Something that will probably surprise few of you is that worker-owned cooperatives are, broadly speaking, more productive than their privately owned competitors:

“The largest study comparing the productivity of worker co-operatives with that of conventional businesses finds that in several industries, conventional companies would produce more with their current levels of employment and capital if they behaved like employee-owned firms.”

(https://www.uk.coop/resources/what-do-we-really-know-about-worker-co-operatives)

This makes intuitive sense, because capitalists do not play any role in production but do collect income from production, serving as dead weight on any firm.

This raises an apparent paradox: if capitalism is competitive, then shouldn’t these more-productive coops out-compete the less-productive capitalist firms?

This is where we bring in a key insight by Shimshon Nitzan and Jonathan Nitzan, author of “Capital as Power.” Capital, in their theory, is an abstract quantification of power to order and reorder society.

“To earn a profit, corporate owners must exert their power over society. And to provide the liquidity needed to price this power, they must be confident that society will continue to obey them – because if it doesn’t, future profits will falter along with prices.”

(https://capitalaspower.com/casp-forum/topic/confidence-in-obedience-or-confidence-in-liquidity/)

I can think of no clearer example of this than Eli Lilly’s recent loss of billions of dollars in value after someone fake-tweeted that the pharmaceutical firm would stop charging for insulin. (See the bottom of this post for an illustration of the loss.)

Eli Lilly earns huge rents by a) selling a drug critical for the daily survival of diabetics that is b) protected by a government-issued monopoly parents. The “announcement” on twitter that the firm was forgoing those rents was, in other words, a repudiation of the firm’s ability to compel obedience by both diabetics and potential competitors. The firm was worth less because it was less powerful, or was at least perceived to be.

(https://www.thestar.com/amp/business/technology/2022/11/11/eli-lilly-loses-billions-in-market-cap-after-verified-twitter-impostor-promises-free-insulin.html)

Worker-owned coops have not replaced capitalist firms, then, because they are not as powerful as capitalist firms; they cannot compel obedience the same way capitalists can via the coercive state. They are more productive but not more *profitable* because they are less able to assert their will on society.

Capitalist competition, then, is not primarily about productivity, except perhaps at the lowest scales of small-to-medium sized enterprises, those firms too small to exercise meaningful control.

For the rest, though, competition for profits is a function of power: can the firm throw up barriers to entry into its market, like licensing requirements; can the firm afford to sway courts in its favor; can the firm secure ownership of patents and copyrights; can the firm secure subsidies from local governments by threatening to withdraw employment from their jurisdictions; can the firm secure preferential access to credit-issuing entities; can the firm hire death squads to murder labor organizers in Latin America; etc.

As @KevinCarson1 has noted, executives are often rewarded for increasing control even at the cost of lower profits:

“Costco’s stock fell in value, despite the company’s having outperformed Wal-Mart in profit, in response to adverse publicity in the business community about its above-average wages. Deutsche Bank analyst Bill Dreher snidely remarked, ‘At Costco, it’s better to be an employee or a customer than a shareholder.’ Nevertheless, in the world of faith-based investment, Wal-Mart ‘remains the darling of the Street, which, like Wal-Mart and many other companies, believes that shareholders are best served if employers do all they can to hold down costs, including the cost of labor.’”

(https://fee.org/articles/economic-calculation-in-the-corporate-commonwealth/)

The firm’s value is lower, despite higher revenue, because it exercises less *power* over its workers in the form of lower wages.

This is why you see capitalists try to force workers back into centralized workplaces, even though working from home is often more productive, or, failing that, impose remote monitoring software on workers even though this reduces morale and incentivizes workers to inefficiently work to satisfy the software rather than actual production.

(https://www.apollotechnical.com/working-from-home-productivity-statistics/)

Capitalism is ultimately one in a long line of systems designed to empower the few over the many. Like Oxymandias commanding armies of laborers to build his gargantuan statues in the desert, capitalism is a system of control, of power, of obedience. Other systems might threaten you directly with violence, or compel you to labor as a religious obligation. Capitalism mediates and distributes that control through alienating systems like the market and wage labor, but it’s still control.

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