§ 14. Limited success of producers' cooperation. Practi cally, the plan has been made to work in a comparatively few simple industries. A much cited example of successful cooperation in America is that in the cooper-shops in Minne apolis. There were few and uniform materials, patterns, and qualities of product, few machines and much hand-labor, simple well-known processes, a simple problem of costs, a sure local market. At its largest development the enterprise was small compared with the typical manufacturing enterprises in America. After more than thirty years the main shop, when visited by the writer, was still in operation, but with a membership of the older men and with no growth. A number of the less skilled workers received ordinary wages, and there had recently been labor troubles of quite an ordinary kind.
In America a few of the productive cooperative companies are found operating small factories. In England there have been numerous successful societies, but all in small enterprises, mostly connected with agriculture. Within the whole field of industry, this method of organization makes little if any progress. Most experiments have failed, and the successful ones have become or are tending to become ordinary stock companies with most of the stock in the hands of a few men. Therefore, whether losing or making money, they nearly all cease to exist as cooperative enterprises. This result has dis appointed the hopes and prophecies of many well-wishers of the working-classes.
§ 15. Its main difficulty. The main difficulty in producers' cooperation is to get and retain managerial ability of a high order. Failure to do this results in inability to maintain and keep in repair the equipment and to pay the ordinary returns to the passive investment, and financial failure follows. There is no touchstone for business talent, no way of selecting it with any certainty in advance of trial. This selection is made hard in cooperative shops by jealousies and rivalries, and by politics among the workmen. A man selected by his fellows finds it difficult to enforce discipline. In cooperation there is occasionally developed good business ability that might have remained dormant under the wage system ; some work men showing unusual capacity cease to be handicraftsmen.
But the unwillingness on the part of the workers to pay high salaries results in the loss of able managers. Having demon strated their ability, the leaders go to competing establish ments where their function is not in such poor repute, and where they are given higher salaries, or they go into business independently, being able easily to get the needed backing from passive capitalists.
Cooperative schemes thus suffer from the workers' inability to appreciate the functions of enterprise and management. Most men make a very imperfect analysis of the productive process. They see that a large part of the product does not go to the workmen; they see the gross amount going to the enterpriser; and they ignore the fact that this contains the cost of materials, interest on capital, and incidental expenses. Further, they fail to see that the investment function is an essential one. The theory of exploitation, as explaining profits, is very commonly held in a more or less vague way by work men. With a body of intelligent and thoroughly honest work men, keenly alive to the truth, the dangers, and the risks of the enterprise, cooperation would be possible in many indus tries where now it is not. Producers' cooperative schemes usually stumble into unsuspected pitfalls. When a heedless and over-confident army ventures into an enemy's country without a knowledge of its geography, without a map, and without leaders that have been tested on the field of battle, the result can easily be foreseen.
The cooperative principle has been embodied much more successfully and on a larger scale in America in the form of producers' selling organizations or of consumers' cooperative stores. As, however, both of these forms of organization have been developed in America more largely by farmers than by wage-workers, the discussion of them may better be undertaken in connection with problems of rural organization rather than with those of labor.