How cooperatives are leading the way to empowered workers and healthy communities. <\/i><\/p>\n
Pushing my grocery cart down the aisle, I spot on the fruit counter a dozen plastic bags of bananas labeled \u201cOrganic, Equal Exchange.\u201d My heart leaps a little. I\u2019d been thrilled, months earlier, when I found my local grocer carrying bananas\u2014a new product from Equal Exchange\u2014because this employee-owned cooperativeme outside Boston is one of my favorite companies. Its main business remains the fair trade coffee and chocolate the company started with in 1986. Since then, the company has flourished, and its mission remains supporting small farmer co-ops in developing countries and giving power to employees through ownership. It\u2019s as close to an ideal company as I\u2019ve found. And I\u2019m delighted to see their banana business thriving, since I know it was rocky for a time. (Hence the leaping of my heart.)<\/p>\n
I happen to know a bit more than the average shopper about Equal Exchange, because I count myself lucky to be one of its few investors who are not worker-owners. Over more than 20 years, it has paid investors a steady and impressive average of 5 percent annually (these days, a coveted return).<\/p>\n
Maneuvering my cart toward the dairy case, I search out butter made by Cabot Creamery, and pick up some Cabot cheddar cheese. I choose Cabot because, like Equal Exchange, it\u2019s a cooperative, owned by dairy farmers since 1919.<\/p>\n
At the checkout, I hand over my Visa card from Summit Credit Union, a depositor-owned bank in Madison, Wis., where I lived years ago. Credit unions are another type of cooperative, meaning that members like me are partial owners, so Summit doesn\u2019t charge us the usurious penalty rate of 25 percent or more levied by other banks at the merest breath of a late payment. They\u2019re loyal to me, and I\u2019m loyal to them.<\/p>\n
On my way home, I pull up to the drive-through at Beverly Cooperative Bank to make a withdrawal. This bank is yet another kind of cooperative\u2014owned by customers and designed to serve them. Though it\u2019s small\u2014with only $700 million in assets, and just four branches (all of which I could reach on my bike)\u2014its ATM card is recognized everywhere. I\u2019ve used it even in Copenhagen and London.<\/p>\n
With this series of transactions on one afternoon, I am weaving my way through a profoundly different and virtually invisible world: the cooperative economy. It\u2019s an economy that aims to serve customers, rather than extract maximum profits from them. It operates through various models, which share the goal of treating suppliers, employees, and investors fairly. The cooperative economy has dwelled alongside the corporate economy for close to two centuries. But it may be an economy whose time has come.<\/p>\n
Something is dying in our time.<\/b> As the nation struggles to recover from unsustainable personal and national debt, stagnant wages, the damages wrought by climate change, and more, a whole way of life is drawing to a close. It began with railroads and steam engines at the dawn of the Industrial Age, and over two centuries has swelled into a corporation-dominated system marked today by vast wealth inequity and bloated carbon emissions. That economy is today proving fundamentally unsustainable. We\u2019re hitting twin limits, ecological and financial. We\u2019re experiencing both ecological and financial overshoot.<\/p>\n
If ecological limits are something many of us understand, we\u2019re just beginning to find language to talk about financial limits\u2014that point of diminishing return where the hunt for financial gain actually depletes the tax-and-wage base that sustains us all.<\/p>\n
Here\u2019s the problem: The very aim of maximum financial extraction is built into the foundational social architecture of our capitalist economy\u2014that is, the concept of ownership.
\nIf the root of government is sovereignty (the question of who controls the state), the root construct of every economy is property (the question of who controls the infrastructure of wealth creation).<\/p>\n
Many of the great social struggles in history have come down to the issue of who will control land, water, and the essentials of life. Ownership has been at the center of the most profound changes in civilization\u2014from ending slavery to patenting the genome of life.<\/p>\n
Throughout the Industrial Age, the global economy has increasingly come to be dominated by a single form of ownership: the publicly traded corporation, where shares are bought and sold in stock markets. The systemic crises we face today are deeply entwined with this design, which forms the foundation of what we might call the extractive economy, intent on maximum physical and financial extraction.<\/p>\n
The concept of extractive ownership traces its lineage to Anglo-Saxon legal tradition. The 18th century British legal theorist William Blackstone described ownership as the right to \u201csole and despotic dominion.\u201d This view\u2014the right to control one\u2019s world in order to extract maximum benefit for oneself\u2014is a core legitimating concept for a civilization in which white, property-owning males have claimed dominion over women, other races, laborers, and the earth itself.
\nIn the 20th century, we were schooled to believe there were essentially two economic systems: capitalism (private ownership) and socialism\/communism (public ownership). Yet both tended, in practice, to support the concentration of economic power in the hands of the few.<\/p>\n
Emerging in our time\u2014in largely disconnected experiments across the globe\u2014are the seeds of a different kind of economy. It, too, is built on a foundation of ownership, but of a unique type. The cooperative economy is a large piece of it. But this economy doesn\u2019t rely on a monoculture of design, the way capitalism does. It\u2019s as rich in diversity as a rainforest is in its plethora of species\u2014with commons ownership, municipal ownership, employee ownership, and others. You could even include open-source models like Wikipedia, owned by no one and managed collectively.<\/p>\n
These varieties of alternative ownership have yet to be recognized as a single family, in part because they\u2019ve yet to unite under a common name. We might call them generative, for their aim is to generate conditions where our common life can flourish. Generative design isn\u2019t about dominion. It\u2019s about belonging\u2014a sense of belonging to a common whole.<\/p>\n
We see this sensibility in a variety of alternatives gaining ground today. New state laws chartering benefit corporations have passed recently in 12 states, and are in the works in 14 more. Benefit corporations\u2014like Patagonia and Seventh Generation\u2014build into their governing documents a commitment to serve not only stockholders but other stakeholders, including employees, the community, and the environment.<\/p>\n
Also spreading are social enterprises, which serve a social mission while still functioning as businesses (many of them owned by nonprofits). Employee-owned firms are gaining ground in Spain, Poland, France, Denmark, and Sweden. Still another model is the mission-controlled corporation, exemplified by foundation-owned companies such as Novo Nordisk and Ikea in northern Europe. While publicly traded, these companies safeguard their social purpose by keeping board control in mission-oriented hands.<\/p>\n
If there are more kinds of generative ownership than most of us realize, the scale of activity is also larger than we might suppose\u2014particularly in the cooperative economy. In the United States, more than 130 million people are members of a co-op or credit union. More Americans hold membership in a co-op than hold shares in the stock market. Worldwide, cooperatives have close to a billion members. Among the 300 largest cooperative and mutually owned companies worldwide, total revenues approach $2 trillion. If these enterprises were a single nation, its economy would be the 9th largest on earth.<\/p>\n
Often, these entities are profit making, but they\u2019re not profit maximizing. Alongside more traditional nonprofit and government models, they add a category of private ownership for the common good. Their growth across the globe represents a largely unheralded revolution.<\/p>\n
What unites generative designs are the living purposes at their core, and the beneficial outcomes they tend to generate. More research remains to be done, but there is evidence that these models create broad benefits and remain resilient in crisis. We\u2019ve seen this, for example, in the success of the state-owned Bank of North Dakota, which remained strong in the 2008 crisis, even as other banks foundered; this led more than a dozen states to pursue similar models. We\u2019ve seen it in the behavior of credit unions, which tended not to create toxic mortgages, and required few bailouts.<\/p>\n
We\u2019ve seen it in the fact that workers at firms with employee stock ownership plans enjoy more than double the defined-benefit retirement assets of comparable employees at other firms. And we\u2019ve seen it in the fact that the Basque region of Spain\u2014home to the massive Mondragon cooperative\u2014has seen substantially lower unemployment than the country as a whole.<\/p>\n
Together, these various models might one day form the foundation for a generative economy, where the intent is to meet human needs and create conditions in which life can thrive. Generative ownership aims to do what the butcher, the baker, and the candlestick maker have always done: make a living by serving the community. The profit-maximizing corporation is the real detour in the evolution of ownership, and it\u2019s a relatively recent detour at that.<\/p>\n
The resilience of generative design<\/b> is a key reason that people have often turned to these models in times of crisis. When the Industrial Revolution was forcing many skilled workers into poverty in the 1840s, weavers and artisans banded together to form the Rochdale Society of Equitable Pioneers, the first modern, consumer-owned cooperative, selling food to members who couldn\u2019t otherwise afford it.<\/p>\n
During the Great Depression in the United States, the Federal Credit Union Act\u2014ensuring that credit would be available to people of meager means\u2014was intended to help stabilize an imbalanced financial system. Today, credit union assets total more than $700 billion. In the recent financial crisis, their loan delinquency rates were half those of traditional banks. Since the crisis, credit unions have added more than 1.5 million members. In Argentina in 2001, when a financial meltdown created thousands of bankruptcies and saw many business owners flee, workers\u2014with government support\u2014took over more than 200 firms and ran these empresas recuperadas <\/i>themselves, and they\u2019re still running them.<\/p>\n
Last year, with financial and ecological crises mounting worldwide, the U.N. named 2012 the Year of the Cooperative, and cooperative activity, is advancing around the globe. Cooperatives were largely sidelined during the rise of the industrial age. But current trends indicate that conditions may be ripe for a surge in cooperative enterprises. As people lose faith in the stock market, feel mounting anger at banks, and distrust high-earning CEOs, there\u2019s growing distaste for the business-as-usual Wall Street model. Meanwhile, the Internet has enabled the expansion of informal cooperation on an unprecedented scale\u2014with the Creative Commons, for example, now encompassing more than 450,000 works. As the speculative, mass-production economy hits limits, cooperatives may be uniquely suited to a post-growth world, for they are active in sectors related to fundamental needs (agriculture, insurance, food, finance, and electricity comprise the top five co-op sectors).<\/p>\n
If many of us fail to recognize an emerging ownership shift as a sign of progress, it may be because it arises from an unexpected place\u2014not from government action, or protests in the streets, but from within the structure of our economy itself. Not from the leadership of a charismatic individual, but from the longing in many hearts, the genius of many minds, the effort of many hands to build what we know, instinctively, that we need.<\/p>\n
This goes much deeper than legal or financial engineering. It\u2019s about a shift in the cultural values that underpin social institutions. History has seen such shifts before\u2014in the values that underlay the monarchy, racism, and sexism. What\u2019s weakening today is a different kind of systemic bias. It\u2019s capital bias: capital-ism\u2014the belief system that maximizing capital matters more than anything else.<\/p>\n
The cooperative economy\u2014and the broader family of generative ownership models\u2014is helping to reawaken an ancient wisdom about living together in community, something largely lost in the spread of capitalism. Economic historian Karl Polanyi describes this in his 1944 work, The Great Transformation<\/i>, tracing the crises of capitalism to the fact that it \u201cdisembedded\u201d economic activity from community. Throughout history, he noted, economic activity had been part of a larger social order that included religion, government, families, and the natural world. The Industrial Revolution upended this. It turned labor and land into commodities to be \u201cbought and sold, used and destroyed, as if they were simply merchandise,\u201d Polanyi wrote. But these were fictitious commodities. They were none other than human beings and the earth itself.<\/p>\n
Generative design decommodifies land and labor, putting them again under the control of the community.<\/p>\n
It\u2019s no accident that the deep redesign of our economy isn\u2019t beginning in Washington, D.C. It is rooted in relationships: to the living earth and to one another. The generative economy finds fertile soil for its growth within the human heart. The ownership revolution is part of the \u201cmetaphysical reconstruction\u201d that E.F. Schumacher said would be needed to transform our economy. When economic relations are designed in a generative way, they\u2019re no longer about sole and despotic dominion. Economic activity is no longer about squeezing every penny from something we imagine that we own. It\u2019s about being interwoven with the world around us. It\u2019s about a shift from dominion to community.<\/p>\n
__________________________<\/p>\n
Marjorie Kelly is a fellow with the Tellus Institute and is director of ownership strategy with Cutting Edge Capital consulting firm. She is author of the new book, Owning Our Future: The Emerging Ownership Revolution. She was co-founder and for 20 years president of Ethics magazine.<\/i><\/p>\n