Cooperatives in the Age of Google

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Report

* Co-operation in the Age of Google. Co-operatives UK, 2010

URL = http://www.uk.coop/ageofgoogle


Abstract

"What is the way forward for the co-operative sector? Commissioned by Co-operatives UK, Robin Murray – a co-operative innovator and key thinker behind Fairtrade, Twin Trading and much more besides – has produced a radical vision of the how the co-operative sector can expand in the 21st Century.


Co-operation in the age of Google shows that we are living at a time of profound transformation. The information and communication revolution, widespread concerns about private sector greed, public sector finances and impending climate chaos present a wide range of possibilities for co-operative expansion.


But Robin says the co-operative sector is not yet in a position to make the most of these opportunities. It needs to be more innovative, more integrated, more internationalist, to get better infrastructure and to find ‘the idea’ that can mobilise support for co-operation.


The review proposes a series of practical initiatives for 2011 and 2012 to strengthen the co-operative sector."


Synopsis

Google was started in a garage in 1998. It now has a market capitalisation of $173 billion. It is one of a number of companies of comparable size – Microsoft, IBM, Apple, Cisco – who are leading an information and communications revolution which is redrawing the economic landscape. This is the necessary starting point for a review of the future of co-operation.

Just as the pioneers of Toad Lane started their project in the midst of a railway boom and the ruin of an industry, so co-operation today is facing a new generic technology that is destroying old industries and creating new ones as it goes. As in the 1840s and again in the 1920s a financial frenzy has accompanied the rise of the new sectors, creating a bubble that has collapsed into a slump. What we can now see with hindsight is that these depressive pauses were a time of transition, when an old world was dying while a new one was forming to take its place.


Previous technological changes of this magnitude were about material production – textile mills, railways, steel and Ford’s mass production factories. The information and communications revolution is different. It has created a virtual economy that sits in cyberspace above the material economy of goods and services. It is connected by airwaves and spectrums rather than roads and railways. It sends messages by satellite and ethernets, and uses cloud computing. Like the sky its horizons seem to stretch to infinity.


But its impact is only too material. Traditional industries are finding their foundations dissolving – music, broadcasting, the press, publishing, postal services, travel agents, branches of retailing all face a receding economic tide. Others are expanding in their place. Design, data processing, scientific research, software and computer systems, management and technical consultancy, education, artists and a host of maintenance and support services – these top the list of most rapidly growing sectors.


The traditional pillars of the 20th century economy – the great centralised corporations and welfare administrations – are far from finished. But they are being hollowed out, bypassed, or if they are banks, have to be publicly propped up in order to survive. What at once felt solid is being remoulded. Which forms will become dominant is not yet clear. Their emergence is contested. There are alternative paths of development and how they are organised. I refer to this as a second industrial divide.


The evidence of this divide is unfolding in sector after sector – in energy, waste, food, finance, retail, broadband, housing, education, health, and many of the caring services. It is clear that there are different ways of organising these services, each with their own systems of regulation and organisational structures. Much depends on which path is taken. That will determine how far the new information economy can spread its benefits throughout the economy or will be used to consolidate the existing structures of economic and political power.


It will also shape the prospects and process of co-operative development. For co-ops have always flourished best in decentralised economies, and one common pattern across the economy is the return of the micro. Early industrialisation centred on small firms and homeworkers. Both were marginalised in the 20th century. But now industrial processes are being separated out and distributed in the search for creativity and flexibility. The technological icons are no longer huge factories and power stations but the computer, the iPhone and the solar panel. It is as if a flower pod has burst open and scattered its seeds and new micro technologies have followed.


There have been parallel trends in economic organisation. The 20th century model of command and control has in some cases been strengthened by the ever expanding capacity to gather and process information. The surveillance society has its parallel in the surveillance economy, and is the antithesis of co-operation.


But the last thirty years have seen the introduction of quite different distributed models of organisation. They mix collaboration and delegated responsibility with systemic orchestration, and are most common in those industries dependent on high levels of innovation and external interaction. Front line workers and plant managers have been given greater autonomy and are managed by results and statistical oversight via continuous flows of information. Work is being organised in teams and around projects. Projects draw in other firms in webs of collaboration. The capacity to co-operate, within firms and between them, is becoming more important than the principle of obedience.


There are other trends that run in favour of co-operation: the increasing involvement of both shop floor workers and consumers in the process of production; the growing importance of a civil economy based on values and mutualism; an expanding class of creative occupations and skills; and a new subjectivity in a generation that puts self expression and autonomy before security, and who are determined authors of their own lives. All of them provide fertile soil for the growth of co-operation at all levels, both formal and informal.


These are economic forces that have swung behind co-operation and help explain the turn in the political tide. All three political parties are now advocates of mutualism. It has become an ideological centrepiece of the Coalition’s policies. The Age of Google has within it the potential to usher in a new era of co-operation.


Virtual co-operation

This is already evident in the explosion of informal co-operation in the sphere of information itself . Over the past decade the growth of the internet has seen information break free from the customary world of the market and the state. Citizens armed with their computers have bypassed the old institutions and are connecting to each other directly. They are sharing their news and their images, even their unused gardens. They are exchanging or passing on no longer needed possessions. They share advice and experience and work together on developing ideas and projects.


The most celebrated example is the creation of software. Two thirds of the world’s software is now produced collaboratively and circulated freely under open source protocols. Programmes like Linux or Mozilla, or projects like Wikipedia or the mapping of Mars, are examples of how a collective intelligence at an entirely different level has emerged as the result of the web. Discussion has moved from the kitchen table and the meeting room to the four corners of the world itself.


The informal information economy is open and global. It is driven by interest and enthusiasm rather than money. The bulk of its traffic is free. It is taking time to digest the implications of these changes, and for those involved to work out what rules are necessary to govern behaviour. Some have seen it as a new form of the commons, and looked at codes of behaviour that have been developed by those using common land or fishing grounds. But this informal economy is more than sharing a common resource, for with the web the resource is unlimited. It is merely a site for relationships, and where joint projects are involved, it requires the kind of qualities found in those pioneer communities where everyone worked together to raise the roof of a home.


It is nothing other than a co-operative economy that is now growing with the speed and diversity of a tropical forest. It is informal and astonishingly inventive. It shares many of the same values and practices of formal co-operatives, and opens up numerous possibilities for a meshing between them. William Morris’s News from Nowhere depicted a world based on mutualism that for more than a century was seen as utopian. But in the last decade it has emerged as a reality not on the banks of the Thames but in the world of the web.


Challenges

If we look at the co-operative movement through the lens of this new economy of information, it has many assets where there is a close fit:


  • it is a distributed network, its elements linked together through shared values and a federal organisational architecture at the level of industries and of the movement as a whole.


  • it has values that stress the importance of collaboration and sharing, not just between co-ops but with the communities within which they work


  • it has a democratic organisational form which is inclusive of those connected with production, whether as consumers, workers, or communities, and a long experience of how to make this work effectively


Yet seen through the same lens there are areas which need strengthening if the movement is to make the most of the current co-operative moment.


i) Integration.

The co-operative economy is stronger at the micro level than the macro. The emphasis in co-operative development has been on the creation and support of new co-operatives rather than on the expansion of existing ones and on strengthening the inter-connections of the co-operative economy as a whole. Too little attention has been given to how information, know-how and technologies are diffused between co-ops, and to the development of specialisms between them. There are notable and instructive exceptions, but the conclusion of this Review is that strengthening the way co-ops work together as a system is the first priority for a strategy of co-operative development.


This emphasis reflects the fact that the trend towards distributed production has taken place in the context of the design and management of complex systems. The house can become a power station, a hospital, or an office because it is connected to networks, to smart grids, or health management systems. Each part of the network may be able to connect to any other part directly, but this depends on the design and management of a platform and tools that allows them to do so. Attention has shifted from economies of scale and scope to economies of system.


The systemic quality is one of the characteristics of the successful co-operative districts in Italy and Spain. The Italian industrial districts have developed as complex systems of small firms. They are specialised, collaborative, and connected through consortia and common institutions for those services (particularly the gathering and circulation of information) where there are economies of scale. They have developed financial and training institutions that support the productive economy, as well as technology centres and common kite marks. Much the same applies to the Mondragon co-ops. There are major system economy gains to be made for the British co-operative movement.


ii) Intelligence.

The 5th co-operative principle on the promotion of education, training and information is directly in tune with the new economic and technological paradigm. It is central to the coherence of the movement that those involved have a common perspective and collaborative skills, and that the movement is able to reflect on its work and the strategic opportunities it wishes to pursue. At the moment these functions need to be radically expanded, with the help of the technologies and methods now available.


iii) Information.

A similar point holds for the ability of the movement to draw on ideas from outside, to track international developments, and to share information and pass on know how between co-operatives. Information technology has revolutionised the way information is generated, codified, circulated and analysed, and it is imperative that individual co-ops and the co-operative economy as a whole is able to keep up with and make use of the latest tools in this field.


iv) Innovation.

The contemporary economy has moved from episodic to continuous innovation. The new competition has shifted focus from scale to innovation in product, process, and service capacity. Design, prototyping, rapid user and market testing have all grown as specialisms, for services as well as goods. Continental small firm and co-operative districts have developed their own institutions for innovation: intermediaries that link the needs of small firms and with university research capacity; specialist research co-ops; innovation consortia; technology scouts; and subsidised design programmes. There are examples of this within British co-operatives, but there is little economy-wide support for co-operative innovation or for identifying co-operative opportunities opened up by innovation elsewhere.


v) International.

British co-ops have an internally oriented tradition. Their strength has been in the local, and in communities of attachment. For the most part (some of the agricultural co-ops and travel companies are a partial exception) they are oriented towards domestic not overseas markets. Yet even in sectors that are traditionally domestic – retail, funerals, education, even health care – the global with its systems is crossing the threshold.


If the economy is being globalised, co-operatives may offer a local, rooted alternative, but this will necessarily be ‘glocal’. It will face pressure from the global and will need the support of co-operatives globally. There is scope for a much greater degree of international collaboration, for example in the design and delivery of systems of co-operative care, or in the organisation and micro technologies of local food systems.


vi) Idea.

Informal co-operation is driven by a shared interest and enthusiasm. The same is true for the social economy. 19th century co-operation had a strong and disruptive idea, of an autonomous economy democratically controlled. It had both an economic proposition and a democratic one, and the same holds true for successful co-operative economies elsewhere. British co-operation is distinguished by its values and democratic structures, but its values are less distinct relative to others in the social economy (and some parts of private market), while the co-operative economic model has lost its specificity.


Work needs to be done on developing both the economic and democratic expression of the co-operative idea in the information age. In particular co-operation needs to be positioned as a unique and practicable path between the private market and the state for addressing the ever more intractable problems of climate change, resources and welfare. As an idea it has to address ends as well as means, in a way that has a strong, distinctive social resonance.


vii) Infrastructure.

The current infrastructure of support for co-operative development needs expansion, in its capacities, its brief and its coverage. It should extend from the generation and early development of new co-ops, to their expansion and diffusion, and to the development of sectors. The existing co-operative development bodies need to be more closely integrated into a Co-operative Advisory Service supplemented by support from within existing co-operatives and by the addition of a network of Sectoral Development Bodies. This infrastructure would provide multiple points of local and sectoral animation and support, both responding to particular circumstances and opportunities, and advancing national co-operative initiatives.


viii) Institutions.

British co-operation has a formal federated structure of governance, but it lacks an overall capacity for systemic economic organisation. This problem has arisen because of the growing economic diversification of the movement. For many years it was predominantly a co-operative retailing economy, and the process of amalgamations into the Co-operative Group along with the associated retail societies means that this part of the movement is strongly co-ordinated. But retailing now accounts for only some 50% of co-operative turnover. The other 50% may have their own industry federations, but as a group they are a loose flotilla. The formal umbrella body, Co-operatives UK, is under-resourced to undertake the tasks of co-ordination and systemic inter-connection. It is in these non retail areas that the opportunities for major co-operative expansion are now appearing, and where the requirement for strategic animation is most apparent.


There is one general conclusion from the above. The co-operative movement will only be in a position to fully respond to the current opportunities by greatly strengthening its local, sectoral and systemic capacities. The recommendations in the Review are geared to that end.


Ways forward

The Review proposes a series of initiatives as part of an initial 2 year action plan from 2011-2012, designed to strengthen the systemic elements of the co-operative economy and enable it to make greater use of its own resources as well as to mobilise others. Each of them is an entrepreneurial venture in itself, and for the purpose of the two year plan, 10 initial teams are proposed to take the work forward and establish:


1. A broad programme of development of co-operative education through the College, including a co-operative business school, a reflective practice service, the digitalisation of the co-operative archive, the development of We-Learning, and a co-operative cable channel.

2. A Knowledge Hub.

3. A specialist web unit to promote web-based services for existing co-ops and the co-operative movement as a whole, as well as stimulating the development of new e-co-ops.

4. A network of sectoral development bodies and a prototype co-operative ‘MITI’ to develop and facilitate the implementation of a Co-operative Industrial Strategy.

5. An international conversion consultancy, bringing the expertise and experience of the international co-operative movement to bear on the increasing pace of conversion currently taking place in the UK.

6. A strengthened and expanded Co-operative Advisory Service.

7. A Co-operative Innovation Lab.

8. A co-operative mark and/or smart card as a tool to strengthen the integration of the co-operative economy and extend its range.

9. A financial institution on the model of the first phase Caja Laboral to strengthen the connection between venture formation and funding, and to provide an oversight and support for existing co-operatives.

10. A Co-operative Economy Acceleration Trust to mobilise finance for the expansion programme.

The detail and rationale for each of these is discussed in the Review.


Conclusion.

There are ten summary propositions that have informed the analysis and recommendations of the Review:


1. We are living at a time of profound economic and social transformation which is leading to the redrawing of the economic and institutional map. I have referred to this as the Age of Google.

2. The current recession signals a point in this transition, parallel to previous major financial crises, when the way opens for a new socio-technical paradigm (in this case the information and communication revolution) to become generalised in areas that have been largely untouched.

3. The new paradigm presents a wide range of possibilities for co-operative expansion, reflected in the cross party political support for co-operation.

4. The economic transformation affects all current co-operative operations. This poses threats and opportunities for individual co-operatives and places.

5. To make the most of the possibilities the co-operative movement will need to strengthen its capacity to act as a movement, and in particular to bring in changes that reflect the new socio-technical paradigm.

6. A primary task is to develop the central co-operative idea both in terms of its economic proposition and its democratic one. The movement should shift its definition of co-operatives from form to values, and should refocus its role in relation to the two dominant issues of the coming period: the growing environmental crisis and the reconstitution of the welfare state.

7. It should then redesign its educational, intelligence, financial, infrastructural and information systems both to strengthen individual co-ops and their integration.

8. It should draw on the lessons of the social movements, not by abandoning its democratic structures but re-invigorating them with new forms of local organisation

9. The central organisational issue is the gap between that half of the movement organised through the Co-operative Group and the half which is fragmented and where many of the new opportunities are now opening up. The latter needs to have a much strengthened Co-operatives UK

10. It needs to develop a new financial model for financing the growth and integration of the co-operative economy as a whole."


Reviews

See: Reviews of Co-operation in the Age of Google


Discussion

Robin Murray in discussion with Jeremy Gilbert and Andrew Goffey:

"* Jeremy Can you say something more about the arguments in your 2010 paper ‘Cooperation in the age of Google’?

Robin: I was asked to offer some perspectives for the co-operative movement in the coming decade. The co-operative economy in this country had been inspired by the 1844 Rochdale Pioneers, and the working-class co-operative network that grew from it, to become by the 1880s one of the largest set of enterprises in the world. Many of the co-ops from the early period had had difficulty in keeping pace with scale-based Fordism, but over the past twenty years there has been a new wave of co-ops that have some of the features of the Italian industrial districts like the one in Poggibonsi. The question I looked at was what the future holds for the new and older strands of the UK’s co-operative economy.

My starting point was the potential for more lateral and democratic forms of production and circulation as the result of the internet and growing civil socialization. The potential for co-operation is startling. If anyone says to me, ‘co-ops are over’, the response has to be ‘What about Linux?’. Open source is a contemporary form of cooperation. With open source projects you don’t need to set up a coop, because there’s nothing bought or sold. But if you think that the majority of software in the world is now dependent on open source, co-operation has now reached a scale that William Morris could scarcely have dreamt of.

How does this translate into the material world of food and energy or expanding services like education, or health and social care? All these have the potential to develop as distributed post-post Fordist systems. Already Germany’s remarkable growth in renewable energy has been driven by local energy co-operatives (as was Denmark’s wind industry). Similar patterns have emerged in social care (in Italy over 14,000 social co-ops involving families, care workers and volunteers have been established in the last twenty-five years). In Japan, food co-ops, based on box schemes, now involve 12 million households, organised around local cells of 6-12 households. These food co-ops have now diversified into health, social care and a myriad of worker co-ops. In all these systems, and in similar ones in the wider social economy, platforms, grids and common services are crucial to the effectiveness and economy of the constituent parts. What marks them out is that the infrastructure and support services are directly controlled by the productive ‘cells’ they are there to service. So the first recommendation of my study was to move away from the pyramidal structures that marked many of the larger twentieth-century co-ops, and towards developing such platforms and common services for distributed co-operative systems.


Secondly, if co-ops are driven by wider social and environmental goals, what holds everyone together and ensures that democratic structures remain inclusive and constructive? This has been a problem for the co-op movement. As co-ops grow in size, you can see a common tendency: after initial enthusiasm and expansion, pyramids based on knowledge often develop, with power moving to technicians and managers. In Fordist co-operatives, the managers tend to be sucked in to the methods and ideologies of their corporate competition. The economies of system clash with the economies of cooperation. How to marry the two?

The distributed systems of German energy or Japanese food are one answer. Another is ideological. The Mondragon network of 220 worker coops (with 85,0000 workers) has a Lego-like structure, with the individual co-ops encouraged to remain small and specialise, and spin off operations as they grow. But their distinguishing feature is their emphasis on education, or ‘formacion’ as they put it. Launched in 1956 from a training course, Mondragon now has a university serving its members, whose purpose is both technical and ideological, so that the values of co-operation are embodied in all its parts. Its founder, the priest Jose Arizmendierreta, when asked why they place such importance on education in an economic project, replied ‘No, no - this is an educational project with an economic component’.

Another post-post Fordist feature of the co-operative landscape is the appearance of co-operative platforms as a way of marrying autonomy and scale. The One-Click platform allows you to set up a co-op or other social venture in ten minutes, and then enables members to come in and out of discussions normally reserved for a Board according to each person’s time and interest.

What is fascinating about how it works in practice is that there’s rarely a nonconsensus decision. If there are differences those involved are encouraged to sort it out offline and return online to take formal decisions. Charles Armstrong, who developed One Click, describes it as ‘emergent democracy’.

One way of looking at these developments is to focus on how knowledge and information are generated and shared. One of my arguments in ‘Cooperation in the Age of Google’ was that co-ops with social and environmental goals have an incentive to share their knowledge with other social organisations with similar goals. We can think of it as a potential co-operative commons of information. This is one element of the economics of co-operation, and it gives co-ops, like others in the social economy, a decisive advantage over private corporations,

I suggested a number of ways in which the movement as a whole could establish systems for the collection and sharing of their information and knowledge, as one part of a wider strategy for the British co-operative movement to embrace the emerging features of post-post Fordist production - distributed systems, platforms, formation, and open information.

I also raised the issue of developing a cooperative currency. As Amazon and Google have both recognised, currency is a great tool for socialisation. As with ‘open source’ collaboration and its socialisation of information and knowledge, so a co-operative currency is a way of directly connecting (that is ‘socialising’), the different parts of a co-operative system." (https://www.lwbooks.co.uk/sites/default/files/nf8485_11murray_gilbert_goffey.pdf)