The Theory of Co-operatives

Marxist theory on economic organizations formed by the voluntary union of workers.

Co-operatives (or co-operative societies) arose in the period of capitalist industrial revolution, the development of large-scale socialized production posed a strong threat to small commodity producers and small-scale peasant economy. In order to protect their own interests, workers or small producers voluntarily joined forces to establish various forms of co-operatives. 19th-century utopian socialists propagated and experimented with the idea of co-operatives in an attempt to transform capitalist society with co-operatives. Although Owen et al. failed in their experiment, under their influence, the co-operative movement of workers developed. Workers’ consumption co-operatives, established in the 1840s, were designed to protect workers’ economic interests and free members from the exploitation by commercial capital and usurer’s capital. Such co-operatives soon became popular in Western and Northern Europe. Since the 1850s, co-operative factories have appeared again, and co-operation has extended to the sphere of production. Marx and Engels paid close attention to the co-operative movement very early and used the theory of historical materialism for scientific analysis. They conducted in-depth inquiry in works such as The Peasant Question in France and Germany, and formed the Marxist theory of co-operatives. Thereafter, in the practice of the socialist revolution and construction in Russia, and in the practice of transforming a small-scale peasant economy into a modern socialist agriculture, Lenin conducted in-depth inquiry on the nature, form, role, organizational principle and mode of activity of socialist co-operatives, and made significant developments in the theory of co-operatives. After the founding of New China, in the light of the concrete reality of China, the Chinese Communists further enriched the theory of co-operatives in the socialist construction in China.

Marx and Engels’ theory of co-operatives shows that: first, co-operative production is not an independent mode of production that plays a decisive role; it directly depends on the basic mode of production of a certain society. Under capitalist conditions, co-operatives only relatively reduce the intermediate exploitation by capitalists, protect the economic interests of the working masses to a certain extent, and do not really get rid of the dependence on capitalists. They are prone to bankruptcy in market competition, and the economic condition of the working masses has not been fundamentally improved, let alone being capable of changing the capitalist relations of production. Under the capitalist system, as a mode of production organization, co-operative production cannot fundamentally realize the emancipation of the proletariat. Second, as a creation of working masses, co-operatives aim to eliminate the opposition between capital and labor. The co-operative system (or co-operation) is inherently consistent with the ultimate realization of the property in the means of production by the whole society, and “practically show[s], that the present pauperizing, and despotic system of the subordination of labor to capital can be superseded by the republican and beneficent system of the association of free and equal producers.” The progressive role of co-operatives can only be realized if the capitalist system is abolished and the political power of the proletariat is established, and the cooperatives can truly become economic organizations for the emancipation of labor if they rely on the financial resources of the whole country and are developed on a national scale. Third, during the transition period from capitalism to communism, it is necessary to adopt co-operative production on a large scale as an intermediate link and, above all, to uphold that the society (above of all the state) preserves the ownership of the means of production, so that the particular interests of co-operatives cannot override the overall interests of the whole society.

Lenin’s theory of co-operatives focuses on the question of building socialist co-operatives. It emphasizes that, first, in the socialist stage, as long as the land and the main means of production belong to the state, co-operatives “do not differ from socialist enterprises”. Through co-operative production, small-scale peasant economy should be attracted to socialist construction and transformed into socialist large-scale production. Second, the state should assist co-operatives by providing financial and credit convenience, offering material incentives, and popularizing cultural education. Third, in establishing co-operatives, we should uphold the principle of voluntariness, endorse the method of education by persuasion and demonstration by example, and not allow the use of administrative orders or any compulsory means.

The practice of socialist co-operatives has proved that the Marxist theory of co-operative is the only scientific and revolutionary theory about co-operatives, and an important theoretical basis for carrying out socialist transformation and construction and formulating relevant policies.