The Workers' Paradise

February 22, 2010

#24 Concern for Community

Filed under: Governance,Identity Statement Series — Tags: , , — John McNamara @ 10:06 am

Concern for Community is the last of the principles listed in the Identity Statement. It is the expression of the value of solidarity and social responsibility. It creates one of the multiple bottom lines for co-operatives. It is not enough for a co-operative to be a profitable business. If it fails to be a leader for a more just, verdant and peaceful world*, then it has failed as a co-operative and might as well just be a group of greedy stockholders. Too often worker co-operators become insular and prone to naval gazing. Our structure is set up that way. We are predetermined (if we don’t act or create other structures) to focus on internal operations to the exclusion of the outside world. If we don’t engage this principle, we can fall into a pit of arrogance.

Because I worked for a taxi co-operative, I see this particular principle as all encompassing. Concern for community, to me, means: yielding to pedestrians, not tailgating, not speeding through residential neighborhoods, helping people with their bags, helping the elderly and people with disabilities manage steps and slippery walks.

It doesn’t have to mean political action in the partisan arena. Indeed, I think that most co-operatives should generally avoid taking a partisan side until a political party based on the Cooperative Ideal comes into existence. It does mean caring about the community that we serve—not because they are potential customers, but because our co-operatives are part of the community and should be community leaders.

The ICA makes the short definition: “Co-operatives work for the sustainable development of their communities through policies approved by their members.”

Mondragon, parses “Concern for Community” into two separate principles that unpack the term a bit:

Universality

“The Mondragon Cooperative Experience , as an expression of its universality, proclaims its solidarity with all those working for economic justice in the sphere of the “Social Economy”, championing the objectives of Peace, Justice and Development, which are essential features of International Cooperation.”

Social Transformation

“The Mondragon Cooperative Experience manifests its desire for social transformation based on solidarity with that of other peoples, through its activity in the Basque country in a process of expansion which will contribute to economic and social reconstruction and the creation of a Basque society which is more free, just, solidary.”

The term, Concern for Community, is a huge concept. It is sort of a giant stew of issues. It might be about being good neighbors, good drivers, and good stewards of the land. It might mean participating in social development projects such as affordable housing, micro-lending, The Basque see promotion of the Basque language as part of this principle. Providing health insurance in an industry that normally doesn’t provide could be another example. Ensuring a living wage for workers in a consumer co-operative (or encouraging unionization of a co-operative’s work force) might be another expression.

For the worker co-operatives, it should mean excelling in customer service, being good stewards of the land that we control, creating systems to help our membership develop and succeed as human beings. We need to accept our roles as leaders in our community. We should conduct ourselves in a way that the general public (the community) will appreciate. We should set the standard of how a business treats the community as a whole if for no other reason than it is our community. It is where we earn our living, but it is likely also where we live our lives. Even in communities that have priced working people out of the central area (like San Francisco), it is still the co-operatives’ community.

Working for a better community means working for security for our members, their families, and their friends as well as our customers, their families and their friends and all of the other stakeholders that depend on us (our vendors, their families and friends) . It would be interesting to create a stakeholder map that listed everyone connected to our businesses and their connections (sort of like LinkedIn) to see the effect that our businesses have of the community. We are the George Bailey’s of the business world after all. As workers, we touch so many lives and, because we owners and control our destiny, have the opportunity to change people in a way that other businesses simply don’t.

It is really a small world out there spinning around a small sun in a enormous universe. All that we really have are each other. The co-operative community recognizes that and part of our job as co-op practitioners is to make that principle come alive through our co-operatives.

*I know that I am stealing from the NPR statement for some foundation, but it is such a great line!

Next Week: A summary of the Identity Statement including an examination of the writing of Dr. MacPherson as well as the comments on the 10th anniversary by Johnston Birchall.

February 15, 2010

#23 Co-operation Among Co-operatives

Filed under: Identity Statement Series — Tags: , , — John McNamara @ 8:57 am

I usually make the snarky comment that the only time that I hear about this principle is when some slacker co-op wants a discount or donation. . . that is horribly unfair, of course. Also, we should discount each other—we need to do what we can to keep the money inside the co-operative community!

This principle, however, brings the value of solidarity, caring for others and social responsibility into the principles. Co-operation provides the basic form of human survival. The Folks at Sesame Street get it right: Co-operation Makes It Happen!

The Statement on Co-operative Identity uses the following definition: “Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.”

This, of course, means that those of us in the North America should all join either the National Co-operative Business Association or the Canadian Co-operative Association as well as our sector. In the US, that would be the US Federation of Worker Co-operatives and in Canada, the Canadian Federation of Worker Co-operatives. We shouldn’t just join, but should actively engage these organizations. We also should put aside some biases.

One of the moments in my life that proved (to me) that I would never be a tele-marketer was when I fulfilled my duty as a USFWC director by calling members and checking in. This one high-tech co-operative contact told me that he wasn’t going to renew because he attended the New York Conference and thought that the workshop that he attended was allowed to be taken over by Industrial Workers of the World (IWW) ideologues. It didn’t matter to him that this was a third party organization or that other attendees should have the right to express their views. He wanted a workshop that talked about business, not this political crap.

Well, I couldn’t help but notice that he seemed to be speaking for the entire co-op even though I doubt that he actually presented a fair view of the federation to the other six members. I wonder if he even mentioned it. My interaction made me think that it was a “co-op” but that this guy was really the boss—which then makes sense that he didn’t want to hear from the IWW lest his fellow members catch on that co-ops should be a democracy.

In any event, the point of building the movement isn’t to bring immediate gain to one’s co-operative. It is to build the co-operative image as a valuable community asset. Arizmendiaretta noted, “It is a mistake to each a co-operative a closed world. We must consider inter-cooperative solidarity the only resource to be used to forestall other problems of growth and maturity: we must consider a growing development adapted to circumstance.” The reality is that we (worker co-operatives) have a lot to teach each other. Mondragon speaks of the concept of Inter-cooperation. They define this principle as a specific application of solidarity and a requirement for business efficiency. While it is great to be able to do business with each other, it is even better to support each other by trading concepts, trainings, and skills.

When I was younger (pushing 30) and president of Union Cab. I remember proclaiming that worker co-operatives in the US co-operative world and a blue-collar cab co-op was unique among worker co-ops. The upshot is that there was nothing to learn from the other co-ops. We were alone in the world and had to find our won way. I was young (and arrogant)—and there weren’t a lot of other worker co-ops known to us in the early 90’s. I hear our young leaders say that today and make a mental note to take them aside and have a talk. I also hear people lament our membership dues to NCBA and USFWC and The Co-operative Network wondering what our co-op gets out of our membership.

Well, we (individually and through our co-operatives) help build the movement. We help government officials understand what a co-operative is. We help each other learn how to co-operate better. We help other co-op sectors understand the importance of treating their workers well. We get back what we put into these organizations, but even if all we do is write a check, we help build the movement. This doesn’t have to mean just giving each other discounts. We should share our policy manuals, help each other find new ways of working together. In the US, we need to find a way to pool resources to provide some of the things that our individual co-ops cannot achieve on their own: affordable health care, pensions, retirement plans, etc.

I think that this principle needs to be expanded. Yes, the apex organizations can do a lot. However, we need to create local networks, marketing campaigns and even our own banking system. Even the casual observer of Mondragon recognizes that the Caja Popular had a significant (if not vital) role to play in the rise of Mondragon. The Cooperative Warehouse Society and the Co-operative Bank clearly played the same role in making The Co-operative* the largest consumer co-operative society in the world.

We all need each other to make the co-operative model succeed. I don’t want to limit this to just the co-ops either but to the other legs of the stool as it were. We need the academics who study and propose new concepts in management, who help educate as developers, or teachers, or professors. We need the politicians who help protect the co-operative model.

Co-operation among co-operatives starts with the individual but quickly moves on to the entire world. Our co-operatives need to educate the membership and help them to realize that they, but joining their co-operative, have joined an international movement of 800 million people. We aren’t in this alone, but together. If we can’t see the commonality between our worker co-operatives and the consumer co-ops or large Agriculture co-ops such as Land o’ Lakes, then we aren’t really seeing the co-op movement in its entirety.

When we take the time to understand the dynamics of a water co-operative in rural India, we make our individual co-operatives stronger. When we support the efforts of defending the co-operative movement in Bolivia and Argentina, we make the co-ops in the United States and Canada stronger. This isn’t a zero sum game where we take resources from our co-ops to give to other co-ops. Social capital, like fiscal capital, gains velocity as it travels. Both forms of capital, in the famous quip, are like manure, they only create something worthwhile if they get spread around.

*Normally, I hate it when organizations use a definite article in front of their name. I refuse to call Ohio State University, “The Ohio State University” and not because I’m a Badger through and through. However, if any organization deserves to use the definite article it is The Co-operative.

Next Week: #24 Concern for Community

February 1, 2010

#21-Autonomy and Independence

Filed under: Identity Statement Series — Tags: , — John McNamara @ 10:36 am

This is a good week for a discussion about the 4th Principle of Co-operatives. On my other blog, Breathing Lessons, I discuss the role of co-operatives in the race for Governor in Wisconsin. We, in the co-op movement, get pigeon-holed pretty quickly. Even amongst ourselves, worker co-operators get slammed as “commie hippies”. Even Michael Moore expressed shock on numerous occasions that the workers of Isthmus Engineering looked “like Republicans”.  I imagine that  lot of us in the worker co-operative world see farmer co-operators as red-necked, right-wing social conservatives. Of course, there isn’t any sort of litmus test for any sector. I’ve seen anti-choice and even “W” bumper stickers at the food co-op and even in the parking lot of Union Cab and the long haired George Siemon, “C-E-I-E-I-O”* of Organic Valley certainly changes the image of Ag Coops.

Of course co-operatives aren’t so monolithic, however, they do comprise themselves of self-selected members who have common social, economic, and cultural needs and connections.  They are also organizations that should have a degree of independence and autonomy from other groups. The 4th Principle of the Co-operative Identity says this:

“Co-operatives are autonomous, self-help organisations controlled by their members. If they enter to agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.”

Depending on the memberships interpretation of this principle, it might mean that the co-operative focuses internally and severely limits its effect outside of the membership. For worker co-operatives, which already have a tendency to focus too much on internal issues to the negation of customer service and market forces, this can be a dangerous sentiment. Our boards, however much they may want to feel the power, can’t really tell other organizations what to do. They generally cannot dictate terms to the banks or (for those in government regulated industries) to the government. In terms of the Federations, well, if one co-op dominated the Federation, then the other member co-operatives would be violating the principle just by joining, right?

Ian MacPherson wrote on this principle: “In a way, it is a restatement of the Rochdale commitment to political neutrality with an added emphasis on autonomy, whenever co-operatives associate themselves with other organisations. It is a reminder of how necessary it is for co-operatives to guard at all costs their capacity for independent action. It is only when co-operatives are genuinely autonomous that they can follow the wishes and meet the needs of their members energetically.’

The desire for autonomy and independence runs deep within us as humans. It drove the expansion of Europeans into the Western Hemisphere and beyond. It is, perhaps, the driving force of conflict between peoples as one group seeks the resources of another. Sometimes, once autonomy and independence are obtained, the oppressed too often become the oppressors. The following clip is  a nice discussion about the role of autonomy and indenpendence in a community (and I recognize for my UK friends that this only tells one side of the story):

Being Master of our Destiny is the heart of the co-operative movement. From the first Pioneers of Rochdale, the drive to throw off our economic and political masters became the motivating force to establish an economic system respectful of individual autonomy as well as the democratic decision making process required for group action. Co-operatives, by nature of their identity, exist as peer organizations. Regardless of our standing outside the co-operative, within it we are equals. Barack Obama is the President of the United States and a member of Seminary Book Co-operative in Chicago. His membership in the co-op makes him an equal member of the co-operative entitled to the same dignity as any other member regardless of his other job.

The point is, that we want to control our destiny but to succeed we also have to find a way for our organizations to work together. Autonomy and independence are important parts of the co-operative movement, but so is the root word, “co-operate” or “work together”. Our co-operatives gain strength from respecting our individuality while also requiring members to participate. The movement gains strength from respecting the autonomy of the organizations, while developing ways for them to work together and create synergy.

As Dr. MacPherson notes, our actions as co-operatives need to express the will of our members and protect the co-operative from co-optation by other sources. For worker co-operatives, this can be significant as they could easily end up as the employees of an organization rather than the owners, or so associated with political or social movement that they begin to falter as a business. It is important for us to consider these issues as we interact with other co-operatives and non-co-operatives. It is a lot easier to keep one’s co-operative autonomous and independent than to get that independence back.

*If you don’t get it, simply refer to the song.

Next Week: #5 Education, Training and Information

January 25, 2010

#20 Payment Solidarity

Filed under: Identity Statement Series — Tags: , , , , , , — John McNamara @ 1:50 pm

The Mondragon Co-operatives maintain the concept of wage solidarity. From the beginning, the ratio of the highest paid position (manager) and the lowest paid (new worker) was locked at 3:1. In the 80’s this changed and today there are some positions that earn a 6:1 ratio and one (the CEO of the International MCC) who receives 9:1. Even with the tripling of the upper end of the ratio, it is still a far cry from the 150 or even 300:1 ratios that modern stock corporations tend to employ.

What interests me about this principle (and I think that it should be in the Identity Statement as well), is that Mondragon expresses the co-operative value of solidarity. It puts solidarity into the operations of the co-operative.

The language of Mondragon follows:

“The Mondragon Co-operative Experience proclaims sufficient and solidarity remuneration to be a basic principle in its management, expressed in the following terms:

a) Sufficient, in accordance with the possibilities of the Co-operative

b) Solidarity, in the following specific spheres:

  1. a. Internal. Materialised, amongst other aspect, in the existence of a differential, based on solidarity, in payment for work.
  2. b. External. Materialised in the criteria that average internal payment levels are equivalent to those of salaried workers in the area, unless the wage policy in this area is obviously insufficient.”

Note that the principle calls upon the worker co-operative to either ensure that its workers receive the prevailing wage or, if that wage is too low, become the wage leader in their industry and area. The prevailing wage must be at least a living wage*  for the community.

The principle of pay solidarity helps flatten the hierarchy in worker co-operatives. The pay differentials are kept small as a means of valuing all work performed to help the co-operative succeed as well as valuing all workers in the co-operative from the very new to the very senior. This principle helps to deflate the ego within the co-operative. Is someone with 30 years in the co-operative worth more as a worker? In some senses, the  experience and knowledge of the industry that comes with 30 years of work can be vital to the success of the organization, but is it worth them being paid 30 times the pay of a new hire?

Does someone who manages the marketing of the co-operative do more to create wealth (by getting customers) than front-line workers? Should that ability earn more than others?

These are very real questions for worker co-operatives and they are questions which can cause a lot of divisiveness. The way that the worker co-operative addresses these issues can dramatically effect the co-operative to enable it to succeed or cause it to fail.

Does a flat compensation system (everyone gets the same pay regardless of their job duties) encourage good management or cause the people who have management skills to seek employment elsewhere? Does a staggered system of seniority and pay levels create an aristocracy within the co-operative?

It is important for worker co-operatives to find the right balance based on their industry and their internal culture. It probably needs to be revisited from time-to-time. One aspect, in thinking about payment solidarity, should be leadership development. If the compensation levels are set too low, then the co-op will likely become a training center for its competitors or other businesses. If it is set too high, the co-operative may create a rift between the high bracket managers and the low bracket workers. Creating an “us vs. them” mentality can only lead to failure of the co-operative.

To truly maintain solidarity in payment, co-operatives must employ measures to develop leadership among their own ranks. When we need to hire managers from outside, who know the industry, we risk a lot. The culture of a worker co-operative can be destroyed by outside management who bring the attitudes of the traditional corporations with them. I’ve seen this up-close and personal and also from a far. Good Vibrations recently demutualized (becoming a standard ESOP) after hiring outside management (and changing the pay ratio to do so). Now, I am sure that the decisions to demutualize were very complicated (and it was a unanimous vote of the membership); however, it was clear that the culture of the organization changed after they increased their pay ratio in order to hire a manager from the mail order industry.

Of course, once we develop management, we also will need to compete with the outside world to keep them. Thus, our development programs must be based on two concepts: the management needs of the industry and the management needs of the co-operative. Whether our management has a traditional hierarchy or done through committee and semi-autonomous collectives, these two concepts need to be part of the discussion. With this in mind, it can be easier to develop a payment solidarity plan that recognizes a member’s experience, knowledge and commitment while also ensuring that the  “floor” for workers (whether by position or seniority) remains suited to a living wage for the community. This is the opposite of the corporations who figure out the senior management pay and stockholder dividends first and then use what is left over for the workers.

From Don José María Arizmendiaretta, “Solidarity is not just a theoretical proclamation, but something that should be put into practice and made manifest, willingly accepting the limitations of team work and of association, since this is the way to enable people to help each other.” (as reported by José María Ormaechea in his book The Mondragon Cooperative Experience)

This marks the end of the Mondragon diversion. I have called these four principles the “worker co-operative user principles”. These four principles should, in my opinion, be part of the Co-operative Identity. Co-operatives, regardless of the sector, require people to do work to benefit the users. Because of this, co-operatives should see the worker as a primary stakeholder and create means for the worker to truly benefit from their experience in the co-operative. I will even go so far as to argue that all co-operatives should either have a membership class for the workers or actively promote the unionization of their workers. Co-operatives must avoid exploitation. If we believe in Fair Trade for farmers producing coffee, chocolate, sugar and the like, then we must also believe in fair trade for the laborers who get those products on the shelf.

*what is a “living wage”? Madison, WI sets their definition as 120% of the poverty threshold for a family of four (currently $11.21/hour). Dane County arbitrarily declared it to be $8.70/hour. I think that worker co-operatives should work on this definition. I think that it should be a wage that allows a family to experience security with regards to nutrition, housing, health, education, clothing and socialization. This number will vary based on the community. I don’t think that it needs to mean a single-income home, but it should mean that someone can take care of themselves and their dependents at a basic level. Probably a topic for another post. . . .

Next: the 4th Principle—Autonomy and Independence

January 11, 2010

#18 The Instrumental and Subordinate Nature of Capital

Filed under: Human Relations,Identity Statement Series — Tags: , , , — John McNamara @ 10:20 am

“We do not aspire to economic development as an end, but as a means.”

–Don José María Arizmendiarrieta, spiritual founder of Mondragon

This Mondragon principle, in practice, operates more closely to the Identity Statement principle of Member Economic Participation. I included it in this side road of the over all series because I believe that Mondragon presents a nuance all too often lost in the co-operative movement and, in the silo-ed environment of the US worker co-operative movement, we often tend to forget the role of capital in our organizations is significantly different from that of our industry and capitalist competitors.

The role of capital in a worker co-operative should be two-fold:

1) ensure the on-going operations of the co-operative

2) allow the co-operative to maintain the highest level of safety and quality of work-life.

Thus, this principle presents the balancing act of worker co-operatives. As the opening quote suggests, if we are just in it for the money, what are we really trying to accomplish? However, DJMA has also said, “Cooperativism without the structural capacity to attract and assimilate capital at the level of the requirements of industrial productivity is but a temporary solution, an invalid formula.”

The definition of this principle is as follows:

” The Mondragon Cooperative Experience considers capital to an instrument, subordinate to Labour, necessary for business development and worthy, therefore, of:

a) Remuneration, which is:

  • Just, in relation to the efforts implied in accumulating capital,
  • Adequate, to enable necessary resources to be provided,
  • Limited in its amount, by means of corresponding controls,
  • Not directly linked to the profits made.

b) Availability subordinate to the continuity and development of the cooperative, without preventing the correct application of the principle of open admission.”

As a tool, the role of capital should not exclude members from participation in their co-operative. This is a key point for worker co-operatives. The level of capital investment by the member should be appropriate to the needs of the industry and the ability of the worker to contribute. Otherwise, the role of capital dwarfs the rights of the workers, the human beings.

Another important diversion for worker co-operatives is the separation of capital from profits. Too often I hear directors (who have come to us from the “for profit” world) talk about the need for “return on investment” or “return on equity” as the means for deciding the correct course of the co-operative. However, that places capital in a position of greater importance than it needs to be or should be. While a surplus (profit) is needed to re-capitalize the organization and to expand, that should be the limit of its effect. We should not seek to maximize ROI because that mindset leads to the disaster capitalism that has plagued our macro-economy for thirty years.

Capital, in a cooperative, exists to serve the needs of the members collectively. In a worker co-operative, Capital should mean ensuring good paying jobs, safe working conditions and the opportunity for human development. Co-operatives exists as a means for socio-economic transformation of the community, not for the further enrichment of the few who control capital. This may be one of the key differences of cooperation from its market based cousin capitalism. Capital, in a cooperative, should be used to elevate the human being, to eliminate (or minimize) exploitation, and create a sustainable community.

This may seem like an obvious concept, but it is not. Too often co-operative managers hear the siren song of the capitalists. When we start hearing managers talking about industry “best practices” we should immediately ask who those practices are best for. Are those practices “best” for the workers or the stockholders? Are they best for the consumers or the stockholders? Are they “best” for managers or the members? Are they “best” for the community or the stockholders? We need to see that our co-operatives must develop their own best practices for the industry. By creating best practices that do not get tied to maximizing ROI or ROE, we can create strong, vibrant workplaces that will, in turn, create sustainable, vibrant communities.

These are, I believe, the questions that Don Jose wants us to ask. We cannot simply pretend that we are at the grown-ups table when we manage our businesses. We cannot model the “industry” without focusing on the unique role of capital in our co-operatives. As the opening quote states, the role of capital is simply a means to a better future. It should never be considered an end unto itself.

Next Week: Participatory Management

December 28, 2009

The Worker Coop User Principles and The Mondragon Experience

Filed under: Identity Statement Series — Tags: , , — John McNamara @ 8:05 am

The US Department of Agriculture identifies the first three principles of the identity statement as the “user principles.’ In US parlance, this means that the users of a cooperative’s services benefit from the cooperative’s activities, the users of a cooperative own the cooperative and the users of cooperative control the activities of the cooperative.

However, in a worker co-operative, the users of the cooperative services generally do not own or control the cooperative. Should worker cooperatives have their own set of principles unique to the experience of worker ownership? The Mondragon Cooperative has developed a set of ten principles that it uses to guide its collective actions. The 10 Principles of Mondragon overlap to some extent with the Identity Statement:

Mondragon Coop Identity

1. Open Admission                                    Voluntary and Open Membership

2. Democratic Organization                    Member Democratic Control

3. Sovereignty of Labor

4. The Instrumental and Autonomy and Independence

Subordinate Nature of Capital

5. Participatory Management                   Member Economic Participation

6. Payment Solidarity

7. Intercooperation                                     Cooperation Among Cooperatives

8. Social Transformation                           Concern for Community

9. Universality

10. Education                                                Education, Training and Information

In considering this series, I initially saw the three principles of Sovereignty of Labor, Subordination of Capital and Payment Solidarity as the three that separated from the Identity Statement. However, it is clear that the Subordination of Capital directly relates to Autonomy and Independence. Yet, this principle also has a special nuance for worker cooperatives. Likewise, the role of Universality is a direct expression of the value of solidarity. It is not simply Concern for Community or Cooperation Among Cooperatives. It speaks directly to the need for worker cooperatives to support all movements that seek dignity for workers. This makes a substantial break from the principles and other cooperative sectors that may not support labor movements and may even be antagonistic to labor unions.

Over the next four weeks, I will detour from the Identity Statement of the ICA to consider the importance of the four Mondragon principles in order: Sovereignty of Labor, The Instrumental and Subordinate Nature of Capital, Payment Solidarity and Universality. For background information, I will be quoting heavily from The Mondragon Cooperative Experience by Jose Maria Ormaechea (January, 1993). Sr. Ormaechea is the “O” of ULGOR Cooperative, the first cooperative of the Mondragon Experience and the name was dervived from the initials of the five original members (it is known as FAGOR today). He was one of the first students of Don Jose Maria Arizmendiertta. He served as Managing Director of the Caja Laboral Popular (today, the Caja Popular) from 1960-1988. He also served at Director of Otalora, the management training facility and publisher of this book.

A Few Words About Mondragon

The principles of Mondragon are significant—in addition to acknowledging the history of the cooperative movement, they also expand upon the ideals of cooperation by addressing the role of labor. This was a very important issue for Arizmendiaretta. He believed in the sanctity of work and education. Through these two arenas, the human spirit could be elevated and all of society would benefit.

Mondragon was the pearl to come out of the fascist experiments of the 20th Century. Don Jose was in prison awaiting execution when the Pope decided that Franco had to quit killing priests. He was sent to the backwater industrial village of Mondragon instead of Bilbao to shut him up and ensure that his radical views would not gain traction. Mondragon succeeded in part because of some unique issues:

Communists in the South and the Anarchists of Barcelona had regrouped. Franco’s economic policies had failed even by his standards. It was easy for Franco’s people to see the Mondragon experiment as one of entrepreneurialism, not revolution.

Nevertheless, for the first two decades of Mondragon, the government was fascist and people had to be careful. They were harassed and had the deck stacked against them. The bank and social security systems were created because they were not allowed access to finances and health care otherwise. Add to that the role of the ETA and the Basque desire for independence (or at least to be left alone) and one sees a unique culture that produced Mondragon and has a lot to do with their decision making process.

The workers of Mondragon have “built the road as they traveled.” They haven’t always made the decisions that I would have made (sitting in my condo in Madison, WI instead of Basque Country), but those decisions were theirs to make.I have learned, however, that even when a decision is made, that may only be the beginning of the discussion. As with all of our co-operatives, sometimes decisions get made in order to survive to a day that a real fix can be made that will be more consistent with the principles.

I like that Mondragon refers to itself as an “experience.” I think that all of our worker co-operatives should adopt that attitude. We are an experience of our culture, society, place in history, and the good and bad tendencies of our collective memberships. The experience of cooperation offers us metamorphosis that will highlight our better natures. It is a process and a journey. We will occasionally stray from the correct path as a means of survival (or ignorance), but if our diversion will allow us the opportunity to correct ourselves in the future, we should be happy for another day.

That is my basic take on Mondragon. We have a lot to learn from them. They can learn some things from us too. However, we must always be cognizant of the principles that bind us. We must understand that we are only human and will make mistakes. We should embrace forgiveness and understanding of the human condition. There are as many ways to “co-operate” as there are personalities. We should be willing to honor our differences as much as our similarities, but always along the lines of the principles and values of the cooperative identity.

December 9, 2009

#14 Democratic Member Control

Filed under: Identity Statement Series — Tags: , , — John McNamara @ 9:09 am

After missing my Monday morning deadline due to a funeral, Mother Nature has given me the gift of a day away from the office (I really haven’t anyway to get to work) so I can at least catch up on the series.

The Identity Statement created the following definition for the Second Principle of Co-operatives:

Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.

This principle acts as the second of the “User Principles.” In this case, the users of the co-operative control the co-operative. In a worker co-operative, it is the workers who are using the co-operative in order to earn a fair living.

The Identity Statement Background Paper makes the following point about this principle: “Within co-operatives, ‘democracy’ includes considerations of rights; indeed, rights and responsibilities. but it also means more: it means fostering the spirit of democracy within co-operatives, a never-ending, difficult, valuable, even essential, task.”

In general, this principle leads to the membership empowering a board of directors to make decisions who then often empower a manager to make operational decisions. However, in many worker co-operatives, this principle comes to life with non-hierarchical structures in which all decisions (the big strategic and philosophical to the small operational) allow input and decision making by the collective. There is a basic concept that for a collective to truly operate as a collective it needs to stay under forty members. Obviously, the larger and more spread out the operation, the more likely it is need levels of hierarchy to manage effectively.

This principle brings up one of the more exciting differences between worker co-operatives and other sectors. Because the users/members are the workers, the function of democracy takes a significantly different role. Even in large co-operatives, the operational issues get debated by the membership. Management generally involves working with people to develop a consensus as opposed to barking orders. It also involves clearly defined roles for those times when someone does have to bark orders.

Mondragon has a famous saying that “there is no democracy on the shop floor.” I understand that concept, but disagree to a point. Obviously, every decision cannot involve a consensus of the majority. People have to be assigned roles with authority to act and have those decisions respected. However, there are ways to build in a sense of democracy into the operations. To me, that is one of the challenges of worker co-operatives. As stated earlier, we have a responsibility to foster the spirit of democracy throughout our actions. For those of us who have hierarchy in our co-operatives (especially those of us who have the title of “manager”), we need to find ways to manage that reflect the spirit of the principles. We cannot simply model our competitors and say that we have democracy because their is an annual meeting and board of directors.

Another key point in the discussion of democracy involves the middle sentence of the principle description: “Men and women serving as elected representatives are accountable to the membership.” The Background Paper makes the following concept: “This sentence reminds elected representatives that they hold their offices in trust for the immediate and long-term benefit of members. Co-operatives do not ‘belong’ to elected officials any more than they ‘belong’ to the employees who report to these officials.” In a worker co-operative, the sense of ownership is vital to its success. However, we must remember that we are a democratic organization and while we may be owners, our control is collective. To paraphrase Chief Seattle, “We belong to the co-operative, it does not belong to us.” As a result, it is our duty as leaders, directors and owners to take care of the co-operative for the generations of workers who will be looking to it for their healthy workplace.

Next Week: Member Economic Participation–the last of the user principles.

November 30, 2009

#13 Voluntary and Open Membership

Filed under: Identity Statement Series — Tags: , — John McNamara @ 12:06 pm

The principle of voluntary and open membership has always held problems for co-operatives. It is a very important part of co-operatives that keep them community based and relevant; however, it can also challenge founding members when late-comers express their rights (and their generational view). It can also challenge governments that want to have an alternative to capitalism, but only in a way that they can control.

Let’s start with the Identity Statement’s definition:

“Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.”

In this statement is the echo of the definition of a co-operative. More importantly, the language reaches back to the founding members of Rochdale who were universal suffragists and included women in the rights of membership. Notably, too, the membership is about the ability of the member to use the coop’s services and accept the responsibilities of membership. Nothing else really matters–even the political affiliation of the individual must be excluded.

This statement, however, should not be considered static. In a society which remains dominated by specific cultures, gender and class, co-operative must do more than simply ensure the policies and membership are neutral. Co-operatives should strive for communities that look like the larger community around them. They should develop program to encourage leadership development throughout the membership with special encouragement to those groups that normally don’t get promoted in society as a whole.

The Background Paper makes the following point: “Co-operatives should also reach out, either through their own activities, or through assisting in the development of new co-operatives, to all evident population groups and minorities able to benefit from co-operative enterprise. The basis for this involvement should not be charity; it should be the result of a careful, practical and innovative assessment of the possibilities for co-operative action. “

I don’t think that this statement should be seen as a call for “affirmative action” as much as it is for understanding the historical methods of exclusion that have been internalized by populations in the majority and the minority. This principle does call for us to understand the concept of oppression and take action to develop anti-oppression tactics in our co-operatives.

The Worker Co-operative Dilemma

For worker co-operatives, this principle might seem problematic. We limit the number of members for reasons of maintaining a living wage. Even though this is called one of the “user principles” by the US Department of Agriculture, it is only happenstance that the worker-members use the co-op’s services. In some cases, the workers might not be able to afford the co-op’s services.

The Background Paper refers to one point of the worker co-op problem in a discussion: “The phrase ‘open to all persons able to use their services. . . ‘ acknowledges that co-operatives are organised for specific purposes; in many instances, they can only effectively serve a certain kind of member or a limited number of members. For example fishing co-operatives essentially serve fishing people; housing co-operatives can house only so many members; worker co-operatives can employ only  a limited number of members. In other words, there may be understandable and acceptable reasons why a co-operative may impose a limit on membership.”

For worker co-operatives, members must also be able to do the tasks assigned. Cab drivers must be able to operate a vehicle in city traffic safely. Engineers need the education and training to design the machines. Grocery store workers need the skills of retail. Bike shop workers need to know how to repair bicycles.

Another dilemma involves the responsibilities of membership. Often, our co-ops grow faster than we can find bonafide co-op types to work for us. We then hire and membership people who really just want a good job. This seems a large contradiction of the principle. What if our members aren’t willing to accept the responsibilities of membership? The other method would be to allow workers to not join the co-operative and simply serve as hired guns until such a time as they chose to embrace the co-operative model.

The Closed Shop

I support a closed shop. I believe that all workers in a worker co-operative must be members of the worker co-operative. I liken it to the concept of a closed shop within the labor union movement. The workers all share in the benefits of a collective bargaining agreement, so they should all support the labor union that speaks for them in bargaining. If they have problems with the leadership of the labor union, they can engage the membership and run for stewards, officers, and even the bargaining team. However, they need to support the infrastructure from which they benefit. Likewise, members of a worker co-operative enjoy the benefits of co-operation and should bear the responsibility of membership to support that beneficial working environment.

I think that the CICOPA Declaration on Worker Co-operatives presents a workable compromise, but 50% is too low of a threshold. It allows worker co-operatives to create plantations and two-tier worker classes. I won’t even refer to co-ops under 50% ownership as a worker co-op. At that point, they are employer co-operatives and the workers should unionize to protect their interests. There are some that don’t agree. Often the argument runs along the lines of “workers not being intellectually ready for co-operation” or that the culture doesn’t support co-operation. These all tend to be the same arguments that supported anti-democratic governments throughout history. They were wrong then and they remain wrong today. Worker Co-operatives cannot, however benevolent, be economic imperialists.

The voluntary nature of this principle is the basis for the argument of an open shop. People shouldn’t be forced to join the co-operative if it is voluntary. One could point to this cogent argument of the Background Paper: “People cannot be made to co-operators. They must be given the opportunity to study and undestand the values for which co-operatives stand; they must be allowed to participate freely.” This sounds like a great argument for an open shop, but it isn’t. In fact, allowing this argument in a worker co-operative creates a method to use the ideal of “voluntary and open membership” to restrict workers’ rights. If we simply say “well, these workers don’t want to join!”, then we must also ask
“Why don’t they want to join?” What is creating the barrier? Is is a gender gap, a racial divide, a class division? Are the workers only there for the money and nothing else? Do we really want hired guns representing our co-operative?

Of course, the authors of the Background Paper focus on consumer, producer and housing co-operatives. I think that worker co-operatives have a unique situation. While their discussion concerns the role of governments in pushing people into joining co-operatives, it applies here as well: “In those instances co-operatives have a special responsibility to ensure that all members are fully invovled so that they will come to support their co-operatives on a voluntary basis.”

Worker Co-operatives have a special duty under the first principle. They must activate the other principles to an even larger degree that non-worker co-operatives. They must educate the workforce on the benefits of co-operation. They must work to develop their members as human beings. They must actively encourage participation among the workforce. Worker Co-operatives must be about worker liberation and human dignity.

Coming Up Next: Democratic Member Control

Sources:

MacPherson, Ian            (1996) Co-operative Principles, ICA Review 1995 (pdf)

For more extensive reading on the Statement on the Cooperative Identity, please visit the International Cooperative Information Centre through the UW Center for Cooperative’s website.

November 23, 2009

#12 The Principles of Co-operation

Filed under: Identity Statement Series,Uncategorized — Tags: , , , — John McNamara @ 12:44 pm

The Co-operative Difference, which creates the Co-operative Advantage, results from the creation of the Co-operative Principles.

The Principles have been with the Co-operative Movement since the success of Rochdale Society of Pioneers. Most of us know the story, after several attempts to create an ethical market enterprise; the organizers of Rochdale tried a different tactic. They created a set of rules that would govern the co-operative. Among these included the prohibition of credit to consumers and other tactics used by markets to control consumers and workers. Many of these principles and practices (such as food at meetings) have passed through the generations to our co-operatives today.

The Background Paper on the Identity Statement makes this point about the principles:

“Many people understand principles as iron-clad commandments that must be followed literally. In one sense, that is true in that principles should provide standards of measurement. In another sense, they should restrict, even prohibit, certain actions while encouraging others.”

“Principles, however, are more than commandments; they are also guidelines for judging behaviour and for making decisions. It is not enough to ask if a co-operative is following the letter of the principles, it is important to know if it is following their spirit, if the vision each principle affords, individually and collectively, is ingrained in the daily activities of the co-operative. From that perspective, principles area not a stale list to be reviewed periodically and ritualistically; they are empowering frameworks—energizing agents—though which co-operatives can grasp the future.”

In many of our co-ops, we ask if our choice of action is financially feasible. How many of our choices are socially feasible when compared to the principles? Everyday managers need to make key strategic decisions without the luxury of a consultant. The principles should guide their decisions along with the values and ethics of the Identity Statement. The teachings through the Masters of Management: Co-operative and Credit Union program focus on the merging established management practices with co-operative principles. When these two diverge, the goal of the MMCCU candidate will be to find a way to amend the practices to fit the principles. This is the key difference between programs such as MMCCU and other educational programs that utilize co-operatives as part of a large toolbox to reform capitalism (non-profits, ESOPs etc).

They also make us strong. They cause us to spend money on things that our competitors don’t. I think, however, that expense on the principles creates a competitive advantage not a disadvantage. Sometimes, when times get tough, co-operatives have to make decisions that may cause the principles to get “set aside”. In other co-ops, the lack of a clear co-operative identity may cause the principles to be co-opted as something else. In either case, the path to demutualization may be built by small decisions to ignore the principles.

The history of the principles is interesting. The Identity Statement, like the Rochdale Principles, is a living document. Since 1844, co-operative leaders from around the world have reviewed and amended them. The changes reflect the generation of co-operators that existed at the time as well as honoring the history of the co-operators that have gone before.

In 1844, Rochdale had a lenghty list of “laws” detailing every aspect of the co-operative. By 1860, the list of “Rochdale Practices”* had been whittled down to nine many of which sound quite familiar:

  • That capital should be of their own providing and bear a fixed rate of interest.
  • That only the purest provisions procurable should be supplied to members.
  • That full weight and measure should be given.
  • That market prices should be charged and no credit given nor asked.
  • That profits should be divided pro rata upon the amount of purchases made by each member.
  • That the principle of “one member one vote” should obtain in government and the equality of the sexes in membership.
  • That the management should be in the hands of the officers and committee elected periodically.
  • That a definite percentage of profits should be allotted to education.
  • That frequent statements and balance sheets should be presented to members.

As they have evolved, they have become integral to each other. In 1937, the seven principles were officially created as the Rochdale Principles:

  1. Open membership
  2. Democratic control
  3. Distribution of the surplus to the members in proportion to their transactions.
  4. Limited interest on capital
  5. Political and religious neutrality
  6. Cash trading
  7. Promotion of education

The seven principles that most of us know came into being in the late 1960′s and reflected the new ethos of that era. They continued to evolve to the Identity Statement of 1995. Today, there is a strong effort to add an 8th Principle called “Ecological Perspective”.

As the Background Paper continues:

“The principles that form the heart of co-operatives are not independent of each other. They are subtly linked; when one is ignored, all are diminished. Co-operatives should not be judged exclusively on the basis of any one principle; rather, they should be evaluated on how well they adhere to the principles as an entirety.”

Is it possible to have democratic participation without education, information? The first three principles “voluntary and open membership”,  “democratic member control” and “member economic participation” are collectively known as The User Principles by the US Department of Agriculture. They detail the internal dynamics of the co-op while the last four deal with the operation and external relationships

Over the next few weeks, I will consider the seven principles of the Identity Statement as well as three principles of Mondragon that I think should be part of the identity statement (or at least part of our identity as worker co-operatives).  Mondragon’s principles focus on the elevation of the worker over capital and social cohesion of the co-operative.

Here is a great video on the principles of co-operatives:

Next Week: 1st Principle: Voluntary and Open Membership

Source and Reading Recomendation:

*Fairbarin, Brett  The Meaning of Rochdale: The Rochdale Pioneers and the Co-operative Principles, Centre for the Study of Co-operation, University of Saskatchewan, Saskatoon.

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