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Why the cooperative model needs to be at the heart of our new economy

In a new book, journalist Nathan Schneider positions cooperative businesses as both radical and traditional–and says all businesses should move toward more democracy.

Why the cooperative model needs to be at the heart of our new economy
[Source Image: StudioM1/iStock]

In 1903, an American entrepreneur, Charles Boettcher, founded the Great Western Sugar Company in Colorado, and opened two beet sugar refineries outside of Denver. Over the course of the 20th century, the company expanded, adding more facilities in Wyoming, Montana, and Nebraska, and encompassing hundreds of growers across those states. The company passed from owner to owner for several decades, starting in the 1970s, and its last owner, unnerved by the volatilities in the beet sugar market at the time, began looking for someone to buy it in 1990. In 2002, they finalized a sale not to another private owner, but to the nearly 1,000 sugar beet growers who had kept the business alive for decades. They still do. Only now, the growers own and operate it themselves as the Western Sugar Cooperative.

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For Nathan Schneider, a journalist and professor of media studies at University of Colorado, Boulder, the story of the Western Sugar Cooperative is a family one: His grandfather was born in Colorado in 1916, and grew up helping his family, who tenant-farmed sugar beets for the Great Western Sugar Company. Now, his grandfather’s nephew grows beets as a member-owner of the Western Sugar Cooperative, where he shares in company profits and votes in decision-making.

[Source Image: StudioM1/iStock]

This type of transition from top-down corporation to a democratically run cooperative is radical in that it bucks the trend of the powerful conglomerates that one might think of when they think of American business. But it’s also a surprisingly pervasive and traditionally American way of doing business. Bridging these two aspects forms the core of Schneider’s new book, Everything for Everyone: The Radical Tradition that Is Shaping the Next Economy.

In it, Schneider documents the history of cooperativism: He delves into early Christian monasticism (itself a type of radical cooperativism, in a way) and how it informed a much later movement, starting in 2011 in Italy, to develop an “unMonastery” dedicated to creating a more shared and transparent internet and technological framework. In the United States, he describes how farmers organized into cooperatives to save money on purchasing supplies and processing transactions, and how African Americans, following the abolition of slavery, pioneered the formation of co-op lending circles, stores, and insurance pools to support one another when the government neglected them. He details how, since the Great Depression, rural electric cooperatives, in which utility rate payers own and govern their own power supplies, serve 75% of the U.S. landmass, and how cities from Jackson, Mississippi, to New York City are beginning to throw financial and administrative support behind the development of more cooperatives. The blockchain, too, Schneider writes, can be a type of cooperativism.

[Source Image: StudioM1/iStock]

Lately, Schneider says, co-ops have been gaining some small amount of momentum: The National Co-op Grocers, an umbrella organization that oversees food cooperatives, has seen its membership grow from 106 to 151 in the past decade, and, while still small, this type of steady growth is extending across different industries. The focus, largely, has remained on worker cooperatives–generally, smaller businesses owned and democratically governed by their employees. Earlier this year, for instance, the Democracy at Work Institute, an umbrella organization for U.S. worker cooperatives, released a series of videos highlighting a number of business owners who sold their companies to their employees, who now are worker-owners of small cooperatives.

This, though, is just one model of cooperativism. There are also producer co-ops, like the Western Sugar Cooperative, which unite producers of a specific commodity or craft so they can share resources, and consumer co-ops, where people who buy goods and services also share in the ownership of a business, but the range of involvement in consumer co-ops can vary. REI and rural electric co-ops require next to no participation from members, but grocery cooperatives like the Park Slope Food Co-op require member-customers to put in hours of work at the co-op to reap the benefits of membership. There are also purchasing co-ops, which are owned by local businesses who band together to share resources. With some notable exceptions, these other co-op varieties aren’t often discussed as particularly revolutionary. In some cases, like with the Western Sugar Cooperative and rural electric co-ops, they’ve been around for so long that people tend to just take them for granted. “But a lot of the most powerful co-ops are the ones working in the background,” Schneider says. “We need a new way of telling these stories to make their cooperation more visible.”

[Source Image: StudioM1/iStock]

That, in essence, is what Schneider does in Everything for Everyone. In documenting both the reach of co-ops already in existence, as well as how they operate and the benefits they deliver to people who participate in them, Schneider makes the case that the various cooperative models are not only feasible in the modern economy, but could also help rectify some of its more serious ailments, from social inequity to economic disenfranchisement. “There’s a value in re-introducing this tradition–its breadth and depth and long history,” Schneider says. That value lies in the fundamentally democratic structure of cooperative business models, and how that ethos could begin to re-inform the way businesses and the economy are run now.

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“When we know the diversity and dexterity of past models, we’ll be better at finding the combinations we need for the present,” Schneider writes. An example of the present application of a purchasing cooperative model that particularly compelled him, he says, is the D.C.-based Community Purchasing Alliance, which is jointly owned by 160 local organizations, from churches and charter schools. By combining resources and purchasing power, CPA has saved its member organizations over $3 million on contracts for things like electricity, security, sanitation, and landscaping. The member organizations mainly serve people of color, and also can make choices to source from businesses owned by people of color, too: A contract with the CPA has enabled a black-owned local security company to double in size. Now, the CPA is working with communities in North Carolina and Connecticut to help them adopt the model.

To Schneider, CPA is one of those powerful co-ops that operates mainly in the background of society. It’s not “disrupting” anything around it, but rather solidifying bonds across a community that the mainstream economy often fails. That, to Schneider, is the true power of cooperative models.

[Image: Andrey_A/iStock]

And it’s something, he writes, for sectors like tech to take to heart as they try to engage in efforts to support equity. Throughout the course of writing Everything for Everyone, Schneider engaged in discussions and conferences around topics like blockchain, the sharing economy, and universal basic income. All, he writes, have the potential to engineer more equity into the economy, but to best do so they need a cooperative approach written into their DNA. The blockchain and bitcoin, he writes, need to remain separate from the big banks, which are already trying to co-opt the technology. Sharing economy platforms, like Uber and Airbnb, should explore a model by which people that use the platform, like Uber drivers or Airbnb hosts, have shared ownership over it. Airbnb is exploring offering stock to hosts, which the ride-sharing company Juno also did before folding. (While stock options for platform users are a positive step, they still fall short of cooperation because they don’t invite users to participate in company decision-making. A new movement called Platform Cooperativsm advocates for this approach.)

For a potential future basic income to be effective, those distributing it have to ensure that those receiving the funds have a say in how the program is managed. Currently, tech accelerators like Y Combinator are piloting basic income programs for low-income residents. “Giving people free money could surely help vanquish poverty, lessen inequality, and liberate time,” Schneider writes. “But under what terms would the lords of the platform deliver it? Those left out of economies past have learned that shared prosperity only really comes with shared power.”

Workers’ lack of power is a feature of our economy that Schneider believes cooperative models could help correct. And while he’s conscious of critiques that advocating for more cooperativism sounds like leftist idea, he believes that, fundamentally, the cooperative model is one that could draw bipartisan support. Going back to the story of Western Sugar Cooperative and other agricultural co-ops that Schneider sees scattered throughout his native Colorado, “these are people who are as conservative as you can get, generally,” he says. “And yet they’re using the same business model that these radical, anarcho-leaning activists of Occupy were interested in.” At the moment when the politics of this country feel extremely polarized, “it gives me hope to work with this tradition that seems to cross some of these lines,” Schneider says. “There’s something about how this tradition fits into a society that claims to be democratic . . . Whether you’re conservative or liberal, the idea that you would extend democracy into the economy just seems like a no-brainer.”

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About the author

Eillie Anzilotti is an assistant editor for Fast Company's Ideas section, covering sustainability, social good, and alternative economies. Previously, she wrote for CityLab.

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