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

March 10, 2014

The Things We Know

Filed under: The Things We Know — Tags: , , , — John McNamara @ 7:00 am

This weekend I noticed a posting from a friend, colleague and mentor of mine: Tom Webb. He had found an old write up called The Things We Know. I am not sure of the source of this document, but if it comes from Tom, it probably has a rich history within the Canadian Maritime Cooperative Movement. I am sharing it today, but will spend the next few weeks, discussing each bullit point in more detail. So tune in, comment, and let’s have a great discussion about our coops (warts and all).

  • The successful cooperatives of the world are those that have grown out of the efforts and determination of the people themselves. It is not enough that coops be for the people, they must be of and by them as well.
  • The best coops are those that had dedicated and courageous leaders either in the very beginning or in their early) history
  • The capital created within the working of the cooperative is vastly more important than the financial resources of the members in the beginning
  • Coops make their best contribution to human welfare and social progress when they initiate policies and practices different from those of old line businesses
  • There comes a time in the development of every cooperative enterprise when it must have managerial ability of a high order
  • Coops that stand for something more than financial gains have amazing powers of survival in times of stress and difficulty
  • Coops that isolate themselves from other coops and refuse to join the bigger cooperative movement tend to shrivel up and die
  • Coops can withstand prolonged attacks from without, but they can’t survive weak or dishonest leadership within
  • Too much aid from government or paternalism of any kind will blight cooperative effort
  • Cooperatives with weak leadership resist change
  • There is no type business too big or difficult for the cooperative way
  • Too rigid a structure in organizational set up is a serious obstacle to progress in cooperative development, especially in a period of rapid change
  • Coops in which control narrows down to fewer and fewer hands tend to behave more and more like old line capitalism
  • A cooperative with no education program is in mortal danger

April 22, 2013

Democracy at Work Network

Filed under: Education,Movement — Tags: , , , , — John McNamara @ 12:14 pm


I was recently reelected to DAWN’s Board of Governors and the Training and Certification Committee. I am also a founding member of the organization. The following opinion (pitch, if you will) is all mine, however, and should not be seen as a statement by DAWN or representing DAWN.


Last weekend, the third annual spring meeting of the Democracy at Work Network (DAWN) convened along with the certification of its third cohort of Peer Advisers. It was an incredible weekend and we were reminded by our the folks on the Marketing Committee that we need to get the word out.

What is DAWN? 

DAWN is, as it names implies, an organization of people aimed at assisting worker owned businesses in improving their functionality and governance as a democratic workplace. What makes DAWN different from a consulting service or academic pursuit arises from the population of the group. DAWN focuses on Peer Advising. The majority of people in DAWN either work in a worker cooperative or have worked in a workers cooperative within the last five years. This is an essential element. While we do have members who work as professional consultants, DAWN looks to embody the concept of inter-cooperation and solidarity. Peer Advisers don’t need to learn about the dynamics of workers cooperatives since they live those dynamics.

However, this isn’t just people who work in co-op sharing war stories. The certification process ensures that the PA can provide the level of assistance needed. The first year of membership is spent engaging in intensive training through webinars and weekend retreats. while learning about financing, legal structures, strategic planning and a host of other issues, PA apprentices conduct research about coop models, teach each other about those models, and participate in an internship utilizing their host and a mentor for guidance. All of this culminates, if successful,  in becoming a Certified Peer Advisor.

DAWN’s Goal

DAWN ‘s stated goals are to:

  • meet the demand for technical assistance and development advice with high-quality services, and
  • increase worker cooperative technical assistance capacity from inside the movement.

I think that an unstated part of this is to also get our worker cooperatives (over 300 in the United States) to not always rely on a “do-it-yourself” method of development. Too often, in my opinion and experience, co-operatives either ignore development as something too expensive or too corporate or just too complicated. If co-ops do engage in development, then it is usually the result of a small group within the coop driving it and not necessarily part of a strategic vision. At best, everything is successful and the people leading have the knowledge, skills and ability to manage the manage the program and  are around long enough to see it through to fruition. At worst, it creates a series of false starts that further stigmatize coop development or organizational development as expensive, time consuming and not worth the effort. For most cooperatives, I imagine, the reality lies somewhere along the continuum between those extremes with most co-ops just feeling too busy managing operations to deal with the larger picture issues until an issue reaches a boiling point and demands the attention of the group.

Why DAWN Can Help Worker Coops Succeed

Operations tend to be what we are best at as co-operators. I think that this is a nature aspect of worker cooperation. We get the gritty details of getting people cabs, fixing bicycles, running retail operations, and making/roasting coffee. Sometimes the bigger picture of long-term planning, capital planning, organizational culture, governance and accountability gets lost in the mix as we try to keep our customers coming back, pay ourselves and our vendors. Some of these development issues get us outside of our comfort zones and don’t seem to really make a difference, so why spend our members’ hard-earned equity on it?

Worker Co-ops need to create new ways of managing. We aren’t our competitors and don’t want to be. Taking the time (and money) to think and create new ways of managing the collective assets of the cooperative in a manner that strengthens the organization along cooperative values and principles should help make our coops stronger and more resilient to the demands of the market place. It should create added-value for the consumers of our operations. Sometimes, this can be hard to do by ourselves. We may not always have the right mix of knowledge and skills or there may be underlying social issues that prevent moving forward. This is true of any type of business, not just worker coops and is why consultants often get brought into any business.

DAWN offers the ability to efficiently deal with development issues and build structures tailored to the individual cooperative. Outside facilitation can assist the members is seeing their organization from a different perspective, learn from other worker coop models (cross-pollinate if you will) and develop systems and strategies that will help their cooperatives meet missions, core values and be successful. DAWN is a fee-for-service organization. It isn’t cheap, but it does provide value.

DAWN was created to help coops help themselves through a peer assistance program. If you think that your coop needs some outside assistance, please consider DAWN as a resource created specifically for worker cooperatives.

To keep up to date with DAWN check them out on Facebook or Twitter


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.

November 9, 2010

The Three Dimensional Business Integration

Filed under: Education,Human Relations — Tags: , , — John McNamara @ 7:26 pm

The people who work in our businesses are not two dimensional, why should the structure be?

If you have studied business, or even US history, you have likely heard the term “vertical integration”. This concept was developed by US Steel as a means of controlling the industry through control of the supply lines and distribution networks. It allows a company a lot of control and the ability to benefit from making expenses profit centers since the different parts of the supply and distribution chains can be used for non-competing products as well.

Another common concept is that of horizontal integration. This allows economies of scale as the company can create similar products within a market. General Motors was a great example of this format with the Pontiac, Oldsmobile, and Chevrolet nameplates have a number of common designs with slightly different features.

Well, those of the two external dimensions which notably ignore depth. Is there an example of a company engaged in depth integration? What would that look like? Further, what would a company look like if it engaged in all three forms of business integration to create a three-dimensional business model? There is a great example–Mondragon.

The depth integration develops from something that few US corporations would really care about (or it they did, it would likely end up as The Company Store). Depth, after all, creates an internal dynamic and this means attending to the needs of the workers and sustainability of the business. Of course, this is exactly what Mondragon has done.

First, however, they do have a fairly vertical integration in which they develop co-operatives to handle supply lines and distribution lines. Horizontally, ULGOR has been working hard to keep their place in the market by buying the smaller companies (most recently was the Brand corporation which was just behind ULGOR in market share). So far, Mondragon looks like a standard corporation operating on the global scale. This is where the third dimension arrives:

The Depth integration of Mondragon involves creating co-operatives to provide the social and human needs of the workers. This area of integration means a K-University school system, a Social Security system that provides a horn of plenty in terms of benefits and services, a banking system to meet the members needs and soon assisted living communities for the aging population. All of this works together to provide the basic needs of the workers and families.

Depth integration does more than simply keep the money in the Mondragon system. The presence of a university, management institute and trade school allows workers in unemployment to return to school and learn new skills. this not only benefits the worker, but helps Mondragon keep the correct number of workers to maintain decent wages and benefits. It provides other avenues for workers to use their knowledge and skills. A worker who can’t do the physical labor in the plant may transition to a teaching position. It allows workers to develop themselves as human being through their work. This was the ultimate idea of Mondragon’s spiritual founder, Don José María Arizmendiaretta.

In the US, we often marvel at Mondragon and people fall over themselves to either create Mondragon in the US or to expose every chink in the armor. Fortunately, there are plenty of grad students up to these tasks! However, something that we should consider is this revolutionary form of integration. We don’t need to re-create Mondragon in America, but we should consider how to develop a three-dimensional integration in our existing co-operatives. We need to see where we can partner with existing institutions and create the institutions that we don’t have.

September 21, 2010

The Agency Dilemma in Worker Co-operatives

Filed under: Movement,Worker Rights — Tags: , , , , , , — John McNamara @ 8:00 am

Last week at my other blog, Breathing Lessons, I discussed the Rochdale cul-de-sac as it applies to consumer cooperatives. This week, as part of this discussion over the future of US worker cooperatives, if not the labor movement in the United States, I want to put the spotlight of the Agency Dilemma on our movement.

It would be a mistake to presume that worker cooperatives, by their nature, enjoy an immunity to the agency dilemma. Race Matthews notes that even Mondragon has its issues. In the US, we have a lot of issues that arise from our culture as well as from the Agency Dilemma.

A More Critical View of Mondragon

First, while I am impressed with Mondragon and loathe to point out the cobwebs up in the corners, it is worth mentioning that perfection is a goal that we strive for, but can never attain. Thus, the criticism of Mondragon (and our own co-operatives) should be accepted in the effort to make them better.

The single biggest criticism of Mondragon has been their outsourcing labor to the developing countries without developing worker co-operatives. This not only runs counter to their principles but invokes the legacy of Spanish imperialism especially when they are engaging the South American economy. However, even within their co-operatives, Mondragon can succumb to elitism and a class separation among their workforce. Matthews cites research conducted by groups within and without Mondragon. Specifically the work of Cornell University anthropologist Dayvydd Greenwood and the ethnography of Sharyn Kasmir . Matthews also taps the work of Mondragon insiders José Luis González (at the time, the Director of Human Resources at FAGOR), and  Mikel Limenez. The work that Matthews uses is from his 1990 position as the Director of Sociological Research for Ikasbide, the predecessor of Otalara Institute. Mikel generally leads the tour groups.

While the workers love their co-operatives and appreciate them, they also recognize that there are “those above” and “those below” (Matthews, 1999, 225) They also speak of issues that should resonate with those of us in the United States, “we are less equal among ourselves than the workers in a capitalist firm; being members, many of us often have to put up with things that workers in other firms would not tolerate.” (Matthews, 1999, 225) Certainly, the 1974 strike revealed a very real rift along gender lines in the co-operatives. While the official discussion of the strike resulted in limiting the size of co-operatives (the factory co-op that suffered the strike had over 2,500 members), it did not talk about how the strike leaders were treated. According to Kasmir in The Myth of Mondragon, twenty-four leaders from the strike were fired (2/3’s of them women). Twenty-two were re-hired except for two women. They were unable to find decent employment in the Basque country for almost five years (public pressure finally forced their re-hiring). (Kasmir, 1996, 110-120) Kasmir’s work provides a Gramsci-esque critique of Mondragon. I can tell you that it is not well received by academia and considered flawed. It is an ethnography so her work does have certain limitations, but I think that it does raise some issues that shouldn’t be ignored.

The point is that our co-operatives can easily succumb to the dominant paradigm of capitalism. Even Mondragon can create an environment where mental and physical labor has separate value within the organization. We are not immune from creating agency theory. If our Human Resource department only has the corporate world of human resources to use for educating itself, it shouldn’t be a surprise that our HR departments talk and act like other corporations. Unless we create a structure that either flattens hierarchy or contains and channels its power, we are susceptible to it overcoming our democracies. If Mondragon cannot eradicate it despite their principles and culture, then it will be doubly hard for our US Co-ops.

The US Agency Dilemma

Our coops have few, if any, resources as worker cooperatives. While the Worker Co-operative conferences offer some skill sets and workshops, it can be difficult to translate between industries. We often have to turn to our industry and their “best practices.” As I have mentioned before, we need to critique the “best practices” rather than simply accept them. In whose interest are these practices best? My guess is that they work best for the managers first and the stakeholders second. The workers are far down the pecking order.

Because US culture bases itself on control and power, it creates an environment where it can be quite easy for our worker co-ops to mimic them. We often haven’t the time or energy to explain and debate every detail of the operations to the membership. It is easier to let individuals specialize in their area and run it. However, that needn’t take away from the democracy of the organization. For the smaller co-ops, it is easier to maintain a collective attitude; however, as co-ops grow, they cannot always follow the Rainbow Grocery or the Arizmendi models due to the needs of their industry. These co-ops do need some level of structure and we shouldn’t see hierarchy as an automatic failure or example of Agency. We shouldn’t simply hire managers to run our co-ops and then complain about their decisions.

The Danger of Agency

One of my current fears regarding the Agency Theory and US Labor Movement comes from the two sources. First, the traditional labor movement has largely given itself over to Agency long ago. Corporate officers and union leaders make as much as the CEO and have little in common with the rank-and-file. SEIU’s growth strategy has resembled Wal-Mart more than a people’s movement. In our movement, we are seeing social workers and “community developers” find ways to co-opt the movement to include well-heeled consultants and advisers. Elsewhere, worker co-operatives are being created to outsource unionized government services with lower paid and benefit-poor positions.

The Cleveland Model offers hope, but also offers dangers. It is an agency development model that focuses on good jobs and keeping the neighborhood intact. However, it is based on the benevolence of a couple of large institutions and has a control structure that will fill the key decider roles from the established philanthropists (at least initially). Capital, in Cleveland, is creating worker co-ops to serve it, but doesn’t really adopt the concept of the sovereignty of labor or the subordinate nature of capital. This might end up being a revolutionary act and greatly aid the development of large scale co-operatives, or it might be a wonderful act of charity that really can’t be replicated (and subject to the goodwill of the benefactors). The real test of this project will come when the primary financiers step aside and allow the workers complete control over their destiny.

How Do We Move Forward?

We need to create a set of best practices for worker co-operatives regardless of their industry, size, and structure. Certainly, the CICOPA Declaration on Worker Co-operatives can provide a lot of guidance in this effort. Worker Co-op Best Practices need to be aimed at diffusing the control and power of elite groups within the organization as well as preventing cliques and informal processes from overcoming the democracy of the organization. This can and should be a role for the US Federation of Worker Cooperatives or its “project” the Democracy at Work Institute.

We need to recognize that few workers come to our co-operatives with the illumination of the co-operative movement. We need to create the means for them to understand and develop. We need to follow Arizmendiaretta’s belief that our movement is an educational movement with an economic basis. We can’t simply teach people how to read a balance sheet or write a cash-flow statement and think that we are done. We need to teach critical thinking an analysis. We need to develop a work force where every member has the knowledge and intellectual skill to engage as a fully vested member of the co-operative.

This means working to overcome our culture of treating people and labor as mere machinations of the marketplace. We need to find a way to develop a new path through our co-operatives that provides a real answer to neo-liberalism. If we only try to democratize capitalism, then we really fail. We can only be a parody of our capitalist competitors: children playing dress-up as opposed to engaging as a true adult and providing a counter-weight, a true Third Road to Socialism and Capitalism.

To overcome our Agency dilemma and develop a true Distributist society, we will need to challenge our institutions and our co-operatives to step forward, to be leaders of the labor movement. My next post will discuss the idea of how to do that and creating a neo-syndicalist movement to counter the neo-liberals.


Kasmir, Sharyn The Myth of Mondragon: Cooperatives, Politics, and Working-Class Life in a Basque Town, State of University of New York Press, Albany, 1996

Matthews, Race Jobs of Our Own: Building a Stakeholder Society (Alternatives to the Market and the State), Comerford and Miller and Pluto Press. Syndney and London. 1999

July 12, 2010

Worker Co-ops and Workers or All in the Family

Filed under: Education,Worker Rights — Tags: , , — John McNamara @ 11:47 am

This might take several posts to really work through the issues, but the nature of worker coops conjures up visions of a workers’ paradise (and the source of the name for this blog); however, too often conflict rises and worker co-ops easily devolve into a deformed workers’ state (the alternative name for this blog when I am cranky).

Without a doubt, the biggest strength and greatest weakness of worker co-operatives revolves around the internal issues of discipline and treatment of workers. An acquaintance of mine in Madison told me about his two experiences with worker co-operatives. Both were bakeries (one small one and one large factory style).

The small one was controlled by the members who were mostly, in his words, Trustafarians. They weren’t interested in growing the business because they didn’t need to do so. For stiffs like my friend, who didn’t have a trust fund, this meant working for minimum wage. The love of making bread and doing one’s own thing didn’t pay the rent. To make matters worse, the paychecks would be distributed together in a basket. The core group often didn’t pick up their checks for months at a time! This only highlighted the economic disparity among the membership and made my friend feel belittled and embittered.

The larger bakery produced at a level where wages and benefits were competitive, but it was really controlled by management and had little input from the worker members. To highlight this, at the annual summer “employee” picnic, management provided commercial mass produced white bread and  buns and bread. My friend was shocked that management wasn’t even willing to spring for the worker’s own bread for the picnic and went for the cheapest crap that they could find.

My long career in worker co-ops (22 years) has seen a lot of internal disputes. I remember a trying time when it was external forces that threatened the co-operative and one fellow member noted that the success or failure of our co-op lies entirely within us. Regardless of the external economy or attacks on our company, we are, as Moses Coady would say, the Masters of Our Destiny.

I would like to pretend that size matters, but it doesn’t. As the tale of two bakeries suggest, the real struggle comes from activating co-operative values and interpreting them in the real world of worker co-operatives. There is a very interesting paper entitled Dispute Resolution in Worker Co-operatives: Formal Procedures and Procedural Justice by Elizabeth Hoffman. My co-op was the subject of this case study and I was president during the period of study. I have a few issues with the work (she never interviewed me or other officers for our perspective of what happened), however, I completely agree with her analysis and it ties in well with another important work, The Tyranny of Structurelessness by Jo Freeman. Co-operatives are societies and they require a certain level of bureaucracy and structure to work effectively. Unfortunately, a lot of people come to worker co-operatives because they want to get away from “the man” and stupid rules, and all the other BS of corporate America. As William Golding taught all of us, however, it just isn’t that easy. Humans are social animals and will establish a social order. It can be an order based on personality, mythology, power, or humanity (ethics, values and principles). For co-operatives, we choose humanity (or I hope that we do).  The point, however, is that an order will be created with or without our efforts.

How often do we hear bosses talk about their company as “being like a family”? I always find that annoying. How patronizing! However, they are simply trying to describe their structure which is based on personality and power. Sometimes I hear that language in co-operatives. We talk about the Yellow Family at Union Cab, but no one is talking about parents, we are talking about siblings, cousins, and weird uncles (I think after 22 years, I get the cranky weird uncle title). Of course, if we really think about this analogy, aren’t we also talking about sibling rivalry and all the BS that goes into dealing with families. There is a great line from the play, ‘night, Mother in which the protagonists speaks to her inability to choose her family.

The difference is that we chose to be part of our co-operatives. We voluntarily choose to join and participate. We don’t have the right to act like obnoxious siblings. We have an obligation to interact with our co-operative on the terms of the ethics, values and principles of the co-operative movement. This is not an easy step. Corporate America and the dominant paradigm created by them encourages us to act as siblings to their parenthood. Workers in our society are encouraged to fight each other (over race, immigration, gender, sexual preference, religion, creed and a host of other false differences) and let the parents (managers, politicians) control our lives.

Unfortunately, we sometimes bring this corruption into our co-operatives. Not all, but many, co-operatives mirror the paternalistic hierarchy of the corporate world. We create a “dad” or “mom” in the form of a General Manager and then act out the role of obedient and disobedient children (and attack each other in miming sibling rivalries). We need to be better than this and we can do it. Some feel that having more that 40 members means being forced into this world. Others might argue “human nature”. I think that we can do more and better by simply focusing on the Co-op Identity.

Rainbow Grocery is a great example of a large co-operative that has flattened its hierarchy. I am not on the inside, so I can’t speak to how their conflict mediation works, but they have shown a way that even a large co-op can eschew the Family Circus. Union Cab is currently revising its dispute resolution system holistically (for the first time in 30 years). The challenge for getting rid of “dad” or “mom” is that we can’t simply replace them with “big brother” or “big sister”. We have to really find a way for all of us in the society to exist as equals and take that responsibility seriously. This means spending a lot of money (co-operative assets) on education, training and information (the 5th Principle). It also means making requirements on our membership that may seem onerous (such as participating in the education, training and information).

I believe that part of the duty of a worker co-operative involves elevating its membership from the siblings of corporate America’s “families” and creating fully-developed human beings that can interact as equals and recognize their connection to the larger world of workers and economics. This will be how the worker co-operatives grow and move forward, not by imitating our former bosses but by creating a truly new paradigm based on our identity.

February 13, 2010

Another View of the Undercover Boss

Filed under: Society — Tags: , , , — John McNamara @ 10:37 am

The really great people at Labor Notes also noticed this show. Definitely read their take on it.

The Labor Notes essay reminded me of one of the real problems of the show (and the co-operative difference).

The narrative follows a fairly old plot device: The King is bored and feeling insecure about his subject’s love for him so he dons the clothes of a peasant and heads out to the realm to see how life really is. Along the way, he finds corrupt Sheriffs acting in his name, a damsel in distress, and other failures that he never dreamed existed because his royal court kept him sheltered from it all. In the end, he returns to the castle, uplifts the noble peasants who were kind to him, throws down the corrupt, marries the damsel and nestles back into the world of comfort, wealth and power.

That is essentially the plot of this show. Like the ancient narrative that it follows, it ignores reality serving instead to instruct the peasants that it is “hard work” being the decider!

Shakespeare had the most honest version of it in Henry V. Never one to trust the mob, Shakespeare allows his disguised Henry to defend the power of the King and to exonerate the King from the blood of war:

So, if a son that is by his father sent about
merchandise do sinfully miscarry upon the sea, the
imputation of his wickedness by your rule, should be
imposed upon his father that sent him: or if a
servant, under his master’s command transporting a
sum of money, be assailed by robbers and die in
many irreconciled iniquities, you may call the
business of the master the author of the servant’s
damnation: but this is not so: the king is not
bound to answer the particular endings of his
soldiers, the father of his son, nor the master of
his servant; for they purpose not their death, when
they purpose their services. Besides, there is no
king, be his cause never so spotless, if it come to
the arbitrement of swords, can try it out with all
unspotted soldiers: some peradventure have on them
the guilt of premeditated and contrived murder;
some, of beguiling virgins with the broken seals of
perjury; some, making the wars their bulwark, that
have before gored the gentle bosom of peace with
pillage and robbery. Now, if these men have
defeated the law and outrun native punishment,
though they can outstrip men, they have no wings to
fly from God: war is his beadle, war is vengeance;
so that here men are punished for before-breach of
the king’s laws in now the king’s quarrel: where
they feared the death, they have borne life away;
and where they would be safe, they perish: then if
they die unprovided, no more is the king guilty of
their damnation than he was before guilty of those
impieties for the which they are now visited. Every
subject’s duty is the king’s; but every subject’s
soul is his own. Therefore should every soldier in
the wars do as every sick man in his bed, wash every
mote out of his conscience: and dying so, death
is to him advantage; or not dying, the time was
blessedly lost wherein such preparation was gained:
and in him that escapes, it were not sin to think
that, making God so free an offer, He let him
outlive that day to see His greatness and to teach
others how they should prepare.”

So it is with the CEO of modern commerce. They are the Dukes and Kings of our era and act much in the same manner. There decisions are just by the fact that they made them. Any consequences on the people cannot be laid at their feet. People are responsible for themselves, after all. Larry O’Donnell professes safety, but cuts hours without any realization that speed-ups affect safety. His company, according to Labor Notes, is a “safe” workplace where “Waste Management workers are three times more likely to get killed on the job than firemen, and 60 percent more likely than police officers.”

Of course, taking a week off work to see how the plebes survive isn’t the same as being one. At least the kings in the old stories actually risked their lives, but the CEO can jump safely back to the corporate office at any time. Undercover Boss is the modern grim fairy tale of corporatized America. Worker Co-operation is the reality anti-dote.

January 18, 2010

#19 Participatory Management

The next principle from Mondragon is that of Participatory Management. This seems like a no-brainer for worker co-operatives. What is the point of going through all the work of setting up a worker co-op if the workers don’t actually have a say in how the place is run? They would be better off in a unionized Employee Stock Ownership Program.

I’ll get more into this in a second. First, I want to share the language of the principle from Mondragon (translated, as they all are, of course):

“The Mondragon Cooperative Experience believes that the democratic character of the Cooperative is not limited to membership aspects, but that it also implies the progressive development of self-management and consequently of the participation of members in the sphere of business management which, in turn, requires:

a)     The development of suitable mechanisms and channels for participation.

b)    Freedom of information concerning the development of the basic management variables of the Cooperative.

c)     The practice of methods of consultation and negotiation with worker-members and their social representatives in economic, organisational and labour decisions which concern or affect them.

d)    The systematic application of social and professional training plans for members.

e)     The establishment of internal promotion as the basic means of covering posts with greater professional responsibility.”

(source: The Mondragon Cooperative Experience, by José María Ormaechea, 2000)

Second, I want to parse the word management. We manage our co-operative whether or not we have a person holding a title with the word “manager”. Some co-ops manage collectively, some manage through a hierarchy, but we all manage the same things: assets, liabilities, equity, work performance, customer satisfaction etc. In this, as in most posts, I use the term management and manager in the broad sense.

Participatory management does not mean democracy and democracy does not mean participatory management. I say this because they are often linked together in a synonymous manner. A worker co-operative can have a strict top-down hierarchy that allows little or no member input and still elect its board of directors. Likewise, the concept of participatory workplaces can exist in capitalist organizations.

This principle exposes some dangers to worker co-operatives in that it is this area that the co-operative movement may be co-opted. World Blu has created a list of the “most democratic workplaces” for a couple of years now. While I have nothing against their mission, they misuse the word democracy when they mean participatory management. Only a handful of the companies on their list are co-ops or esops. In other words, they are honoring workplaces as “democratic” when the workers have no control over the governance of the organization. While I think that participatory management is a noble thing for a stock corporation to entertain, it isn’t democracy, it isn’t a right. It can be taken away as soon as the stockholders decide the experiment isn’t making them enough money. While I support World Blu’s efforts to humanize capitalism, I don’t think it will ever succeed on a grand scale but am glad that the workers in those business have a decent place to work.

A worker co-operative should abide by the values and principles of democracy. Participatory management should be another user principle for co-operatives even if it isn’t in the Identity Statement. It is the means by which the workers of the co-operative “use” their co-operative. Just as consumers use the products and services of a consumer co-operatives, workers use their ability to participate in decisions affecting their work life (roughly ¼-1/3 of our lives) as their right of membership.

Mondragon has created an excellent definition of participatory management. It isn’t simply deciding what type chairs to get for the office, it involves a complete involvement of the workforce in the operations and planning of the organization.

Note though, that the principle discusses the creation of “suitable” methods. Decisions have to be made and they have to be made in a way that enhances the organization in terms of serving their customers and succeeding in the market place. A restaurant can’t hold a membership meeting to discuss which person serves which table every time a customer walks in for dinner. A cab company can’t hold a debate about call assignment for each and every order. However, the co-operative can create methods of having these discussions about systems that ensure fairness and those methods should involve a wide range of voices from the membership.

Information has to be available to everyone or how can it truly run as a democracy. This isn’t on a “need-to-know” basis, but on the basis of ownership.

Another key point is that the co-operative needs to create bodies that will assist the worker-members in finding their voice. This might be a peer support program, a traditional stewards’ council, or even a labor union (although that is decidedly not what Mondragon is talking about). The bigger point being that management in a worker co-operative (whether run with a hierarchy or not) needs to establish means for worker’s to have a real voice in the discussion. Depending on the size of the organization (and the work week schedule) this will have different levels of formality. Rainbow Grocery is famous for its collectivist approach while Union CabMondragon models the labor movement through a stewards’ council and committee structure. uses a “social committee” in which elected representatives help provide input to the board and management as well as acting as a watch dog.

The last two points of the principle create an imperative of making participation systemic. As with the Sovereignty of Labour, this principle promotes the belief of internal promotion. The top end positions of a worker co-operative should generally not be hired from the outside of the worker co-operative movement. It is better for worker co-operative to create strong in-house training (and utilize professional development programs such as the Masters of Management: Co-operatives and Credit Unions) to develop the future leaders of the co-operative. One of the problems, in the United States, is that our co-operatives tend to be small and this limits opportunity for workers to advance and develop. It also limits the level of education and training that can be provided. However, we need to think beyond our stand-alone co-operatives. Just as Mondragon is a system of 180 or so co-operatives, we should start thinking of US Worker Cooperatives existing as an economic base.

Ormaechea chose this particular quote from Don José: “Co-operation brings people together in a collective task, but it gives each one responsibility. It is the development of the individual, not against the rest, but with the rest.”

By creating a base of strong management of our co-operatives we build the capacity for the movement to grow. We create the means for our co-operatives to cross-pollinate, to occasionally go outside of our stand-alone co-ops and we also create the means for the rank-and-file members to expand themselves, to develop themselves as people.

Next Week: Payment Solidarity

November 23, 2009

#12 The Principles of Co-operation

Filed under: Identity Statement Series — 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.

October 29, 2007

The Co-operative Management Model

Filed under: Management — Tags: , — John McNamara @ 3:20 pm

José Luis LaFuente discussed the management model being developed by Mondragon. He began by placing the model in perspective with the overall philosophy of Mondragon. It begins with the Inspirational Philosophy (the principles, the culture, and the values of Mondragon). Then, the Management Model, which flows to the Systems, set to deal with situations, and the Tools (methodologies and instructions).

The pursuit of the Model began with a re-drafting of the MCC Mission, which referred to the Management model. Once that draft was accepted, then MCC’s council and management felt obligated to create it.

The creation of the model has followed a long evolution beginning in 1996 with an appreciation of Total Quality Management. Mondragon, at the time, essentially copied TQM (a concept reviled by US labor unions). In 2002, Mondragon caught the next flavor of the month and developed “Good Corporate Practices”. In 2006, Mondragon began a massive re-write with a specific internal focus. It created focus groups with the mission to focus on the Basic Principles and Mondragon culture. It created a draft of the model and tested it in three sectors: Eroski, Caja Laboral, and the industrial cooperatives. Once the model was adjusted, it was adopted. Instructors are now being taught in order to teach the “model” throughout the system.

Why is the model needed?

•To foster the development of management dynamics consistent with Basic Principles
•To increase business competitiveness (especially since the model cannot be copied by investor owned businesses)
•To make our management style a mark of identity that generates a feeling of well being, belonging, and helping to create synergies.
•It must be remembered that the model is a “tool, not a rule.”

The model consists on one core and four elements.  The center of the model is the Basic Principles of Mondragon. The elements include “people in cooperation”, “joint projects and participatory organization”, “excellence” and “socio-entrepreneurial results.”

The Basic Principles are divided into an internal and external focus. Internal includes democracy, finance, labor, etc while the external include other cooperatives, society and the environment.

The People in Cooperation include such things as team spirit, dedication of the owners, cooperative conduct, leadership and development. Joint Projects include the mission, vision and values of MCC, inter-cooperation, strategic perspective and deployment. Participatory organization includes corporate development, self-management, and communication. Excellent Company stresses a focus on the customers, processes, innovation, partnerships and social engagements. Finally, the social-entrepreneurial results also include a customer focus and innovation but also stresses profitability and people.

The next step is to create an implementation and assessment plan. This involves building awareness to create the implementation plan and also developing an individual approach for each cooperative. Each cooperative gets assigned a coordinator and elects a work team. They work together to assess the cooperative according to the model and develop an implementation plan. Overall, the important aspect is to bring cooperative ideals into the management model.

The actual model is unavailable to put on this site right now, but hit the link and you will see it. They do have another diagram related to the Model which they refer to as best practices:

What is unique about this model and the best practices is that the aspect of profitability is only one of several expected results. In the full model, the only reference to results is the phrase “socio-entrepreneurial results”.  Likewise, the Mission Statement of MCC clearly puts the focus on the principles and community of people:

“The Mondragón Corpración Cooperativa (MCC) is a socioeconomic reality of a business nature with deep cultural roots in the Basque Country, set up by and for people, inspired by the Basic Principles of our Co-operative Experience, committed to the community, competitive improvement and customer satisfaction, to generate wealth in society by means of business development and job creation, which:

•Is based on a commitment to solidarity and uses democratic methods for its organization and management.
•Encourages the participation and integration of people in the management, results and ownership of their companies, in order to carry out a joint project harmonizing social, business and personal progress.
•Promotes training and innovation, based on the development of human and technical skills, and
•Applies a Management Model of its own to achieve positions of leadership and promote Co-operation.”

In addition, this marks a true departure from Mondragon’s history. Mondragon, like most of Spain, came out of the cloud of fascism with an inferiority complex. They looked to the more energetic countries for lessons in business management. The timing could not have been worse as the Franco regime ended just as Breton Woods was changing to a neoliberal economic model. Thus, the models of Japan, Chicago School of Economics and Harvard held sway for many years. What is exciting about this model is that they are looking internally for guidance. One might argue that it is just so much Corporate Social Responsibility BS; however, after speaking with workers, managers, and trainers, one realizes that this is the genuine form of CSR that can only exist within the cooperative model.

Between the mission statement and a management model that clearly intends to institutionalize the principles of the cooperative, it appears that Mondragón’s leadership have finally found their footing and are beginning to create structures within the organization to properly deal with the effects of globalization and the European Union. I cam away from this discussion with the distinct feeling that, while MCC has a long way to go, they are not strictly being defensive anymore, but are on the move and now believe in exporting the revolution!

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