Cooperatives in the 21st century

 

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Kofi Annan has said: “Founded on the principles of private initiative, entrepreneurship and self-employment, underpinned by the values of democracy, equality and solidarity, the co-operative movement can help pave the way to a more just and inclusive economic order.” This quote outlines the opportunities for the co-operative movement as a source of empowerment for people as well as its underlying principles. The history of the cooperative dates back to 19th century Europe, mainly Britain and France. It is not new, and it has a rich history as well as a variety of examples, with differing levels of participation. Cooperatives are attractive, because they are appealing – they bring the idea of participatory democracy to the workplace. They are a strong example of how a mainly economic enterprise can be tightly linked to a democratic practice. This article addresses the role and opportunities for the cooperative in the 21st century.

An interesting research in this area was published in 2010 by The Community Inventors Lab, which is a part of MIT’s Department for Urban Studies and Planning, the name of it “Sustainable Economic Democracy: Worker Cooperatives for the 21st Century”. The paper examines two examples of cooperative practices – Mondragon in Spain and Evergreen in the US. The central idea of the paper is the importance of economic democracy, meaning that “local economic institutions are democratically controlled”.[1] Economic institutions include such sectors as businesses, finance, research and development, as well as education.

The road to economic democracy can be achieved through cooperative ownership of the local economy by those who participate, which in turn helps to root the wealth in local communities and prevents resources from going somewhere else.[2]

There are different types of cooperatives and this article focuses on the idea of the worker cooperative. Workers’ cooperatives still operate for business interests and capital investment is still relevant, however workers’ are involved to a much higher degree and the focus is on cooperation among them. Even though the profit making motive does not leave the enterprise, the involvement of the workers allows for a balance, workers’ interests get taken into consideration. However the report does point out that the successes of cooperatives have been varied, but that does not mean we should not at least discuss their potential.[3] Also it is pointed out that worker cooperatives can operate in a larger network, rather than as separate entities that most probably will suffer in the competitive global market.

The two examples examined in the research provide valuable lessons for the future of the role of cooperatives in a 21st century democracy. For example, Mondragon in Spain developed into a cooperative group, where different cooperatives were working closely together, it allowed for a sharing of a governance structure, pooling of profits and losses and allowed for the movement of worker-owners among different member firms of the group.[4]  The approach of Mondragon includes 4 elements to creating a cooperative group.

The elements are primary cooperatives, secondary cooperatives, spin off cooperatives and lastly the cooperative group. The primary cooperatives are created in the most important sectors, such as industry and retail. The secondary cooperatives along with the spin off ones are created to support the primary ones and expand the network. Lastly the creation of a cooperative group allows for risk and resource pooling, as well as increased mobility. In addition, it is important not to forget that these cooperatives were established in different sectors, such as industry, retail, finance and education.

This strategy of diversification allowed for Mondragon to remain competitive. The ability to move between different cooperatives allowed for flexibility and in a growingly competitive market, this is of importance – the ability to adjust and learn quickly. The amount of different cooperatives allowed for one to produce what the other ones could not and exchanging amongst themselves and thus eliminating the need for importing things. Of course, there are those, who argue that each case is unique and successes cannot be replicated one to one, but certain lessons do appear. For example, the necessity for an interconnected network and a diversified approach. One must also remember that the model of Mondragon was developed over decades and this kind of a strategy requires long term planning.

The Evergreen enterprise took the example of Mondragon, but adjusted it to their own specific circumstances, focusing on one central local institution and branched out from there. Different cooperatives are responsible for different aspects, the same as in Mondragon – one for finance, one for leading, another for funding and lastly one that is responsible for governing.  So it adjusts the model of cooperative networks for its own internal needs.

The report points out the main things that are useful for the future of cooperatives in the 21st century[5]:

  • A defined geographic area
  • A local network known as the ecosystem
  • Internally driven economic development, where imports are replaced by the cooperative network’s participants supporting each other

Lastly the research outlines the values that should guide this kind of an approach – a strong, but democratic leadership, values of local ownership and solidarity, education as a tool for expanding networks and lastly cooperatives as organizing entities that help to organize people according to common interest, transcending, for example, racial or ethnic divides.

There are millions of people working in cooperatives in the 21st century, however, it is sometimes forgotten that they in effect are democratic entities. Maybe something can indeed be learned from these two examples. Because democracy is about people getting involved and where is it more appropriate than in the workplace, where many of us spend our daily hours? It is about having a stake and thus an interest into what happens to you in the workplace, as well as to your colleagues.

[1] Nicholas Iuviene, Amy Stitely, Lorlene Hoyt, „Sustainable Economic Democracy :  Worker Cooperatives for the 21st Century,”The Community Inventors Lab, October 2010, p 5.

[2] Ibid, p 5.

[3] Ibid, p 7.

[4] Ibid, p 8.

[5] Nicholas Iuviene, Amy Stitely, Lorlene Hoyt, „Sustainable Economic Democracy :  Worker Cooperatives for the 21st Century,”The Community Inventors Lab, October 2010, p 26.

[Alina]


The publication was performed in the framework of the project “PROVIDUS – a partner of state in policy planning and policy making process“.

Project is financed by Iceland, Liechtenstein and Norway in framework of NGO Activity Support Measure.

NGO Activity Support Measure is financed with financial support from EEA Financial Mechanism and Republic of Latvia.

www.sif.lv

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www.eeagrants.org

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