A Magazine about the Hudson Valley’s local economy, published by Hudson Valley Current.

Cooperative Capitalism? A Workers’ Path To Community Rises

By Paul Smart

A year ago we introduced Livelihood readers to the great Welsh philosopher and philanthropist Robert Owen in a piece that concentrated on his thoughts, and actions, regarding the use of time as a key to the valuation of currency. Six months back, we addressed the ways in which cooperative systems were utilized, with our federal government’s backing under Franklin Delano Roosevelt, to bring electricity to much of rural America.

A shared element from both stories was the call for cooperative efforts as a means of building efficiency and wellbeing among workers. Facing the increasing challenges of the Industrial Revolution’s early decades, Owen pushed for cooperative living communities, and cooperative means for meeting workers’ food and other purchasing needs. His efforts resulted in the building of several utopian communities, and his branding by Karl Marx and Frederick Engels as a “utopian socialist.” FDR’s electrical cooperatives push incorporated elements of the Rochdale Principles borne out of Owen’s ideas in 1844: open membership; democratic control (one person, one vote); distribution of surplus in proportion to trade; payment of limited interest on capital; political and religious neutrality; cash trading (no credit extended); promotion of education and later, after 1960 changes, open, voluntary membership; democratic governance; limited return on equity; surplus belongs to members; education of members and public in cooperative principles; and cooperation between cooperatives.

Beginning with the rise of Bernie Sanders’s campaign for president in 2016, and its focus on income inequalities rupturing economies across the globe, many have started talking and writing about worker cooperatives as an alternative to strictly for-profit and non-profit models of business ownership.

Workers’, producers’ and social cooperatives are nothing new. They number over one billion members in thousands of unique entities around the globe, with large concentrations throughout Europe and South America, a major 123-year-old international organization based in Brussels, and the world’s largest coops, the 60 plus-year-old Indian Coffee Houses—running 400 such establishments throughout the subcontinent and employing thousands—and Spain’s Mondragon cooperatives, which employ nearly 75,000 and are now that nation’s10th largest company.

Worker cooperatives are based on the idea of collective ownership of an enterprise, and egalitarian voting rights in terms of its management. According to the International Cooperative Alliance, “a cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs, and aspirations through a jointly-owned and democratically-controlled enterprise,” which is “based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others.”

The accepted principles for worker cooperatives are based on those written by the Rochdale Association nearly two centuries ago, augmented to include equal contribution to and control of a company’s capital, mindfulness for all agreements and partnerships with outside organizations, full transparency, and an assurance that they will always “work for the sustainable development of their communities through policies approved by their members.”

Of course, this being modernity (and a world where Google has recently announced a $1 million grant for the creation of a coop development kit in collaboration with five worker-owned pilot projects they’re involved with), shifts are occurring in cooperative systems that some see diluting the movement’s ideals, and its underlying claim to a utopian vision.

Add to this the fact that here in America, many states have no cooperative incorporation statutes, forcing democratic workplaces to become S or C corporations, LLCs, etc. And with concentrations of the cooperative spirit in the Northeast, West Coast and Upper Midwest, along with most of the 300 such “democratic” workplaces. Nationally, there are 300 “democratic” workplaces being small businesses in the retail and service sectors, according to the U.S. Federation of Worker Cooperatives, and one may wonder how such a global phenomenon can survive in our current nation.
Naysayers have backed up their worries about anything slightly socialist entering the American workplace by noting the example of a 1970s worker cooperative pioneer, the Oregon-based bicycle trailer builders at Burley, that ended up selling out to a single owner who then laid off most of the company’s workers in 2006, saying such businesses couldn’t be competitive. But academics have countered that argument by noting how it was the hiring of too many workers, and a breakdown of the underlying cooperative ethos, that caused Burley’s problems.

This past spring, the well-respected business magazine Fast Company wrote a piece signaling new growth in worker cooperative start-ups, praising the format’s incentive match to millennial’s employment expectations. They pointed to various efforts, from inside and outside government, to supply capital for such endeavors, and lauded the relatively new Democracy at Work Institute (DAWI), a non-profit that supports the development of worker co-ops through training programs, and the creation of a new School of Democratic Management.

Then there’s the growing ideal of building new coops through “coops of coops” such as the 13-year old Valley Association of Worker Cooperatives (VAWC) covering Western Massachusetts and Southern Vermont. After asking why there weren’t more worker cooperatives or collectives in our country, they found problems in the setting up of such entities by non-profits, as well as the use of outside funds of any sort.
“So here we have organizations that aren’t structured as cooperatives themselves implementing development as dictated by private or federal funds,” VAWC wrote in a report last year. “Coupled with this discrepancy has been a lack of cooperatives stepping up to direct and fund development themselves.”
Their answer has been the creation of a member-run development model, and the need for a strong network of cooperating cooperatives that can withstand the sort of outside capitalist pressures that, for example, ended up ending Israel’s pioneering worker kibbutzim through public investments and political pressures over time.

Similar efforts are underway as more and more business-minded folks, reading business-minded publications (or listening to business-minded podcasts), hear about how worker-owned cooperatives play a critical role in building community wealth. How? According to the website community-wealth.org, “they create quality, empowering jobs for community members and since most workers are community residents, worker cooperatives are more likely than other businesses to employ sustainable business practices that do not harm the local environment, and profits are more likely to remain and circulate within the community. As democratically run organizations, cooperatives help member-owners develop critical leadership skills and practice direct, grassroots decision-making.”

Plus they allow employees to accumulate wealth and build assets through having an ownership stake in the cooperative.

Tied to the idea that the importance of capital should be subordinated to labor in contexts more “labor-ist” than “capital-ist,” the ideal of the worker cooperative may be ripe for our times, this valley, and the Hudson Valley Currents’ underlying ethos of community capital supporting itself through community currencies.

Forget utopian socialism, Robert Owen and FDR. Worker cooperatives may just be the answer to our times.