Apr 13, 2011

Can cooperatives humanize the economy?


Book Review of Humanizing the Economy: Cooperatives in the Age of Capital, by John Restakis, New Society Publishers, 2010.

The economy is about business, right? Sure, we have a dynamic mixed economy, and most people support decent social programs and government intervention to protect the environment or to improve living conditions for the poorest. In fact, the countries who have the biggest public sectors not only do better on social outcomes but also tend to be the most competitive, when ranked by organizations like the World Economic Forum.

Still, the commonly-accepted framework is that any positive things from government can only happen on the back of a successful market (that is, capitalist) economy. So we are often chastened by stern voices representing business that we ought to be careful not to “kill the goose that lays the golden eggs.” As much as we seek to make the world a better place, we have to accept runaway CEO salaries, fossil fuel addiction, financialization and tax cuts as preconditions for doing good.

One way out of this is to change the game by not ceding business as purely the sphere of capitalist enterprise. John Restakis reminds us in his book, Humanizing the Economy: Cooperatives in the Age of Capital, that when it comes to business, capitalism isn’t the only game in town. Indeed, at a time when inequality has reached alarming proportions (and the looming policy agenda promises to make them even worse) and climate change points to wrenching challenges for human civilization, we need a big break from business-as-usual.

“Cooperatives,” says Restakis, “are enduring evidence of another way of living our lives.” His thesis is that cooperatives show us an alternative model of economic and social exchange based on cooperation and reciprocity. It is a very different path from the standard polarity between business and government, “a middle path that avoids the extremes of market rejection on the one hand (as in the case of Marxism) and the unbridled power of capital as expressed in neoliberalism on the other.”

Humanizing the Economy is a profoundly readable and accessible book in spite of its sweeping scope. Cooperatives read like a forgotten chapter in our economic history. I found the early part of the book, in which Restakis reviews the intellectual and practical history of cooperatives as a reaction to the excesses of early capitalism, particularly fascinating.

In the 20th century, trade unions and public ownership have gotten more attention in Canadian political economy, and their impact is still manifest today as a means by which inequality is reduced and other broader social objectives achieved. That these acts reduce the massive slice of the pie going to the very top earners and owners explains why they have been under attack federally and provincially (and worse, south of the border). The other grand narrative of the 20th century — revolution — used to be galvanizing to working classes and compelling to idealists, but seems officially dead in the wake of failures of Soviet Russia.

Restakis points out the quiet and incremental revolution represented by the cooperative movement, which has emerged as a counter-force to capitalism in its own right, claiming 800 million members across 85 countries. By documenting the steps from early history of coops to modern examples in different industries and different parts of the world, Humanizing the Economy provides a long list of “yes, we can” case studies of the cooperative form, showing its versatility across different contexts. If we were to include the not-for-profit sector this scope of non-capitalist enterprise is greater still.

The promise of cooperative institutions reaches beyond profits for a shrewd and small minority of investors to democratizing the production system, and in doing so rebuilding the very social capital that capitalism erodes. Agriculture was central to early cooperatives. There is a long history of farmers’ coops, supply management practices and marketing boards in Canada, and not only that they have been very successful in response to a ruthless free market more inclined to leave farmers bankrupt.

But coops can exist in pretty much any sector, from housing to car-sharing to outdoor equipment (MEC) to financial services (credit unions). They are just another way of organizing in order to produce things of value. Coops are of the marketplace, but transcend the atomized producer-consumer model we see in economics textbooks by creating new nodes of market power based on the mutual interests of many members. The book covers a diverse range of examples, from major industry to social care services to consumers to sex trade workers to fishers, each with the common element of people joining together to find economic strength in numbers.

Perhaps one area that needed more attention in the book is around finance and banking. Cooperative credit is peppered throughout the book in the context of the various coops in different locales, but hammering the point home with a review of credit unions would have been nice. Take Vancity credit union as an example (one conspicuous by its absence since Restakis hails from Vancouver). Serendipitously, I just opened up my member package that gives me a vote in the upcoming board elections. In the package the latest financials show that Vancity has $14.5 billion of assets, more than $12 billion of which are loans, mostly mortgages. The credit union charges competitive interest rates, and the profits go back to members (the total membership equity in the credit union is $770 million), not distant shareholders only concerned about stock value. If Vancity disappeared, the flow of funds to Bay Street would be noticeable.

So now is a great time for the entrepreneurial, socially-minded and environmentally-conscious folks to develop networks to reclaim economic space from global megacorps and put it back in the realm of local people. With any luck, they’ll be popping up like mushrooms. Coops thus offer us a new chance to reinvent citizenship as mutual co-owners of enterprises that meet our collective needs, “firing the boss” as Naomi Klein and Avi Lewis put it in their movie, The Take.

But how this will all come about is a question I’m left struggling with. It requires precisely the entrepreneurial spirit of small business, but harnessed in a different direction. In addition, there are many coops that struggle to make things work. We are part of a consumer coop, Neighbours Organic Weekly, that connects to local farmers but through bulk purchasing supplies lower cost organics. The coop is viable, but has not experienced surging growth in membership. How can such cooperative models be scaled up?

The most successful cooperative economy model in advanced economies is Emilia-Romagna in northern Italy. Restakis’s review of the region’s history is lively and fascinating, but also raises some key challenges for coops. First, there is historical inertia as a barrier to change. How easily replicable is a regional economy like Emilia-Romagna to a province like BC? Coops arose in Italy out of a distinct time and circumstance that cannot be easily replicated in other jurisdictions (just as public auto insurance, ferries and electricity did in BC). Secondly, does scaling up change the nature of the exercise. One challenging example Restakis gives is SACMI from Imola, Italy. It is a dominant player among regional coops, and with “control of 60 capitalist firms, 37 of them abroad, and sales in 100 countries.” This fusion of coop and capitalist is not what we might normally think of. This coop provides employment for 5,000 workers, but has only 390 coop members. It reads almost like a law firm, where some workers eventually can make it to become partners.

Just keeping the idea of coops alive is an important contribution of Restakis’s book, so that when the circumstances present themselves people can self-organize. It would be fascinating to think about what a legislative agenda supportive of coops could look like, especially in areas like food and energy, where we are likely to want greater insulation from climate impacts. Restakis’s thoughts on how that could happen, given the urgency of change we need in our economy, would be welcome.

Humanizing the Economy plants some seeds of radical change. If nurtured by enough of us, a cooperative economy could be a new model for how we do business in the 21st century, although non-profits and public enterprises would be part of the world I envision. Small and large businesses will inevitably have a role to play, too, but to the extent that a cooperative model can democratize key parts of the economic system, and remove the absentee shareholders of megacorporations from the picture, it could drive a huge improvement in developing an economic system more aligned with good social and environmental values. Restakis tells us it is possible, and though we still need a strategy and a roadmap, he should be thanked for lifting the veil of narrow economic debates and showing us that “business community” need not be an oxymoron.

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