Posts Tagged ‘Abel Aganbegyan’

Book Review: G.D.H. Cole’s A Century of Co-Operation

July 2, 2016

Cooperative Cole

(George Allen & Unwin Ltd. for the Co-operative Union Ltd 1944).

Many of us of a certain age still remember the Co-op before it became a regular supermarket chain. It was a store in which regular shoppers – the co-op’s members, were also it’s owners, and entitled to receive a share of the profits. This meant that you were paid a dividend. This was later issued in the form of ‘Green Shield’ stamps, which could be used to buy further goods in the stores. The co-operative movement was founded way back in the 1840s by the Rochdale Pioneers, former members of Robert Owen’s socialist movement. After this had collapsed, the Pioneers then went on to apply his socialist principles to running retail stores. The movement rapidly caught on and expanded, not least because, unlike ordinary shops, the co-ops sold pure food without the poisonous substances added elsewhere. For example, many bakers added arsenic to their bread to make it whiter, and more attractive to the purchaser. The co-ops didn’t, and so their food and goods was healthier, and thus more popular. Unlike their competitors, you could be fairly sure that what you bought from the co-op wouldn’t kill you in the name of making it appear more tasty. By 1942 there were 1,058 co-operative retail societies, with a total membership of 8,925,000 – just shy of 9 million people.

I found this book on the history of the movement in one of the charity bookshops in Bristol. It’s by the great socialist and writer, G.D.H. Cole, who was one of the leading members of Guild Socialism, a British form of syndicalism, which recommended the abolition of the state and its replacement with a system of guilds – trade unions, which would include all the workers in an industry, and which would run industry and the economy. Instead of parliament, there would be something like the TUC, which would also have administrative organs to protect the consumer.

The book’s chapters include:
I: “The Hungry ‘Forties'”,
II: Co-operation before the Pioneers
II. Rochdale.
IV. The Rochdale Pioneers Begin.
V. The Rochdale Pioneers to 1874.
VI Christian Socialists, Redemptionists, and Trade Unions
VII. Co-operation and the Law.
VIII. The Origins of the Co-Operative Wholesale Society
IX. Co-operative Growth in the ‘Sixties and ‘Seventies.
X. The Second Revolution.
XI. The ‘Eighties and ‘Nineties.
XII. The Women’s Guild.
XIII. Co-operators and Education.
XIV. Co-operation in Agriculture – Ireland: The Beginning of International Co-operation.
XV. Co-operation before and during the First World War.
XVI. From War to War.
XVII. Guild Socialism and the Building Guilds
XVIII. Co-operative Development between the Wars.
XIX. Co-operators in Politics.
XX. Co-operative Employment.
XXI. International Co-operation.
XXII Co-operation Today and Tomorrow
I. the Growth of Co-operation.
ii. The Development of Co-operative Trade.
iii. Large and Small Societies.
iv. Democratic Control.
v. Regional Strength and Weakness.
vi. Co-operative Education.
vii. The producers’ Societies.
viii. The Wholesales and Production.
ix. The Next Steps.

Appendix: Who Were the Pioneers?

Cole notes that some forms of what became known as co-operation existed in various trades and businesses before the Rochdale Pioneers. Some of the capital used to set up businesses in the early 19th century, came from the workers. They tended to invest in other businesses’ than their employers, so that if their wages were cut during a recession or dip in trade, the dividends they would receive from their shares would not also suffer. Although not remarked on in the book, you could say that this shows how the working class has been disinherited. In many cases, they contributed their savings and money to the development of capitalism, but despite the existence in some firms of profit-sharing schemes, they have been and are being excluded from the profits of the modern, industrial economy.

From industry, co-operation also entered politics, with the establishment of a Co-operative Party, which is now part of the Labour party. The movement spread across Europe, to Germany and as far as Russia. Lenin was greatly impressed by the value of the co-operatives as a form of socialism. According to Aganbegyan, Gorbachev’s chief economist for perestroika, before 1950 47 per cent of all industries, including farms in the USSR were co-ops. Industrial democracy and co-operatives were a central plank of Gorbachev’s perestroika. Unfortunately, Gorby’s attempts to revive Communism failed, and Yeltsin turned them into bog-standard capitalist companies through the voucher system. Other thinkers and politicians in other countries saw co-operation as the solution to their countries’ social and economic problems. One of these was the Bulgarian Stambolisky, the leader of a peasant’s party before the First World War. He wished to organise the peasant farms into a system of co-operation, which would modernise the country by allowing them to acquire electricity and improve production and conditions. More recently, the Mondragon co-operatives, set up in Spain by a Roman Catholic priest in the 1950s, has become an industrial giant, involved in just about all areas of the Spanish economy.

Cole’s book understandably concentrates on the history of the co-operative movement from its emergence to the middle of the Second World War, and is an immensely detailed and thorough work of scholarship. Although not as prominent as they once were, co-operative businesses still exist in Britain. They were supported in the 1970s and ’80s by politicos like the great Tony Benn and Ken Livingstone, and may once again become a major force in British society and the economy.

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Aganbegyan on Perestroika and Workers’ Control

June 29, 2016

Earlier this week I put up a translation of an Austrian governmental pamphlet from the 1980s on the system of factory councils and workers’ representation in industry. Over the in Soviet Union, Mikhail Gorbachev, the last Soviet Communist president, advocated a system of workers’ control and the transformation of state enterprises into co-operatives, in order to reform and invigorate the moribund Soviet economy and political system. It was also intended as part of a wider series of measures, like free speech and elections, which were to transform the USSR into a Socialist democracy. I’ve posted up pieces from Gorbachev himself in his book, Perestroika, about the new thinking, and from Ken Livingstone, who was deeply impressed with this aspect of the Soviet experiment. Gorbachev’s chief economist, Abel Aganbegyan, also discusses the importance of industrial democracy in his The Challenge: Economics of Perestroika (London: CenturyHutchinson 1988).

Aganbegyan states that the importance of co-operatives in the Soviet economy was recognised by Lenin, and that Gorbachev was returning to this earlier Soviet ideal. He wrote:

The development of cooperatives and self-employment is not a departure from Socialist principles of economic management. In Soviet conditions a cooperative is a socialist form of economic management, foreseen by Lenin in one of his last articles “On Co-operatives”. As is well known, Lenin’s last articles were dictated by him. He was extremely ill and sensed his imminent death; these articles are rightly seen as his last will. It is symbolic that among the various questions to which Lenin wished to draw society’s attention, was the question of cooperatives as an important form of socialist economic management. Lenin fully understood that a socialist society could not be developed solely on enthusiasm and on the application of administrative measures. He wrote about the need to employ the principles of material self-interest, self-financing, financial accountability (Khozraschet) and material responsibility. The cooperative form of economic management is indeed a form which ensures greater material incentive in work, more responsibility and the ability to pay one’s way. At the same time it is a democratic form since it is voluntary. Lenin attached fundamental importance to the voluntary nature of the cooperative. Cooperatives are self-managing organisations, where the collective itself decides everything and things are not fixed from above by an official. Thus the potential advantages of cooperatives within our society are far from exhausted. And we know from economic history, no economic form will disappear if it contains within it potential for self-development. The development of self-employment has also to be approached as a way of strengthening the material interest of individuals in creative labour.

The aim of socialist development in the final analysis lies in meeting the needs of all members of society more fully. Cooperatives and self-employment contribute to this end and therefore reinforce our socialist principles. They completely correspond to Gorbachev’s slogan for prestroika, ‘Give us more socialism!’ (p. 30).

The Cooperatives and Democratisation

Aganbegyan also makes it very clear in the book that the creation of the co-operatives was part of the wider process of democratising the USSR.

Democratisation of the whole of our society including the development of glasnost is an important aspect of perestroika. As it applies to the economy, debate is proceeding on an increased role in workers’ collectives in the resolution of economic questions, and in the transition to self-management. In the Law on Socialist Enterprises, workers’ collectives have been granted extensive rights in framing the plan of economic development for their enterprise, deciding on the way incentives should be offered, on work conditions and salaries, and the social development of their collective.

Of particular significance is the right of workers’ collectives choose their economic leaders, at brigade, enterprise and association level. Earlier, under the administrative system, directives on the conduct of the plan, even the smallest details, were handed down from above. Now, with full economic independence and self-accounting, the welfare of the collective depends above all on work organisation and levels of productivity. Its leader, as head of the working collective, must take the lead in striving for higher efficiency and productivity. (P. 31).

The Workers’ Democracy in Action

Aganbegyan also describes the new system of industrial democracy at work, and how it was introduced by a number of firms, so that managers had to compete for their positions. As a result of this, 8 per cent of the most inefficient were weeded out.

In the new system of economic management the rights of working collectives have been greatly expanded by the Law on Social Enterprises passed in June 1987. The working collective now determines the development policy of the enterprise. It also establishes the plan of development for its enterprise, including the plan for the five-year period. Plans set by the collective are final and are not subject to the approval of any higher authorities. The collective determines the way the enterprise uses the self-accounting income which it has earned. it scrutinises particularly the way the enterprise’s funds are used in the technological research and development fund, the social development fund and the financial incentives fund.

The working collective carries out its f8unctions both directly at meetings of the whole working collective and through democratically elected Councils to represent its interests. The decision to broaden the rights of the working collective was not taken dogmatically, but on the basis of generalisation of the experience accumulated at individual enterprises in the Soviet Union. At the Kaluga Turbine Factory, fore example, a council of brigade leaders, representing the working collective’s interests, has been operating effectively for many years. The fact is that here collective labour brigades were genuinely organised. Each brigade elects its brigade leader, so that the brigade leaders’ council is a democratically elected body. The factory has major productive and social results to its credit and, moreover, the long-term development policy of the enterprise is in the main the responsibility of the brigade leaders’ council.

For the first time working collectives are being given extensive rights such as the right to elect the manager. This affects the election of managers of all ranks: the brigade elects the brigadier, the workers and section foremen the section head, the working collective of the factory elects the director of the factory, and the whole working collective of the association elects the General Director. These elections are planned as a creative process. They must be preceded by public competition for managerial posts, with a preliminary selection made by, say, the working collective council. Each candidate then meets with the workers in the sections, departments and enterprises, attends meetings and meets with representatives of public organisations. Each candidate for the post of manager draws up a programme of actions and presents it to the working collective. Secret elections then take place with votes cast for a specific person, whose particulars and potential are known, and for a definite development programme for the enterprise.

The idea of appointing managers by election has already been taken up by many working collectives. Even before the official acceptance of the Law on Enterprises these elections were being organised independently in many places. Interesting events occurred for example at the Riga Car Factory. This factory produces the RAF microbuses which gained popularity in their day, but had eventually ceased to meet the increasingly sophisticated demands as needs changed and technology developed. The factory was in a deep crisis and stopped fulfilling the plan. A new leader was needed. Under the aegis of the newspaper Komsomolskaya Pravda a nationwide competition was held for the post of director of the factory. A total of four thousand applications was received from all corners of the country and a commission was specially created composed of car construction specialists (from the Ministry of Car Industry), from the factory and from local bodies. About thirty candidates were shortlisted. They studied the factory and made their proposals for it. One the basis of a detailed examination of these more concrete data the list of candidates was further reduced to eight. They came to the factory, familiarized themselves with the work, stated their views on how to improve the situation and finally the working collective in a secret ballot selected its factory director. This turned out to be V.L. Bossert, an energetic young manager, 35 years of age, who up to then was working as the manager of the Omsk Factory, a major producer of gear-boxes for the Moskvich car. The collective supported the candidacy of this new director and gave its views on his programme for the full reconstruction of the factory and the design of a new model of microbus which would be on a par with world standards. Having elected the director, the collective began to work intensively and soon fulfilled the plan. The number of claims for replacement of defective goods was reduced. The financial situation of the enterprise improved, people started to receive prizes and work motivation grew. Parallel to this, work continues on designing a new car and reconstructing the factory.

This experience has proved to be successful and it has caught on. Based on the RAF factory’s example, tens and even hundreds of other enterprises have organised elections for directors. Success is assured wherever this is carried out not as a mere formality, but where competition is guaranteed, where time is given and conditions are created for the preparation of imaginative programmes of development of the working collective, and where people really feel they are participating in the advancement of their enterprise at management level. In discussing the question of appointment of leaders by election, we have studied attentively the experience of other socialist countries, Bulgaria and Hungary. In Hungary in particular, the democratic mechanism has been very effective. In re-election for the post of direct 8% of former directors were voted out, but 92% had their competence at management confirmed by the collective. IN this way the quality of managers has been improved.(Pp. 197-9).

Unfortunately, this experiment was abandoned. The cooperatives throughout the eastern bloc were transformed into bog-standard capitalist enterprises through the voucher system. Yeltsin recklessly privatised everything he could lay his hands on, with the result that the Russian economy went into meltdown. And the end result of this has been the rise of Putin and the oligarchs. It is a great pity, as if this experiment had succeeded, Russia could have been the first and greatest genuinely democratic, socialist country, and undoubtedly the benefits this gave its working people would have been taken up and copied around the world.

Ken Livingstone on Perestroika and Industrial Democracy

May 31, 2016

This morning I put up a piece about how Mikhail Gorbachev, the very last president of the Soviet Union, attempted to regenerate Soviet Communism by introducing industrial democracy and strengthening trade unions as part of Perestroika. Ken Livingstone devotes an entire chapter of his book, Livingstone’s Labour, on Perestroika, including a few paragraphs on worker’s control. He writes

So far the reformers around Gorbachev such as Aganbegyan have stressed that as the economy is modernised the workers must be protected from cuts in their standard of living. that is why he emphasises the strengthening of social provision such as housing, health and education. He has also spelt out the intention to keep rents low and to ensure that when price reform comes there must be compensation to protect living standards. He argues that there must be increased investment in new technology but makes the following innovative condition:

The distinctive feature of this reform is industrial democracy moving towards self-management … this will involved [workers] in determining the enterprise plan, the allocation of resources and the election of managers. It is a revolutionary programme. There will be much opposition, especially from management… This can only be overcome because the … driving force is political openness and democratisation.

It is not only academic economists who talk like this. I was struck by the enthusiasm and pleasure with which Vadim Zagladin, the Head of the International Department of the Central Committee, described how a Siberian shoe factory, which had been facing closure, had been taken over by the workers. The products of the factory were notorious for falling apart within days of purchase but the Central Committee had agreed to give the workers a last chance to improve their shoes before closure. Once the workers took control their first act was to sack the incompetent managers. They then turned the business into a dramatic success within two years. Now the factory is expanding and their shoes are in demand all over the USSR. Even more innovative is the workers’ proposal to issue ‘shares’ in factory-not to investors, but to their customers who would then be in a position to exercise real consumer power. (Pp. 205-6).

Livingstone also explains that the Perestroika movement was divided into two camps, with a right-wing that favoured something like Thatcherism, and a left, which included Gorby himself, that wanted to protect the workers as much as possible. He stated

In the first place, the perestroika movement is split into two quite distinct camps (it is the failure to understand this which has led so many We3stern observers to talk so inaccurately about the reintroduction of capitalism). there are those like Nikolai Shmelev and the technocrats Lisichkin and Popov whose arguments are similar to those of Thatcher that the economy can be reformed by the creation of a poll of unemployment which will act as a spur to increase productivity. They argue that Soviet society must be led by an elite and that the welfare state is a ‘survival of feudalism’.

The other faction inside the perestroika movement is that of the democratisers. Typified by the economists Aganbegyan and Zaslavskaya, this faction believes that the economy can only be modernised by democratising Soviet society from the grass roots upwards. Most important of all, they see the way to improve the economic performance of the USSR is by introducing democratic rights at work so that the workers elect their managers. At every stage Gorbachev has thrown his weight behind the democratisers and against the elitists. As he wrote in his book Perestroika (1987)’There was opinion…that we ought to give up planned economy and sanction unemployment. We cannot permit this… since we aim to strengthen socialism, not replace it with a different system … Furthermore, a work collective must have the right to elect its manager.’ (P. 204).

Livingstone was aware how radical Gorbachev’s reforms were, and that there were many who wished them to fail so that they could introduce unemployment:

The excitement with which progressive Central Committee members like Zagladin recount each successful experiment in workers democracy is an indication of just how much is riding on the hopes of the reformers that democracy from below will be the key to the modernisation of the Soviet economy. If they fail the conservatives will be waiting in the wings to try the ‘spur’ of unemployment.(p. 206).

By ‘Conservatives’, Livingstone means the traditional managerial class of party functionaries and civil servants.

This passage is interesting, as it shows how well-informed Red Ken was about the Soviet Union and perestroika. He was well aware, for example, that the restructuring of the Soviet economy would result in 16 million jobs being lost, and acknowledged that this would present a serious problem. In the event, Gorbachev’s radical proposal to transform Soviet industry into co-operatives was abandoned, and they were transformed through the voucher system into straightforward capitalist enterprises. The result was chaos and the complete meltdown of the country’s economy under Boris Yeltsin, a drunk, corrupt incompetent, who was useful as a stooge to the Neo-Cons and Neo-Libs then in the White House and Downing Street.

This also explains one of the quotes the Scum attributed to Red Ken in their campaign against Labour in the 1987 general election. The rag produced a page of photos of various Labour MPs and activists, with a radical quote from each underneath the photo to scare people. Under Diane Abbott they placed the words, ‘All White people are racist’. With Red Ken they placed a line about how he wasn’t in favour of the army, but a corps of soldiers to defend the factories. Looking back now, it seems quite unlikely that those quotes were even true, especially Ken’s, except perhaps at a time in his early career when he, like many left-wingers, was far more radical. But his interest in perestroika, and the reintroduction of industrial democracy, also showed how much of a threat he was to Thatcher and her programme of grinding the workers down any way she could.

Gorbachev and the Introduction of Co-operatives in Perestroika

May 7, 2014

Aganbegyan Pic

Abel Aganbegyan, leading economist of Perestroika

One of the ways the last Soviet leader, Mikhail Gorbachev, attempted to reinvigorate the country’s economy was through the establishment and transformation of state industries into workers’ co-operatives. They were also intended to create jobs for workers, who had been made unemployed through Gorby’s other reforms aimed at making the country’s industries more efficient. This started with 1986 Law on Economic Activity, which permitted a very limited amount of private enterprise. The only people permitted to work for themselves, either as self-employed or in co-operatives, were pensioners, students and employees working after hours. The materials they used had to be surplus to those of the state industries. The co-ops were restricted to a list of 29 permitted activities, such as taxi-driving and dress-making. This effectively legalised what many Russians were already doing any way. In March 1988 the restrictions were further lifted, so that the co-ops were allowed to pay staff and do business with foreign nationals. A further law in August 1990 allowed the co-ops near total freedom. By the end of 1990 there were nearly 260,000 co-operatives employing 6.2 million people, including those with other jobs. They produced 70 billion roubles’ worth of goods and services. 10 billion roubles were for the Soviet population. The co-ops were originally envisaged as small firms, but three-fifths of the new enterprises were in the former large state industries.

However, the impact of the co-operatives on the retail market was much smaller. Co-operatively managed garages, home decoration, household repairs, tailoring and dressmaking, catering, small manufacturing and retail only accounted for 2 per cent of the products bought by Russian consumers. Many of the new co-operatives also became more-or-less ordinary capitalist industries by a law which allowed profits to be drawn on investment, rather than the amount of work put in. See ‘Co-operative’ in Andrew Wilson and Nina Bachkatov, Russia Revised: An Alphabetical Key to the Soviet Collapse and the New Republics (London: Andre Deutsch 1992) pp. 49-50.

Abel Aganbegyan, the Soviet economist and chief architect of perestroika, describes the reasons behind the establishment of the co-operatives and the experiments in setting up the system in his book, The Challenge: Economics of Perestroika (London: Hutchinson 1988) pp. 196-9. He states that they were set up to give Soviet workers a sense of responsibility as co-owners, describes the co-operative’s management system, including the election of brigade officials and directors. There was even a nationwide competition to find the new manager for the Riga car factory, organised by Komsomolskaya Pravda, the newspaper of the party’s youth group. Describing the election of managers and officials, he writes:

The working collective carries out its functions both directly at meetings of the whole working collective and through democratically elected Councils to represent its interests. The decision to broaden the rights of the working collective was not taken dogmatically, but out on the basis of generalisation of the experience accumulated at individual enterprises in the Soviet Union. At the Kaluga Turbine Factory, for example, a council of brigade leaders, representing the working collective’s interests, has been operating effectively for many years. The fact is that here collective labour brigades were genuinely organised. Each brigade elects its brigade leader, so that the brigade leaders’ council is a democratically elected body. The factory has major productive and social results to its credit and, moreover, the long-term development policy of the enterprise is in the main the responsibility of the brigade leaders’ council.

For the first time working collectives are being given extensive rights such as the right to elect the manager. This affects the election of managers of all ranks: the brigade elects the brigadier, the workers and section foremen the section head, the working collective of the factory elects the director of the factory, and the whole working collective of the association elects the General Director. These elections are planned as a creative process. They must be preceded by public competition for managerial posts, with a preliminary selection made by, say, the working council. Each candidate then meets with the workers in the sections, departments and enterprises, attends meetings and meets with representatives of public organisations. Each candidate for the post of manager draws up a programme of action and presents it to the working collective. Secret elections then take place with votes cast for a specific person, whose particulars and potential are known, and for a definite development programme for the enterprise. (pp. 197-8).

He then proceeds to describe the election run by Komsomolskaya Pravda for the ailing Riga Car Factory.

This factory produces the RAF microbuses which gained popularity in their day, but had eventually ceased to meet the increasingly sophisticated demands as needs changed and technology developed. The factory was in a deep crisis and stopped fulfilling the plan. A new leader was needed. Under the aegis of the newspapers Komsomolskaya Pravda a nationwide competition was held for the post of director of the factory. A total of four thousand applications was received from all corners of the country and a commission was specially created composed of car construction specialists (from the Ministry of Car Industry), from the factory and from local bodies. About thirty candidates were shortlisted. They studied the factory and made their proposals for it. One the basis of a detailed examination of these more concrete data the list of candidates was further reduced to eight. They came to the factory, familiarized themselves with the work, stated their views on how to improve the situation and finally the working collective in a secret ballot selected its factory director. This turned out to be V.L. Bossert, an energetic young manager, 35 years of age, who up to them was working as the manager of the Omsk Factory, a major producer of gear boxes for the Moskvich car. The collective supported the candidacy of this new director and gave its views on his programme for the full reconstruction of the factory and the design of a new model of microbus which would be on a par with world standards. Having elected the director, the collective began to work intensively and soon fulfilled the plan. The number of claims for replacement of defective goods was reduced. The financial situation of the enterprise improved, people started to receive prizes and work motivation grew. Parallel to this, work continues on designing a new car and reconstructing the factory.

This experience has proved to be successful and it has caught on. Based on the RAF factory’s example, tens and even h7undreds of other enterprises have organised elections for directors. Success is assured wherever this is carried out not as a mere formality, but were competition is guaranteed, where time is given and conditions are created for the preparation of imaginative programmes of development for the working collective, and where people really feel they are participating in the advancement of their enterprise at management level. In discussing the question of appointment of leaders by election, we have studied attentively the experience of other socialist countries, Bulgaria and Hungary. In Hungary in particular, this democratic mechanism has been very effective. In re-election for the post of direct 8 % of former directors were voted out, but 92% had their competence at management confirmed by the collective. In this was the quality of managers has been improved. pp. 198-9).

apprentice_sir-alan_pink-pigeon

The Apprentice’s Sir Alan Sugar: Now imagine someone in overalls and work boots saying to their boss ‘You’re fired!’

The competition sounds like a radical Socialist version of Top Gear or Dragon’s Den. Certainly it would have been interesting to see Clarkson covering the election by car factory workers of their manager, all the while careering round Moscow or, in this case, Riga, while making sneering comments about the condition of the roads and Soviet era cars. As for Dragon’s Den, it might be a bit too dangerously subversive for the Dragons. After all, it turns the class system on it’s head by empowering the workers to sack incompetent bosses. Which might actually make it perfect as a kind of anti-Apprentice. After all, how many of the more pompous captains of industry, priding themselves on their ability to make ‘tough decisions’ to close down factories and throw thousands out on the streets for their profit and that of the shareholders, would welcome standing in front of committee of proles and being told ‘You’re fired’. Now that really is an idea for a TV show.