The Workers' Paradise A Discussion of Workers Cooperatives and Building the New Economy

February 9, 2017

CICOPA’s Declaration on migrants and refugees

Since my last post on January 23, I had been wondering how to address some of the actions that have happened since in terms of the worker cooperative identity. Fortunately for me, my friends at the Canadian Worker Co-op Federation posted the following (adopted April, 2016) The International of Industrial and Service Cooperatives (CICOPA) put forth the following Declaration on Migrants and Refugees:

According to the United Nations, the number of international migrants increased by 41% over the last 15 years, from 173 million in 2000 to 244 million in 2015;1 the UN also point out that the main reasons for migrating include conflict, poverty, inequality and lack of decent jobs, and that the distinction between countries of origin, transit and destination is becoming increasingly obsolete.2

According to the UNHCR, refugees reached an estimated 15.1 million people in mid-2015, up from 10.5 million in 2012, 3 namely an increase of 40% in only 3 years, the vast majority being hosted by low or middle income countries.4

This massive increase in the flow of migrants and refugees is bound to increase over the next few years, both because the present reasons for such an increase have not been solved and because new phenomena are beginning to impact on migration, such as climate change.

Europe in particular is facing the gravest migration and humanitarian crisis since World War II, bringing into light its own paradoxes and inabilities to apply its constituent values such as solidarity, respect for human dignity and liberty.

It should be pointed out that, when they are able to survive during their exodus, migrants often face difficulties in accessing employment opportunities and basic social and health services. Furthermore, migrants are among the most exposed to working in low-paid precarious jobs and potentially exploitive conditions in the informal economy.

CICOPA is fully aware of the complex reality which migrants are facings around the world and that it is, at times, a difficult or perilous path.

As an organization active globally, CICOPA strives to change this paradigm through the development and growth of industrial and service cooperatives, in compliance with the first cooperative principle according to which “cooperatives 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”.

Industrial and service cooperatives contribute to a decent and dignified life and to the social and economic integration of refugees and migrants in various parts of the world. 5 They are also used as a tool by migrants and refugees themselves for developing entrepreneurship initiatives together with other members from the community, thus increasing autonomy, solidarity and human development while at the same time contributing to a sustainable economy both globally and locally.

Industrial and service cooperatives are the natural allies of international organizations, regional organizations and national governments in carrying out inclusive policies that provide basic services and socioeconomic inclusion for migrants and refugees. Cooperative entrepreneurship is a valuable tool to maximize the developmental benefits represented by migrants and refugees for welcoming countries, in terms of human resources, competences and skills.

Through this Declaration, CICOPA wants to express its commitment to fight for an equal access to services and work opportunities provided by cooperatives, allowing for a decent life and increased opportunities for the entrepreneurial projects to be initiated by workers and producers in the migrant and refugee communities around the world.

Cooperatives are based on the principle of equality, whereby all human beings are equal in rights and remain at the heart of all policy concerns. This is why cooperatives in industry and services commit themselves to fight against discrimination, stigmatization and exclusion which refugees and migrants are facing all around the globe.

 

1 United Nations Department of Economic and Social Affairs (2016) International Migration Report 2015; New York: United Nations, p. 5

2 Ibid.

3 UNHCR (2015) Mid-Year Trends 2015 ; Geneva : UNHCR

4 Ibid., p. 7 2 CICOPA – C/O European House of Cooperatives – avenue Milcamps 105 – BE-1030 BRUSSELS TEL. (+32/2) 543 10 33 – WWW.CICOPA.COOP– CICOPA@CICOPA.COOP 5 For example, Si, Se Puede! (Yes, it is possible!) Women’s Cooperative was founded in

5 For example, Si, Se Puede! (Yes, it is possible!) Women’s Cooperative was founded in New York in 2006, with the mission to bring together immigrant women to create a women-run, women-owned, eco-friendly housecleaning business. The cooperative Nor Bum, established in 2011 in La Plata, Argentina, groups 7 construction workers coming from Bolivia. Social cooperative Camelot established in 1997 in Ferrara, Italy, by

September 1, 2014

We Need to Reclaim “The Sharing Economy”

There has been a lot of discussion of late regarding the so-called “sharing economy”. This phrase refers, generally, to organizations such as Uber, Lyft, AirBnB, and others that provide an on-line broker service so that people can monetize practically everything in their life. The term sharing economy is a great marketing ploy to suggest that this practice engages the voluntary actions of the participants who just want to earn a little extra money from their assets. On the face of it, it makes a lot of sense–if someone wants to pay me $10 bucks to use the lawnmower that I am not using, why not? If I can give someone a ride to work on my way to work and it pays for my gas, that is a great deal and I am helping out a fellow human who may need that ride due to lack of access to public transportation or a personal vehicle. However, that isn’t what these organizations are really doing and I would argue that the the people engaging in it do so because they are rather desperate in a late-stage capitalist economy taking full advantage of having largely crushed the labor unions.

The New York Times recently ran a “balanced” article chronicling the days of a couple of workers. In this article, the workers seem content and like the variety and hustle-and-bustle of the life of managing multiple phone apps, 10-14 hour days, and not being able to spend time with their family to earn about $10 an hour after self-employment taxes and expenses. They would probably be better off with a menial minimum wage job, but that would limit their total hours or require them to maintain multiple jobs such as the women who recently succumbed to fumes and died while taking a rest break in her car. The non-sharing economy doesn’t have a lot to offer to workers today either.

Maureen Conway, of the Aspen Institute, sums up the reality of this new effort by capitalists to avoid any responsibility to the communities from which they extract wealth:

“In the end, the sharing economy is nice words for what is really more of the same. More money going to business profits held by a few, and less money going to the labor income that is the primary means of support for most Americans. What we need is a sharing economy in which working people share in the wealth that their labor creates. Unfortunately, this version of a sharing economy does not promise that. “

The “sharing economy” is about workers “sharing” their labor and capital with venture capitalists for a percentage while also accepting 100% of the risk (expenses, accidents, taxes, etc). This isn’t a new effort. Last week, (August 27, 2014), a Federal Court finally ruled in a long-running dispute that FedEx improperly classified many of its employees as “independent contractors”. FedEx has tried to claim that its drivers were independent contractors mainly because it has shifted most of the expenses on to them (they have to buy the truck, rent the equipment to track deliveries, etc). I remember one argument that FedEx made in a similar case that is still to be decided that the drivers could use the truck to run other deliveries provided that they removed all the FedEx decals first and then reapplied them in time for their next shift. Seriously. Had FedEx won this case (and it might still go to the Supreme Court), it would have been a watershed moment that would essentially bring us back to the early days of 1800. What company wouldn’t love to reclassify its workers as independent contractors and immediately save on payroll taxes plus other items? However, that is essentially what the sharing economy is hoping to do.

There is a real sharing economy, however. It has existed (as an on-going concern) since 1844 and in different forms for many years before that such as the first mutual insurance company founded by Benjamin Franklin in 1752. Cooperation brings people together to share their capital for the common good. Instead of groups such as Uber or AirBnB in which people provide their labor and capital to provide wealth for a third party, the labor and capital provided to a cooperative benefits the users of the cooperative–the members. Further, in the true concept of sharing, democratic decision making allows the opinions of the different people sharing to be expressed on an equal basis (Uber, Lyft and others essentially present the terms of service to the workers and either they accept or quit working for them). Any surplus generated from the cooperative sharing economy gets distributed according to the inputs into the enterprise.

One thing that Taskmaster, Favor Delivery, Lyft, et al have pointed out is that a market exists for connecting people with others. This can and should be done in a cooperative format that doesn’t exploit the people providing the labor. Dane County Timebank has made a start, but seems to come up short. This needs to be national, it needs to be modern (phone apps), it needs to engage more than bartering. I realize that Timebank seeks to demonetize society as a key part of its mission–it is all about getting off of the currency addiction. Unfortunately, for many working people, money comes in pretty handy. Landlords don’t accept barter and neither do health clinics, gas stations, and a host of other places that provide vital goods and services. Until they do, a “sharing economy” needs to provide the means for people to earn a decent a living and maintain a quality of life.

Cooperatives need to reclaim the concept of the “sharing economy”. We need to help people struggling to find work, make ends meet, and otherwise seek their dreams understand that they don’t have to rent out their bodies and everything they own (is their a site where someone who likes parenting, but doesn’t want the hassle of a full-time kid, rent somebodies child for an afternoon?). Cooperatives (worker, consumer, producer and financial) need to challenge these profiteers by helping people combine their resources to create dynamic cooperatives that can provide the things that the “sharing” apps provide which is essentially services for people who need them.

There is also a role for labor unions. SEIU, CWA, USW have all been engaging worker cooperatives of late. This “new” economy offer them a real opportunity as well. Through the creation of a “union coop” of drivers, they could help Uber and Lyft workers negotiate better terms. This would be similar to the Campbell’s union drive in which Campbells’ claimed the farmworker’s conditions weren’t their responsibility since Campbell’s only contracted with the farmers and didn’t employ the farmworkers. Unions could also organize the “favor” workers to negotiate better terms. There really isn’t anything new in the “sharing economy” model, but it needs a response.

Sharing constitutes the basis of cooperative life and economics. As cooperators, we share our labor, our capital and our knowledge with each other to create a resilient and sustainable economy and environment. Over the years, many times, the selfish economy have borrowed our ideas to advance their personal goals. Today, the investor class corrupts the very concept of being a good neighbor by using the noble concept of community to extract wealth in a one-way relationship. Cooperatives have always offered an alternative to the selfish economy but have generally operated under the radar. We need to stop doing that. We need to quit being the world’s best kept secret. We need to claim the “sharing economy” as the “cooperative economy”.

January 27, 2014

Block of Cheese–#AsktheWH

Filed under: Movement — Tags: , , — John McNamara @ 9:39 am

As legend has it, in 1837, President Andrew Jackson threw open the doors of the White House to invite the people to come sample a 1,400 pound block of cheese. Presumably, they also petitioned the government while they were noshing. For fans of The West Wing, it may be one of the top episodes.

On Wednesday, January 29, President Obama is holding a virtual “block of cheese” day. It is a day in which the public is encouraged to tweet or post on various social media questions for the President or his administration to consider. Using the hashtag #AshtheWH, and 143 characters, we have the opportunity to raise the profile of worker ownership and worker cooperation within the administration as it engages in its effort to affect the income inequality in this country.

To have any hope of an impact, however, our message needs to rise above the likely millions of tweets. This means using the phrase “worker ownership” or “worker cooperative” and (if there is room) noting the US Federation of Worker Cooperatives or another group, the American Sustainable Business Council.

I have come up with a few tweets that I am happy to share (in fact, I hope people take the opportunity to send them along):

  • Worker Ownership creates a sustainable economy, will POTUS make it part of the agenda? #askthWH #ASBC #USFWC
  • Washington and Jefferson used worker ownership to rebuild the cod industry, will Obama use it to build a sustainable economy? #askthWH #ASBC #USFWC
  • Worker ownership promotes income equity and a sustainable economy. Make worker ownership part of the economic agenda. #askthWH #ASBC #USFWC

Feel free to come up with your own, edit these, or what have you. Please post tweets here as well in the comments. The more of us doing this, the more likely that the idea of worker ownership might get noticed.

The Block of Cheese event isn’t going to change the world, or even change Washington. I certainly don’t expect any sort of sea change to occur because of this, but we need to do even the small things to raise our profile and this is one that all of our members can do from their phones, tablets, and computers.

 

Next Week: More on the American Sustainable Business Council and the Big Tent of Worker Ownership

October 28, 2013

Circling Around to the Beginning?

Filed under: Worker Rights — Tags: , , , , , , — John McNamara @ 1:34 pm

In my studies over the last two years, I have learned a lot about American politics and the attitude towards labor in these United States. It is a very interesting dynamic and one that helps to make Foucault’s concept of Genealogy quite relevant. The role of genealogy allows an examination of the history of labor in the United States and elsewhere. The concept of work and the employee as known in 2013 is significantly different from that in 1963 and even more from 1863. However, this does not suggest, nor should it, an evolutionary transition based on modern progress, but a running debate between competing discourses rooted in the concept of Republicanism on the one hand and aristocratic control and domination on the other (see Roy Jacques’s Manfuacturing the Employee).

In the earliest days of the US labor movement, the call for national unions coincided with calls for worker owned factories. The idea of the “wage” system was seen exactly for the trick that it has become. The wage creates a schism between the output of a worker and their ability to do the job. It led to the scientific management motto of Fred Taylor “an honest day’s work for an honest day’s pay”. Of course, it is management, not the worker, who decides what each value becomes. The focus on wages then led to a small confined box for labor unions to negotiate: wages and benefits. This hampers the workers ability to negotiate conditions of labor and those conditions tend to be, with some minor exceptions, wrapped up into the rights of Management.

Now, however, after thirty years of destroying the power of labor union’s ability to provided living wages and benefits, we come back to the 1860’s and a greater call for worker ownership. However, there generally isn’t, except for the IWW, a call for abolishing the wage system. If we are going to create a better working environment for workers through ownership, can we do that by simply imitating the capitalist system?

The debate over worker ownership and the value of the worker has been occurring almost as long as the debate over the role of the federal government and the right of property owners. As we debate the sort of sustainable economy that we want, we should also debate the means of compensating workers for their labor. We should simply accept the wage and benefit system as the predetermined perfect way as it has barely existed for 120 years. If we are going to work in a different economic paradigm for the marketplace (cooperation), we need to consider holistic changes to our industrial relations.

October 21, 2013

Can Coops Bring a Renaissance in Detroit?

Over the weekend, I had the honor of being part of a panel discussing worker cooperatives with the Southeastern Michigan Jobs with Justice organization. About 35-40 people ventured out on a cold rainy day to ask questions and listen to the experiences of myself, a worker from Madison’s Nature’s Bakery, two leaders of the New Era Worker Cooperative and a representative of The Working World.

It was a lively discussion as all three coops developed through slightly different methods, are of different sizes, and have different structures. Despite the differences, we all talked about the difference between ownership and control. There was a commonality in how workers engage as owners to move the business forward. A lot of the discussion focused on the importance of communication, education, and information.

I grew up in Toledo, Ohio which remains part of the larger auto industry. During my high school years, I would make a monthly trip to Port Huron in the summer with a scuba diving club. The members of the club were working men and women from the region (at the AMC plant, and other factories). A large number were union members and the ones that weren’t didn’t really talk about it. Making the drive up I-75 some thirty years later was more than depressing. Starting with the site of the old plant on Willy’s Parkway and all the way to the UAW Vote Center on Livernois Ave, it was a trail of broken concrete, vacant overgrown lots, and crumbling buildings that spoke to a different era of vibrant activity. It felt as if I was travelling through the ruins of a lost civilization.

Behind the scenes is the government of Michigan attempts to force bankruptcy on the City and steal the pensions of city workers. It is a city in a major crisis.

Can the worker coop model help? I think it is possible, but people will need to forget about the Detroit of the 1950’s and 1960’s. In using the cooperative model, the community should focus on the needs that currently aren’t being met (either because of the failure of the State and local government) or the lack of people willing to enter the market without a guaranteed profit. This might include groceries, daycare, and even charter schools using the worker coop model.

In some ways, Detroit provides a great opportunity to build a Mondragon-style” cooperative community. By starting small, and siphoning off development funds and solidarity funds along the way, the cooperatives could start building a larger development fund. With assistance from groups such as The Working World, Northcountry Cooperative Development Fund, and other sources (perhaps some investor angles who don’t mind settling for a 5% return), they could rebuild Detroit as a truly Cooperative City.

One of the key concepts that we spoke about was building sustainable communities. This isn’t about maximizing pay, but creating a decent life with jobs that won’t be shipped to the lowest bidder. It means earning enough to be able to afford good, wholesome food, quality clothes and decent housing. It also means that this generation needs to make a sacrifice to get it started. As the president of the New Era Windows noted, he could have gone to work at O’Hare and made a decent wage, but this struggle is about more than wages, it is about  working with each other to build a strong community. In the end, that will benefit all of us.

 

January 14, 2013

What is Progress? and How Do We Measure It?

Filed under: Imagine2012 — Tags: , , , , — John McNamara @ 1:05 pm

Imagine 2012 continued

Ron Colemen, the Director and Founder of the Nova Scotia based GPI Atlantic (a non-profit research institute measuring wellness and developer of the Genuine Progress Index) spoke on the nature of progress and how the means of measurement work against a sustainable ecosystem. The following are my notes from his talk and the following commentary. However, first let me add a few comments. This conference didn’t just bring together economists such as Coleman and the cooperative world, it also presented a challenge to the existing cooperative paradigm. We need to do more that play by the rules that are made for us. We need to change the rules. As Coleman points out, the way that we count creates the the ability to hide the environmental costs of our actions. No accounting firm would ever allow a cab company to ignore depreciation of its vehicles and the surplus or profit shown would be expected to help replace those assets. So why don’t we have the same concept with natural assets (trees, water, breathable air, etc)?

Likewise, the small federal credit unions of Brooklyn have resisted the urge to get big. Not surprisingly, they maintain a humanity about them that has only become a marketing ploy of some giant credit unions. It isn’t enough to call a business a coop or credit union. It needs to be making a real difference in the world.

 Ron Coleman on the New Economic Paradigm

The window for change is shrinking rapidly. Within a short period time, the earth will be locked into the a period of climate change.

Coops are planting the seeds of the new economy. If change doesn’t happen within this movement, then where will we find it?  Yet every coop uses the same accounting system that has gotten the world into trouble in the first place. To make a change, we need an accurate accounting system that includes the human, social and ecological costs. If co-ops can structure their annual reports to include the real cost, it can affect price signals and make a change in the way that we do business.

Let’s begin with diagnosis and then change the way we measure progress.

Our current GDP based accounting system that only measures market flows in monetary value of what is produced. It ignores a wide range of social, human and ecological costs which send inaccurate signals to the public and the policy makers. Accounts assess values and we can change how that works. The current account mechanisms do not account for natural wealth, beauty and ecological services, voluntary work, family/leisure time and more.

Robert F. Kennedy on the GDP: “It accounts everything except that which makes life worthwhile.”

If you hire a housekeeper, the GDP goes up. If you marry your housekeeper the GDP goes down. If you hire a stranger to care for your child, GDP goes up, if you care for your child, it has no economic value.

The quicker we cut down trees, deplete our fisheries and use up our fossil fuels, the faster the economy will grow.

What we count reflects what we value. it determines what makes in ont the policy agenda and influences behaviour. Is this system appropriate for cooperatives and credit unions? We do our own members a disservice by using an accounting system that is fundamentally flawed and anti-cooperative.

Accounts Are Powerful.

If we understand that, then the alternative is very straightforward. We need to expand our accounting. We need to include social capital in our accounts. Natural resources should be subject to depreciation and requiring re-investment. Voluntary work, safe communities enhance social capital.

General Progress Index Accounts

Crime, sickness, disasters and pollution clean up are counted as costs rather that contributions to well being. 1/4 of the world’s prison population is in the United States and the Prison industrial complex grows the economy.

The GPI Nova Scotia has over 100 detailed reports. Natural Capital Account, Human Impact on the Environment, Living Standards, Social and Human Capital.

Price signals are very powerful. Nothing removed SUVs from the road more effectively than a massive increase in fuel.

This is the 20th anniversary of the Canadian moratorium on Cod fishing–the GDP sent no signals since the only thing that counted were the fish that were caught. There was no accounting method for fish stocks and when they collapsed, 40,000 jobs collapsed with them. This proves that environmental costs lead to dramatic economic losses.

Using a net process, we can see that the costs to farming are increasing as a percentage of Income.

Full Cost Accounting:

  • Internalize “externalities”
  • Recognize economic value of non-market assets (voluntary sector, natural capital)
  • Fixed–>variable costs (e.g. car registration, insurance)–give credit to workers to carpool or use public transit.
  • $ Values–strategic only= inadequacy of $ as valuation instrument. “Value” = larger.

Dutch experiment with part time work at good pay and benefits. People work better in shorter hours. .

The political will is not present (even with the New Democratic Party). What will bring the political will to happen? Bhutan is the first sovereign nation will be using this new accounting system and present the rudiments of the paradigm presented to the United Nations in 2013.

However, Cooperatives can start doing this today. They can be a powerful force in the development of a new economic paradigm.

Commentary on New Economic Paradigm from Joy Cousminer

Commented on how large credit unions call it the credit union industry instead of the credit union movement and that is antithetical to what credit unions are.

“BetheX credit union was formed to serve poor and working poor in New York City. Most early members were women on welfare  (Aid To Families with Dependent Children). the Board is a volunteer group. Members benefited by having a safe place to save compared to a sugar jar. Women made small loans and could avoid the loan shark and the pawn shop.

Our growth is horizontal–we seek out poor people and do not recruit from the middle class, but they find us on their own. We visit homeless and domestic abuse shelters to find new members.

We specialize in start-ups and run credit reports to please the bank examiner but ignore them. We make loans to seniors even those over 70. Employees come from the community and hire relatives (considered a “no no”) and all start as tellers and work their way up. The Credit union pays all health care and dental and a clothing allowance for the workers. We encourage staff to improve their education. As we do better financially, we reduce fees and interest.

Created a group called “We care for Credit Unions” to assist small credit unions.

By making money easily available, we are reducing stress, and helping families. Poor people do not dream of living in mansions, they dream commensurate with their station in life. They want a nice dress for their daughter and a car that won’t break down on the way to the family picnic.”

 

January 7, 2013

Imagine 2012 and Beyond

Filed under: Imagine2012 — Tags: , , , , — John McNamara @ 12:56 pm
In October, economists and cooperative thinkers from around the world met in Quebec to bridge the gap between the disciplines. The conference, Imagine2012, International Conference on Cooperative Economics featured a number of presenters such as Neva Goodwin, Thomas Homer-Dixon, Stefano Zamagni and Vera Zamagni. Maxnfred Max-Neef was unable to attend and Elinor Ostrum was scheduled but passed away prior to the conference. The next several posts will be from my notes on the event. Starting with the opening press conference.
This event is particularly important in the last quarter of the International Year of the Cooperatives. It allows us to spotlight our enterprises. My notes, even with quotes, should be seen as paraphrasing.
Colin Dodd, President Saint Mary’s University
Colin Dodd spoke of some of the origins for the idea of the conference which began through Saint Mary’s unique master’s program in cooperative management. He noted that Tom Webb had proposed a program based on a course at Saint Francis Xavier (home to Moses Coady and the Antigonish Movement). Further, Dodd’s own background was growing up in the mining community of Northern England near Manchester home to the birthplace of cooperative and trade unions, which had, by Pres. Dodd’s day created a “cradle-to-grave” cooperative movement.
The master’s program was build from the ground up, not simply a copy of an MBA. It reflects the essentials of the cooperative movement and complements the goals of the Sobey School of Business and SMU to be a global university. It creates a sustainable global economic model based on democracy.
Monique Leroux, CEO and President, Desjardins
Cooperatives are diffierent, our goals are difference, our long term vision is different. So few universities and business schools recognize coops. I hope that more universities will follow St. Mary’s lead. We need more innovation, sustainable growth, and more businesses to invest and think long-term. Cooperatives are not an alternative to businesses, what make them distinctive is that they base themseves on the needs of people, not profit.
Why are coops more likely to be studied in sociology courses instead of business courses?
Dame Pauline Green, President, International Cooperative Alliance
We are delighted to be part of this event. We need fresh thinking about how to go forward in building the cooperative movement. This event is a kickstart to where we want to go in the future. The IYC has been an opportunity to reach out to the cooperative movement.  For the first time in 170 years, our movement has worked together in a cohesive manner.
We need to keep on working to make sure that our model is a key part of the global economy. A billion people in the world are not “idealistic”.
Tom Webb, organizer of Imagine 2012
Tom commented on the differences in approaching cooperative management and understanding cooperative economics:
Want we need to do is to account how we use our resources to meet our goals and meet human needs. How do we market to human needs. We don’t teach human resources, we teach personnel management. We realized that we could not teach neoclassical economics to coop managers.
In neoclassical economics, needs get trumped by wants. income inequality is of no concern (as opposed to economies of scale and minimal markets).
What have we gotten, more wealth than ever even why we cannot afford education and healthcare. 100 million people work in coops.
Has the economy become an angry god to whom we must sacrifice: children, the elderly, the environment, the poor, healthcare, education
“The economy is a complex set of relationships that people use to provide thmsevles with the goods and services needed to provide themselves with a meaningful life.”
Economics is the sutdy of how effective the economy is at meting human need in a manner that allowes people to have a meaningful life.
Stefano Zamagni, Vice-director, Bologna Center
Prof. Zamagni is a leader in cooperative economics and, with his wife Vera, has produced some excellent works on the topic such as “Cooperative Enterprise: facing the challenge of globalization.”
“Why did cooperatives disapear from economic thought? Since the start of the market economy, their are two types of competition. Since globalization era began, the cooperative model has grown even if the economist will not admit it. Connective capital has also grown but that is simply another way of saying cooperative competition.  Why does mainstream economic theory continure to ignore coops?
It is common theory that assumes that everyone is Homo Economica statest thats self-interest is the only reason for people to act. Zamagni suggests that a different model is needed a Homo Cooperative? We need to see that common-interest, not self-interest, is what has allowed humans to flourish and will save the planet. Thinking thought vs. calculating thought is what is needed with our cooperatives,
Karen Miner, Manager, MMCCU program at Saint Mary’s University
Emphasis of new economic theory for the future development of cooperatives. Notice how capitalist model borrows from co-operatives. However, co-ops must be careful when borrowing from capitalists that they don’t lose themselves in the process. A cooperative movement must articulate a “future” state. Cooperative managers need specialized knowledge. “
These are only some brief comments from the opening press conference. Over the next few posts, I will be poring through my notes of the speakers.  It was a dynamic conference that explained the perilous state of the environment and the role that economics plays in creating our natural, political and economic environment. The discussion also focused on how we, as cooperators, can turn this around. Not, necessarily  through government intervention, but through a better understanding of economics.

February 13, 2012

Markets Can Be Healthy

Filed under: Education,Movement — Tags: , , , , — John McNamara @ 12:12 pm

As part of my studies this semester, I am reading the English edition of Cooperative Enterprise: Facing the Challenge of Globalization* by Stefano and Vera Zamagni.

In their opening chapters, they lead a discussion about the nature of cooperation (from their Italian perspective), the nature of competition and the nature of the market.

For decades, Stefano has argued that capitalism has been incorrectly used as a synonym for “free market.” Indeed, that connection is so embedded in our culture in the United States that anyone suggesting anything else often gets labeled a socialist. The dominant paradigm sees the dichotomy of the planned economy of socialism and the market economy of capitalism. There isn’t any other means except the historically defunct feudalism.

Today isn’t about getting into the argument about State Capitalism of the former Soviet Union and modern China, rather, it is about debunking the intimate connection between a free market and capitalism. The Zamagni’s carry this thought throughout the introduction to their book.

Essentially, they argue in the language of Flora and Fauna taxonomy. If we consider the “marketplace” to be the Genus of this particular economic strain, then capitalism is but one species within it. Co-operation, they argue is a unique species within the free market. Cooperation is not opposed to the marketplace, but utilizes it in a manner that seeks to maximize the benefit for the community. Capitalism utilizes the market to maximize the benefit for those owning the capital. Both are subject Adam Smith‘s invisible hand of the marketplace that provide the mechanism for each type of business to make adjustments. Both seek to use government (although capitalism is much better at it) to ameliorate the effect of the invisible hand towards the benefit of their shareholders or stakeholders as the case may be.

As a condition of this, competition plays different roles. In the capitalist species, competition is expected to be a ruthless Darwinian arbitrator determining the most fit organization (again for the benefit of the narrow group of stockholders). In the Co-operative species, however, competition plays a much different, almost helpful, role. The authors argue that the root word for competition is cum petere (“literally, tend together toward a common goal”). It is the basis of a free market. This is the antithesis of “creative destruction”:

“We are well aware of the many economic advantages created by this mechanism. But we are equally familiar with its brutality, its harmful social and political reprecussions. And it is clear that creative destruction may enjoy some legitamacy as long as the value of what is created is grreater than that of what is destroyed, that legitamcy ends when–as is the case today–the relation is inverted. We call the specific form of competitive practiced by cooperatives ‘competitive cooperation’, which is a powerful antidote to the damage that would be done by positional competition. “(Zamagni, 2010, 4)

A competition to see who can best serve the community is part of a truly free market. Further, a free market also requires an educated consumer. In the cooperative species, this means much more that printing ingredients on labels. For one, it means that the consumer (in the broadest sense), must be able to read and understand that label! It means that the consumer must posses the analytical skills to discern between products and services and the related price. During this election year, we will hear a lot about paying for education and the free market, but we will likely not hear about how they are connected. We can’t have a free market if we don’t have a populace educated to a level that allows them to make informed decisions.

Of course, this is one of the key traits of the Co-operative species as espoused by the 5th Principle: Education, Information and Training. The principle states: “Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of co-operation.”

Co-operation, not capitalism, embraces the free market. Capitalism uses a vicious form of competition, the type found in nature by parasites, to stifle other actors in the market. The Zamagni’s quote economists Rajan and Zingales’s work Saving Capitalism from Capitalism (2003, University of Chicago Press):

“The worst enemies of capitalism are not union agitators with their corrosive critique of the system, but the managers in pinstriped suits who sing the praises of competitive markets in every speech while they try to suppress them with every action.”

The next time you hear someone trying to red-bait our movement, you could have a lot of fun pointing out that the practice of modern capitalism is much closer to the Kleptocracy of Russia and the party contolled economy of China while the true competitors and champion of the free market are, in fact, co-operatives.

*The only place that I have been able to find an English copy of Cooperative Enterprise has been through Abe’s Books, however, if your local book coop has a good search engine, they might also be able to find it.

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