The Cooperative Movement is on the Rise

Finding alternatives to Capitalism – a tired old system

BY: Luis Fernando Arce, Chief Interviewer

They have even called me “cynic” when I’ve proposed – either in a class discussion or in a drunken tirade in some bar – that the capitalist system is failing us and collapsing on itself. The objective truth of this statement, however, supersedes my own vices and rants – a truth which has manifested itself one financial catastrophe after the other worldwide since the 2008 meltdown.

This reality is becoming more apparent to working class folk as they desperately claw at any semblance of economic security like frightened animals as they realize that unfettered capitalism cannot solve all the world’s problems, and that it has “not helped working families,” according to Labour is Not a Commodity, a blog administered by four organizations focused on international labour issues.

As the economies of previously wealthy European countries collapse one after the other like dominoes, a radical component is budding across the globe with the strength and vitality of the anti-war demonstrations and civil-rights clashes of the ‘60s and ‘70s, with the exception that today we also have technology on our side. I could easily picture some angry old general somewhere in the Pentagon, frantically pegging little red dots on an enormous world map plastered on a wall, highlighting all the countries where the Occupy Movement has ‘infiltrated’, starting with the United States of America itself.

But that old fear-mongering about “communists coming to take your kids away” just doesn’t fly anymore. “Socialism isn’t a boogie-man anymore,: said Ethan Earle, Director of the U.S. branch of The Working World, a micro-credit firm created by Brendan Martin in 2004. He is also an ex-Wall-Streeter that dropped the high-powered life of Bears and Bulls after being inspired by Naomi Klein and Avi Lewis’ movie called La Toma, which depicts the rise of the cooperative movement in that country.

Hazel Corcoran, the Executive Director of the Canadian Worker Cooperative Federation (CWCF) – a “federation of worker co-ops across the country providing trade association functions like lobbying and conferencing, as well as support for the development of new worker cooperatives in Canada” – furthermore suggested that information is power as we chatted on the phone. She spoke hurriedly and excitedly, with a slight lilt, possibly because she was also packing for a trip, but it was obvious she was infatuated with her work.

“You look at the Occupy Movement and…other social movements out there and it feels that it’s a time when people are looking for an alternative way to organize business, society and the economy,” she beamed.
Indeed. The capitalist system’s biggest threat today is not the political left – represented one way or another in the Movements. Rather, it is the angry mob of educated and disillusioned young people who have taken to the streets to voice the roaring discontent of the middle- and working-classes.

Judith Lipp is the Executive Director of the Toronto Renewable Energy Cooperative (TREC), which was created in 1998 by a group of volunteers in order to create a community-owned wind energy project in Toronto. Today, it is a leader in the Renewable Energy Sector.

She voiced a similar perspective except with a hint of pessimism when she told me, in a soft-spoken tone, that she thinks that although people may be looking “to align their values in various ways to participate in society…at the same time a large segment of the population is focused on status and money, and has lost touch with what their values are and any kind of long-term thinking.” She in fact doubts that “we’re close to breaking that cycle.”

But there is something very interesting about the three people I’ve mentioned: they all work directly with a new business-model that challenges the old and tired notion that workers must be led by bosses at the helm.
Let’s face it, who hasn’t had that nauseating job where you had to deal with a belligerent, drunk-on-power fool of a boss who liked to find fault with everything you did while watching over your shoulder like a disease-ridden vulture? Well, I know I have. The worst part is that this is the best of cases: where in order to get fully paid all you had to do is eat a little shit.

In other cases, the tendons in both your shoulders and elbows snap like worn elastic bands, sending you to the surgery room, caused by the repetitiveness and physical strain that comes with five years of unloading trucks, just to be given the boot when “management upstairs” claims that they can’t find any other job suitable to your doctored-prescribed limitations because of your lack of English, which at the factory floor, many minorities will agree, never matters.

Ladies and Gentlemen, I give you: The System!

But hope, as some famous poet once said, springs eternal. Two-thousand-and-twelve has been declared by the United Nations as the International Year of Cooperatives (IYC), which has been “positive for the [cooperative] sector” in Canada, where the movement has really begun to “[wake] up,” said Corcoran.

THE COOPERATIVE MOVEMENT IN ARGENTINA

Since 1995, the owners of the Brukman Suit Factory in Argentina had begun to slash salaries unscrupulously, and eventually ended up firing about half of their labour force. By 2001, with business through the ground, they just decided to abandon the factory and leave the workers unpaid.

Seeing joblessness as an opportunity to band together, a group of 58 seamstresses bravely decided to walk into their factory and, like God did unto Adam, breathed life back into it. As they went along, the seamstresses also grasped how to perform administrative, accounting and managerial duties of a company.

In order to tell this and many other similarly heroic stories that were bourgeoning in the aftermath of the economic collapse in Argentina at the turn of the century, Naomi Klein and Avi Lewis released La Toma (The Take) in 2004. The movie follows a group of Argentinian workers trying to legally obtain their abandoned factory at the same time that it depicts the rise of the Recovered Factory Movement in that country. Their story is not dissimilar to what many countries in Latin America and others around the world associated with the International Monetary Fund (IMF), have had to muddle through.

At the cusp of the new millennium, as Argentinian President Carlos Menem welcomed the new year with a lavish party and champagne – the same political thug who just before the 2003 re-elections would be on House Arrest on Corruption Charges – IMF Managing Director Michel Camdessus lauded that Argentina was indeed in a way to enter the “new century in a very, very solid basis.”

However, outside of those lavish parties, while the glasses still clinked, the country was slipping below the poverty line due to “business friendly” policies that would come to be known as “El Modelo,” characterized by massive downsizing, corporate hand-outs and the sale of public assets to private companies.

As rumours of an economic bust due to corporate failures spread like wildfire in the troubled nation, the currency began to drop quickly. Quite literally overnight, the wealthiest took out $40 billion dollars’ worth of Argentinian pesos out of banks in huge armoured trucks to send to offshore bank-accounts. Thrown into a grand panic, the government froze all accounts, in effect locking the working-class out of their savings while allowing the rich and the factory owners to hoist their money offshore. The people were left with nothing but an inept government, a crumbling economy and closed factories, which unleashed an epidemic of unemployment.

Suddenly, Argentina, one of the most prosperous countries in Latin America, plunged into poverty. But as tradition has it in Latin America, the only logical response to extreme poverty was to PROTEST!

Millions of people of all ages and backgrounds poured onto the streets with the force of a tsunami, all in angry solidarity over the government’s support of the counteractive IMF policies. In utter political and economic disarray, Argentina ended up declaring the “largest sovereign-debt default in world history” in 2002, a symbol, the movie says, of the widespread rejection by the people of the entire economic model itself, and not just of one politician or policy. Though years later, it’s been argued that that sentiment is exactly what the Occupy Movement is currently expressing.

A MORE PERSONAL MODEL FOR BUSINESS

Working class people exist in huge numbers in the Global North – people that have been screwed by management one way or another.

The purpose of the International Year for Cooperatives is to bring to the forefront something that has been working quietly and efficiently for longer than people know. Indeed, the cooperative business model has time and time again presented both economic and social advantages to those societies that have adopted it.

“On a very basic level,” Earle said, “co-ops give people an opportunity to be the protagonist in their own jobs, in their own life-stories.” Corcoran agrees, saying that “one of the reasons why co-ops are so powerful is [precisely] because people spend so much more of their lives and energy and focus as workers rather than as consumers, making work a really big part of their lives.”

When you join a co-operative, the main attraction is its democratic nature. Worker-cooperatives like Big Carrot, for instance, where they have something like 70 staff members, Corcoran explained, “have something like 50 or 60 worker-owners.”

What this means is that the people that work at the store also own it: “the principle that the members in control are the same member-group that shares the profits and that same member-group that decides on who the board members are,” Corcoran said.

General meetings for all members are periodically held at the discretion of each cooperative and it is at these meetings where they decide on all decisions based on a one-member-one-vote principle. The main principle by which cooperatives abide is solidarity and cooperation, both internally and externally, so when it comes to wages, cooperatives provide every employee with sufficient pay to live a decent life.

In Argentina, many factories have opted to pay all employees equal salaries, a decision made at a general meeting and by a democratic vote inclusive of all members. In other places, such as in Italy and Spain, two countries where the cooperative movement has solidified itself and shown blatant progress in the lives of all employees and the communities in which they operate, salaries are not always equal, although always equitable.

In Emilia-Romagna, for instance, one of the largest regions in Italy located at the North of the European Boot, the Cooperative Movement has helped the average per capita income to climb to 21,025 Euros, well above the national average of 16,315.

More importantly, despite a global trend, unemployment has continued to drop in parts of the world where cooperatives are the dominant part of the economy such as in both Emilia-Romagna and in the Basque Region of Spain where Mondragon operates (a Corporation/Federation of over 256 cooperatives employing over 83,000 workers).

“Spain has an economy in a complete and utter mess!” Corcoran exclaimed jubilantly. “And Mondragon is there, still struggling, because their sales are being challenged and so on, but they don’t have any unemployment! They just share the pains; everyone gets paid a little less and maybe gets less hours, but no one is thrown out!”

Similarly, in an essay by John Logue, Founder and Director of the Ohio Employee Ownership Center (OEOC) until his unfortunate death in 2009, it was found that in Emilia-Romagna, unemployment was at an “enviable 3% among the 10 richest of the European Union’s 122 regions.” As of 2011 it has climbed to 6%, which is still quite low. The region also remains the fourth largest Italian Exporter, and up to 30% of the region’s GDP comes from co-ops.

Making the case for the advancement of cooperatives in the U.S. and Canada, Earle pointed out that “the introduction of a cooperative into a traditional business ecosystem makes that system healthier…[by] pushing traditional employers to be more responsible and democratic with their workers.”

The idea is that once workers realize that there is indeed a better system available by which they can control and organize themselves and therefore assure economic stability, Bosses and Management will think twice before laying people off in order to boost their own bonuses. Therefore, he concluded, “I think there’s certainly nothing [about cooperatives] that is incompatible with the U.S. economy.”

Moreover, in stark contrast to the housing and general social situation in the United States, for instance, “housing co-ops and consumer co-ops are so numerous [in Emilia-Romagna] that they hold down prices, and most privatized social services are provided by employee co-ops (including 60% of home health care services),” Logue pointed out.

Community-focus is also incredible. In Argentina, cooperatives have not only worked in solidarity with one another, but have also subsidized and offered free products to charities, schools and community centers.

A testimony from one of the sisters of a worker-owner of the Brukman Recovered Factory seen in the La Toma movie declares that under corporate management, her sister was docked pay every time she missed work to go for cancer treatment. Under the workers’ management, she told the camera elatedly, they pay her every cent she is owed even when she is getting her treatment.

“This is the people we must support!” exclaimed the woman as she raised her fists and laughed for the camera.
The Spanish cooperative Mondragon goes as far as to offer supportive capital and services internationally.

FINDING “SUPPORT”

Although it sounds like an easy concept – to support a movement which clearly empowers and provides a better life for the middle class – there are certain barriers to the movement.

Firstly, investment from the private sector is hard to come by when high returns cannot be promised.
“It’s a difficulty in some ways,” Earle said, “particularly when you take seasoned investors with a particular idea of what an investment has to look like. To a certain degree,” he continued, “we’re trying to change the mentality of what we really need to be investing in: that is, looking outside of individual returns and thinking genuinely in investing in society at large.”

The Working World loans money ranging from $1000 to $40000 to new and established cooperatives which would normally be turned away by traditional creditors as they have little or no collateral. It does this on very friendly terms, never asking for the money to be re-paid yet nevertheless boasting a 97% repayment rate.

The organization began with funds from Martin’s own pockets and “two angel donors who have given [them] long-term support.” At this point, Earle said, it is “sort of a smorgasbord of funding,” since they’ve received as recently as 2009, a bit of financing from the Argentinian government through the Ministry of Social Development under Leftist president Nestor Kirchner.

“More recently,” he explained, “in a shining moment for the organization, two different federations of cooperatives actually had extra money that they had a mandate to use to support the growth of other worker cooperatives in the area, [but] they cast that money over to us, which was a real affirmation of the quality of the work that we’d been doing and…the extent to which we were seen as a group genuinely responsive to the needs of the movement.”

“I’d be lying to say that people are beating down our door to give us their investments,” he clarified with a chuckle. “But at the same time I can say that we do have a moderately-sized group of regular investors.” As a matter of fact, he thinks that this year they will be going “over the one million-dollar [mark] in loans.”

TREC and its two affiliated projects – WindShare and SolarShare – have also had difficulty “getting people to put investment up front,” Lipp told me, largely because they are trying to provide renewable energy sources in an industry that has been “dominated for the last hundred years by large centralized entities.”

“We’re transitioning to a decentralized electricity system, but there are lots of people who don’t understand what we are doing,” she said. “On the whole,” she began explaining, “it is [a group of] – environmentally-conscious, middle-class individuals interested in finding ways to address climate change and other issues, but also looking for investment opportunities that align with their values.” Unfortunately, that is precisely the reason why it is difficult coming by private investment.

People “turn the lights on but they don’t really want to engage with how it is that we keep those lights on and the impact that keeping those lights on has on the environment as well as on other social aspects,” Lipp explained. “So the challenge is navigating the system that is geared towards large players and being able to make that system work for essentially small players who are doing smaller projects.”

Luckily, there are programs in Ontario such as the Green-Energy Act, a Feed-In Tariff (FIT) program, and the Community Energy Partnership Program, all of which “essentially provide the framework…to apply and become a generator and feed into the grid as long as you’re given a contract,” Lipp reassured me.

For TREC in particular, the fact that the Federal Government is ending the Cooperative Development Initiative (CDI) program will not adversely affect them yet since they have one more year in their three-year grant contract. But Lipp told me that it will definitely be a painful blow going forward for new cooperatives.

Corcoran also agreed. “Getting grants is almost impossible from federal foundations….and getting capital, as well, it’s a challenge because of its nature in cooperatives, which is instrumental and not what is driving the business.”
She continued: “We’ve long argued that there is a need for a national co-op development fund on the order of $20 million or bigger.” The CWCF currently offers a small fund that people can use to start their own co-ops.

In talking with all three, it became apparent that the biggest obstacle to the cooperative movement had to do with funding. It was agreed that because the work that cooperatives do is in many ways innovative, focused mostly on social advantages rather than on individual profits, not many “seasoned investors” are interested in offering their dollars. Nevertheless, Lipp assured me that as viable alternatives to traditional capitalist economic models go, cooperatives were certainly on the list since they “have been around for the last 200 years.”

Indeed, in Italy, the cooperative movement had its origins in the 1850s, and flourished until the end of the Second World War, when Mussolini’s brutal fascism decimated “its strong cooperative and labour movements,” Logue’s essay reads.

But this did not end the movement. And neither did the CIA money that went into destabilizing the Left-wing government in Emilia-Romagna who, in spite of those Machiavellian American efforts, managed to “encourage employee ownership, consumer cooperatives, and agricultural cooperatives, [as well as] the development of Cooperative Institutions for all small businesses.”

Although we no longer find any blatant suppression towards cooperative and labour movements, governments in the United States and in Canada have kept hush on funding them.
As mentioned above, the Canadian Federals are currently cutting the funds fuelling the Cooperative Development Initiative, but even long before this Conservative noose on the country, the Liberals weren’t exactly paving crossroads.

“We actually spent ten years starting this organization,” Corcoran told me, because they “had next to nothing, like $30,000 or $40,000-a-year budget. We were about to give up when we obtained our funds,” she said, laughing with disbelief.

“We hadn’t obtained the capital funds after years of lobbying the Liberals – we were just going to throw in the towel because we were exhausted and tired. But luckily that came in just in time… in 2001.” This was used to start their Capital Fund for starting co-ops, which they are still operating. They had come close to obtaining the full funds, she said, “but the liberals didn’t act fast enough, then the government became a minority Conservative one and then of course they wouldn’t do it.” Actually, they’ve sent money to Quebec, but she told me that that was money that was supposed to go to the CWCF and to Ontario, but because we lack the “political capital…and people prepared to stand up and lobby and go to the streets,” she opines, Ontario was overlooked.

Government support is essential to the cooperative movement’s progress. In Italy, for example, the movement is enshrined under Article 45 of the 1947 Italian Constitution and the Basevi Law of 1947, which, Logue explains, “provided co-ops with special tax treatment to encourage their self-capitalization by creating the concept of ‘indivisible reserves’ for the benefit of all (i.e., future generations of employees and the community).”

But the most difficult barrier of all is the myth that corporate or individual-focused capitalism is the only feasible business method out there.

“We do have a strong culture of individualism and the mythology of the individual entrepreneur is very strong,” said Earle. “I don’t think that in 100 years all businesses will be cooperatives…I think of it more as a one-step-a-time process in the sense of supporting those cooperatives out there…as an option that is on the table and make sure that it will always be on the table for folks looking for new work opportunities.”

Lipp also thought, like Corcoran told me at one point, that the cooperative model is indeed a viable alternative to capitalism.

“The cooperative movement is an antidote to the capitalist model which is all about maximizing profits for the shareholders,” she explained enthusiastically. “This is about maximizing profits for the community and at the same time recognizing the social values that people are interested in pursuing. Ultimately, the biggest difference between a co-op and a corporate model….is the member vote: regardless of your investment, it is one member one vote – a democratic enterprise.”

“Beyond that,” she continued, “you can use a co-op for any number of activities. We could be using a co-op instead of a corporate structure for banking, retail, cultural factors, the energy sector, because it’s a model that’s proven to be more in line with peoples values….It’s a way for people to get involved in the green energy sector as opposed to what’s been happening with some of the contentious issues around project development, where foreign companies are coming in and, at the very local level, are setting projects and sometimes not respecting the people on the ground.”

Think pipelines!

However, like Earle, she did not think that this was going to happen in our lifetime. “On the other hand … I think we’ve created a system where people just think they have to keep working harder and harder to make more and more money so that they can buy more things. I’m not sure we’re close to breaking that cycle. I’d like to say ‘yes,’ but I don’t think so. I do think more people are looking for alternatives, but not on a massive scale. Also look at what’s being taught at schools and universities – the dominant capitalist and individualistic model … so how do you break that?”
She was kind of right, and it depressed me a little bit to think so. But I disagreed with her opinion that it was not on a massive scale yet. It is precisely what movements like Occupy are trying to do, I thought. Perhaps the advent and proliferation of cooperatives is a mission that the Occupy movement could adopt as a way to put forth not only a protest against the current system, but also a specific proposition of what the adopted alternative should be.

TO BE OR NOT TO BE (POLITICAL), THAT IS THE QUESTION

The important thing to remember about the cooperative movement is that it is a post-partisan movement, able to stand on its own without having to take sides on the political spectrum. Members of cooperatives range from leftists to rightists. However, wherever the movement is aligned with the Left, its main objective will be to retain its sovereignty and adherence to the International Cooperative Principles.

In many places in Latin America and Europe, such as in Emilia-Romagna, for instance, left-wing parties have already embraced the cooperative movement, “with reason and understandably, and in ways that I hope continue to happen,” said Earle.

The world has already held the First and Second Latin American Conferences on Recovered Companies in 2005 and 2009, respectively. The conferences were held in Caracas, Venezuela – socialist ground under President Hugo Chavez, who addressed them both, declaring that “recovered factories are…an alternative to capitalism and the antithesis to the Free Trade Agreement of the Americas (FTAA)”. He also pledged a $5 million rotating fund to each country and promised to provide raw materials in exchange for hiring Venezuelan workers. There were over 200 workers from countries including Canada, Argentina, Paraguay, Bolivia, Mexico, Brazil, Venezuela, Turkey and Iraq, as well as leading activists from many companies like Mitsubishi, Vivex, etc., and leading trade unionists.

The point of the conferences was to establish an international network of cooperatives, particularly in Latin America, to support each other financially and otherwise, and also to establish the difference between Worker Cooperatives and Nationalized Factories Under worker Control. The former implies that although it is under worker control, the establishment will continue to operate based on Free-Market Rules, while the latter implies that the factory belongs not only to the workers but to society at large, and the management is therefore made with social interests at heart, usually by members that belong to Leftist Parties.

And “while there certainly are co-ops that are more political and radical in addition to having strong business,” Earle told me, “there are others that aren’t so political and that are more about having community-based businesses where everyone has a chance to be owners and have certain amount of democratic input, and there isn’t necessarily a whole lot more political stuff that is injected into that.”

Lipp also didn’t think that as a political entity, cooperatives had much clout.

“Political parties will pick up causes if they see that there’s an advantage to them as far as getting elected…But there’s a huge lack of understanding of what co-ops do,” she explained. “I think in rural communities they certainly understand them, but most Canadians live in cities and I think a lot of them don’t have a clue about cooperatives … So I can’t see them being politicized at this point.”

CONCLUSIONS: LET THE MOVEMENT GROW

Cooperatives are a solution to the abusive and out-of-touch corporate pyramid that places a few at the top and the majority at the very bottom. The signs that people want a different economic system are becoming clearer every day, especially when the streets are flooded with the Occupy Movements across the United States and the world; in Canada, where students are protesting tuition hikes and satellite Occupy movements have also come together; in the Middle East, where people are revolting against tyrants and economic oppression; in Europe, where more and more people take to the streets to protest austerity measures and job lay-offs; in Latin America, where a new 21st Century Socialism is sweeping the continent, keeping none of the repressive USSR methods and focusing instead on providing better standards of living for the poor majority.

Yes, change is in the air– even in the United States, the powerhouse of traditional capitalism.

“We just recently went to the U.S. Cooperative Conference in Boston,” Earle told me. “And it had the feel of something that is trending upward,” especially with more than 400 attendants, a huge percentage of which, Corcoran who was also there told me, “had found the movement through Occupy!” Additionally, the International Year of Cooperatives declared by the UN will definitely “support that upward trend,” said Earle.

There will be another conference held in Hamilton in November.

And remember, as Earle said, “the cooperative movement is a lot more developed than it gets credit for…there are some really interesting larger cooperative support organizations out there. They tend to be beneath the surface so that perhaps you don’t really notice they’re there, although they’re right under your noses.”

But that’s changing.

“The Evergreen Model in Cleveland has been a high-profile success; in California, in the Bay Area, there are a lot of interesting things going on,” said Earle. “Certainly there aren’t as many cooperatives as there are in Argentina or Italy, but it is an interesting first group of cooperatives…and it is one that is growing.”

Cooperation and affiliation amongst cooperatives has also solidified through a world-wide federation where huge cooperatives across the world meet to talk about furthering the movement. In October of this year, a summit will be held in Quebec where representatives from Mondragon as well as Hazel Corcoran will attend.

Applying to work in cooperatives is easy, provided you find one and that they have work available.

“In Toronto there’s not a huge number – if you look at the CWCF website you can see a list of members which are most of the worker co-ops in Toronto. And you go and you put in an application to any given one,” explained Corcoran. Some of these are the National Food Store, Big Carrot and Urbane Cyclist. Usually there is a small one-time fee members have to pay to be part of the cooperative, normally followed by a period of time where you are a “member-in-progress,” meaning you have to put in some time as a regular worker before you are accepted as a full member.

If you are interested in renewable Energy, you can also look to affiliate yourself with TREC, WindShare or SolarShare.
For instance, Lipp told me, “people can buy bonds of $1000 denominations and they earn a five percent return on that bond.” That is the product being sold by the co-op to raise money for the project. “As the generation of these projects are producing power, and the co-op gets paid for that power [through the FIT program], [they] use that revenue to pay back investors.”

You can also pitch your own project to them.

Lipp explained: “A group will already be down the way with their own project, and then they [can] come to us and say: ‘now we’re at the stage where we need help with our business plan or financial modeling or offering statement. We are signing up members and we’d like to use your [reference]…’ Co-ops usually originate from the community and for the most part people who have that idea want to be quite heavily involved. So we sort of get brought in on a periodic basis rather than us developing it from scratch.”

For those who bring their own renewable energy project to them, TREC offers “a number of tools…as far as checklists are concerned, and there are a number of resources through the Ontario Co-op Association that [they] will direct people to.”

The Cooperative Business Model provides people with all the tools to be their own leaders and empowers the communities in which they are erected. The workers have all that is needed to run a profitable business, as proven time and time again.

I think it was Nietzsche who spoke about finding that “great contempt” – those characteristics in man that make him worthy of contempt and which, if eradicated, would allow human beings to evolve. Well, it appears to me that the world has found that great contempt, not necessarily in man, but in the system that man perpetuates at the expense of the “99%”.

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