching work of organisation.
And it is labour which was, and is, worth the trouble. Even if the co-operative store did nothing more than lower the profit rate in the retail trades, it would accomplish a work extremely useful for the national economy. And there can be no doubt that it does work in this direction. Here is a handle by means of which the working class can seize for itself a considerable portion of the social wealth which would otherwise serve to increase the income of the propertied classes and thereby strengthen them, and this, without direct destruction of life, without recourse to force which, as wre have seen, is no simple affair.