Sunday, April 1, 2007

Van Ornum, Co-operation, XIII

Twentieth Century, August 9, 1894, 7-9.

CO-OPERATION.—A FOUNDATION.—XIII

BY W. H. VAN ORNUM.

We are now ready to proceed to formulate such a plan of cooperation a will fulfill the high expectations of a system which will destroy capitalism and recast human society. The conditions of such a co-operation are, that it shall exclude all capitalistic features, such as capital stock, interest, dividends and salaries. It must give to the producers the entire product of their labor; must eliminate the idea of profit; abolish the wage system, and destroy competition, except that emulation among men which seeks the honor and love of their fellows—a competition as to who can best work and best achieve. It must be confined strictly to matters of common business in which all are equally interested and leave each individual perfectly free to regulate his private conduct and habits as suits his own convenience and tastes without let or hindrance from any. Thus will conform the greatest good of society to the most perfect liberty of the individual.

There are a great many reasons why there should be no share capital in co-operative associations. In Illinois, and probably in all the other states, the law recognizes shares of capital stock in corporations as property which may be sold and transferred from person to person at will. Very little, if any, control can be exercised by the corporation over those transfers. It also gives each shareholder one vote for each share held, which is another source of inequality. Even if it were able to prevent one person from subscribing to more than one share, it is unable to prevent individuals from buying up the shares of others. Buying up the shares of stock in so-called co-operative enterprises, which have made successes, and so obtaining a control, is the most ordinary method of undermining and destroying what little of co-operation there is in them. A capital stock puts the control of the memberships out of the hands of the association. It is all important that the association shall always be able to select its own members. No one must be received unless capable in their trade, honest and faithful in their relations with their fellows, and who possess such other personal qualities as will not be liable to occasion discord. A capital stock also implies a limitation of the liability of the holder to the amount of his shares. This is a sacrifice of one of the most valuable features of co operation, that of unlimited liability. The history of those European Credit Banks which are based upon that principle has abundantly demonstrated, not only that there is no danger in it, but that it is absolutely essential to an adequate system of co-operation. Where every member is liable for the acts of all, more care will be taken in the admission of members. It will raise the standard of excellence in the community among those who hope to become members, and a closer watch and discipline will be maintained over them after they have been elected. It heightens the esprit du corps of the association and increases the feeling of solidarity as nothing else will do. It will add to the confidence in the outside community, in the security of the cooperative certificates of credit, which must be issued, and thus insure their general circulation as money. To leave out the principle of unlimited liability from a co operative society would be like building up the body of a man, but leaving out the breath of life. As before said, capital stock is a limitation of liability, and is, in every way, opposed to co-operation. And, finally, even the name, capital, should not be used. It implies the old system which must he destroyed. We must avoid even its nomenclature. Terms must be used which fix in the public mind the sharp contrast between capitalism and co-operation.

Interest must also be avoided because it is pure capitalism. It arises from the teaching of political economy that capital is one of the factors in production, and that interest is the share which rightfully goes to capital for the part which it has performed. It is a clear violation of that tenet of social economy which teaches that all wealth is the product of labor and rightfully belongs to labor. Capital is but a tool in the hands of labor. It is passive. It does nothing. It is entitled to no reward any more than the plow, with which the farmer cultivates the field, is entitled to a reward. Interest would be impossible were it not that the issue of money has been monopolized. Interest is the tribute that labor is compelled to pay to that monopoly. Money, in its essential character, is only a certificate of credit. If a person or a society is entitled to credit, he or it is entitled to such a certificate or evidence of that credit as will enable them to use it without paying toll as interest or discount to any one for the privilege. Co-operators can easily arrange for the issue of such certificates on the security of their memberships and on their products as shall meet all the requirements of money on a plan slightly modified from that proposed in my “Money, Cooperative Banking and Exchange.” Co-operative societies have frequently resorted to borrowing from their own members or outsiders in order to increase their funds on which to do business, for which they have paid considerable sums as interest. All this can be avoided, thus placing the co operators in a position of great advantage over business men outside of co-operative societies who are subjected to the burdens of interest.

Diridends on capital stock is only another form of interest; and will be obviated by the plan of fixed memberships instead of a share capital.

The payment of salaries or commissions must also be discarded. The history of the Raiffeisen Loan Banks scattered throughout Germany, Austria, Hungary and Italy, covering a period of nearly half a century, proves that it is possible to obtain talent of the very highest order for all the necessary work of management without any other compensation than the honor which comes from faithful service. The results have been vastly superior to those obtained under the Schulze-Delitzsch Credit Banks, which always paid both salaries and commissions on the business done. And it stands to reason. If additional emoluments are given for the performance of special functions it sets up inequalities among the members and becomes a source of intrigue, corruption and discord. Whereas, if all share and share alike the only distinction is in personal excellence, something that all will strive to the utmost to achieve.

Of course, it is not to be expected that any scheme of co operation can give to labor its entire product at first. We shall be subject to present laws until those laws can be abolished or changed. Among them are the laws which recognize the claims of the landlords. Wherever we undertake the work of co-operative production, we must make terms with the landlords. We must obtain access to the laud in some way. Whatever we pay for that access, whether it be in the city of Chicago or elsewhere, is just so much substracted from the total product and which does not go to the co-operators—to labor. Until the land monopoly can be destroyed we shall fall just so far short of realizing the full measure of what co operation has in store for us.

Taxation is another one of the forms by which a portion of the products of labor are prevented from going to labor. Whatever is paid in taxes lessens the amount by so much that labor receives. Until men become intelligent enough to dispense with the humbug of government they must submit to have their earnings confiscated to support useless drones who assume to regulate the affairs of other people. Under capitalism the masses are kept too poor and ignorant to see that they are being robbed and fettered; but cooperation opens a way for improvement in material condition and knowledge, which, in time, will abolish government.

Other monopolies, such as patents, copyrights, tariffs, and trust manufactured or controlled goods: in fact, everything which increases prices above the labor cost of production, all reduce the rewards of labor by increasing the prices of those things which labor has to buy through an exchange of its own immediate products. For instance, workmen who make shoes and who must obtain clothing by an exchange, directly or indirectly, of shoes for clothing, are cheated if the clothing is increased above the normal price—the labor cost of production. Nor will such increase benefit those workmen who make the clothing; because that increase results from monopoly somewhere; and monopoly gets it. It never goes to labor. The government levies an enormous tax upon whiskey, both on the manufacture and sale, so that the price of whiskey is increased from ten to twenty times over before it reaches the consumer. Do the workmen, who actually make the whiskey, get any of that increase? Not a penny. It all goes first to the government monopoly; and, second, to the whiskey trust. The whiskey trust would be impossible were it not for the restrictions which the government puts upon the manufacture and sale of whiskey. And just so with every other trust or trade combination in the world; their only power to increase prices comes from restrictions upon production or trade established by law; and which ultimately operate as special privileges to the monopolies which grow out of these restrictions.

Labor, then, is always interested in low prices; or prices not above that labor cost of production. Capitalism constantly endeavors to raise prices above that standard and so realize a profit. Profit is the excess in the selling price above that labor cost. Therefore, co-operation, which seeks to give the whole product of labor to labor, would eliminate profit. It is utterly antagonistic to profit. Adulteration in goods also grows out of the profit or capitalistic system. Capitalism seeks by adulteration to deceive and thereby increase profits. Co-operation, on the other hand, is interested in honest goods of full weight and good quality. There cannot be the slightest interest in the world for workingmen producing under cooperation, and exchanging with one another at the labor cost of production, to realize a profit or to adulterate o misrepresent their goods. Therefore, wherever co operative production or distribution has been introduced, even to a small extent, it has sought to do away with adulterations and furnish goods of the best quality and at honest measure. It will readily be seen from the foregoing that, under such a co-operation which produces goods of good quality at the cost of production, and exchanging them with others on a like basis without profit, there would be no such thing as competition for trade among them. The competitive system would e abolished; and along with it the wage system, which are both only other names for the same thing: that is, capitalism. A man’s wages would be his equal share in the joint product of his society.

Such a co-operation then, as stands out in clear and positive contrast to capitalism, and which excludes all capitalistic features, so far as its own workings are concerned, will accomplish all that I have outlined in the opening of this chapter. Insofar as it is subject to established monopolies of land, of taxes, of patents and trusts generally, they must be bourne with for the present until co-operation becomes strong enough to down them, which it can do in time. Let every cooperative society treat all payments of rent, taxes, royalties and profits paid to monopolies as items of expense; and carry them on their reports as contributions to monopoly, so that they can be laid before their members in every monthly or quarterly report, and it will operate as a tremendous educator. Men will begin to see what an enormous burden they are paying all the time for the privilege of being governed. Those reports will not only have a circulation among the members but will be watched with the closest interest in the community outside the co operators. Any plan of co-operation which may be adopted will be ‘canned in every detail and be commented upon both by friend and foe. So that this educational influence will not be confined merely to our own people. It cannot fail to attract the attention of multitudes of others who have never thought of this subject before.

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