The American labor movement is in a state of crisis. It currently only represents 7% of the workforce and has lost significant electoral battles in the past few years, including the passage of right to work laws in former strongholds like Michigan.
The labor movement has been traditionally defined by the notion of collective bargaining: i.e., negotiating and if need be, the ability to strike to achieve better wages and benefits from employers.
Yet the early American labor movement was inspired less by the idea of collective bargaining with management but rather a cooperative model where the laborers collectively became management. Now as it is facing an uncertain present, labor must look to its past to find its future.
Since the time of the Owenites and New Harmony in the early nineteenth century, cooperatives have been looked at by mainstream society with derision and occasionally fear. Yet this alternative form of economic organization did find its way into the mainstream labor movement in the 1920’s and 30s. The Industrial Workers of the World, nicknamed ‘the Wobblies’, set up what was called the “Wobbly Shop’; a workplace wherein workers owned their company and voted on important workplace decisions. Rather than viewing management as a hostile power to alternatively do battle and make deals with, management was viewed as the cooperative power of the entire workforce acting together in its interests. While the Wobblies declined in influence due to the Palmer Raids and the first Red Scare, other influential labor activists continued to keep the cause of cooperative economics in the mainstream of organized labor.
Key organizations like the Farmer-Labor Party and UAW had cooperative economics as the end goal within both of their organizations constitutions. The FLP, a successor to the Populist Party, gained significant influence at the state level throughout the Depression in Upper Midwestern states. The party united rural farmers with urban industrial laborers to advocate against the entrenched business interests that governed their states.
As early as the 1930s, UAW President Walter Reuther had been regularly writing about cooperative and the benefits they had. A 1947 article in his newsletter was entitled “How to form a cooperative in your neighborhood”. His views on the subject were said to have informed the early proponents of social democracy in Sweden. Even towards the end of his life he was advocating for cooperatives, stating in a 1967 Senate hearing “profit sharing in the form of stock distributions to workers would help to democratize the ownership of Americas vast corporate wealth”.
Reuther’s work in this area earned him praise from a diverse array of figures, including both Dr. Martin Luther King Jr. and President Ronald Reagan. One of the key policies he advocated for was the ESOP or Employee Stock Ownership Plan that helped make employees owners of the very companies they worked for. ESOPs are now a common employee benefits package, but they have proven insufficient to stem the tide of outsourcing and corporate greed that has devastated the middle class. A new model of cooperative economics has to be found for the 21st century economy. Just as the Swedish social democrats learned from the American labor movement, today’s labor movement must learn from cooperative companies in Europe like Mondragon.
Unlike most corporations which are founded by a group of investors hoping to make money, the Mondragon Corporation was founded in Spain by a Catholic priest and devout laymen focused on putting the principles of Catholic Social Teaching into practice at the workplace. Since its beginnings in 1956, Mondragon has grown by leaps and bounds and is now a successful and large multinational, yet it has stuck true to its roots and continues to be governed cooperatively with its employees.
In recent years it has signed partnerships with the United Steelworkers Union (USW) to focus on creating cooperative shops here in the US, merging the principles of a traditional unionized workforce with the alternative ownership structure cooperative economics provides. Additionally we recently have seen striking workers, like those at a Massachusetts aircraft plant, demand a cooperative ownership model.
Reuther’s successors at the UAW made increased employee ownership a key component of their new contracts with the bailed-out Big Three automakers. Slowly but surely the tactics and goals of the Wobblies that kept them out of the mainstream labor movement are being adopted by the very unions that once scorned this model of organizing. Traditional labor is realizing that it too must adapt to survive: perhaps by going back to its past and embracing cooperative economics it can save its future.