Marxism and the English Workers Movement Pt. 3

Cooperation – The Bourgeois Phase

In the second section of this series we noted that there were two phases of the cooperative movement, a utopian and a bourgeois stage. As we have dealt in detail with the first phase we shall now turn our attention to the second. We aim to sum up the two opposing views, that of Marxism as against bourgeois cooperative defendants, and finally with the Fabian metamorphosis of bourgeois views into a form of « socialism ».

A few words of clarification are in order to prevent confusion. We are dealing in the main with the arguments advanced by Ernest Jones in the reorganisation of the Chartist Movement in England during 1851-2 when he was a disciple of Marx and Engels. There are comments in the correspondence between Marx and Engels at the time which show that they fully approved of Jones’ assault on the Cooperative Movement. Many years later Marx wrote to Engels (November 4th, 1864) with the following comments:

 I happened to come across several numbers of E. Jones’ Notes to the People (1851,1852) which, as far as economic articles are concerned, had been written in the main points under my direction and in part even under my close participation. Well! What do I find there? That there we conducted the same polemic – only in a better way – against the cooperative movement, since in its present narrow-minded form it claimed to be the latest word, as ten to twelve years later Lassalle conducted in Germany against Schulze-Delitzsch.

It wasn’t just the arguments for and against the contemporary phase of the cooperative movement, but the mustering of forces during the splits of 1850-2, which we outlined in the first section of this series. It was a question of confronting all the important issues facing the proletarian movement – competition within capitalism or the struggle of classes to overthrow class-ridden society. In a sense the debate and confrontation pre-figured many that would take place within the socialist movement in the following decades.

The collapse of the utopian phase of cooperation has been dealt with in previous articles and we now intend to deal with the movement which arose upon its ashes. The new style cooperative movement had no pretensions of politically attacking bourgeois society, but claimed to use the system of trading to undermine private capitalism itself. It took as its model the operation founded in Rochdale in 1844, by the men called the Rochdale Pioneers.

These early « Pioneers » of grocery trading had no illusions about forming a new kind of socialism or of challenging the capitalist mode of production as such. It was later on that the rather awkward label of « socialism » was affixed to these traders, this was started by Beatrice Potter (better known by her married name of Webb), and later continued by every revisionist since, right up to the present-day Euro-Communists of Italy, France and, rather modestly, of Britain.

Our intention here is not to criticise trading in groceries, or any other basic commodity, as such, but we are hostile to anyone who tries to impute to such actions that they represent an alternative to capitalism. That goes for the early forms of cooperative trading just as much as for the rather trendy fashions of supplying infinite varieties of beans and seaweed today. Indeed there is nothing new about today’s operations – they are merely shabbier versions of systems tried out a century and or ago.

In the initial part of this article we will deal exclusively with the critique advanced by Ernest Jones.

The Initial Critique

In number two of Notes to the People, Jones addressed an open letter to the advocates of cooperation and to Cooperative Societies as a whole. He first of all stated that, whilst no doubt all the members were honest and well-meaning, they had overlooked some fatal flaws in their plans. He felt it was necessary to warn them of the consequences of these flaws. ’I contend that cooperation as now developed, must result in failure to the majority of those concerned, and that it is merely perpetuating the evils which it professes to remove. I will divide the remarks I have to offer, under three heads: 1st, what are the means the present cooperative movement possesses, of defeating the system of monopoly and wages-slavery; 2nd, what would be its effects upon society if successful; 3rd, what is the only salutary basis for cooperative industry? »

Jones goes on to outline the avowed objects of cooperation:

To put an end to profitmongering – to emancipate the working-classes from wages-slavery, by enabling them to become their own masters; to destroy monopoly and to counteract the centralisation of wealth, by its equable and general diffusion. We now proceed to consider:

I, the means applied to effect these results. For the above purposes the working classes are exhorted to subscribe their pence, under the conviction that, by so doing they will soon be enabled to beat the monopolist out of the field, and become workers and shopkeepers for themselves ».

These fallacies are exploded by pointing out that the workers’ pence can never out-buy the sovereigns of the rich. During the previous 50 years, the savings of the workers had been £43 million (in fact much of this actually belonged to the middle classes), the upper classes had increased their capital by 56 times that amount. « It is, therefore, an error to say, that capital against capital – pence against pounds – the cooperation of the working classes can beat down the combination of the rich, if their power of so doing is argued on the ground, that they possess more money collectively« .

Should all the resources of the working people be used to maximum effect, the financial power of the bourgeoisie would still be much more effective. The ruling class after all are so much further ahead in the financial race – they wield all the national power – and they are independent of the home market. Also they can afford to lose money by undermining any proletarian ventures, while the workers cannot.

It is amusing to remark, that many of those who advise a union with the middle classes are strenuous supporters of the present cooperative system; they seek the support of the middle class, and tell us to expect it – with the same breath shouting to the world, that their « cooperation » will destroy the shopkeepers! That destruction, however, proceeds but very slowly, cooperation on their plan has now been long tried – is widely developed, and they tell us it is locally successful – yet, never in the same period, has the monopolist reaped such profits, or extended his operations with such giant strides. Do we find Moses, or Hyam, waning before the tailors – Grissel or Peto, shrinking before the builders – Clowes, or Odell, falling before the printers? Everywhere they are more successful than before! – Why because the same briskness of trade that enables the cooperators to live, enables the monopolists with their greater powers, to luxuriate.

Jones goes on to point out that the resources being so gathered were to be used for three objects: 1, To purchase land; 2,To purchase machinery, for the purpose of manufacture; 3, To establish stores, for the purposes of distribution. Jones deals with the problems in detail, which we summarise below:

1. The Land
a. It would cost more than workers could afford.
b. If workers started buying, then demand would increase the price.
c. Whilst the cost of land is rising, workers wages are constantly falling.
d. The bourgeoisie don’t have to sell the land and can withhold it from the workers, and have all the laws and political powers to protect their ownership.

2. Machinery and Manufacture
The Cooperators believe that by establishing manufacturing, they will force the private employers to shut their factories by taking away all their workers and markets. This is not true, says Jones, because the capitalists do not depend purely on home markets. Generally speaking, they can under-sell the cooperators, and in any case, the state of the labour market is such that they can usually find new workers. But what are the effects of the increased competition of the Cooperators?

If, then, we do not shut up the factories, we only increase the evil by still more over-glutting the market. It is a market for that which is manufactured, far more than a deficiency of manufacture under which we labour. If we add manufacture we cheapen prices; if we cheapen prices we cheapen sages (these generally shrink disproportionately) – and thus add to the misery and poverty of the toiling population. «But, you may argue, we shall make a market – create home-trade, by rendering the working classes prosperous». You fail a lever: the prosperity of the working classes is necessary to enable your cooperation to succeed; and, according to your own argument, the success of your cooperation is necessary to make the working classes prosperous! Do you not see you are reasoning in a circle? You are beating the air. You want some third power to ensure success. In fine, you want political power to reconstruct the bases of society. Under the present political system, on your political plan, all your efforts must prove vain – have proved vain – towards the production of a national result.

3. Cooperative Stores – « By these you undertake to make the working-man his own shopkeeper, and enable him to keep in his own pocket the profits which the shopkeeper formerly extracted from his custom ».

The end result would be: If the goods are more expensive in the long-run, then the workers will end up subsidising the Cooperative stores. If the goods are cheaper long-term, then this would contribute to a decline in the level of wages. Either way the workers would lose. Jones then goes on to contend:

II. That the cooperative system, as at present practiced, carries within it the germs of dissolution, would inflict a renewed evil on the masses of the people, and is essentially destructive of the real principles of cooperation. Instead of abrogating profitmongering, it recreates it. Instead of counteracting competition, it re-establishes it. Instead of preventing centralisation, it renews it – merely transferring the role from one set of actors to another ».

1. It is to destroy profitmongering: And yet all of the early reports of the cooperative societies reported profit rates that would have made the most greedy of capitalist entrepreneurs blush! “They are stepping in the footprints of the profit mongers, only they are beginning to do now what the others began some centuries ago ».

2. It is to put an end to competition, « but unfortunately it recreates it. Each store or club stands as an isolated body, with individual interests. Firstly, they have to compete with the shopkeeper – but, secondly, they are beginning to compete with each other ».

3. It is to counteract the centralisation of wealth, « but it renews it. We proceed on step further – the fratricidal battle has been fought in the one town – the one association has triumphed over the others, it absorbs the custom of its neighbors – the cooperative power falls out of many hands into few – wealth centralises« .

Let us reflect, what are the great canal companies, joint stock companies, banking companies, railway companies, trading companies – what are they but cooperative associations in the hands of the rich? What have been their effects on the people? To centralise wealth, and to pauperise labour. Where is the essential difference between those and the present cooperative schemes? A few men club their means together. So did they. Whether the means are large or little, makes no difference in the working of the plan, otherwise than the rapidity or slowness of the development. But many of our richest companies began with the smallest means. A few men start in trade, and accumulate profits. So did they. Profits grow on profits, capital accumulates on capital – always flowing into the pockets of those few men. The same with their rich prototypes. What kind of cooperation do you call this?… A system which makes a few new shopkeepers and capitalists to replace the old, and increases the great curse of the working class, the aristocracy of labour ».

Jones then goes on to examine what could and should be done as an alternative to the established order.

III. Then what is the only salutary basis for cooperative industry? A NATIONAL one. All cooperation should be founded, not on the isolated efforts, absorbing, if successful, vast riches for themselves, but on a national union which should distribute the national wealth. To make these associations secure and beneficial, you must make it in their interest to assist each other, instead of competing with each other – you must give then UNITY OF ACTION, AND IDENTITY OF INTEREST…

This is the vital point: are the profits to accumulate in the hands of isolated clubs, or are they to be devoted to the elevation of the entire people? Is the wealth to gather around local centres, or is it to be diffused by a distributive agency?

This alternative embraces the fortune of the future. From the one flows profitmongering, competition, monopoly, and ruin; from the other may emanate the regeneration of society…

If, then, you would recreate society, if you would destroy profitmongering, if you would supplant competition by the genial influence of fraternity, and counteract the centralization of wealth and all its concomitant evils, NATIONALISE COOPERATION.

The Functioning of Cooperation

In issue number 21 of Notes to the People Jones returns to the critique of cooperation, this time concentrating on how it functions as an organisation. We will summarise it as briefly as possible. The main plank on which cooperative aspirations are based, is buying in wholesale – to sell dearer. Only in a few instances are the sales to shareholders – in the main it is to the general public.

Where the sales are limited to shareholders alone we have no complaint. How they go about their affairs is purely their own business. If they wish to establish a mechanism to regulate the purchase and distribution of goods bought by their own funds, that is up to them. What a number of households could do by buying in bulk, these cooperators do by establishing a society to do the administrating. After all, the bourgeoisie buys in bulk, saving substantial amounts, rather than buying in retail. What a few, or perhaps a dozen, households would do collectively by buying wholesale, is exactly what the cooperative societies do.

This could be done by twenty or thirty, as well as by two or three. Here you have all the advantages of a cooperative store, without any of the expenses and difficulties. You require no payment of rent, taxes and rates; no feeing of officers; no fittings and counters; no advertising and placarding; no payments to lawyers; NO REGISTERING, ENROLLING, OR CERTIFYING; no profitmongering whatever… and there you have all that is required; you keep your money in your own pockets… Can anything be more comical, than men saying we’ll buy at first-hand, but we won’t take our goods home, we’ll let them stop half way, we’ll charge ourselves too much, we’ll pay for an expensive machinery in order that we may be overcharged, and then, at the end of the year, we’ll pay ourselves back a portion of what is left after payment of the working charges…

But where cooperative societies had been formed mainly to sell to the general public, then a different situation exists. The most soothing excuses are used when it comes to dealing with the public at large. After all, it’s money has to be made in order to develop the cooperative stores, it has to be made from someone other than the cooperators themselves.

The « cooperator » buys in the cheapest market, and he sells as dear as he can, coolly telling us that he is doing this with the view to the destruction of that horrid profitmongering of the shopocracy. The poor customer pays him the profit – and that he divides at the end of the year between himself and his brother cooperators! Then they boast, that they have made £2,000 net in one year! What did these £2,000 consist of? Of the difference between the wholesale price (the price at which they bought) and the retail price, (the price at which they sold) over and above the working charges.

There were many different arrangements made amongst the various cooperative societies, some divided the profits out amongst themselves whilst some, conscious of the criticism of profiteering no doubt, kept some of the profit for investment. But even these amounts spent on further investment only added to future profits and enlarged the concern. But the profiteering was not just kept to grocery trading. Jones goes on to point out:

In Rochdale and Padiham, «Cooperation» has assumed a form more injurious still to the best interests of humanity and progression. At the latter place, a «cooperative» factory has been built, by shares of £25 each, payable in 5s, calls. This is a workingman’s factory with a vengeance! – and here, as in almost all the cooperative attempts in England, all the profits are divided among the shareholders – the amount of profit to be extorted from the public, being left to the consciences of the profitmongers themselves.

Each of these types of activity is simply profiteering, or to use a more appropriate title – capitalism! Each functions no differently than any railway, banking or shipping company.

But what should cooperation be? For Jones, as for Marxism, it should mean the abolition of profiteering and wage slavery, by the development of independent and associated labour. This can be established by the principles laid down in that same article. “No man has a right to take more from society, than the value of that which he confers upon it« . Consequently cooperation has no right to take more from society than for the primary cost of production, and also to enable all those involved in production and distribution to live adequately. Already we see here the fundamentals of the Marxist critique of capitalism.

So for Jones, there were two alternatives: that of just charging enough for production on the one hand, or of charging more, and having every part of the extra going towards developing land, factories, etc. Jones much preferred the second option, as it set forward the possibility of allowing the wage slaves employment in self remunerating employment.

It is cooperation, because it establishes a COMMUNITY OF INTEREST – the success of each « branch » furthers the success of every other- and of the whole collectivity. There can be no conflicting interests – no rivalry – no competition – for the greater the success of each undertaking, the more the stability and the permanency of the whole is ensured. It makes it the interest of each and of all to see cooperative associations spread and multiply. This, I repeat emphatically, THIS IS REAL COOPERATION.

The conceptions developed and defended by Jones were the basics of Marxism, for they touched on the vital question of the need for political power – what we would call the dictatorship of the proletariat. However, we should point out that at this stage of the development of the means of production, the elimination of money itself was not practicable, so the Communist perspective was still not very well developed.

Cooperation: The Bourgeois Defence

The criticisms outlined above must have struck home because an advocate of the bourgeois cooperative movement wrote in defence of it. A Mr. Neale went to great pains to show that this cooperative movement was not composed of ‘isolated’ bodies but societies that work together rather than trying to cut each other’s throats. Neale advanced the idea that despite any problems, this movement was a means, rather than an end – although he did not state what the end might be.

Workers on poor wages are seldom able, says Mr. Neale, even were they able to club together in twenty or so groups, to purchase wholesale, so should they buy at the cooperative store or be in debt to the shopkeeper. We could point out, that at least the local shopkeeper may allow a limited credit, on the « slate », or on « tick », until the next wages are at hand, while the cooperative societies have built into their principles, no credit without collateral. Which of the two would let people starve without hard cash on the counter?

Mr. Neale then goes on to point out the various problems of buying wholesale, that knowledge of mixing and dividing up large quantities of tea, coffee and sugar is needed, and that capital must intervene at various stages. He also goes to great lengths to attempt to repudiate the charge of profit as robbery. Value, for Mr. Neale, has a rather mysterious quality that can only be summed up as being dependent on the desires and means of the buyer. On the issue of profit, Neale at tines gets rather touchy:

True it is that under the present system the employer or trader may often make a profit which does not fairly belong to him, which, in justice, ought to be shared with those whom he employs, or of whom he buys. To obviate this injustice is one great aim of association. But to argue that this profit is robbery of the public, who freely buy the article at what they consider its worth to them, is entirely to misconceive the character of the transactions. The proceeds of labour may be inequitably distributed, but it does not therefore follow that they are unjustly obtained ».

The last sentence shows that Mr. Neale dearly missed an alternative career, as a comedian.

Do today’s Euro-Communists say anything different?

Jones pointed out that on many issues hr Neale has not criticised his attacks.

…I endeavored to show that it rested in the power of the great moneyed class to prevent and to destroy the associative movement wherever they choose – unless cooperation were backed by political power.

On this point, silence should not be considered as agreement. The two positions are diametrically opposed. We do not differ just on the ends, but also on the means. There is a world of difference between the two conceptions, a difference of class perspectives, of class interests. Jones goes on to elaborate the difference between the two views of value and profits:

You there set out with defending the receipt of profits, and, in so doing, you endeavour to define in what the value of an article consists.

You state that it is just that you should charge profits, because the individual to whom you sell, and from whom you buy charges profits also. In other words, because you rob me, it is just that I should rob you also. A strange notion of « justice » yours must be! Is it part of your creed that we may do evil that good may come?

But, Sir, you seem to have forgotten the working-man – the poor wages-slave – altogether. I suppose cooperation is intended for his especial benefit – and from whom does he take profits? He sells nothing but his labour – and sorry is the « profit » he makes out of that! Then sir – since he charges no « profit » to you, you are committing an act of gross injustice – a rottery – (I don’t flinch from using the right word) if you charge him one fraction more than necessary, since he neither does nor can retaliate on you: and, recollect! the working-men would and do form the bulk of your customers: so that by charging profits, you would not place yourself on the unequal terms you seem to imagine – and by charging profits, you rob far more men who do not rob you, than you retaliate on those who do.

You now proceed to lay down the standard of «value», in answer to the axiom propounded, that «it is robbery for a man to take more from society than the value of what he gives to it» – an axiom, by the way, you do not venture to controvert. All that you attack is my notion of value, and seem to think that the «value» of an article depends quite upon a «fancy price».

Now, sir, you commit the error (in my opinion) of making the value depend upon the desire and want of the purchaser, instead of depending on the labour and well-being of the PRODUCER…

THE VALUE OF AN ARTICLE IS, THEREFORE, THE TIME AND LAB0UR SPENT UPON IT, not the desires and wants of the purchaser.

[NOTA BENE – when this was written, in 1851, the critique of economics was still imprecise, unlike after Marx‘s fundamental works of Critique, Grundrisse and Capital. The phrase should be read as the value of an article is the socially-necessary labour-time spent upon it. We state this here before any smart alecks start reaching for their pens, joyful at finding something they can apparently attack us for].

How in the name of common sense, could the latter idea have entered your head? It (the idea) contains the germ of every social evil. Make the want of the buyer define the value of an article? Monstrous! no wonder you should defend profitmongering, when you are (pardon me for the expression, I merely repeat it from you) so utterly ignorant of the true and just principles of commercial exchange. See what your plan would lead to – would? do I say? – what it has and does! It leads to creating want that an extortionate price may be charged for the satisfaction of that want which extortion has created. Thus the regrater may create an artificial famine – and quadruple the price of corn. But is that a proper standard of its value? Did the labourer spend more time and labour on the growth of that corn? – No: but actually, by your standard, that same labourer would have to pay so much more for bread. I tell you, sir – and I defy you to controvert it – the standard of the value of that corn is the labour of the labourer, and what will give him a decent maintenance in return for it.

Again, sir, you tell us the public buy « freely »: therefore, I presume, if they don’t like the price, they may leave the article. That is the argument of the capitalist to his wages-slave, when driving down his wages. But, I tell you, the public do not buy «freely»: – they are obliged to buy the necessaries of life; and if you regulate the prices of those necessaries by any other standard than the cost of production (labour included), if you regulate it by the want of the purchaser, and it rests in your power (as it does now, and as it would under your cooperative plan), to increase that want by scarcity, if it rests with you as the monopolists of production, to fix any price you like, you take a base advantage of the wants of your neighbor, and rob him of the difference between the cost of distribution and distribution, and the retail price you charge aver and above that standard.

I will leave it to the public to judge on whose side rests the « ignorance » and « misconception » of the « true principle of exchange ».

The discussion did not end there. Mr. Neale responded summarising the positions: Jones was advancing forward the notion of class struggle, « as a hostile move of the poor against the rich », while Neale himself was for true Christian charity and for binding classes together which had previously been opposed. As far as the positions Jones was putting forward, only one conclusion was possible: « It has a well-known name, and that name is Communism« . Not just any old Communism, but an impracticable Communism, largely because it does away with competition and value. The altering of the concept of value with regards to the produce of labour is something these cooperators could not accept, we suspect because of the abolition of the profit motive – if profit (now called surplus value by the Marxist movement) was to no longer exist, what reason for existence would they have? There then followed the final reply by Jones, on profit – value – cooperation, which effectively terminated the debate.

As to Communism, Mr. Neale tells us it is right in theory, but that it is wrong to take those practical measures which would realise that theory in action. I pity the legal acumen which will find out, that a thing in principle, would be wrong in practice! [the address of Mr. Neale was Lincoln’s Inn, a centre for solicitors in London] I am perfectly ready to discuss Communism with Mr. Neale, but I have not even touched upon it yet.

Mr. Neale next proceeds to combat my assertion, that Co-operation, without legislative power, would be at the mercy of the rich. No! he does not combat it, but he assures us, that from the pure pity and kindness of the rich they are stretching out a helping hand to working-men’s co-operation, and he has little doubt that they will continue so to do.

Now, who are the greatest enemies of labour? The moneyocracy. Are they helping? Not they! It is a few landlords, and bishops, and farmers, whose interest it is to keep the moneyocracy in check, and who, like drowning men, are catching at a straw to save themselves, and try to make a cats-paw of Co-operation to help them against manufacturing supremacy. If Mr. Neale fixes his hopes on the state church and on the landed aristocracy, he will find them but as broker reeds; for both state church, landed aristocracy, and moneyocracy too, will have to bow before the advancing march of proletarian revolution. Mr. Neale must well know, that the money-class are, for a time, coming to power – that their interest is to crush Co-operation; he cannot deny that, and how can he make it reasonably appear that they will not use their power to their own interest, as they have ever done? Mr., Neale may say, «this is suppositious». Equally suppositious, I reply, is his assertion, that the rich will help us out of pity and good-nature, and spare us cut of mercy in our little efforts…

Then, in the face of this, dare you tell us to have nothing to do with political agitation? Dare you insult and calumniate the men of France because they strove for political power? Dare you advise us, like Whig and Tory, to have nothing to do with politics? Oh! a most convenient recommendation! You may make what laws you please – you may govern, and tax, and prey, and waste – we poor slaves have nothing to do with those matters – they are above our comprehension – your monarchy is to be the world – «our republic is to be only the workshop» – we must merely toil, and slave, and obey, while you rule – and as a crowning kindness, allow us to buy, and sell, and huxter, a little among ourselves – as long as you, our great law-makers, in your infinite goodness, permit us so to do.

Thank you, for speaking out! I always said the present co-operative movement (perfectly ANTI-SOCIAL in its every tendency) was reactionary in the highest degree. I now see from your words how right I was! It is merely an attempt of a small knot among the aristocracy of labour to creep on to the platform of the middle-class – backed at first by a few of the poorer, on whose shoulders they contrive to rise, and then to kick them down from underneath. Thank you, for showing us the real spirit, aim, and object of your cooperation and of its leaders! You lose no opportunity of attacking democracy, and upholding our class institutions – your official organ is a supporter of the state-church – and you now tell us to leave politics to the rich, to go on toiling, huxtering, and slaving among ourselves ».

Of especial interest were a series of letters and statements from workers in different parts of the country complaining about the way some of the cooperative societies functioned. They were included in the Trades Grievances, a regular section in « Notes to the People » dealing with the conditions of the workers and actions of employers. The inclusion in the Trades Grievances of these complaints shows the attitude taken regarding whether these were class issues.

The examination of the Cooperative movement, almost at its birth, was undertaken by Jones, with the active collaboration and approval by Marx. It was a necessary work of the proletarian movement, which was being organised in the reformed National Chartist Association at that time, in criticising its enemies. It could not fail but to confront one of the chief enemies of socialism, constituted by the then new-styled Cooperative movement. It can be stated to be a general guide-line, or test, of whether an organisation is reformist or not by its attitude to the Cooperative movement. At the time those who had gone off in a reformist direction, which included Julian Harney at that time, gravitated around and defended the Cooperatives. Incidentally, one of the clearest indications of the defection of Jones himself from the revolutionary movement (he abandoned revolutionary agitation for an alliance with the industrial bourgeoisie) was that he slid back on his opposition to the Cooperative movement in 1855.

It was the Fabians who finally declared this movement to be socialist, much to the surprise of the cooperators, and everyone else. This we turn to next.