As I entered the reception for the opening evening of the 5th National Worker Cooperative Conference (as compared to consumer cooperatives which most of us are more familiar with) I experienced a kind of euphoria.

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After all, we had just finished the keynote speech by Congressman Chaka Fattah, a nine-term progressive leader from Pennsylvania, who introduced The National Cooperative Development Act into Congress. When passed, the bill will considerably improve government support for developing a cooperative economy here in the States and bring us more in line with Europe. Moreover, the Small Business Administration had just agreed to provide some funding for cooperatives and –wait for it — the UN had declared this the UN Year of the Coop! We had arrived! No longer were we a little side note of Utopian idealist organic food coops — we had gone mainstream!

The creation of a society based on democratic, grassroots cooperatives as an antidote to capitalism has been a dream many of us have worked toward. The cooperative movement began with the 1844 Rochdale cooperative experiment in England (http://en.wikipedia.org/wiki/Rochdale_Society_of_Equitable_Pioneers), continued through the anarcho-syndicalist cooperative movement beginning in the 1880s (frequently associated with Emma Goldman and the IWW), was energized by the farmer’s populist rebellion in the 1930s in the United States, and in recent years the Mondragon model formed in Spain in the 50s (100,000 workers and 12 billion in assets) and the industrias recuparadas in Argentina in the 1990s. But for the first time– perhaps more through objective necessity as we globalize and shift from an industrial economy to a digital economy–it seems to be a vision whose time has come and is actually within our grasp.

So I was prepared to enjoy the kind of movement simpatico and joie de vivre that revitalizes all us activists when we get away for the weekend with like minded souls when we are in a period of radicalization– and, to manage, of course, to gather new information and contacts to bring back to the struggle.

After Rep. Fattah’s presentation — which he finished by noting that both he and his wife were active supporters of REI (Recreational Equipment Incorporated which is a world famous consumer cooperative geared to hikers, runners, and other outdoor types) — I sat down with a plate full of delicious organic and vegetarian food. Next to me sat an enthusiastic young blonde who just happened to be the treasurer of the finances at the Occupy Wall Street site. She was discussing an educational cooperative venture that she and her boyfriend were planning to establish on their farm in New Hampshire. They would bring inner city kids out for an educational experience combined with a practicum in farming to help counteract the decaying educational system in New York City. How wonderful I thought.

But be careful what you wish for. It was just at that point that the discussion started to get tricky. The first group of kids for their cooperative project, it turns out, were going to be from a charter school in New York City. The school was given $250,000 by Walmart. When I and another community organizer sitting next to me seemed taken aback that they would partner with the charter schools and Walmart, the woman acknowledged the problem but noted that they would not be in any way beholden to Walmart and they hadn’t been able to find any other way of funding the project.

Forget the fact that one of Walmart’s primary goals is to privatize education while still ripping off public resources (private charter schools, which have no accountability or oversight, are frequently housed in public school buildings at public cost, leaving less room and resources for the “less fortunate” who did not get into a “charter” school). Forget that this mirrors Walmart’s modus operandi in their stores where Walmart bad mouths unions as it accumulates its billions, yet pays it’s employees so little that the employees must apply for Medicaid and Food Stamps to survive (government programs which Walmart also bad mouths).

The young couple seemed unaware that by simply accommodating Walmart’s funding of the charter school model, they were furthering privatization of public education. Before we condemn the ignorance and gullibility of the young couple too much, we have to remember that Bill Gates, Obama and Al Sharpton support the charter school program as well. However, the young woman’s general lack of awareness of the struggle over Walmart and her obliviousness to the consequences of their choices did make me question how their coop project would fit in with the broader intent and principals of the cooperative movement.

So I turned to my left and zoned in on another conversation where a very articulate man was promoting “crowd funding” as a way to raise capital for cooperative projects (one of the most difficult problems the coop movement faces). With great enthusiasm, he spoke about how easy it would be to raise investment money over the internet once the jobs bill had passed and “crowd funding” became legal. Forget the great possibilities for fraud that this opened for coops and the community, or that his enthusiastic promoting of outside investors contradicted the concept of worker owners as the only shareholders, a concept necessary to keep the cooperatives democratic– he was off on a vision of larger and larger capital investment monies for ever bigger and more grandiose cooperative ventures. Again I wondered where the cooperative principles that drove the movement had gone.
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Melissa Hoover, the Executive Director of the U.S. Federation of Cooperatives and a tireless worker for a cooperative movement based on cooperative principals, noted that since its inception, the Federation tries to be a “big tent” for all cooperative ventures. And the conference was, indeed, filled with many creative approaches for developing a truly democratic, grassroots cooperative movement that could actually develop into a full blown cooperative economy (which I will discuss later). However, the total spectrum of values and approaches was on full display at the conference, including many of the tendencies that take us away from our cooperative principals.

Those who hold to a “pure” worker owned/worker controlled model with no accommodations to the capitalist system under which we live were counter-posed by those who feel we have to be pragmatic “businessmen” and unquestioningly accommodate capitalist mechanism such as outside investors. Those who come out of the historical radical anti-capitalist anarcho-syndicalist tradition were counter-posed by a new bunch of anarcho-capitalists (libertarians) who hold to the grassroots anti-Statist aspects of cooperatives while still clinging to capitalist free market values, failing to see that the capitalist financial systems are as controlling as the state. (http://anarchism.pageabode.com/anarcho/an-anarchist-critique-of-anarcho-statism)

 

It was obvious in the opening events I related that I had I already encountered both anarcho-capitalists and pragmatic capitalist hustlers . This tendency continued in a legal workshop which focused on getting coops to use limited liability corporations where individual members are not responsible for debts incurred by the cooperative. The Limited Liability Corporation was touted as a way to avoid “risk” to the exclusion to an analysis of other cooperative legal forms. The LLC is one of the main causes of our current 1% capitalists ability to speculate without accountability to the company or the community. And the main speaker at one economic development workshop promoted growth of the individual cooperative to a sufficiently large scale (read millions) to fund capital intensive projects without mentioning how a community of cooperatives could, through a cooperative network and shared funds, support large scale capital intensive projects just as well.

Somewhere in the course of the conference I thought back to Rep. Fattah’s reference to REI, a consumer cooperative that is fashionable with the progressive crowd. I remembered that, when I lived in Seattle in the 1970s where REI was founded, a young woman who came around the women’s center worked in an REI factory making sleeping bags. She told us she was making minimum wage, the factory was poorly lit, hot and the air was full of lint. She said she had no benefits and that the Asian women who worked on the floor just above her (they apparently separated the Asian and Caucasian women) made about $.25 an hour less. I wondered if conditions had changed.

 

So, just to get us back to basics, here are the agreed upon principals of the cooperative movement. Once we have these clear, we can talk:

Seven Cooperative Principles: Cooperatives around the world generally operate according to the same core principles and values, adopted by the International Co-operative Alliance in 1995. Cooperatives trace the roots of these principles to the first modern consumer cooperative founded in Rochdale, England in 1844.

1. Voluntary and Open Membership
Cooperatives are voluntary organizations, open to all people able to use its services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
2. Democratic Member Control
Cooperatives are democratic organizations controlled by their members—those who buy the goods or use the services of the cooperative—who actively participate in setting policies and making decisions.
3. Members’ Economic Participation
Members contribute equally to, and democratically control, the capital of the cooperative. This benefits members in proportion to the business they conduct with the cooperative rather than on the capital invested.
4. Autonomy and Independence
Cooperatives are autonomous, self-help organizations controlled by their members. If the co-op enters into agreements with other organizations or raises capital from external sources, it is done so based on terms that ensure democratic control by the members and maintains the cooperative’s autonomy.
5. Education, Training and Information
Cooperatives provide education and training for members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperative. Members also inform the general public about the nature and benefits of cooperatives.
6. Cooperation among Cooperatives
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
7. Concern for Community
While focusing on member needs, cooperatives work for the sustainable development of communities through policies and programs accepted by the members.

Why do co-operatives fail as co-operatives? By seeking advice from experts who will not see, speak or hear about co-operation. The above heading is the title of an article by David Griffiths that is excerpted below:

“It is important to understand why co-operatives fail as co-operatives – why they cease being co-operatives. In addressing this, it is necessary to differentiate between economic and co-operative failure:

Economic failure is when a co-operative fails as an ongoing and viable business -
it is unable to compete, generate profits and survive as a business.

Co-operative failure is when a co-operative ceases to practice co-operative
values and principles irrespective of its economic viability. The business may
continue to operate and generate profits but its adherence to co-operative values
and principles has become legalistic and token….

The starting point for co-operative failure lies in the formation decision and the
formation process. The formation decision is when a decision is being made about
whether or not to form a co-operative. The formation process is the process
undertaken to form a co-operative…

A co-operative is member owned and controlled. The members of the co-operative
are the users and the beneficiaries of the co-operative. It is critical that this
fundamental characteristic of co-operatives is understood and accepted.
What, then, does this exactly mean? It means that each and every member actively
uses and participates in the co-operative. This has two inter-related dimensions -economic and political.

The management practice [must] reflect and reinforce co-operation.
Co-operative boards appoint managers to manage co-operatives on behalf of the
members. The board needs to be careful that it does not assume that it’s role is to manage the co-operative and that the managers role is to manage the business.
This creates an unhealthy division that will not necessarily be noticeable in the
short-term but will have long-term unintended consequences. There should be no
separation between “co-operative” and “business”. Instead, there is a need to
recognize that co-operative managers need to integrate co-operative values within
their management practice.
Without this integration, there will invariably be conflicts between “co-operative” and “business” success – potentially exacerbated by long-serving managers whose longevity could reinforce this separation. This is not to be confused, however, with the division of responsibilities between a board and a CEO or manager…

Co-operatives, then, fail as co-operatives when they cease practicing co-operative
values and principles. They may continue as a successful business – competitive,
profitable and growing and open to demutualisation….

Co-operative failure is not inevitable. It is, however, the inevitable outcome of the
failure of a co-operative to recognize the importance of co-operative values and
principles and making decisions that are incompatible with these values and
principles:
• A co-operative may choose, for instance, not to recruit as new members its non- member users [and workers]yet allow the non-members to become an increasing proportion of users. This was an important element in what happened to the Victorian Producers Co-operative Co Ltd.
• A co-operative may decide to raise capital through non-member shareholders and, therefore, create a conflict of interest between the member and non-member shareholders and could contribute towards the co-operative’s demutualisation.
• A co-operative may decide not to provide ongoing co-operative education and training for its directors, members, managers and staff. Co-operative values and principles, therefore, are expected to be the product of osmosis.
• A co-operative may market its products and services but its marketing does not identify the co-operative as a co-operative – denying that the co-operative difference is a marketing advantage.”

ENOUGH OF THE DOWNSIDE. ON TO THE HIGH POINTS OF THE CONFERENCE!

The diversity and internationalism of the cooperative community. The best part, as always, is the chance to talk to individual cooperators putting into practice our theories I spent some time with a CWA union representative working on a coop proposal for Cincinnati and had lunch with two Latina women from the Workers Justice Center in Northwest Arkansas who are helping immigrants set up cooperatives (this is a growing part of the coop movement).

As an individual participant I could not attend all the workshops and choose to focus on the domestic cooperatives since I have written on the International cooperative movement before (see DK ). In the International year of the Cooperatives, however, the conference did host a workshop on cooperatives in the global South (Argentina, which currently has over 10000 cooperatives was represented by Jose Hernan Orbaiceta, a Board member of urban coops of INAES, the national institute for cooperativism and social economy in Argentina. The workshop explored how domestic and international co-op development efforts might demonstrate solidarity with each other.

In other workshops and chatting in the hallways, it became clear that the cooperative movement is far more advanced and accepted abroad. I ran into folks who had come from as far away as Sweden (the Secretary General of CICOPA, the international federation of worker cooperatives, who had worked on development of cooperatives in China, India and Central Europe and Japan (Represented by the Japan Workers’ Cooperative Union). The International component was a nice addition.

A comparison of the development and growth of three different domestic cooperatives: 1) a green architectural & engineering firm, South Mountain Company in Massachusetts went from one worker/owner to 19 with 11 other workers who either choose not to be owners (2) to workers who are in transition to cooperative membership. The firm is currently grossing 9 million dollars 2)a 4 woman food delivery service, Valley Green Feast, that specializes in distributing fresh grown vegetables — the women work part-time, they currently have revenues of $104,000 a year and are growing rapidly. 3) worker -owned coop that processes natural fibers into knitting yarns and has grown from 4 workers to 12 workers of which 7 have currently been admitted as cooperators and has an annual income of $400,000.

The best part was that we had the chance to discuss with the workers how the type of business they had effected how closely they adhered to the cooperative model, etc. Cooperatives with professional members frequently have greater pay scale differentials for workers to be competitive in the market and it is important to know who and how they determine what the differential in wages will be. Tech cooperatives are on the rise, by the way, and there was a separate workshop just on the tech coops (IT and Web companies). Most of the tech coops have been started by younger people who have a commitment to the social justice values of cooperatives, although there are still wage differentials for professionals. On the other hand, the smallest of the cooperatives, has compensated for its size by participating with a cooperative network where each cooperative gives back 5% of their annual revenue in interest and surplus to the umbrella group (YAK) to help fund future coops as well as providing support for existing coops.

Can non-worker investors be included without the workers losing control of the enterprise?
In an ad hoc discussion in the legal workshop, Daniel Fireside from Equal Exchange, a fair Trade coffee cooperative with assets in the millions, seems to have come up with a possible solution to one of the thorniest problems of the real (as opposed to the theoretical) cooperative movement: Equal Exchange has a special category of non-worker shareholders who buy Preferred Stock which pays a dividend of anywhere from 5-8% dividends (much like a bank loan), but who have no say in the corporations decisions. These preferred stockholders are paid back first, right after the bank loans. This keeps both the outside shareholders from decision making and makes the worker-shareholders accountable to the cooperative since they do not receive their dividends until both the banks and outside shareholders are paid. The workers would set the limits on how many outside investors would be allowed. What do you think? Is this a solution or would David Griffith raise some questions? My own Marxist tendencies lead me to question whether we can ever fully achieve our goals when we are operating in a capitalist system using their systems.
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Who will lend you money and give you a step by step plan to start your coop? The next best part of the conference was those workshops that give you exactly the information you need to get a coop going. Since 1975, Chris Clamp, of the Cooperative Fund of New England has provided $25 million in loans to more than 560 co-ops at reasonable rates with the kind of coop friendly support you are looking for (www.coopfund.coop). Paul C. Vasquez (pevasques@mail.com) works with the Industrial Cooperative Association (ICA) which provides excellent support for tech coops, though at a significant price.

There has recently developed a field of professionals to help people start cooperatives, especially with blossoming of all the “cooperative incubators” (community development projects attempting to set up several inter-connected cooperatives in depressed low income areas). While some of the new developers can seem like outside interlopers to the movement, there are several good committed coop educator groups that provide a basic course (usually 11-13 sessions)to help you set up your coop. Naemi Giszpenc (ngiszpenc@cdi.coop) with the Cooperative Development Institute (www.cdi.coop) provides a free online syllabus for all budding educators and start-up. Green Worker Cooperatives in the Bronx, New York (omar@greenworker.coop) helps worker-owned green businesses rooted in democracy and environmental justice get started. There is a fee, however, as I believe they are an independent coop with no other funding and need to support themselves.

For putting this bash together and allowing us to have these very real, very pertinent discussions and disputes, a final Thank You to the:

US Federation of Worker Cooperatives (USFWC),
Worker Owned & Run Cooperative Network of Boston (WORC’N),
Valley Alliance of Worker Co-operatives (VAWC),
Eastern Conference for Workplace Democracy (ECWD

And to the 11 person three story cooperative house in Somerville that put me up for the weekend. (Who knew? They decorate, have healthy plants, delicious vegetarian food and great conversation. And they have an opening.)