Co-operative Solutions in Hard Times

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Seven point eight trillion dollars. That’s over half of the annual Gross Domestic Product of the United States.

As of November 26, 2008, it’s also the amount of taxpayers’ money that had been committed to bailing out the collapsing American financial system. This is an astounding amount of money-$25,500 for every man, woman and child in the U.S.

Around the world, it’s a similar story. Stock markets have lost half of their value, housing prices are plummeting, retail discounts have never been deeper, governments are piling up debt, and people are losing their jobs. It’s the Great Depression redux.

Two years ago, Nicholas Stern, head of the British Government Economic Service and former World Bank Chief Economist, issued his report, “The Economics of Climate Change,” with this admission: “Climate change is the greatest market failure the world has seen.“1

That’s two unprecedented market failures in two years. It’s a gloomy picture, but one full of opportunity for cooperatives.

Our current economic system originated in England at the beginning of the industrial revolution. As Karl Polanyi detailed in his classic work, The Great Transformation, 2 market liberalism was the theoretical response of English thinkers to the massive social disruptions caused by industrialization in the early 1800s. Writers like Adam Smith attempted to provide a moral basis for the theory of market liberalism by defining “economic” rules that justified its core belief that human society should be subordinated to “self-regulating” markets. As England expanded its empire in the nineteenth century, these beliefs became the dominant organizing principle for the world economy.

Cooperative economics, championed by social reformers such as Robert Owen (a Welsh businessman), provided a humane and concrete response to the social misery caused by free markets. In 1844, a group of weavers in Rochdale, England, inspired by Owen, started a food co-op based on the co-operative principles they penned. As word of their success spread, co-operatives based on the Rochdale principles were started throughout the world.

During the “Dirty Thirties,” there was a ­successful flurry of new self-help co-operatives organized in the United States, including 300,000 members in California’s “reciprocal economy.“3 In Canada, several established co-operatives hired organizers to help start new co-operatives of all kinds.4

Today, as self-regulating markets fail again, people all over the world are joining and starting cooperatives to meet their needs. There are thousands of examples of local co-operative initiatives, from credit unions in India, fair trade coffee growers in Nicaragua, industrial worker co-ops in Argentina, renewable energy co-ops in Denmark, and forestry co-ops in Canada.

The following statistics paint an impressive picture of the worldwide impact of the co-operative model5:

• In 1994, the United Nations estimated that the livelihood of nearly 3 billion people, or half of the world’s population, was made secure through co-operative enterprises.

• Over 800 million people in over 100 ­countries worldwide are members of
  co-operatives.

• Co-operatives provide over 100 million jobs around the world, 20 percent more than multinational enterprises.

• In the United States, more than 120 million people (40 percent of Americans) belong to 47,000 co-operatives.

• There are 132,000 co-operative enterprises in the European Union, with 100 million members and 2.3 million employees.

• Canada has over 9,500 co-operatives and credit unions, with combined assets of approximately $300 billion, employing over 155,000 people.

• Quebec, a province that has had co-operative friendly policies for decades, accounts for almost 40 percent of all co-operatives in Canada, and nearly 50 percent of co-op jobs.

The principles and values of co-operatives provide a positive alternative to the failing hierarchical business structure favoured by the neo-liberal economy. The table on page 25 provides a comparison between the values of the competitive “free market” and the co-operative “fair market.”

These values provide the underlying motivations for people in their daily activities. The contrast between the competitive values and the co-operative values is startlingly clear. Given the last few years of very public corporate scandals, and the greed exhibited by many corporate officers, it is not surprising that co-operatives enjoy a very favorable public perception. Here are some results from public opinion surveys.

In the United States:6

• 77 percent of people said co-ops have the best interests of consumers in mind, compared to only 47 percent for private corporations.

• 76 percent agreed that co-ops run their businesses in a trustworthy manner and
  for the benefit of their communities, ­compared to 53 percent for publicly traded corporations.

Notes

1. Nicholas Stern, Stern Review: The Economics of Climate Change. October 2006, Executive Summary, page viii.

2. Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time. Boston: Beacon Press, 1944, 1957, 2000.

3. Jonathan Rowe, “Entrepreneurs of Cooperation”, YES! A Journal of Positive Futures. Bainbridge Island, Washington: Positive Futures Network Issue 38, Summer 2006.

4. Ian McPherson, Co-operative Movement.
www.canadianencyclopedia.com www.canadianencyclopedia.com

5. International Co-operative Alliance, www.ica.coop , 2007; National Cooperative Business Alliance, www.ncba.coop, 2007 ; and Canadian Co-operative Association, www.cca.coop , 2007.

6. National Co-operative Business Association, survey performed by The Opinion Research Corporation of Princeton, N.J., 2003.
www.co-opmonth.coop/primer/perceptions.html

***

Russ Christianson lives in Campbellford, Ontario and has worked with Canadian co-operatives for many years. His “Sustainability Scorecard” and related documents in the same edition of Cooperative Grocer are intended for shared public use (russ.c@xplornet.com; 705-653-0527).