The company as a historical subject
Giulio Sapelli, by now it is established, is one of the most important scholars in the world of history and theory of business. The International Bibliography of Business History (UK) has placed our Giulio among the founders of the history of business worldwide.
A few days ago the publisher Macmillan (one of the world's big five) published his book entitled Beyond Capitalism. Machines, Work and Property (published in Italy with the same title by Guerini/goWare in 2018; however, the English edition has additional content that will soon be made available to the Italian public).
Sapelli, with Enrico Quintavalle who works in the SME field, published, again in 2018 and again with Guerini/goWare, a book of great interest on the Italian SME system, Nulla è come prima. Small businesses in the decade of great transformation. The great recession and the technological revolution have brought out the features of a new conceptual and operational paradigm in small and medium-sized enterprises. The book discusses precisely this topic on a theoretical and practical level.
Sapelli's field of work
Once peregrine in historical studies, the history of the company is becoming mainstream, not only in countries with an Anglo-Saxon tradition, but wherever there is still History with a capital "S".
That Sapelli's studies can have an international value can only surprise some naive people. The Turin intellectual moves with the ease of the specialist between economics, history, sociology, international relations, history of culture, political doctrines. Difficult to find a similar polyphony in a panorama of scholars increasingly structured in silos.
Furthermore Sapelli knows, from direct experience, not only Italy and Europe, but also other regions of the world such as South America, an area of human development that is generally missing in the curricula of many analysts and scholars of international affairs and of non-capitalist economies.
Sapelli does not speak of companies only for book erudition or to have heard of them. He's just an insider. He has worked at various levels in companies carrying out both purely operational and managerial and managerial activities. His youthful activity in Olivetti, where he arrived from an experience in the Turin trade union, marked his entire vision of the world, of the economy and of work in a humanistic sense.
Beyond the neoclassical capitalist enterprise
A vision that has forcefully returned to the fore in all circles that also matter in the finance of hedge funds and in the technology industry. Ray Dalio, founder of Bridgewater Associates and thinking head, recently told CNBC that the capitalist enterprise modeled on the thought of Milton Friedman is a train launched towards Cassandra Crossing. Marc Benioff, founder of Salesforce, in a long speech in the "New York Times" wrote the eulogy of that type of capitalism, inviting the business world to become more inclusive and open to communities. Issues that must not be left only to politics, but permeate the very nature of doing business. It is a sort of ethical imperative that envelops the very shell of the modern capitalist enterprise.
The Business Roundtable, a club that brings together the leaders of corporate America such as Mary Barra, Tim Cook, Jeff Bezos, Jamie Dimon and many others, decreed, just a few months ago, the end of the primacy of shareholders and set new objectives for the role of enterprise in today's world.
The polyphonic economy
Sapelli has long been able to interpret and be the spokesperson for the spirit of our times in a continuity of thought and action that demonstrates the intellectual independence and originality of the Turin scholar.
These days Guerini and goWare have republished a 1999 study. Why businesses exist and how they are made dates back to before the Internet bubble and before the great recession. Twenty years later, this study contains analyzes of a great modernity whose reverberations can be traced in the current international debate on the crisis of capitalism.
We publish below chapter 6 dedicated to what Sapelli calls the polyphonic economy, which will be the economy of the future. In this future, private companies, public companies, cooperative companies and the third sector will coexist side by side, giving rise to that virtuous circle that is currently absent on the global scene.
The Turin scholar traces the characteristics of one of the components of the polyphonic economy, the cooperative enterprise. Faced with the difficulties of private and public companies in responding to the challenge of our time, which is to level out inequalities, many look at the cooperative form differently from the past. Perhaps it is truly the most modern form of enterprise, even in the advanced technology sector. A shape that Sapelli has been studying for 40 years.
Happy reading and get inspired!
The model of the cooperative enterprise
Another historically decisive phenomenon that sums up well the polyphony of music that emanates from the emergence of the company as a phenomenon of modernity is the growth that characterized between the second half of the XNUMXth century and the XNUMXth century. That is, companies with a social name not so much founded on capital as, rather, on people, such as cooperative companies.
In my opinion, the true otherness or the true historical alternative that presented itself in the arena of markets and political solidarity was not that of public enterprise, as is commonly believed. Even the public enterprise, in fact, has historically configured itself, everywhere and whenever it has manifested itself with more or less marked irreversibility, as a capital enterprise. A firm overdetermined by the imperative of profit and profitability, both under conditions of monopoly and under conditions of competition.
The public enterprise model
Historically, it was centralized, in the early days of the twentieth century economic growth, following the models of the distribution of property rights and the more or less strong prevalence of market economies.
Natural monopolies are the founding nucleus of public enterprise, which has its roots in the European experiences of seventeenth- and eighteenth-century mercantilism and absolutism. It first developed in Europe and then in South America in the thirties (which are those, let us not forget, of the great depression).
In Africa and Asia it developed after the Second World War, under the pressure both of the powerful economic nationalisms that grew in the XNUMXth century, and of the political pressures of the socialist and social-Christian and populist forces that conquered political power at the national or municipal level.
The historical forces that overdetermine its constitution are the spirit of national power and the circulation of political elites that govern the distribution and redistribution of the tax and the contribution that citizens are asked, or imposed, in democracy or in authoritarian regimes.
The public enterprise as a political enterprise
As for its morphogenesis, the public enterprise is a «political enterprise». That is, it distributes more or less coercively the costs of certain productions aimed at obtaining goods or services among the members of the unity of the people, which can be the State or the municipality. The coercive force necessary to achieve this goal is political power.
However, the joint-stock company with a public majority or the public body, which normally controls clusters of joint-stock companies, must act, and in many cases has acted, according to the typical processes of rational corporate management, according to models and logics of behavior similar to that of private companies.
The role imposed on the public enterprise
Historically, in countries characterized by the prevalence of small businesses or enterprises that are backward in terms of management, the public enterprise has spread, due to its large scale dimensions and its location in strategic positions of production of primary and capital goods, managerial and managerial knowledge and cheap inputs to the private industries of the respective countries.
Just think of Italy in the XNUMXs and XNUMXs and Atatürk's Turkey in the period between the two world wars, or Brazil in the last fifty years.
However, the political classes have normally imposed on public enterprises extra-economic goals that are not compatible with the economic goals, according to a process to understand which it is more useful to study Vilfredo Pareto and Gaetano Mosca (my dearest teachers) than the economists of the «theories of games" or "of the agency".
The consequences of this state of affairs
In doing so, the political classes have aggravated the tax coercion on the community e (in primis) on future generations, crushed by public debt by virtue of the deficit of these companies. The willed state and the political classes have continually recapitalized public enterprises.
It is no coincidence that, when this phenomenon appears, the legal-rational administrative state is transformed into the state of consensual-clientist parties. Thus, public companies are no longer governed by managers. Rather it is a «mixed technostructure», that is to say faithful not so much to the company and to the legal-rational State, which governs them.
As are the party clans that determine its rise in the corporate system, deeply corrupting the institutionalization and therefore the autonomy of the company itself.
The liberal reaction
This historical phenomenon, very pervasive, has led to a wave of liberal reaction in the last thirty years. It is no coincidence that it coincided with the crisis of economies based on the substitution of imports, on customs barriers, on the prevalence of economic nationalism over the competition of the deployed international market.
Moreover, the growing erosion of state-national economic sovereignty has largely called into question the twentieth-century experience of public enterprise.
All phenomena, these, which have led to privatization or a profound reclassification of its economic and political influence. This is also determined by the new growth rates of world trade in the last twenty years, which have removed the winds of crisis from private industry.
After the crisis of '29
The same winds which, on the other hand, in many countries had led it, in the XNUMXs, to bankruptcy and setback which not by chance coincided not only in Europe with the rise of the public hand in the economy in the strategic sectors of credit and primary goods.
In fact, after the great depression of 1929, in countries with the strongest statist and mercantilist traditions, the creation of complexes of enterprises controlled and owned by the State established itself by inheriting and rationalizing the failures of the private sector. This happened under the pressure of both nationalistic and social reasons and therefore connected with the reasons of political consensus.
The roots of the cooperative enterprise
The enterprise which, on the other hand, historically presents itself as the most radical alternative to private enterprise because it is not founded on individualistic property rights, is the cooperative enterprise. It follows in its history the progress of the capitalist system. This happens from the United Kingdom (and the Commonwealth) and from the most industrialized Europe of the nineteenth century, to the two Americas of the nineteenth and twentieth centuries, to colonial Africa and Asia, first, and then marked by decolonization and capitalist development after the Second World War.
The cooperative enterprise spreads as a result of ideal religious and political motivations, assuming at its origins above all the aspect of one of the most interesting phenomena of the "social question". This has its roots in socialist utopianism, in Jewish messianic prophecy, in Protestant and Catholic theodicy, in liberal philanthropism.
The nature of the cooperative enterprise
The cooperative is a partnership of people, not capital, and responds to the failures of both the market and the capitalist enterprise. It pursues in an associated form the achievement of goods (work, consumption, credits, assistance) that would not be achievable in an individualistic form. It manifests an otherness also with respect to the public enterprise. The cooperative is an expression of the collective ownership of more or less vast groups, and not the result of a decision of political sovereignty, as is the case, precisely, of the diversified forms of public enterprise.
The end of cooperation is not profit and the appropriation of the surplus, but the pursuit of profit as a regulatory instrument of management. It aims at the continuity of the associated pursuit of the goods of labour, consumption, credit and assistance. The purpose of cooperation is the preservation and expansion of the social bond that gave birth to the company.
A social bond, a specific solidarity that overdetermines every performance of the cooperation. A non-union link, because it aims to create an organization that acts stably on the markets. A bond that is not simply "benevolent" and not simply nonprofit as to the structure of its economic and social regulation.
The cooperative is a specific form of enterprise, socially directed and with social purposes, which cannot be combined with the so-called activities of those organizations which are called the "third sector" or social economy.
The management of the cooperative
The element of the gift, of the gratuitousness of the exchange, is grafted into a very delicate and precious management mechanism in the cooperative enterprise. Participation in decisions takes place through democratic systems of designation of managers (which cannot happen in the capitalist enterprise) and meritocratic and technocratic control of their management by the collective owners of the group: the partners.
These management mechanisms require confrontation with the market and in the market to change its physiognomy, not to escape from it thus leaving it to act, and fail, undisturbed, thus relegating cooperation to a marginal role.
Business and social movement at the same time
For these reasons, cooperation is both an enterprise and a social movement. Solidarity, ideal inspiration, solidarity continuity are not secondary elements, but inherent to the specific form of its management.
The cooperation between enterprise and social movement is proof that the economy is the fruit of personalistic historicity and is a complex of relationships between people rather than between goods, reifying and alienating. And this complex is polyphonic and not monophonic: different instruments can contribute to configuring the markets and the rules that determine them.
The "rapid growth of the cooperative enterprise in capitalist development" has had the effect of expanding its scale and market share.
All of this took place in a period of time that was often so concentrated, all over the world, that it did not allow for a balanced formation of all the management functions and an effective and democratic relationship between these and the shareholders as a whole.
The different types of cooperative enterprise
Cooperation can achieve effectiveness and democracy because the social conflicts of a proprietary nature present in the capitalist enterprise do not exist within it. Social conflicts have an organisational, functional and meritocratic nature and can therefore be resolved by broadening rather than restricting participation.
This situation, common to all of Europe in particular, but also to extra-European cooperation, characterizes the various countries in different ways and cooperation cannot and will not fail to suffer as a result. The most evident transformation that it is possible to hypothesize right now is a redefinition of the traditional classifications of cooperative enterprises.
Alongside, or rather, below the traditional subdivision (production, consumption, services, credit) another is emerging in the real economy. What I would provisionally define between traditional cooperatives, hereditary cooperatives and emerging cooperatives. The former are those that we have been accustomed to seeing grow and operate before our eyes after the Second World War, whatever the sector in which they operate.
Hereditary cooperatives
Hereditary cooperatives are the product of the crisis and the consequent transition from a capitalist enterprise to a cooperative enterprise. The assets of the previous social form are passed on to the cooperative. It inherits, rather than the virtues, the vices of the capitalist enterprise and with it its internal problems and market positioning.
The bottlenecks of the situation require cooperative enterprises to accelerate and pursue, on pain of widespread mortality, a path of "merciless" rationalization of resources. In doing so, these cooperatives are the embodiment of the challenge that cooperation poses to the business world.
That is, that of making a "democratic - participatory strategy for the achievement of efficiency and effectiveness" practicable.
Market orientation becomes the culture to be firmly implanted in these hereditary economic units. This cannot fail to be done even with high organizational conflict, which often directly involves the supporters of the cooperative choice themselves.
emerging cooperatives
Emerging cooperatives are the bet «of the future» in a society founded on the centrality that they will gradually take on the complex workforce, the high intensity of the value (not the quantity!) of fixed capital, organizational flexibility. Socially too, they will have new protagonists: technicians, middle managers and highly qualified young people, who are oriented towards highly responsible and creative work.
Can the advanced tertiary sector be cooperative? This is the other challenge inherent in this structural genetic mutation of the cooperative world.
And the other challenge is that which emanates from the terrible trials which human life must undergo in the difficult conditions of survival in which the person struggles in a large part of the undeveloped or too unevenly developed world. There the cooperative is more social movement than enterprise, more solidarity collective action than irreversible economic action on imperfect markets. Nonetheless, the role that the cooperative movement can play is extremely important, for the development of social action and for economic growth together.
An efficient and fair form
Essential is the presence, even in these new cooperative forms of enterprise, of the fact that the surplus or cooperative profit is distributed in the form of rebates, wages and investments of fixed capital, and becomes a condition first of survival and then of development of the business.
In fact, it is genetically the result of the transfer of tensions from collective mobilization to the creation of economic units that maximize organizational continuity. This occurs in the presence of the social unification (non-functional, of course) of ownership (the shareholders' meeting) and of control (the technostructure). The benefit of employment or the acquisition of products or credits is the utility to be achieved at any cost, through the distribution of the surplus, to the detriment of rebates and wages and to the advantage of investments.
A completely different process from that of maximizing income at the expense of employment, or, at the macroeconomic level, of the prevalence of the development of cooperative employment only in the presence of recession. Planned investments are thus defined as those necessary for the survival of the company and its development in the growth phase.
This mainly occurs due to the fact that the availability of the means of production is not all crystallized in a resource that can be allocated on the basis of choices that can be external to the structure of the company itself (as in the case of the capital of joint-stock companies), but rather , in a resource which is itself the foundation of the structure: the work of the members who own the means of production.
The cooperative challenge
Economics and politics, therefore, are inseparably united in the history and theory of the cooperative enterprise. In the sense that its constitution is founded on a specific form of collective property. It constitutes the main character of this form of enterprise, as the reflection developed in the nineteenth century had grasped very well.
In this principal character lay the cause of that "disturbance" and "disorientation" of the minds of liberal economists and on which some of the interpreters of this social phenomenon discussed at the turn of the twentieth century, still unsurpassed in analytical depth, not obscured by passion with which they favored (or opposed!) cooperation.
Cooperation incorporates the typical properties of «managerial capitalism», despite the social identity of ownership and control. After all, isn't it perhaps the founding character, «appropriation of material and production means by groups of workers», that generates the political-organizational presuppositions of cooperation?
I am thinking of voting per person and of the predominantly subcultural-political trade union representation system, which interact to guarantee democratic participation in decisions (which is improperly identified with self-management) and the continuity of internalized organic solidarity as a resource.
The "cooperative challenge" to the capitalist enterprise is now about to face its most important and difficult historical period: the one that opened at the end of the XNUMXth century with the globalization of the economy and the globalization of society. Will the polyphonic economy be able to withstand this test?
