Definition

A co-operative 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.

The Wikipedia has a very elaborate entry on Cooperatives, at http://en.wikipedia.org/wiki/Cooperative

Values

Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

Principles behind cooperatives

From http://www.ica.coop/coop/principles.html

The co-operative principles are guidelines by which co-operatives put their values into practice.

1st Principle: Voluntary and Open Membership

Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

2nd Principle: Democratic Member Control

Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.

3rd Principle: Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.

4th Principle: Autonomy and Independence

Co-operatives are autonomous, self-help organisations controlled by their members. If they enter to agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

5th Principle: Education, Training and Information

Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation.

6th Principle: Co-operation among Co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

7th Principle: Concern for Community

Co-operatives work for the sustainable development of their communities through policies approved by their members.

Typology

1.

"Cooperative ownership of business enterprises produces financial benefits for member-owners, while building business skills, and providing experience in democratically controlled enterprise. Successful cooperative businesses enhance neighborhood revitalization and stability. Where cooperatives include community residents as member/owners, they create a strong linkage between people and place by helping to ensure that residents are direct stakeholders in and beneficiaries of local business activity.

Worker Cooperatives enable member-owners to obtain financial benefits as shareholders of the business. Worker cooperatives exist in nearly every business sector and include manufacturing and processing companies, health services agencies, restaurants, and other enterprises. Many include residents as member-owners, thereby playing a central role in the community development arena. A notable example is Cooperative Home Care Associates in the South Bronx, a worker cooperative that employs some 550 African-American and Latina women-75% of whom had previously been on public assistance.

Employee Stock Ownership Plans (ESOPs). ESOPs enable employees to own all or part of a company's stock. They range from "democratic" ESOPs that are controlled on the basis of one-member one-vote, to companies that provide their workers with stock options but no voting rights (the latter case does not constitute a cooperative ownership model). ICA Group has been at the forefront of efforts to expand the role of ESOPs as a community development strategy. ICA has assisted groups like the Fifth Avenue CDC in Brooklyn and Manna Inc. in Washington DC, to establish temporary services agencies that will ultimately be transitioned to worker-owned enterprises. Workers come from the neighborhoods where the agencies are located as well as from throughout New York City and Washington DC.

Consumer Cooperatives. Consumer co-ops enable a group to reap economies of scale through their joint purchasing power. They provide products and services to members in a local or regional area and enable members to exercise more leverage with suppliers. Because consumer coops make purchases in bulk, members are often able to save on per unit costs. Consumer cooperatives are organized primarily in the insurance, food, and utilities industries. Rural electric cooperatives operate more than half of the electric distribution lines in the United States and provide electricity for 26 million people.

Community development credit unions (CDCUs) are a type of consumer cooperative that plays an important role in communities in both rural and urban areas. CDCUs are financial institutions that are owned and operated by low-income residents and provide access to credit by recycling member deposits back into the community. Northeast Community Credit Union provides lending products such as mortgages for first-time homebuyers, small business loans, and credit restoration loans to inhabitants of San Francisco's Chinatown neighborhood and has 1,200 members.

Producer Cooperatives. Producers, individually, or as a group, own and operate cooperatives that provide members with expanded production, marketing and distribution capacity. Many smaller producers lack the production volume to do direct business with wholesalers and retailers of their products. Producer coops thus enable individual producers to aggregate their products and gain more negotiating power in the market place. This coop model is particularly common in the agricultural and agro-industrial sectors. Another type of producer coop, the craft cooperative, has been particularly effective in helping low-income, low-wealth crafts people bring their products to a wider market." (http://www.policylink.org/EDTK/ROMcoop/)

2.

"Any economic activity can be conducted on the cooperative model. Cooperatives may be generally classified as consumer, worker, producer, credit or marketing cooperatives -- or by sector. Traditionally cooperatives have been divided into economic sectors of agriculture, banking and credit, consumer, fisheries, housing, insurance, and workers' co-operatives. Each of those eight sectors has its own global organization whose members are the corresponding national associations, and in turn their members are the individual co-ops of those types in the various countries. (A distinction is made between producer and worker cooperatives inasmuch as large corporations may join together in producer co-ops -- Welch’s and Ocean Spray are United States cases -- without practicing workplace democracy.)

Uniting these eight global organizations of cooperatives is the International Cooperative Alliance (ICA), in Geneva, a UN-recognized consultative NGO linked to the UN’s International Labor Organization. But cooperativism is expanding. It permeates many other activities, from car-sharing and child/elder-care, to health care, home and hospice care, funeral services, computer consultancies, orchestras, schools, tourism, utilities (electricity, water, gas, etc.), transport (taxis, buses, etc), and more." (http://www.globaljusticecenter.org/articles/coop_intro.htm)

3.

The JASecon circle corresponds with how the articles on thejasecon.org wiki are organized.

Example

1. Bowman & Stone: Cooperativization on the Mondragón Model As Alternative to Globalizing Capitalism

Status

World

"Worldwide, roughly 750,000 cooperatives serve 730 million members, according to the National Cooperative Business Association."http://www.alternet.org/story/144969/the_growth_of_citizen_co-ops_is_a_positive_development_as_corporations_fail_us_in_every_way]

U.S.

"Here in this country, some 72,000 co-op establishments operate, providing more than 2 million jobs and serving 120 million members--that's four in 10 Americans. These establishments exist in energy, childcare, food distribution, health care, insurance, agriculture, telecommunications and other industries." [1]

by Elizabeth Bowman and Bob Stone:

"With 800 million members world-wide, co-ops are major economic actors. They provide 100 million of the planet’s jobs, 20% more than multinational enterprises! The ICA reports that in the most cooperativized continent, Europe, over 140 million are members of co-ops of all kinds. Over 10% of France’s employees work in co-ops - not extreme in western Europe. Surprisingly, in the US, as National Co-operative Business Association reports, co-ops of all kinds serve some 120 million members or 4 in 10 citizens. Included are: 10,000 credit unions, 1000 rural electric, 1000 mutual insurance companies, 6,400 housing, 3,400 farm, 270 telephone, and about 300 worker co-ops (a small percent compared to Europe). Worker co-ops are most frequent in Venezuela and Argentina, credit unions in Mexico, agricultural co-ops in Cuba and Brazil.

Since democratizing production can transform an economy, worker co-ops have attracted social change advocates. Surprisingly, most comparative studies show them to be more productive and profitable than similar capitalist firms. Given this pivotal advantage, a cooperative sector, not just the odd co-op or even co-op network, could out-compete traditional firms on their own criteria. Varied explanations have been offered for this advantage. It may be due to owner-members’ stakes in its success. And the pooling of knowledge that would otherwise go unshared may be important. Finally, worker co-ops, freed of the burden of costly managers and absentee shareholders, enjoy financial buoyancy and more options. Instead of being hired by capital for its ends workers would voluntarily join together to hire capital for their ends. If the current economic crisis matures, this taming of markets and narrowing of the wealth gap would bring welcome global economic security and balance.

Based on the premise that cooperatives are public goods – stimulating production and stabilizing demand - measures that would foster growth of a co-op sector in the U.S., for example, might include: community economic development (with neighborhood control of major pieces of municipal and county budgets); tax breaks and priority in government contracts; publicly funded co-op market research; establishment of revolving loan funds for cooperatives; widespread education in cooperative management and accounting; and letting workers themselves use their retirement funds for major buy-outs. Workers empowered in these ways would likely insist on democratizing not only production and investment but also distribution, yielding a viable cooperativized economy. Arguably, the weak effort in that direction made by the former Yugoslavia does not suffice as a counter-example, as we indicate below. Enterprise by enterprise the market in human labor would be abolished and collective decisions would displace “market forces.” (http://www.globaljusticecenter.org/articles/coop_intro.htm)

USA 2009

"a new study by the University of Wisconsin’s Center for Cooperatives points to a long-term gradual growth throughout the movement. There are now almost 30,000 cooperative businesses in the U.S., and they generate about $500 billion in revenue and $25 billion in wages. The Center also found 350 million co-op memberships, with all but 10 million of them in consumer cooperatives." (http://www.solidarityeconomy.net/2009/12/22/worker-co-ops-green-and-just-jobs-you-can-own/)

History

by Elizabeth Bowman and Bob Stone:

"The cooperative movement - born along with and within capitalism as its built-in but radically opposite smaller twin - has for at least 160 years presented itself as an alternative to the dominant system’s antagonistic relations of production. While the utopian community set up by Robert Owen preceded the Rochdale Society of Equitable Pioneers founded in England in 1844, Rochdale is usually considered the first successful co-operative enterprise. Its principles inform the modern movement. Of the following 7 principles of cooperativism, agreed to in 1995 by representatives of the global movement, four were initiated at Rochdale. Numbers one, two, three and five of today’s principles hark back to Rochdale: 1.voluntary and open membership; 2. democratic member control; 3. member economic participation; 4.autonomy and independence; 5. education, training, and information; 6. cooperation among cooperatives; 7. concern for community.

As mechanization was increasingly forcing skilled workers into poverty, a group of 28 weavers and other Rochdale artisans opened their own store in December 1844. They sold food items workers could not otherwise afford. In the four months prior to opening they had struggled to pool together one pound sterling per person for a total of 28 pounds of capital. The store opened with a meager selection of butter, sugar, flour, oatmeal and a few candles. Within three months, selection expanded to include tea and tobacco, and the co-op became known for providing affordable, unadulterated goods. When, to raise more capital, the Rochdale workers took on non-worker investor members, the new members outvoted the pioneers and set up a standard capitalist enterprise -- a trajectory that was to become all too common in future cooperatives.

Subsequent co-op history is a discontinuous tale of sudden upsurges and equally sudden collapses, followed by forgetting. By 1848 it was clear that capitalism could not deliver on humanistic claims of the French and U.S. revolutions. In that year of the first serious protests in Europe against capitalism as such, cooperativism as alternative often figured prominently. And again, in 1871, co-ops of all sorts flourished briefly under the Paris Commune before it was brutally repressed by the French army. Later, in France in May 1968, the re-discovered idea of “self-management” swept through the economy, democratizing factories, apartment blocs, even corporate offices. As the ferment of debate permeated occupied businesses radical change in a developed nation seemed possible. Opposed by the De Gaulle government and subverted by the Communist Party, however, the 1968 uprising was reduced to being yet another flash in the pan. In 1974 workers in the occupation strike at the Lip watch factory at Besançon, France re-started production under “self-management” and began selling their products – an important innovation over the 1968 struggle.

Starting with Rochdale itself, the cooperative movement has been consistently dogged by what has been called “the degeneration problem”: re-absorption of co-ops by capitalism. solved Part of that problem - vulnerability to buy-outs – was largely solved by the “individual capital accounts” invented in the 1950s by the Mondragón Cooperative Corporation in Spain’s Basque country. The Mondragón network became a movement model by demonstrating that a major producer of capital goods could go up against capitalist firms and prosper. However, MCCs choices to enter first the European and later the global markets resulted in centralization of management and sacrifice of much of the democracy that had distinguished it from its capitalist competitors. At the same time however, a long-term democratization of production in capitalism itself may reflect investors’ growing difficulty in exacting more labor and hence more profits without giving workers “a piece of the action” or a semblance of it." (http://www.globaljusticecenter.org/articles/coop_intro.htm)

Discussion

See: Cooperatives - Discussion

More Information

Cooperatives: A Brief Introduction to their Types, History & Social Change Prospect. by Elizabeth Bowman and Bob Stone. December 2007

Also:

1. See http://www.ica.coop/calendar/ga2005/birchallkey.pdf
2. “Cooperative Alternatives to Capitalism,” Special issue of Humanity & Society, Vol. 28, No. 3, August 2004, edited by Frank Lindenfeld
3. Website of International Cooperative Alliance (ICA) -- “Uniting, representing and serving cooperatives world-wide,” www.ica.coop
4. Website of National Cooperative Business Association (US), www.ncba.coop

Encyclopedia