New Internationalist

Tales of the unexpected

Issue 368

The world is a more co-operative place than you might think. David Ransom suggests that co-ops could have a good deal more to do with economic democracy as well.

A while ago I lived in a non-smoking, vegetarian household. The years passed, people came and went, until one day someone thought to ask how many of us were, in point of fact, non-smoking vegetarians. All of us were smoking omnivores.

At the extreme, conformity can create itself out of nothing. It can also express itself as a form of mental illness. ‘There's something called “normopathy”,' psychotherapist Andrew Samuels assured me when we spoke a few weeks ago. ‘ It means that you have views and attitudes that are indistinguishable from the majority. It's a very serious illness. It makes people very unhappy. Everybody has a uniqueness that's trying to get out. If you're only “mass-person” you're in real trouble.'1

The reverse can also happen. Nonconformists can discover that they are very far from being alone. In my own case, most of my working life has been spent in co-operatives, which I like to think of as unusual. Such has been the drift of world events, especially since the collapse of the Soviet Union in 1989 and ‘the end of history', that continuing to work in this way began to feel like an act of sheer perversity.

More Americans own a share in a co-op than in the stock market. Co-ops, it seems, are part of the American way of life

So it came as something of a shock to discover that as long ago as May 1848 ten journalists from six highly competitive New York newspapers met to discuss pooling resources to collect the latest news from Europe. At the time the newspapers competed by sending reporters out in rowboats to meet ships as they arrived in New York harbour. The competition had become a crippling expense. So the papers agreed to set up a news agency. Eventually incorporated as a ‘notfor- profit co-operative' in New York City, it was named the Associated Press. Today AP, still calling itself a co-operative, is the oldest and largest news organization in the world.2

No less venerable institutions turned out to have equally improbable origins. In the spring of 1882 Benjamin Blise announced his intention of sending his orchestra to Warsaw in fourth-class railway carriages. That was the final straw for 54 underpaid musicians, who refused to go. Instead they created what has since become one of the finest orchestras in the world, the Berlin Philharmonic.3 One of the others, the London Symphony Orchestra, celebrates this June the first centenary of its foundation as an independent, self-governing orchestra, owned and managed by the players.4

More revelations

My fond notions of nonconformity took another tumble when I looked a little closer into the metropolis of competitive capitalism, the United States. Here there are over 45,000 co-operatives and credit unions serving more than 100 million members – about 40 per cent of the population. More Americans own a share in a co-op than in the stock market. Co-ops, it seems, are part of the American way of life.5

The final revelation came with the discovery that, worldwide, co-operatives employ about 100 million people – considerably more than the 86 million employed by transnational corporations. A further 600 million people are members of co-ops. In the ‘developing' world more than half the population is said to be ‘closely associated' with co-ops in one way or another.6

This was not the world as I had imagined it to be – increasingly overwhelmed by ruthless competition and transnational corporations. Co-ops have evidently played, and continue to play, a much more active part in creating the world as it is than I had assumed.

This being so, co-operatives also carry more responsibility for what's wrong with it as well. It can have come as little consolation to the fisherfolk of the South Pacific islands, for example, that the super-efficient trawlers and factory ships from Japan, South Korea and Taiwan which devastated their fishing grounds were run by cooperatives. When small farmers have to sell their crops at a loss it makes no difference to them if the buyer is their own co-op. In some parts of Mexico it is almost unthinkable not to be in a co-op. Cooperation based on exclusive selfinterest alone can embrace a host of scams and cartels. The Mafia might even be described as a co-operative of sorts.

So what kind of co-operatives we are talking about becomes quite crucial. Most halfway decent ones accept the basic principles set down by the International Co-operative Alliance (see page 13), which distinguish them from competitive free-market ‘enterprises' and are unlikely to appeal to the Mafia.

The problem for co-ops is that they have ideals – but they also have to provide a practical way to survive in the world as it is. That's a very difficult balancing act to perform. It can be likened to a stool, with economic, social and environmental justice as its three legs. Take one away, and it collapses. Keep them all in place, and co-ops become a robust model, not just for present times but for the future as well.

Above all, co-ops are founded on the principles of co-operation between people. In other words they have to be democratic – they are responsible to each of their members, not to whoever happens to own their shares. If we lived in societies which placed more value on people than on money, the hundreds of millions of people who belong to co-ops would be far more powerful than the relatively tiny number of people who control corporations. As things stand, it's the other way around.

One reason for this is the value system of free-market capitalism. Another is that the same values have been adopted by governments, which make laws, create institutions and establish regimes of taxation and subsidy that hugely favour corporations over co-operatives. Undoubtedly, too, many co-ops have imposed limited ambitions on themselves, looking to compete with competitive capitalism.

In this respect, the history of the Mondragón workers' co-operative in the Spanish Basque country is instructive. Since its foundation in the 1940s Mondragón has become something of an icon for the international co-operative movement. It seemed to show how a workers' co-operative could be as dynamic as its corporate equivalents. By the end of 2002 the network of industrial, financial, retail and educational co-operatives – including, since 1997, a university – that makes up the Mondragón Co-operative Corporation was the seventh-largest business in Spain, employing 66,558 people.7

But it had also embraced corporate globalization, setting up cheap-labour production plants in Mexico, Brazil, Argentina, Morocco, India, Thailand, China. Employees here – like a growing number in Spain itself – are excluded from the co-operative. It has adopted a corporate management structure, increasingly removed from the direct control of the worker-owners themselves. The move has been fiercely contested within the co-op, some of whose members have for the first time considered joining a trade union.8

Beyond gigantism

There is a strong vein of conservatism in the co-operative movement, often for good historical reasons. Many co-ops were set up to defend jobs and communities from the latest ravages of free-market capitalism. Mondragón emerged under the hostile Franco dictatorship and in response to the suppression of Basque identity. By the 1950s the Co-op in Britain had become the largest retailer and agricultural landowner in the country, only to behave in ways that were virtually indistinguishable from its corporate counterparts and fall into a precipitate decline, which has only recently been reversed. The huge ‘mutual' financial sector of building societies and insurance companies in Britain has been largely ‘demutualized' by paying small bribes to members who had scarcely been aware of their membership in the first place.

Yet, since very many more people are – and are likely to remain – excluded from the wealth of capitalism than benefit from it, the roots of the co-operative movement run much deeper than this. Against all the odds it has survived, even flourished, to the point where it now faces what is arguably its most daunting task so far. This involves more than responding to the next crisis in a system that thrives on crises. It is about the very substance of the system itself.

Under capitalism, we are alternately producers in search of the highest prices for what we produce and consumers in search of the lowest prices for what we consume. We are not required to reconcile this conflict in ourselves. The market will do that for us.

In practice, however, the market evades the issue altogether, in the vain expectation that if it keeps on ‘ growing' there will be no need to resolve it at all. The result is not just the infamous trend that empowers an ever-smaller proportion of the world's population to consume an ever-larger proportion of its resources. It is also that we lead increasingly conflicted lives, the producer in us submitting to a tyranny at work more complete than any yet devised by politics, the consumer prepared to sacrifice almost anything to try to satisfy the endless dissatisfactions of limitless consumption.

One symptom of this unresolved conflict is the sterility of the current debate about ‘public' and ‘ private' ownership – both of which are, in truth, equally discredited. Tentative attempts to devise some sort of a ‘third way' – ‘publicprivate partnerships', a ‘mutual state' inhabited by ‘stakeholders' – show little sign of resolving the fundamental conflict rather than rearranging the deckchairs.9

The co-op movement is in a different position. Between them, consumer and credit co-ops still account for the bulk of the movement's membership (see box on page 12). To work effectively they have to employ large numbers of people, running factories, distribution networks, stores, services – very few of which have ever been organized as workers' co-ops. After all, how could a co-op be owned both by its customers and by its employees? Their interests are, surely, fundamentally opposed. Unless, that is, they turn out to be much the same people. Which, in a co-operative world, is precisely what they are – extending democracy into tyrannical workplaces and thence into the definition, creation and distribution of wealth.

‘When you co-operate and relate to people you become more individual, and yourself. If you submerge some of your identity, you find it’

Only one cogent reason is advanced against moving in this direction. It can't have anything to do with efficiency or innovation, since we already know that co-ops are better than average at all of these things. Rather, it is the inability of workers' co-ops to ‘grow'. How is it possible to have a democratic workplace of more people than can regularly talk to each other? Given this constraint, workers' co-ops are doomed to remain small and eccentric.

This limitation may, however, turn out to be one of their greatest strengths – and one of the things that they can teach the wider economy. There are increasing constraints on economic growth. Better, surely, to have the limits built intelligently into the way we work, where they can dispute with thoughtless gigantism and increase the focus on long-term environmental and social goals. In any case, co-ops do not have to be tiny to be democratic; look at the example of the Centre for Alternative Technology on page 16. Besides, millions of citizens inhabit self-proclaimed democratic states. Many of these states may indeed be oversized and emptied of democratic substance – but that, as yet, has not been advanced as an argument against political democracy. Nor is it any argument against economic democracy.

Economic democracy can be about working in an imaginative and co-operative way which may not involve adopting the formal structure of a workers' co-op. Take the unusual example of Semco, in Sâo Paulo, Brazil, which employs 3,000 people making heating equipment, pumps and computer software. The employees here routinely elect their own leaders and fix their own pay. They decide their own working hours and from time to time resort to hammocks for reflection and repose. Conventional corporations are regular visitors, trying to figure out how it works – significantly, none has followed suit. However, the place is not a workers' co-operative. It is the brainchild of its owner, Ricardo Semler, who likes to ask the question ‘why?' three times before being convinced of anything. By that method he has yet to find any good arguments against economic democracy.10

No boss, more motivation

Finally, there is the New Internationalist itself, of course. On the face of it, a publishing house is not an obvious candidate for a workers' co-op. Surely, a magazine must have just one editor. How can we pay everyone the same yet attract, and keep, good people? How can we possibly run an organization in which no-one has the right to tell another what to do?

Well, we do. In fact, it's really not so surprising. Repeated surveys show that people without bosses are much the happier for it. A few years ago, for reasons that now escape me, we invited a management consultant to take a look at us. She found, of course, that we suffer from all the common complaints that afflict two or more people when they gather together. Nonetheless, she began to look a trifle bemused. Most of her work, she said, was about the huge resources conventional companies have to devote to motivating their employees. In our case we seemed to be well enough motivated without devoting any resources to this at all – which left her with little to say.

The greatest benefit of our being as we are is, however, rather different. Not without reason do we acquire so many misapprehensions about the world around us – competitive capitalism invests very actively in selling them to us. In a saner world, a commitment to report as best one can on the world as it is perceived by most of its people would not really be a very big deal. Everyone would be doing it. As things stand, however, it is precisely what makes us different. The simple reason for this is that we are not owned by anyone else. We are financed by you who are reading this and subscribe to the magazine. You have given us a rare freedom which, it seems to me, the co-op helps to sustain and protect. It's hard to imagine any other way in which the same might be so.

The human instinct for co-operation is, in any case, quite impossible to suppress, relatively easy for almost anyone to act on. As Andrew Samuels went on to say: ‘There's a paradox here. When you co-operate and relate to people you become more individual, and more yourself. If you submerge some of your identity, you find it.’

Kinds of co-op

Worldwide, most co-op members belong to consumer societies (slightly more than a third), credit unions (slightly less than third) or agricultural co-ops (about a fifth). Far fewer belong to housing or workerowned co-ops.

Consumer

Members join to get better retail deals. Ownership is not based on shares but on membership – profits are distributed as lower prices and better services.

Credit

Often styled ‘credit unions', they are set up for and by people who cannot get credit through commercial banks or financial institutions.

Agriculture

Almost all small farmers, everywhere in the world, band together to share equipment or to market and distribute what they produce.

Housing

People denied access to housing through conventional property markets work together, sharing their skills and resources to buy and/or build their own homes, then manage and maintain them.

Worker

Owned by the people who work for them. Membership is restricted to employees. In some cases, though workers own an equal share, there are conventional hierarchies of management and reward. Others are ‘non-hierarchical' in their management and have equal-pay policies.

Some worker co-ops, like the NI, are controlled by workers but owned by a trust which exists solely to carry out the work of the company. If the company ceases to function all assets go to charity.

  1. Interview with Andrew Samuels. See also his book, Politics on the Couch – citizenship and the internal life, Karnac, London, 2001.
  2. http://www.ap.org
  3. http://www.berliner-philharmoniker.de
  4. http://www.lso.co.uk
  5. David Thompson, Cooperative America, 1997, http://www.wisc.edu
  6. International Labour Organization, http://www.ilo.org
  7. Mondragon Corporacion Cooperativa, History of an Experience, http://www.mcc.es
  8. Tim Huet, ‘Can Co-ops Go Global?' in Dollars and Sense, no 214, Nov-Dec 1997.
  9. See, for example, Ed Mayo and Henrietta Moore, The Mutual State, New Economics Foundation, London 2001.
  10. The Handy Guide to the Gurus of Management, Episode 11, http://www.bbc.co.uk

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