RD Wolff – Can Worker Cooperatives Lift Families Out of Poverty?

The following is the transcript of a speech given by activist, author, and founder of Democracy at Work Network, Richard D. Wolff, to the New York City Council encouraging the growth of worker cooperatives.

Hearing on “Worker Cooperatives – Is This A Model That Can Lift Families Out Of Poverty?

by Richard Wolff.
Published on February 24, 2014

Committee on Community Development


TESTIMONY of Richard D. Wolff, Democracy at Work, Inc.

Richard D. Wolff

Professor of Economics Emeritus, University of Massachusetts, Amherst

Visiting Professor, New School University, New York

Member of the Board, DemocracyatWork.info

New York, NY

646-336-8443 or

Shane Smith Shane


Let me begin by applauding this committee for organizing this hearing and bringing the issue of workers cooperatives forcefully before the public.

I offer an enthusiastic “yes” in answer to the question that structures this hearing. Mounting evidence clearly supports my “yes” answer. Worker cooperatives have proven their viability and are increasingly offering real solutions to working people facing problems of unemployment and poverty as well as others. Additionally, the most successful worker cooperatives in the world these days – the Mondragon Cooperative Corporation (MCC) in Spain – provides further evidence. Beginning in 1956 in impoverished northern Spain, its founder, a Roman Catholic priest, decided to no longer await an employer. Instead, he helped his community by starting a workers cooperative with 6 workers.

Today, almost 60 years later, MCC employs nearly 100,000 workers. It has lifted many of their families out of poverty and also provided jobs and careers for non-poor as well. The unemployment rate in the Basque region of Spain, where the MCC is concentrated, is less than half the national rate of unemployment.

Mondragon competed successfully with conventional capitalist enterprises. It solved problems of growth while preserving its cooperative principles. It overcame the initial skepticism of many. In the end, it proved that cooperative enterprises – creating secure jobs producing socially useful goods and services – can match or exceed enterprises driven by bottom-line profit motives.

Worker coops – where workers function collectively as their own employer and thus are employers as well as employees – help to overcome poverty and its associated social ills as follows:

– coops better engage the creativity, commitment, quality, and intensity of workers than traditional, for-profit enterprises; this gives coops competitive edges

– coops distribute net revenues among all workers in ways that directly reduce the economic inequalities that accompany poverty

– coops better engage their communities because they are more locally based and locally focused than most conventional enterprises

– coops’ decisions about the technologies they use and their environmental impacts respect their surrounding communities much more than conventional enterprises’ decisions

– coops rarely relocate production sites away from their communities, making coop jobs that much more secure

Many anti-poverty programs over the last century failed because of profit-

driven decisions made by conventional enterprises. For example, decisions to automate production and relocate to lower-wage regions or countries worsened poverty. Likewise, conventionally organized corporations funded politicians in both parties who limited or opposed government anti-poverty initiatives.

Worker cooperatives attack poverty by fundamentally altering who makes all the key enterprise decisions (what, how and where to produce and what to do with the profits) and toward what ends. Instead of a tiny minority of enterprise participants (major shareholders and the boards of directors they select), decision-making authority passes to the totality of all workers operating democratically. Coops’ decision makers have different goals and different methods of making enterprise decisions. Their basic ways of operating reduce poverty.

What worker coops need to be successful is greater public awareness of the possibilities, actual histories, and benefits of worker cooperatives. That will stimulate consumers and businesses to buy coops’ outputs. That will likewise attract workers to seek jobs in coops rather than conventional, profit-driven enterprises.

Worker coops also need a level playing field with profit-driven enterprises. In American history, small businesses got government help (via the Small Business Administration) and sometimes minority-owned and women-owned enterprises did too. The same should be available to worker coops. They need subsidized credit, technical and marketing assistance, tax exemptions, and a share of government orders. With government assistance plus coops’ own competitive edges, they can significantly help New York’s efforts to reduce poverty and provide many other social benefits.

We ask this committee and the City Council to encourage and support the growth of a vibrant workers cooperative sector of our economy.

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