Wednesday, February 1, 2012

Cooperative Capitalism: Can Coops Rejuvenate the American Economy?

German newspaper cooperative

By Francesca Rheannon
(Part One of a 2012 Monthly Series For the International Year of Cooperatives)

Whether producer or consumer owned, coops are not only here to stay, they might just be the next big thing.

Capitalism needs an extreme makeover. An economic system that is blithely destroying the habitat for humans and other living things is clearly crazy.

But it’s not just the environment.

2012: The Year of the Coops?
Anywhere you look, from the failed housing market to the stalling job market; from the failed (U.S.) War on Drugs (kept in place by an enforcement and prison industrial complex) to the failed austerity programs that are rewarding bankers but sinking economies deeper into the doldrums – this iteration of capitalism we call predatory-, casino-, crony-, or vulture-capitalism is just not working.

Turns out competition isn’t all it’s cracked up to be (especially when it leads to annihilating “the competition.”) Is it time to try cooperation?

The United Nations General Assembly thinks cooperation is a good idea, at least when it comes to economic activity, even declaring 2012 as the International Year of Cooperatives, to “highlight the strengths of the cooperative business model as an alternative means of doing business and furthering socioeconomic development.”

For example, did you know that:

  • One billion people are members of cooperatives?
  • The 300 largest cooperatives have sales totaling more than $1 trillion per year?
  • Cooperative enterprises employ 100 million people worldwide, 20 percent more than multinational enterprises?
Whether producer- or consumer-owned, coops are not only here to stay, they might just be the next big thing. As the old system falls apart at the seams, let’s see how cooperatives could step up to the plate.

Coops Counter Inequality
In the United States, worker productivity has been rising steadily since the 1970s, but wages have stagnant for three reasons:

  • Capital went global in its search for the lowest wages,
  • Unions lost clout, partly because of the first factor and partially because business went on an anti-union campaign while government abetted it or stood passively by, and
  • Technological change made workers “redundant,” turning the domestic labor market from shortage to glut.

Of the three factors however, the first two are the most important.

That’s because, while technological change may lessen the numbers of workers needed in a particular industry, government and social policy could create plenty of well-paying jobs in other domestic industries, like infrastructure development, education, health and green energy/efficiency. But these days, government policy is the last place we can expect help from in lessening inequality through more employment at decent wages.

But if cooperatives were the dominant business model, rising productivity could lift all boats. Pay scales would be far more equal. In fact, when or if the need to cut costs arose, a little would be taken from everyone, instead of the CEO taking his compensation out of the hides of everyone else.

Coops Counter Hunger and Poverty
The U.N. Food and Agriculture Organization (FAO) is promoting cooperatives because they are an important weapon against hunger. The FAO says:

 "When empowered by membership in a larger group, smallholder farmers and other producers can negotiate better terms in contracts, and lower prices for agricultural inputs like seeds, fertilizer and fishing gear. They can also reduce risks and gain enough influence to secure land rights and better market opportunities."

That’s what the coffee farmers’ cooperatives in Ethiopia have done. The Yirgacheffe Coffee Farmers Cooperative Union represents more than 44,000 smallholder farmers. And “conscious capitalists” like Dean Cycon of Dean’s Beans can cooperate with coops, too. Cycon sources his beans from Ethiopian farmer cooperatives and promotes Fair Trade practices.

Coops Steward The Environment
Coops underscore sustainable development because they are rooted in their communities.

A cooperative capitalism would see all environmental politics as local. Can you imagine a cooperative business clear-cutting the forests that surround a town? Or drilling for oil in a manner that risks the destruction of local fisheries?

Of course, the scale of cooperative business tends not to be large enough to do the kind of oil and gas exploration that giant multinationals do. But maybe that’s a good thing. Cooperative capitalism would depend more on distributed energy from renewable sources.

Coops Create Jobs
In its relentless drive to boost profits or management fees, vulture capitalism has sliced workplace employment to the bone. (For a powerful telling of this story, read Louis Uichitelle’s book The Disposable American.) In many firms today, workers who still have jobs are doing the work that several people did before.

Cooperative capitalism would create jobs as needed to preserve decent working conditions for all. Job sharing would grow as pay scales would be decent enough to shorten the workweek while expanding employment.

The bottom line is that coops employ more people than multinationals do. And they create jobs for more people than their own member-workers.

Organic Valley, the nation’s largest cooperative of organic farmers, just completed a huge new addition to its headquarters in Wisconsin. With double-digit sales growth in 2011, the coop needed more space. The state-of-the-art green building is now providing good green construction jobs.

As the coop movement expands and spreads, coops are supporting each other and building a localized cooperative infrastructure that can replace the hollowed out shells of economies predatory capitalism is leaving behind.

Next: We'll examine how local coops are building regional and international cooperative connections leading to more opportunities and scalable infrastructure.

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