Yves here. It’s not hard to infer that I’m skeptical about what sound like one-idea remedies to complex problems. While Mondragon is a noteworthy exception, I wonder if many successful cooperatives have 150 people or fewer in them. The reason for fixating on that number is that various studies have found that is largest group you can have where everyone knows each other, and accordingly, an function without a formal hierarchy.
By Esteban Kelly,Executive Director of the US Federation of Worker Cooperatives. He is a founder and core trainer with AORTA, a worker co-op that supports organizations fighting for social justice and a solidarity economy through consulting. He has served on numerous boards including the Democracy At Work Institute and the National Cooperative Business Association (NCBA-CLUSA). Originally published at openDemocracy
“When I heard about the green economy for the first time, a light bulb went off in my head. We can create businesses and jobs for ourselves.” That’s how co-op worker-owner Tim Hall explains his initial spark of inspiration. Eventually he joined together with other unemployed Boston residents to found CERO(Cooperative Energy, Recycling, and Organics), an award-winning food waste pickup and diversion service. The name is fitting, since “CERO”—which means “zero” in Spanish—seamlessly blends their zero-waste mission with a green jobs strategy of workforce development among low-skilled workers, especially immigrants and people of color.
Cooperatives provide a sustainable and accountable way of providing goods and services—and they can help to transform our economies before it is too late. They promise a tantalizing future of sustainable social enterprise, community control, worker self-management and workplace democracy that places economic decision-making back into the hands of workers and consumers. Could co-ops dislodge capitalism and loosen its chokehold on what feels like every facet of our lives, or will they themselves become co-opted?
At some point in the last 50 years capitalism corralled the power to define everything about how we think about economics. That’s one of the benefits baked into being the dominant organizing force of the economy. But the bigger truth is that ‘the economy’ includes more than the profit-maximizing ethos of capitalism, just as ‘democracy’ isn’t the property of Congress or parliament. In democratic societies (at least in theory) we have elected and accountable representatives for everything from parent-teacher associations and children’s sports leagues to the general assemblies where members deliberate with each other in neighborhood associations and union halls.
The same is true for economics, where undemocratic, shareholder-controlled, profit-obsessed enterprises have come to be equated with the concept of business itself—and especially with commerce, money, mission and productivity. Cooperatives are for-profit businesses which operate in virtually every industry. They undergird global commerce, particularly in agriculture, energy, and local banking via credit unions, but instead of maximizing profits for their investors they are driven primarily by the interests of their members–– who may be producers on a farm, the residents of an apartment complex, the consumers of utilities and retail goods, or the workers in a factory. In co-ops the goal is to get a better price for farmers, more affordable housing for residents, higher-quality goods for consumers, and meaningful, healthy, fair-paying jobs for workers.
Is this inherently anti-capitalist? In a way, yes, because co-ops use capital to put people over profit, which inverts the profit-over-people logic of the current global economy. Worker cooperatives may be the most coherent alternative to capitalism as we know it because they put capital at the service of labor rather than the other way around. Some fall short of this ideal of course, and co-ops don’t guarantee social justice by themselves (which is why we still need social movements), but the co-op model inherently prioritizes the good of the many over the benefit of the few.
Generally speaking, the cooperative economy is better described as ‘a-capitalist’ rather than ‘anti-capitalist,’ because it can prosper in both market economies and socialist economies like Cuba, which currently has about the same number of worker co-opsas the United States. But in its desperation to legitimize and stabilize itself, capitalism is eager to co-opt at least the superficial characteristics of the cooperative economy, much as it has co-opted sustainable business through greenwashingcampaigns over the last 20 years. Throughout the 20th century we have witnessed capitalism absorb cooperative elements into its structures in an attempt to reconstitute itself during its many crises.
At the same time, it’s disappointing but necessary to point out that some of the world’s largest cooperatives have managed to compete and survive against conventional businesses by mimicking the corporate cultures of late-capitalist firms. Who knew that American household brands like Land O’Lakesand Ocean Spraywere both cooperatives? And when was the last time you were invited to vote in a general membership meeting of your credit union?
What’s more important than being ‘pro- ‘or ‘anti-capitalist’ is the recognition that cooperatives must figure heavily in any democratic, post-capitalist economy. This matters a great deal now, because while the contradictions and unsustainable nature of capitalism have become glaringly clear, many people struggle to articulate what will replace it. The exception is a rising consensus that cooperatives (along with small independent and family businesses) will replace the capitalist firm as the core non-governmental form of enterprise in the future. Cooperatives are an essential instrument of economic democracy.
But to succeed in this way, co-ops must stay true to the mission and guiding values. Employee-owned cooperatives force us to confront our own desire to do what it takes to live justly, sustainably, and in a participatory, people-centered way. They remove the excuse that the problem is the demands of the shareholder or the red-tape of government bureaucracy or the bullish will of a boss. When we have worker owned and controlled businesses, we must take responsibility for how well we pay ourselves, how connected our businesses are to the community and its needs, and how healthy our own workloads and quality of life truly are.
For as long as cooperatives fight to persist in a ravenous capitalist economy, these challenges will be greater, because a co-op’s products and services must rival the quality and price point of deceitful capitalist enterprises which cut corners on safety and the environment, and steal wages from workers in order to maximize benefits for their shareholders. Cooperatives are put on trial time and again because people want to imbue them with some magical or mechanical power to resolve societal problems. In the current context (or perhaps any context) this is impossible, but they do have the potential to be healthy and restorative as in the case of CERO.
The lowest income people in Boston may be on the frontlines of environmental disaster in their city, but Hall and his colleagues have found a way for their communities to become protagonists in creating solutions. Cooperatives put folks like them at the center of the economy, which means that ordinary people can use the power of business to address their needs and guide how change happens, thus helping to fulfill the promise of a democratic economy—not just voting once or twice a year but coming together to solve problems every day. The real question is this: can we as people put our full weight behind a new economic paradigm that is inclusive, inter-dependent, anti-sexist, multi-racial, anti-imperialist and liberatory?
I’ve spent 20 years as an active member of many different types of cooperative in the US, including the intimate living spaces of over a dozen shared housing co-ops and handling the day-to-day business of two different worker-run cooperatives. What I can tell you is this: by themselves such co-ops aren’t going to save us, nor are they going to transform society. But co-ops are an especially effective tool for change. They leverage innovations from the capitalist era of enterprise and turn them into a positive force within the broader spheres of human relationships, responsible resource consumption, and transparent governance and accountability— typically while staying rooted locally and showing concern for the community.
Deep transformation happens at the level of human beings, who then bring their reorientation to the structures in which they participate. Cooperatives are a vehicle to catalyze that change, but they only yoke together the people in the pilot’s seat. What ultimately matters is the disposition of the pilots themselves. We are the ones that have to change.
However, what I’ve also seen during my decades in cooperative communities is that while co-ops might not transform people, the act of cooperation often does. Not overnight, and not evenly for everyone. But the more my co-workers and housemates participated in cooperative processes like facilities maintenance, financial planning, passing a health inspection or some other shared work or act of problem-solving, the more humility, trust, empathy, stewardship and solidarity we each expressed. The habits of hierarchical, capitalist behaviors receded like the tide as we practiced interdependence and cooperation.
What we need are more opportunities to practice, screw up and improve in this way. And with more practice, we can all develop the qualities required to work through conflict and manage operations sensibly and democratically. Cooperation is the key to a new economy.
34 comments
Comments are closed.
I agree with the article that co-ops are a central part of the answer, but also agree with the comment that an increase in size beyond a certain level, in many cases, negates the cooperative aspect.
Cabot Creamery and especially Organic Valley are big and, it seems to me, they are basically corporations possessing a management class and separate ‘workforce’ of farmers that happens to be able to vote once a year, but is otherwise so removed from the operation of the co-op. Management runs the place, with goals that are hard to distinguish from standard market-share and profit maximization at all costs.
Profits are still, ultimately, the goal in a cooperative/market socialist firm, however, the calculation thereof is slightly different from a traditional corporation. The latter only cares if overall profits go up, as that’s what owners and shareholders want. However, in a worker cooperative the motivation is increased profits per worker/owner. If expansion and growth creates more profits but the increase in the number of worker/owners means the mean earnings go down, then the firm will decide against expansion.
While there are ways to mitigate the disconnect between the elected management and the worker/owners in a co-op, it does become an unworkable task if it gets too big. Although that’s a bit of a good thing; part of the problem with modern late-stage capitalism is too much oligarchy and not enough proper competition. If there’s a naturally tendency to cap out with co-ops, that means more firms and ergo more competition/choice. I think a healthy post-capitalism, economic democracy would be a mix of small business entrepreneurs, worker co-ops, and for the firms that simply need to be big, a semi-nationalized shareholder socialism.
PKMKII’s good points about anti-expansionary factors also resonate in another way, to help limit ravaging of the environment by mindlessly expansionary consumption of resources. I might point out that even “profit per worker” isn’t necessarily the goal–the democratic nature of co-ops means workers may choose to opt for more leisure time or better working conditions in lieu of some “profits” (remuneration). This too limits over-consumption of resources.
Regarding hierarchy, the point is to work for transparency and accountability of those who exercise hierarchical decision-making, to limit any unwarranted “power” accruing to the process. But that’s true in any democratic process, whether economic or political, so we have to solve it anyway. Economies of scale and minimization of redundancy then remain as the only legitimate reason to have “big” firms, and I agree that socialistic nationalization in those cases is the democratic way to go.
Cabot and Organic Valley, along with OceanSpray, Land-o-Lakes and Cenex, are all producer cooperatives, which means that the members are individual farmers/land-owners who may or may not run their operations along cooperative lines (usually not). Same thing with ACE Hardware. ACE itself is a co-op, but the members are individual businesses that are (by and large) not cooperative at all (although often pretty decent places to work). These types of co-op are not revolutionary in any real way.
Worker co-ops, on the other hand, will often have a more radical perspective, though definitely not always. One the one hand you have truly revolutionary co-ops like the Arizmendi network of worker co-ops in SF. On the other hand, you’ve got places like Cleveland, where the “co-op” was designed (poorly) by a bunch of professionals and appears to run in a pretty hierarchical manner.
A cooperative structure is nothing but a tool. It can be used for radical purposes or reactionary ones, depending on who the members are and what they’re after.
A true co op is based in ONE retail or wholesale outlet.
Economies of scale are the friend of capitalism and the enemy of local cooperation because of the removal of money from local economies and the stripping of it from local multiplier effects.
Many local co ops, it seems to me, could belong to a larger regional co op that would service their needs.
Great point!
Here’s information about Evergreen Cooperatives in Cleveland, Ohio
https://en.wikipedia.org/wiki/Evergreen_Cooperatives
And an article about its expansion of its laundry business to include Cleveland Clinic:
https://democracycollaborative.org/content/evergreen-cooperative-laundry-expands-second-plant-more-tripling-its-workforce
Good stuff!
Actually, no. At least not in my estimation. The Evergreen co-ops were a sh*tshow from the very beginning. I could go on at great length about all of the utterly non-cooperative things that went on there, but instead I’ll just link to a couple of articles that take a critical look (some of which I penned).
http://geo.coop/story/untold-story-evergreen-cooperatives
http://geo.coop/story/ascending-non-profit-industrial-complex
http://www.geo.coop/blog/whats-evergreen
http://geo.coop/blog/critical-look-evergreen-model
The Democracy Collaborative specifically designed the Evergreen Co-ops so that they could have an example to flog as they sell their consulting services to cities around the country, and now the globe…at least that’s what their draft strategic plan said. Of course, co-ops are supposed to be about serving the members of the co-op, not about serving a non-profit organization that pays it’s bigwigs handsome 6 figure salaries…even if they only report working an average of 1 hour per week.
In short, the Cleveland model is not one to try to replicate. Sadly, TDC is really good at promoting themselves, and people in the co-op world are, by and large, too timid to call them out. There are good models out there, like the Arizmendi Association and the Valley Alliance of Worker Co-ops. Unfortunately, Evergreen and TDC get way more press for their non-cooperative co-ops than Arizmendi and VAWC get for their actually successful, cooperator-led co-op networks.
I like co-ops in theory, but these arguments always seem to leave out the educational and cultural component. Our entire educational system, remember, is built around a model of individualized competition within rigid and profoundly undemocratic hierarchies. And here in the US, at least, “successful” children are perhaps granted less autonomy and opportunities to resolve conflicts and solve problems independently than pretty much any generation in human history.
Other models of educating and parenting exist, and I can tell you from personal experience that they face profound institutional and cultural resistance when implemented by any but the most elite (it’s ok for their kids, because you don’t get a ticket into the oligarchy by reflexively deferring to authority, but by cooperating with your oligarch friends and expecting deference from everyone else).
It is no more reasonable to expect most people so raised and educated to be prepared to function as an effective member of a co-op than it is to expect someone raised as a hunter-gatherer to be an effective factory worker or office drone. Cooperation with equals and democratic decision making for the common good are very much skills that take many years of practice in supportive environments to learn. Furthermore, as scale and complexity increase, not only is a higher aggregate level of cooperative skills demanded of members, but the necessity of a broad based culture of trusting the integrity and ability of others, and mechanisms to address violations of that trust.
Basically, IMHO, it takes a lot more than a different organizational structure to make this work at scale.
There’s a logical fallacy here:
Of course “unlearning” – or maybe better – “deconditioning” takes time within a cooperative institution, but (and I speak from 20 years of experience) but it doesn’t take years. It does take some initiative, but the example of cooperative behavior on a daily basis with your workmates has a transformative effect.
+1,000 to the idea of elite kids not being able to function. They can’t they’re [redacted] [redacted].
Just a side thought. The consumer cannot detect — as far as merchandise price is concerned — whether she is purchasing from a labor union organized firm or a cooperative. In both cases labor is extracting the highest price it can from the deal.
It’s the power in participation. Solutions evolve with buy in because participation lets one into the decision making chain that churns through the issues at hand. It is not a magic pill because it involves human dynamics –but it gets all involved in the coop working together for that common resolution.
A future will not be livable unless we begin solving this way.
Drive Routes 50/30/36/40 etc. across the Midwest to witness the potential the CoOp movement brought to agriculture production before AgCorp muscled in.
Side Note: the Tennessee Senate race has an issue of using TVA to bring internet across the State.
Thanks for posting this, Yves.
And now here’s a shameless plug for the worker co-op focused website that I manage: http://geo.coop/
diptherio: Thank you for plugging the link to something I need, not knowing what or where, serendipitously finding this too, on this valuable site. I love the lesson on riding two horses and building yourself the sturdy stable needed to contain them.Thanks to Yves too!
For those seeking an alternative to the neoliberal world order, “because…the contradictions and unsustainable nature of capitalism have become glaringly clear,” Edward Bellamy scaled up the cooperative model to the national level, with the entire economy becoming a joint social enterprise in which each citizen holds one equal share. In his “Looking Backward” and “Equality,” novels written in response to the Gilded Age of the late 19th Century, he envisioned in stunning detail how such a cooperative national economy would operate–how it would address the issues of production, distribution, incentive, and social cohesion.
We who call for systemic change in light of the human misery and environmental degradation which neoliberal capitalism inevitably leaves in its wake, are constantly confronted with the same, conversation-ending response: “So what’s your alternative?” Bellamy is the ONE author I have found who lays out an entire alternative economic system with clarity and cogency. “Looking Backward” and “Equality” are free on the net for those who want both a virtual experience of living in a better, more beautiful world, AND an answer to that TINA-based, conversation-ending question.
The ParEcon people have another fleshed out vision of an alternative system (thought I’m not a huge fan).
Thanks, diptherio, for bringing ParEcon to my attention. Have started to plod my way through their website. So far, no mention of Bellamy, who worked through most of these issues in vivid, concrete detail more than 130 years ago. But maybe he’s lurking somewhere in their presentation, which I’m just beginning to explore. If you’re interested, here’s my initial, woefully inadequate stab at putting Bellamy back on the table, if only as a touchstone for further discussion.
https://newtonfinn.com/
Thank you for these reading recommendations, I’m going to follow up. My hope for the future worldview needs a reboot…
Transforming the Economy begins and ends with ‘prosecuting board members and c-suite in the civil courts’
Cooperation is only important after everyone is treated equally
I hope you mean prosecuting in the CRIMINAL courts. Civil penalties and damages and injunctions are pretty easy to get around, especially with the level of *corruption* built in by generations of corporate self-seeking, by the “bigs” in bespoke suits and the many people happy to take a paycheck to “kill the other half of the working class.”
If one is lucky in where one lives, and there is an active government prosecutor with laws and courts that have not been textually de-fanged by that corruption stuff, and institutionally de-fanged by “budget cuts” and infiltration of pro-corp elements, one has a better chance of seeing corporate behaviors changed. C-Suite-ers do not like the threat of jail time, even if their “people” apply their skills to mitigate most of the “inconveniences.” But governance is up for sale, along with everything else, and money talks pretty loud, loud enough to drown out the screams of drowning and poisoned mopes…
It continues to surprise me that people who find themselves and their families and communities being killed or eviscerated by corp structures have not engaged in self-help of that other kind, out of desperation. But then so many have a very wrong idea of who holds the knife that has cut their throats.
Yes, Thanks Yves, for posting this essay. It mirrors another, though much longer essay in a recent issue of Monthly Review.
The emphasis in both is on the membership of cooperatives, not simply worker cooperatives as a policy option for non-profits and economic developers.
On the issue of “maximum cooperative density” in reference to functioning “without a formal hierarchy” – while large cooperative institutions do face challenges with size, these can be mitigated if recognized (as they often are) with appropriate democratic structural resolutions.
For example (and I wish somebody would do an in-depth study of this), the Rainbow Grocery in San Francisco, which is a worker-cooperative retail outlet has over 200 worker-members (it is NOT a consumer cooperative). But to deal with this size, what would pass for middle-management in a traditional firm, is replaced by departmental decentralization. What this means in practice is that each unit – bulk foods, produce, health products, etc., are organized as mini-coops with management control. There are store-wide meetings periodically to put in place an overall structure for the mini-coops, but essentially if you work in the cheese department you order the stuff collectively, organize the work schedules, hire and discipline, etc.
The issue of hierarchy is tricky. I am reminded of the studies of traditional hunter-gatherer societies where leadership is tenuous and premised on performance and humility.
One last point about the worker cooperatives in the SF Bay area and generally across the country – there is an ongoing conversation by the worker cooperatives and the union movement. It has been formalized with a committee on the subject in the national organization of worker cooperatives.
Everyone should study the success, decade after decade, of the John Lewis Partnership in Britain. The goal is to increase value added per employee. Steadily growing profits are not the formal goal but they are the result. This is where corporations must go in the 21st century to revive motivation and productivity. It works.
I like the article. As a bookkeeper I would love to see the accounting of a co-op. How would a good natured accountant and good natured janitor live in a commune with it being both fair and workable. Would the boss make about twice to pay of the dishwasher. It would be nice to know equations involved to best make good natured people work together. My hippie lawn care business 40 years ago fell apart.
There you go:
https://www.mondragon-corporation.com/en/about-us/economic-and-financial-indicators/
Some curious attitudes to co-ops here, remember its enlightened business not a slippery slope to commiedom.
Pinhead mentioned the John Lewis Partnership in the UK ( 5% share of uk supermarket + dept stores) also how about the Co-op, t/o £9.5 bn owned by 4.5m members, https://en.wikipedia.org/wiki/The_Co-operative_Group
If you really want your mind expanding beyond organic farms and amateur woolliness try reading Maverick – https://en.wikipedia.org/wiki/Maverick_(book) about the transformation of an industrial conglomerate in Brazil in the 90s.
I share this view and write from the perspective of having started a number of businesses, including a small cooperative in Europe.
The author presents a number of valid positions but my opinion is that co-ops are suited for certain types of business endeavours but not all of them, unfortunately. In addition, the local business taxation environment will also affect their suitability as a business structure.
Traditional co-ops are definitely ‘for-profit’ entities. Without profits, they will fail. Where losses occur, the members will each be asked to contribute more funds to ensure the entity remains a going concern. It can be difficult to raise large amounts of capital for growth purposes. Mondragon, if I am not mistaken, requires a significant cash contribution for membership.
Profits will flow through to the members and are usually subject to taxation as income at the co-op level and member level. Members share in these after tax profits rather that having a shareholding – each member has an account – something like a bank account. Depending upon the structure of the co-op, the members may have significant restrictions as to how they may withdraw funds from the account. There can be significant restrictions on joining and leaving. Membership rights can vary significantly depending upon the nature of admistrative documents. Co-ops are not necessarily democratic or egalitarian entities.
Compared to the typical limited liability corporation, the governing documents (Articles or Memoranda) can burden the operation with a far greater administrative and accounting requirements. Decision-making is much more distributed and, one could say diluted, compared to many other business forms. All this means that cost of establishing a co-op and its administration and accounting requirements may be excessive for a small scale undertaking, when compared to other business types.
There are many useful scenarios for co-ops, including that of agricultural producers, certain retail operations and banking, for example. But it is not a general purpose structure that can solve all the perceived ills of capitalism.
My personal view is that the better way to tackle the excesses of capitalism is to reform the limited liability corporation or to adopt successful models such as the John Lewis Partnership PLC. Employee ownership should be a key objective, in my opinion, regardless of the business structure.
I recently toured a CSA (Community Supported Agriculture) which was so successful that they decided they had reached their maximum size. They were growing food in backyard plots in a number of locations in an urban environment, many on rental properties. The members sign up in the spring, and receive weekly or biweekly allotments of farm produce. In this way the members share the crop risk with the ‘farmer’. The production staff were all paid the same standard wage, though excess cash was distributed after the growing season based on the number of hours worked.
I think the observation of the problem of scalability is valid, and is a feature that distinguishes such models from standard capitalist production. The solution is to replicate the CSAs at manageable sizes.
> problem of scalability is valid
Indeed. Could be that capitalism can only deal with the scalable:
As the reviewer says:
There is a body of though which states that organization become less effective if they become too large. The ides is discussed under the subject “dis-economies of scale”.
The US military is sometimes quoted as a poster child for this.
My credit union is very obvious about inviting me every year. However, the meeting has always been at a bad time for me, so I have never attended.
Yves
i grew up in Co-op housing 1500 familys built in 1927 and still going strong in West Bronx. talk about knowing your
naighbors and their meetings are always well attended. There are a lot of Co-ops and employee owned businesses i think Woodman’s a multi store supermarket chain in Wisconsin is employee owned and the model in Canada includes gas stations , grocerys and farmers co-ops
As an MIT economics view years ago noted, you cannot have infinite growth on a finite planet. The issue with both capitalism and socialism is dealing with not service but the underpinning extractive profit driven businesses. A case in point is the Canadian social democratic model that attempts to keep its societal benefits flowing even as it strips salmon protective forest biomes or runs pipeline to take out tar sand oil.
In the alternative some people who are Green Party call this desired new outcome where the people, planet and peace comes first before profit, ecosocialism. The plan for carrying out the vision by dialogue and consensus to deal with getting it done is the problem. As noted in the article, even social business oriented systems acquire and use capital so are they also capitalists?
I think what is confusing here is that ‘cooperative’ can mean a method of governance, a means of raising capital, or a way of sharing risk. In worker coops it is more the former, in consumer and producer coops more the latter. The three aren’t mutually exclusive, but one does not not guarantee the others. My local food coop (producer, worker, consumer) collapsed this summer. Financial issues, so far as I can tell, but also governance/management as well. Pity.
The staff knows more than just us consumer-members, I heard that a lot of board members were ‘lost’ over the year and were not replaced, major complication was trying to find a new location after the lease expired. I am still trying to find out exactly what happened and may never do so. Pity again.
When done well, coops cut out the rentiers and professional managers (1% and 10%) and can provide opportunity for enterprises to act out of the straitjacket of “maximizing shareholder worth”.
And of course, if self-management is part of the co-op’s mission, just a reminder that it’s a *lot* of work. Many people would rather hire a boss to do all those meetings and make all those decisions.