Worker coops own economies after eastern bloc falls

[Ohfshkssgb]

After the fall of the Eastern Bloc their socialist economies privatised. In Russia, Ukraine and Belarus the industries were given to the former nomenklatura who previously administered them. This severely hampered their productivity and led to economy decline. The POD is that the fall of the Eastern Bloc is wholly led by workers unions. After the fall of communism Workers of all sectors becomes owners of the enterprises in which they work. Thereby worker coops become the dominant form of ownership in the former eastern bloc. Minerals and oil are nationalized while their profits are put into a sovereign wealth fund

 

[Salvador79]

After the fall of the Eastern Bloc their socialist economies privatised. In Russia, Ukraine and Belarus the industries were given to the former nomenklatura who previously administered them. This severely hampered their productivity and led to economy decline. The POD is that the fall of the Eastern Bloc is wholly led by workers unions. After the fall of communism Workers of all sectors becomes owners of the enterprises in which they work. Thereby worker coops become the dominant form of ownership in the former eastern bloc.

The problem with this is that massive investments were needed in order to raise productivity, almost in every sector. The workers didn't have that money. The nomenklatura also not really, but some emerged as successful lenders on the financial markets and got rich that way. It's the way financial markets worked / work, unfortunately. Even if the worker coops might have done a better job - which we can't really tell -, the financial markets would have been much less likely to lend to them. Emerging oligarchs were trusted to be able to get rid off "surplus workforce" and make "painful adjustments".. stuff that investors tend to love, whether it makes sense or not. Worker coops are known not to do such things.

"After the fall", this doesn't work. There's an open question whether it might have worked as a type of perestroika reform. Problem is that communist governments didn't want to give away power - look at Cuba.

It's a really difficult challenge. Some Eastern bloc governments achieved at least partial cooperativisation e.g. in housing and agriculture.

 

[Sam R.]

The POD is that the fall of the Eastern Bloc is wholly led by workers unions. After the fall of communism

There's a little contradiction here which involved Tanks rolling around a number of times after the great patriotic war.

 

[HexWargamer]

After the fall of the Eastern Bloc their socialist economies privatised. In Russia, Ukraine and Belarus the industries were given to the former nomenklatura who previously administered them. This severely hampered their productivity and led to economy decline. The POD is that the fall of the Eastern Bloc is wholly led by workers unions. After the fall of communism Workers of all sectors becomes owners of the enterprises in which they work. Thereby worker coops become the dominant form of ownership in the former eastern bloc.

I really don't see how this could work - you need to define 'ownership' in this context == I assume it's going to be something other than 'shareholder' ? (i.e. the worker co-ops can't sell their rights and non-workers can't 'buy in' ?) since 'giving shares to the workers' was more or less what happened in many cases - SOME businesses where, in fact, resource rich - such as Oil, for example, and we all know what happened there (the shareholders were paid a pittance to give up their rights).

Any business needs to raise both working and investment capital. To do so in the open market, the assets of the business are put at risk. Yet many ex-soviet factories are hardly worth more than their land / scrap value - often not even that when the cost of demonlition / decontamination is allowed for. Even if members of the workers co-operatives were asked to put up funds, it's hard to see where they would find the money.

What would be their 'liability' ? (I assume something other than 'Limited Company' ??). Even if they were personally liable for the debts run up by the business, I suspect most would still find it exceedingly difficult to raise loans.

Transitioning from a 'command economy' to the 'open market' is not easy in a world that has spent 50 years of ruthless computition bankrupting and rebuilding one industry after another whilst your industry has progessed little since 1945. After being starved of investment and producing not what the customer wants but what 'central office' thinks they should get, it was always going to be difficult.

Workers co-ops, I suggest, will be no-more successful than communism (handing the horse-shoe business to a blacksmiths co-operative won't help when the Model T's start rolling off the production lines...).

However it would make an interesting discussion !!

 

[Nell_Lucifer]

Workers co-ops, I suggest, will be no-more successful than communism (handing the horse-shoe business to a blacksmiths co-operative won't help when the Model T's start rolling off the production lines...).

However it would make an interesting discussion !!

Eh, Worker cooperatives have been around since 1900s, some more successful than others, Spain, Italy and France have I believe the most in Europe. Danobat (lathes) for example in Spain could be recreated throughout the Eastern Block given the heavy industry.

 

[BookwormAF]

I really don't see how this could work - you need to define 'ownership' in this context == I assume it's going to be something other than 'shareholder' ? (i.e. the worker co-ops can't sell their rights and non-workers can't 'buy in' ?) since 'giving shares to the workers' was more or less what happened in many cases - SOME businesses where, in fact, resource rich - such as Oil, for example, and we all know what happened there (the shareholders were paid a pittance to give up their rights).

Any business needs to raise both working and investment capital. To do so in the open market, the assets of the business are put at risk. Yet many ex-soviet factories are hardly worth more than their land / scrap value - often not even that when the cost of demonlition / decontamination is allowed for. Even if members of the workers co-operatives were asked to put up funds, it's hard to see where they would find the money.

What would be their 'liability' ? (I assume something other than 'Limited Company' ??). Even if they were personally liable for the debts run up by the business, I suspect most would still find it exceedingly difficult to raise loans.

Transitioning from a 'command economy' to the 'open market' is not easy in a world that has spent 50 years of ruthless computition bankrupting and rebuilding one industry after another whilst your industry has progessed little since 1945. After being starved of investment and producing not what the customer wants but what 'central office' thinks they should get, it was always going to be difficult.

Workers co-ops, I suggest, will be no-more successful than communism (handing the horse-shoe business to a blacksmiths co-operative won't help when the Model T's start rolling off the production lines...).

However it would make an interesting discussion !!

Workers' cooperatives are already a well-defined economic model, we're not re-inventing something from scratch like you imply here. Most of these questions are answered by a basic Google search or wiki walk. Also, while Soviet industry had a very great many failings and dysfunctions, Cold War propaganda fueled delusions about it being stuck in 1945 was not one of them.

As to the OP's question, no this is not remotely likely. The USSR spent the entire time from 1921 to its fall suppressing or slaughtering (depending on how charitable the leadership was feeling at that moment) anyone who spoke up too loudly about diverging from the Marxist-Leninist approved Way of Doing Things economically. Anyone trying to put in the groundwork to make something like this happen would end up in exile, a jail cell, or a grave long before they could effect much.

 

[Ohfshkssgb]

As to the OP's question, no this is not remotely likely. The USSR spent the entire time from 1921 to its fall suppressing or slaughtering (depending on how charitable the leadership was feeling at that moment) anyone who spoke up too loudly about diverging from the Marxist-Leninist approved Way of Doing Things economically. Anyone trying to put in the groundwork to make something like this happen would end up in exile, a jail cell, or a grave long before they could effect much.

You are forgetting that the Eastern Bloc did fall. So there was a lot of room for dissent

 

[RangrimRumneheim]

You are forgetting that the Eastern Bloc did fall. So there was a lot of room for dissent

Poland's central resistance movement was a labour union with a third of its adult working population as its members; now while Solidarność and Lech Wałesa did end up leaning into conservatism and Western-style capitalism, ultimately unions and cooperatives are representations of the same concept; worker control.

 

[RousseauX]

Poland's central resistance movement was a labour union with a third of its adult working population as its members; now while Solidarność and Lech Wałesa did end up leaning into conservatism and Western-style capitalism, ultimately unions and cooperatives are representations of the same concept; worker control.

a big part of Solidarność and working class support for Perestroika in the USSR indeed lay with the idea that ending Communism meant industries would revert back to -worker- control. They were not for western style Capitalism and private ownership so much as they were for something closer to the original vision of socialism being about workers rather than the party bureaucrats and security men controlling everything.

 

[RousseauX]

After the fall of the Eastern Bloc their socialist economies privatised. In Russia, Ukraine and Belarus the industries were given to the former nomenklatura who previously administered them. This severely hampered their productivity and led to economy decline. The POD is that the fall of the Eastern Bloc is wholly led by workers unions. After the fall of communism Workers of all sectors becomes owners of the enterprises in which they work. Thereby worker coops become the dominant form of ownership in the former eastern bloc. Minerals and oil are nationalized while their profits are put into a sovereign wealth fund

This was actually tried in Russia

so what happened was that workers post-1991 were given vouchers which enabled them to buy shares of the company they worked in, and then in theory this would allow industries to be worker owned.

The problem is that the normal person do not have the knowledge nor the connections to exercise the vouchers in a meaningful way, because as it turned out just because you got rid of Communism doesn't mean you got rid of corruption in management, nor made the ordinary person finance-savvy.

So very quickly management and people with connections just swooped in and bought the vouchers for pennies on the dollar, and then used said vouchers to buy out state owned assets. That's the beginning of the current Russian oligarchy.

 

[RousseauX]

Also, in worker's co-op, what happens if I as a worker of co-op X just want to sell my shares of X to some outsider for $$$ but keep working there

I mean just for some background, I actually do get vested shares of the company I work for as part of my compensation package. I ended up cashing said shares from my previous company for like $25k when they got acquired so it was a nice bonus.

I thought about it even if I get enough shares to actually be involved in making management decisions I dgaf about getting involved and would still 100% sell my shares for hard cash so I can buy shit. I got a feeling most ppl would rather just have money than the right of sitting through board of director meetings or whatever.

At the same time I don't feel like quitting my job either, so is there just gonna be some policy of just banning anyone from owning shares who isn't working there? If so what happens if I quit? Do I just lose the my shares in a co-op?

 

[Sasza]

The problem is always the individual who creates the collective. The individual must be aware of the situation within which and why he or she operates. However, large masses of typical workers are people who are not very interested in everything.

Therefore, if you want this type of solution, only agriculture.

 

[TerranGames]

snip

Interesting! I'm not, by any means an expert on this subject, but I'd argue that if you wanted to do this, you'd have to go back a lot earlier than 1989 to pull off something like this, while people still want to reform socialism, rather than tear it down.

Something like the workers' councils in Hungary during the Revolution in '56.

1. The factory belongs to the workers. The workers pay a tax and a determined share from the profit to the state after the production of the factory. 2. The chief organ of management is the workers’ council, which the workers elect democratically. 3. The workers’ council elects a management committee of three-eight people from its members, which is the permanent organ of the workers’ council. The committee is also responsible for other tasks that will be determined later in detail. 4. The chief manager is the employee of the factory. The manager and other employees who fulfill more responsible positions are elected by the workers’ council. The management committee has to invite applications for these posts before the election. 5. The manager, who runs the factory, is responsible to the workers’ council. 6. The workers’ council reserves the following rights:

A/ consent to every plan of the enterprise,
B/ determines the wage fund and its use,
C/ determines every foreign transfer contracts,
D/ decides every credit operation.

7. In case of dispute the workers’ council decides the beginning and termination of employment concerning every employee. 8. The workers’ council also has to consent to the balances and it decides the allocation of profit, which has been left for the enterprise. 9. The workers’ council is also responsible for the social welfare of the enterprise.

Or with Solidarity in '81 (is this what your question is based off of?)

The social enterprise was to be "the basic element of the national economy [with] full independence, autonomy of its workforce, and . . . self-financing ." In contrast, state enterprises were to be created "only in exceptional cases, inspired by national interest . . . verified by Parliament ." Like the social enterprise, the state enterprise was to be controlled by means of "economic instruments" and had to be self-financing .' Self-financing was conceived to be a condition sine qua non of the self-managed enterprise . Self-financing would free enterprises from control of the government ; it would be an incentive for efficiency, penalizing the inefficient enterprise . To encourage long-term investment, certain modifications to monetary policy would be necessary, for instance, low-interest loans and compulsory reserve funds. But, the principle of self-finance should be "unconditionally observed," and accordingly, the granting of bank credit should no longer be automatic. The self-managed enterprise, as conceived by Solidarity, does not resemble in either form or structure the entrepreneurial firm in Western countries. There are fundamental differences in legal status . The self-managed enterprise would be run by its employees and their elected representatives, or an employees' council. The enterprise managers would be appointed by the employees' council, be "subservient" to it, and would be obliged to carry out the council's resolutions. Such subservience was intended not merely to ensure the democratic control of the enterprise, but also to sever the link between enterprise management, on the one hand, and the central administration and party hierarchy, on the other.

There was genuine popular support for socialism during that time, but by '89, all faith in the system is gone, and every attempt at reform hadn't gone far enough, got crushed under tank treads, or was rolled back by the bureaucracy. I think it's kinda like the reverse of Petrograd in late 1917, everything before that point had to go wrong, and every reform attempt had to fail to get to that point, but if the "bomb" went off then, the entire system was going to change.

 

[Dain]

After the fall of the Eastern Bloc their socialist economies privatised. In Russia, Ukraine and Belarus the industries were given to the former nomenklatura who previously administered them. This severely hampered their productivity and led to economy decline. The POD is that the fall of the Eastern Bloc is wholly led by workers unions. After the fall of communism Workers of all sectors becomes owners of the enterprises in which they work. Thereby worker coops become the dominant form of ownership in the former eastern bloc. Minerals and oil are nationalized while their profits are put into a sovereign wealth fund

The fundamental problem of East block industry was that it was not competitive with Western corporations after mismanaging its priorities and failing to modernize for decades. One has to remember that most of the industry was operating at a severe loss after they suddenly had to compete on an open market. It also didn't help that the newly empowered citizens democratically fought for wage increases as one of their central demands.

East block products were generally more expensive to manufacture than Western imports but often suffered from worse quality. There was the very real prospect for many that as their old captive command economy customers fell away, they'd be unable to sell any of their product even on the domestic market, let alone find buyers elsewhere.

In other words - they had no way to keep going unless they drastically restructured within a short timeframe. That required capital injections from investors. It required foreign expertise. A worker's coop was less likely to get that. It might have indeed helped to prevent more industry from simply being sold off for scrap due to sheer stubborness, but without outside intervention ultimately a lot of these factories just had no feasible way of generating sufficient revenue to keep the lights on.

 

[Carl Schwamberger]

The few worker cooperatives in the US I am aware of are small and a bit idealistic. There may be some larger successful but I can't speak of them. The next closest thing here is the employee owned business. How those are managed varies widely, but I am aware of several successful entities with varying levels of employee involvement.

 

[Carl Schwamberger]

This was actually tried in Russia

so what happened was that workers post-1991 were given vouchers which enabled them to buy shares of the company they worked in, and then in theory this would allow industries to be worker owned.

The problem is that the normal person do not have the knowledge nor the connections to exercise the vouchers in a meaningful way, because as it turned out just because you got rid of Communism doesn't mean you got rid of corruption in management, nor made the ordinary person finance-savvy.

So very quickly management and people with connections just swooped in and bought the vouchers for pennies on the dollar, and then used said vouchers to buy out state owned assets. That's the beginning of the current Russian oligarchy.

A complicated way to transfer control. & Im wondering how the laborers receiving the vouchers were supposed to pay for the shares. Direct distribution of shares has its own set of problems, but could be a bit simpler.

 

[RousseauX]

A complicated way to transfer control. & Im wondering how the laborers receiving the vouchers were supposed to pay for the shares. Direct distribution of shares has its own set of problems, but could be a bit simpler.

It wouldn't make that big a difference imo

The share is just a piece of paper and legal fiction. Even if you directly transfer shares you still need a mechanism for the average person to be able to exercise your rights as a shareholder

Doable in a country with a functional court and political system maybe but yeah good luck with that in 1990s Russia.

 

[Nell_Lucifer]

The fundamental problem of East block industry was that it was not competitive with Western corporations after mismanaging its priorities and failing to modernize for decades. One has to remember that most of the industry was operating at a severe loss after they suddenly had to compete on an open market. It also didn't help that the newly empowered citizens democratically fought for wage increases as one of their central demands.

East block products were generally more expensive to manufacture than Western imports but often suffered from worse quality. There was the very real prospect for many that as their old captive command economy customers fell away, they'd be unable to sell any of their product even on the domestic market, let alone find buyers elsewhere.

In other words - they had no way to keep going unless they drastically restructured within a short timeframe. That required capital injections from investors. It required foreign expertise. A worker's coop was less likely to get that. It might have indeed helped to prevent more industry from simply being sold off for scrap due to sheer stubborness, but without outside intervention ultimately a lot of these factories just had no feasible way of generating sufficient revenue to keep the lights on.

Modernization wasn't the problem, at least by the 1980s, just the economic and bureaucratic administration of factories. Really, from East Germany to the Soviet Union you would find very modern factories with the latest 6-axes CNC machines, advanced semi-automatic and automatic systems, small desktop computers and industrial sized computers, electrically and hydraulically actioned industrial robot arms and so on. The administration was the biggest problem as, in the case of the factories that continued to operate post-communism, and saw little changes to their production methods/technology, they started to make profits.

There was also the black market issue that affected most factories, in some extreme cases in the Soviet Union 90% of the total production went to the black market, while a paltry 10% went to the state.

 

[Band in China]

Modernization wasn't the problem, at least by the 1980s, just the economic and bureaucratic administration of factories. Really, from East Germany to the Soviet Union you would find very modern factories with the latest 6-axes CNC machines, advanced semi-automatic and automatic systems, small desktop computers and industrial sized computers, electrically and hydraulically actioned industrial robot arms and so on. The administration was the biggest problem as, in the case of the factories that continued to operate post-communism, and saw little changes to their production methods/technology, they started to make profits.

Where are you getting these statistics? Even in prosperous post-Soviet countries like Poland the majority of Soviet-era industry was either abandoned, scraped, or heavily modernized.

 

[Sasza]

Most of these types of machines were imported from the West and most of them went to specialized arms factories, but not everywhere. I don't remember which western station produced this material, or it was about the ZIL plant. It is clearly visible from the 1990s how the flood of used but well-maintained cars killed the automotive industry of those countries.