May 10, 1894.
BY WM. H. VAN ORNUM.
In view of the great interest that is being taken in the subject of Co-operation at this time; and in view of the evident confusion of thought which prevails on the subject as shown in the writings of many who assume to discuss it, I have thought it highly desirable to bring on, if possible, such a general discussion as will make clearer the true principles of Cooperation, and the prerequisites for success in co-operative enterprises. The need for such a discussion is apparent the moment we pick up any one of the thousand and one so called co-operative schemes which are offered with all possible assurance by their honest but often not well informed authors. For instance, I have frequently seen in the columns of the TWENTIETH CENTURY, proposed plans of what were called cooperative enterprises, but which were almost purely capitalistic ones, only that the capital was to be distributed in small blocks. I believe that a more general understanding of the subject will not only increase the interest in Co-operation as an ideal method of production and distribution, but it will prevent the large percentage of failures which has marked the history of Co-operation in the past. I will therefore start the discussion and invite criticism, hoping that the result will be helpful to the many co-operative schemes which are being set on foot.
First then, it is necessary to clearly draw the line between Capitalism and Co-operation, so that we shall not be in danger of confounding the two. The first is the present system, or want of system, under which production and distribution is carried on. It is based upon the old notion of political economy, that there are three factors in wealth production, one of which is capital; that capital performs a part in that production and consequently is entitled to share in the product; and that interest is the natural share which capital is justified in exacting. Dividends on capital stock, royalties and profits on invested capital are ah only different forms of interest, and derive their entire sanction from this same idea of capital. This political economy is a very different thing from social economy, which is the science of the production, distribution and consumption of wealth subject only to the natural laws of social intercourse which will necessarily govern human association when freed from the arbitrary interference of the law. On the other hand, political economy is the science, so far as any science is possible, of production, distribution and consumption of wealth subject to the political institutions which interfere with the natural laws of social intercourse. Social economy is always the same, only being modified by the prevailing degree of intelligence in society; while political economy varies greatly according to the political institutions which prevail. For instance, political economy will be a very different thing in a community where the law subjects land to private ownership and monopoly, from what it would be where it were free. So, in order to understand political economy in any country, it is necessary to know the political institutions of that country in relation to wealth, etc. it should be remembered that our whole system and institution of property, particularly that of private fortunes, is the outgrowth of political, instead of social economy. Its results are the results of human enactments and not of the free play of natural forces. Land monopoly, money monopoly, patents, franchises, control of the means of communication, and many others have interfered with the course of nature in social affairs, setting up distinctions, classes and castes based upon wealth and legal privilege. In the absence of those things nature always tends to equality in material condition, with a resulting equality in social relations. The only thing that violates this equality is the legal advantage which comes from privilege. Capitalism then, is a product of the law which builds up wealth and privilege on one side, and on the other poverty, wage slavery and abject dependence.
Co-operation, on the other hand, is based upon the newer social economy which recognizes all wealth as the product of labor, without help from any source whatever, and therefore, which asserts that all wealth belongs to labor without its being called upon to divide with anybody. Seeing that it has produced all wealth in the past and that the only things that stand in the way of unlimited production in the future are the institutions of Capitalism which shut labor off from access to nature, labor seeks a way to overcome the obstructions. This will be found in Co operation, which is nature’s way of overcoming both the natural difficulties, and the artificial obstructions which have been set up by human enactments. Therefore, Cooperation, having an entirely different basis, different methods and a different end it must necessarily keep itself entirely aloof from Capitalism. The two have nothing in common. They are as antagonistic as light is to darkness.
Now let us look at a joint stock company under Capitalism and see how it is made up! There is a certain amount of capital stock held by certain persons called stock holders, who, as such, perform none of the labor of the co-operation. If one of them does any part of the work he always expects pay for his services apart from his stock interest. The president, secretary and other officers, while they are stock holders, and draw their quota of dividends on their stock, always have an additional allowance as a salary. That salary they are expected to earn independent of any stock interest they may possess, so that the dividends never represent labor performed. Wherever also, the corporation has a bonded debt the interest on that debt is wholly outside of any labor performed. While in  some cases the workers may be in possession of some of the bonds of the corporation and in virtue thereof draw interest, that interest is in nowise a compensation for anything done which aids the workers or lightens their burdens. And the same thing is true of those sinecure officers or agents whose work is not actually necessary to the performance of the work of production peculiar to the corporation. Now, as ail the wealth produced is the product of the labor performed; and as ail payments of whatever nature, must be made out of the product, it necessarily follows that the more capital stock there is to draw dividends, the more bonds there are to draw interest, and the more purely ornamental officers there are to draw high salaries the more the fund will be depleted from which wages are to be paid to the real workers. But these capitalistic features which have been engrafted upon an otherwise co-operative society have still further changed the nature of the organization from a basis of pure co operation.
The owners of the capital stock assume, by virtue of that ownership, the proprietorship of the whole society. They pretend to employ those who perform the labor, and then, by reducing wages to the lowest possible price at which it can be obtained, divide the entire surplus, after paying the interest, salaries, etc, among themselves as dividends. Labor stands no possible chance of getting increased returns by increased diligence. Its condition is that of hopeless servitude; while, on the other hand, the proprietors—the stockholders, through the sinecure officers, stand in the relation of masters spurring their slaves on to the greatest possible exertion in order to swell their own unearned gains.
It is easy now to see just what the difference is between a joint stock company and a co-operative society. Eliminate the capitalistic features of any joint stock corporation, such as stocks, bonds and ornamental officers, so that it comprises none but the actual and necessary workers; and then place them ail on the same footing, so that there are no high and no low—for without equality there can be no genuine co operation—and we have an ideal co-operative society. There is not a railroad, telegraph or telephone line in this country, or anywhere else, or public or private works, great or small, which cannot be run by precisely the same men who run them now working as co-operative societies ; and that too with far greater cheapness, safety and dispatch than now obtains. These men are doing the work now. Let them continue to do it, but let the capitalistic features be abolished—the rent, interest, dividends, sinecure salaries and profits ail be wiped out, and the products of the labor divided among those who perform the labor, share and share alike, and there will be no labor question to interfere with the orderly course of events, and every worker will be stimulated to render the best possible service.
Now, taking the joint stock company, or corporation, as we know it, with its capital stock, its bonds, mortgages and fixed charges; its rents, interest, dividend and royalties; its ornamental or useless officers useless so far as the production of wealth is concerned, and only useful when it become necessary to promote destructive competition or trust combination with others, or to manipulate legislatures, and its artificial gradations in the stations and pay of the workers. I say, taking ail these as a type of capitalism, we may also take this same corporation, stripped of ail these capitalistic features, as a type of pure co-operation; so that we have set before us the two systems in the sharpest and strongest contrast, one filching away the entire product of the workers for the benefit of the idle; and reducing those workers to a condition of wage slavery, and the other leaving them in full possession of the entire product of their labor, destroying the inequalities which capitalism had set up, and opening the way to a realization of that common human brotherhood which is the end toward which all reforms finally tend.