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Why don't communist movements focus on creating and nurturing employee owned businesses?
(sh.itjust.works)
this post was submitted on 17 May 2025
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The hell of capitalism is the firm itself, not the fact that the firm has a boss.
The forces of the market and of capital do not go away just because the workers own the company. In worker-owned cooperatives, the workers exploit themselves, because the business still needs to grow. They simply carry out the logic of the capitalist themselves on themselves, using their surplus value to expand the business's capital, and paying for their own labour-power reproduction. i.e., the workers all simply become petit-bourgeois.
There are extant organisations (some political parties, some NGOs) that push for more workers' cooperatives, and none of them are communist nor call themselves communist. If you believe in a cooperative-based economy, you are not a communist. I don't mean that as an insult, it's just a fact, the same as if you want, for instance, the current US economic system, you are not a communist. You can advocate for coops but you would fare much better in that political project if you didn't try to put it under the banner of something it's not, and something far more controversial than just "worker coops are good" anyway.
Why does a worker-owned coop need to grow? Are you presuming they take outside investment / capital?
Capitalism compels firms to grow or die, in order to fight the tendency for the rate of profit to fall. We'd need to move beyond a profit-driven economy to move beyond this issue.
There is no tendency of the rate of profit to fall. The theory is inconclusive, as is empirical research. If TRPF were true, then growing a company would, in fact, accelerate the process.
It's a tendency, not an ironclad law. Competition forces prices down, and rates of profit with it, but this process can be struggled against by expanding markets or finding new industries, which is why Capital always pours into "new fads" in the short term. Imperialism is actually quite a huge driver of this.
There are numerous studies showing broad rates of profit falling over time, as well. Moreover, Marx never lived to see Imperialism as it developed in the early 20th century, where the TRPF was countered most firmly.
This is not true in the general case. If prices for input materials are down, profits rise for the company using them. One company's profit loss is another's gain. That is even with the shaky assumption that competition can exist long term in a free market. Imperialism, as defined by Lenin, results in concentration of capital and the removal of competition.
There are counteracting forces for it, but expanding is not one of them. Expanding does not change the rate of profit (profit/capital invested); at most, it changes the total profit.
If it costs 5 dollars to make one widget on average, and company A creates a machine that improves production so as to lower the cost of widgets produced by them to 3 dollars, then they temporarily make more profit until other companies that make widgets find ways to lower their cost of production to around the same level. This new lower price has a higher ratio of value advanced from machinery as compared to labor, lowering the rate of profit. This is a general tendency, but can be fought against by many measures, including monopolization and using regulations to prevent companies from properly conpeting, ie by copyrighting machinery and production processes.
Imperialism didn't just allow for expansion, it also came with violent means of suppressing wages and extracting super-profits. It wasn't just an expansion that would raise total profitd while rate of profits fell, it also created new avenues for exploiting labor even more intensely, and selling goods domestically at marked up prices.
Really, I don't know what your issue with the TRPF is, are you under the assumption that Marxists claim it's an ironclad law over time and not a tendency, or are you against the Law of Value in general?
You didn't address any of my concerns, nor was I talking about productivity. Let's try again for the the first one with a simple example:
Company 1 makes a product (let's say timber) at 50 surplus value. That 50 is a cost for company 2 that uses the product as an input material (it makes wooden chairs). We can calculate the total rate of profit of both companies. Now company 1 is forced to lower the price to 40 because of competition. We calculate the total rate of profit again and the total rate of profit has actually increased.
Thus, it does not follow that lowering prices/profits leads to a decrease in the overall rate of profit
What you have described is the pure moment of input costs lowering (and you're confusing surplus value with price, 50 being surplus would also imply 10 in variable and 10 in constant, so 70 would be the input for company 2 if you simplify for the sake of example absolutely no tool usage in company 2). However, unless company 2 has a pure monopoly on chairs, this lowering of cost of production would also apply to other chair companies, and costs would lower. When wood prices are low, wooden chairs cost less than when wood prices are higher.
Further, the TRPF isn't really about competition, or even surplus value. That's one-sided. The TRPF is about rising organic composition of Capital, ie as c increases in ratio with v, or c/v. Competition pushes for this, as increasing automation can allow temporary advantage (as you've somewhat shown) before other companies follow suit. What you've shown is one company lowering the ratio of c/v, ie lowering the costs of their constant Capital over their variable, but that would imply that this company should never reduce wages nor increase automation as a rule.
In order to outcompete, constant Capital must rise in ratio, as it can lower prices of production below what others can offer, even though this raises c/v. Hence total profits rise, but rates of profit trend downwards.
Your argument would only hold true if this was the final part of the process and competition didn't exist for company 2, allowing them to charge monopoly prices and never worry about increasing automation and productivity.
Now, the rate of profit falling is often wholly combatted by increasing exploitation, or e=s/v. This, however, gives rise to stagnating real wages while the Capitalists get ever wealthier, sharpening class contradictions.
Thanks for the detailed explanation, and sorry for the late response. Mine was just a simple counterexample to show that the tendency doesn't always apply. You're right that the c2 I used is wrong, and it should be s1+v1+c1, although that would still not change the result. My example was in the case where one producer wants to compete with another with a lower price, so chooses to trade a lower s for a bigger market share, so I wasn't really getting into improved productivity, I was just addressing your initial statement of "competition forces prices down".
In a real economy this chain would be much more complicated with way more steps and even backpropagation of some of the values. If we have a rate of decline of profit for company 1 called R1 and a rate R2, the overall R would only decline if R2 > R1, otherwise it would increase. So to prove a general declining rate of profit you would have to prove that the decline propagates fast enough through the entire chain.
Also, I fail to see how c/v (organic composition of capital) necessarily increases. If prices lower (due to competition, or productivity as you have said), then c will also decrease for the companies using those products (as I have shown in my example) as the cost of machines and input lowers (a computer in 2025 costs way less than the same one in 2000). To prove that c/v increases you would have to prove that dc > dv (derivatives), which is not at all clear since, while they both decrease, they can decrease at varying rates which are not predictable.
No worries about taking time, I'm on social media less and less myself these days. I think the biggest problem with the way you're looking at the TRPF is using microeconomics to describe a macroeconomic pressure. Marxist analysis stresses the interconnectedness of economics, and trying to view 2 companies while obfuscating the rest of the economy is going to run into false assumptions about a general pressure that applies to economies at scale.
In the instance of R2 and R1, the decline in costs from the input of R1's price to R2 applies to the rest of the chair manuracturers. If company 2 doesn't also lower their prices as their cost of input has lowered to match other chair companies, then they will run into fewer total sales. Competition places a negative pressure on Surplus, and increasing productivity of machinery increases Constant Capital in relation to Variable Capital, so the biggest source to counteract the Rate of Profit's decline is by lowering V or stagnating it with respect to productivity, which is what we are seeing now more than anything else.
As for OCC, think of it in this manner: if machinery costs less for better productivity, then it will be employed more. Economies of scale work precisely because of this grand increase in OCC, which is why equivalent goods cost so little today in comparison to 50 years ago. Selling more widgets for a lower rate of profit per widget but greater total profits is the bread and butter of commodity production, and industrialization. If a worker at the widget factory produces 100 widgets with machine A, and 1000 widgets with machine B, then the OCC is rising. Automation increases OCC. Here's Marx in Capital:
[Emphasis mine.]
I really don't know what it is exactly that you're taking issue with. If you agree with Marx's Law of Value at its base, then the TRPF follows from it mathematically as a general downward pressure, not as an ironclad linear relationship. If you don't agree with Marx's Law of Value, then the TRPF isn't worth fighting against, there are other more standard attacks on it. Do you consider yourself a Marxist? That might help me understand where you're coming from a bit more.
It sounds like it's similar to saying climate change isn't real because the weather was colder one day, when in actuality the theory of global warming is describing an ongoing process and tendency of the temperature to increase in the overall system overall long period of time, it's not a day to day weather phenomenon you can describe with a singular slice of time.
No, this is showing a counterexample, which would render the original theory moot. If we find a planet tomorrow that pushes you away rather than attracting you, then Newton's theory of gravitation is (probably) no longer a valid model of the real world, or would have to be revised. That is just how science works.
Ah see, there's the problem. I don't think it's like Newton's Theory of Gravitation. The rate of profit to fall isn't some ironclad law that's applicable in all cases 100% of the time. Cowbee already conceded various ways it could not be true (lack of competition such as through monopoly, exploitation of workers, globalization and imperialism, cartels, trusts, etc).
It seems to describe the natural tendency of a system-wide phenomenon (assuming increasing automation and existing competition in capitalism but nothing really else), so you'd have to consider a macro view of the entire system over a long period of time for it to work. It's like how you can't say one section of the world has been getting colder or staying the same for a couple years and thus climate change has been debunked, as you not only need to look at the whole planet but then the next couple decades as well.
So the next company has a brief increase in rate of profit, but then taking a more extended look at the system, everyone will probably switch suppliers to the cheaper wood and someone is going to lower their prices, forcing everyone else to (barring one of the scenarios above).
Sort of, not quite. The TRPF is closer to saying "if Capitalists continue to automate and improve production, ie if c/v increases, ie if the organic composition of capital increases, then the rate of profit will fall unless exploitation, ie s/v, increases."
s/v can be increased in a number of ways, from increasing intensity, to Imperialism, ie using far more brutal exploitation in foreign countries.
Climate Change is similar in that the TRPF is a tendency, and temperature vaires on a daily basis, but the key difference is that while the TRPF does exist, ways of countering it temporarily also exist, while Climate Change isn't "countered" when it gets colder for a day. It's similar, but I wanted to point it out.
Also, absolute profits and the rate of profit are different, absolute profits have been rising, and rise most by producing and selling more. This is why c/v must rise in Capitalism, you can't just keep stagnating.
You can probably counter climate change temporarily, too. For example, dumping increasingly larger ice cubes in the ocean every year.
But ya, the analogy isn't completely one to one, it was just another good example of a a high level system-wide tendency that must be examined over a whole system and over a longer period of time that I thought most people reading would be familiar with.
That's a bit different to how rates of profit declining are countered, though.
Because they are subjected to market forces. I'm not referring to the decisions an individual worker in a coop might make—an individual may well decide to give away all their money and become homeless, that doesn't mean it's in people's interests to. In a market, you must compete with other businesses, otherwise you will be out-competed and not survive. The "profits" obtained by a coop are still surplus-value; all the laws of capital outlined by Marx are still at play. Marx's critique of political economy did not really hinge upon the specific boss/employee relationship; it's about impersonal domination of the market over people who live in a capitalist mode of production. In Capital Marx spends quite a bit of time talking about how even capitalists are subjected to and dominated by capital; the domination is impersonal, and the domination of (hu)man by (hu)man is only secondary to that impersonal domination.
Have you ever considered that the model of free market under perfect competition in neoclassical economics doesn’t actually say that the market needs to be powered by the financial profit motive, just that the firms need to maximize their own utility? It’s just that in capitalism these get conflated because it’s almost always one and the same thing. But it doesn’t necessarily have to be the case. If you have an economy composed entirely of mission-oriented nonprofit organizations for example that compulsively reinvest all their excesses and internalize all of their external cost, you can still analyze it as a free market under perfect competition, and ironically, it works even better than it does for capitalism.
I am opposed to "maximising utility" because I am a communist. Production should serve needs, not production for the sake of production.
Ok, still exploitation.
I can see that those are your political beliefs. You are welcome to have those political beliefs. OP is asking about communists, and communists do not want this, so this is rather orthogonal to the question.
Is that not what "utility" means? Serving needs?
The verb "maximising" suggests a measurable "utility" which can be "maximised", rather than needs which are either met or not.
When you have hundreds of millions of people in your country, it's not as black and white as that, even just logistically speaking...
I see "maximizing" in this context (describing utility) to imply doing it as well as possible.
Though I suppose, "optimizing" would be a better word to use.
Come on, it's clearly a simple description of a mode of doing things that is not "make line go up". If you need me to dumb it down for you.
I’m just curious what you think utility is and also who do you think is being exploited in economic institution that literally has to internalize all of the external cost? Also believe it or not I didn’t actually express any political beliefs here so I would appreciate it if you didn’t just assume that because I’m challenging you on your conception of things, it means that I disagree with your politics
"Utility" is not a concept I subscribe to per se, unless you just mean use-values in the same sense Marx uses them. I am responding to the concepts you are using. In a communist mode of production, production is, in the famous quote, "according to need"; in a capitalist mode of production, production is divorced from need, and we find production for the sake of production.
Marxists use the word "exploitation" differently to its colloquial use. "Exploitation", in Marx's critique of political economy, refers to the extraction of surplus-value. I'm not sure if you know what that means or not. I can explain it if you want but you can also look it up; it's a pretty basic part of Marx's critique.
I'm assuming you're not a communist because you don't seem to be familiar with communist views, and seem to be advocating for/in defence of a mode of production that is not communist. I don't know how exactly you label yourself politically but it seems based on this short conversation that we can exclude communism from the list of possibilities, meaning we disagree.
Well, since you still haven’t told me what you think the word means in like a formal, well-defined, academic sense, I can’t really tell what your objection to it is. Like at the end of the day it’s just a word, and i have never actually run into a situation where if I thought about it for five minutes, I wasn’t able to actually reconcile the academic concept of utility with Marxism. And in practice, thinking about utility and realizing the highly arbitrary nature under which utility is realized under capitalism, is one of the main things that drew me to leftist economics in the first place.
I certainly am not using it in a colloquial sense and in fact, I have been using it in the Marxist one the entire time which is why I described a market economy where literally all of the firms are compulsively required to reinvest the very surplus revenue you describe back into the firm itself. So again I’m asking you: in that situation, where is the exploitation?
And then the next important thing is to simply realize that such an economy, whatever you wanna call it (because for some reason you seem like you don’t wanna call it a market and I don’t understand why, but fine) is completely consistent with what is called a “market” in neoclassical economics, and so even if for some reason you think it’s really valuable to say that an economy stop being a market when everybody in the economy isn’t trying to mindlessly get ahead anymore, you can still analyze it as a “market” and resisting this extremely useful framework is only making your own life harder
Ok, to put more clearly, I have no definition of "utility" and therefore no objection to it. I am objecting to what is implied by the term "maximise utility"; in a communist mode of production, nothing is "maximised". The implication in that phrasing suggests to me that it refers to an intention to maximise some measurable productivity, which is not communist.
Investing surplus-value into the firm itself is exploitation... The workers still extract surplus-value from themselves. What's not to get?
I never said that such an economy is not a market. It is a market, which is why I am opposed to it.
I need you to give me a rigorous definition of what a “firm” is. Because I think to a lot of people, “firm” just means “distinct agent participating in an economy” and so the idea that this is something that can or even should be avoided on principle (even if basically all firms organized under capitalism are socially harmful) I think makes people imagine a bunch of hermits that never interact with each.
Do you think that it's not possible to interact with each other outside of a market, outside of capitalism?
I mean, it depends. Are you insisting that a market necessarily be composed of extractive firms? Because if so, of course, I can imagine interacting with each other outside of such a structure. But my point is that what people call a “market” in neoclassical economics is literally just any situation where you have a bunch of relatively autonomous groups of people all trying to accomplish various goals all interacting with each other, and so like if we’re going by the neoclassical definition of markets, it really is pretty difficult for me to imagine people interacting with each other outside of that paradigm. The important thing to understand is that even if you hate capitalism, neoclassical economics provide provides a pretty useful framework for analyzing and understanding it, and because of the fact that it can also apply the situations where firms are motivated by other things, like social progress for example, it means it’s perfectly suited for analyzing non-extractive economies too, as long as people are allowed to come together and work on problems without asking someone else for permission first.
It really doesn't—which was Marx's whole project as a critique of political economy, not "communist economics", not "Marxist political economy", etc.
Communism abolishes the individual as economic subject, and the conflicts of interests found in a "market". Communism abolishes exchange, and abolishes economies. So, no, there is no "market" in a communist mode of production, even by your definition.
So like neoclassical economics as a framework was formalized and developed mostly during the hundred years following Marx’s death so I don’t understand the idea that any of his criticisms were oriented at neoclassical economics, or could’ve possibly taken it into account.
I have to be honest I’m not really seeing what you’re saying here because my definition of a market would include just like a neighborhood of people that has like a local nonprofit grocery store that is managed by the people who live there specifically so that people can have food and for no other reason. but maybe like a handful of people notice some problems with the way the grocery store is being run, but are having trouble actually getting people to listen to them so they decide to just show everyone what they mean by starting their own grocery store in the neighborhood too under the same exact community managed model. And I also understand that neoclassical economics gives me extremely powerful tools to analyze situations like that.
I’m just curious is that sort of economy like completely incompatible with your understanding of communism? Also, I would appreciate it if you don’t say something like “well in capitalism ‘stores’ are places where people spend money so there’s literally no way anything remotely resembling this could happen in communism, not even if the food was free”
Many things happened after Marx's death and his critique still applies to. There may well be reactionary theories formulated in the future that my current politics would take account of anyway. Neoclassical economics is a continuation of bourgeois political economy that Marx wrote against. Not to mention that Marxists who have continued Marx's project after his death, have very much written against modern economists.
That sort of thing you describe is a common conception of what life ought to look like by a lot of anarchists, which is opposed by communists precisely because it preserves exchange, implies a division between town and country, and implies the preservation of many things which communism abolishes. It's also worth noting that when we talk about communism as a mode of production we are talking about society as a whole; for instance, a kid deciding to start a lemonade stand in a communist society wouldn't recreate class society as the kid is doing exchange.
A lot of communists stray away from "positive" concepts of communist society because it's much easier to derive what communism doesn't have than what it does have. We can, of course, look at humanity before class society, but a lot of things have changed since then, and it is unlikely that the abolition of class would lead to the primitive pre-class societies that used to exist. I'm disclaiming that not as a cop-out but because I think it would be facetious if I tried to give you an outline of what communist society would look like when really I don't think anyone can know for sure. But, most certainly I can say that what you outline does not sound like something which would exist on a large scale in a communist society. Most communists believe that central planning is a necessary part of a communist mode of production, myself included. Deciding that you don't like a "grocery store" and deciding to start your own sounds rather like capitalism, and suggests an individualistic economy rather than one where society as a whole collaborates. In a communist mode of production there is no economic distinction between individuals, between "grocery stores" as you call them, or between the individual and society. Like I said above, one person deciding to start a "grocery store" wouldn't cause the rebirth of class, but if that's happening on a large scale that doesn't sound like you've achieved a communist mode of production.
Things being "free" doesn't necessarily make it not a store or not capitalist, but a lack of exchange (among other things) does suggest communism, and I don't think the concept of a "store" makes sense without exchange. The abolition of property abolishes exchange. For instance, a food bank is not communist despite being a site where items are distributed for free; its existence relies on the alienation of the means of subsistence from a group of people, ie the existence of property. (that is also ignoring the fact that most food banks rely on a voucher system, which again is exchange, but if we were to pretend that food banks just give away food to anyone who comes and asks)