Posted October 22nd 2010 at 4:33 pm by
in CoLab Philosophy, Collaborative Thesis Project, Cooperatives & New Business Models, Useful Downloads

Cooperatives, Shared Wealth, and Democracy

cooperative: an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

MIT student Elisha Goodman works with members of the Lynn Coalition for Green Development to erect an aquaponics cooperative demonstration project in Lynn, Massachusetts. Photo by Shoko Takemoto, October 2010.

COLAB KICKS OFF THE COOPERATIVE STUDY GROUP

A critical mass of students and CoLab staff has begun meeting regularly to collectively explore the importance of cooperatives.  CoLab program manager Carlos Javier Espinoza Toro (CJET) convened the group and is facilitating their learning journey.   Back in 2007, when Carlos was a student at MIT, he helped put together a course on cooperatives that was taught by Lynn Benander, the President and CEO of Coop Power.  Three years later, Carlos is still passionate about cooperatives and so he has organized this study group.  In this post, Carlos explains the purpose and meaning behind this endeavor.Q: Why are cooperatives important?

CJET: Cooperatives are important because a democratic component plays an important part in their operations. This democratic component allows for individuals to come together and deliberate on decisions that affect their workplace, their economic well-being and their lives in general. On a side note, I am fascinated with how cooperatives deal with the common bond among individuals, with the idea that what brings people together goes beyond monetary value, and with the belief that this common bond creates a strong community.

Q: What is the cooperative study group?

CJET: The cooperative study group is a platform for research, discussion and reflection around cooperatives as a model to build community wealth. Ultimately the group seeks to inspire pioneering experiences based on the cooperative model.

The cooperative study group meets on Wednesday evenings from 7-9pm. Photo by Carlos Espinoza Toro, October 2010.

Q: Why did you convene this group?CJET: I was inspired by my visit to the Evergreen Cooperatives in Cleveland, OH. During this visit I witnessed different dimensions of a cooperative revival in the US. I met with foundation representatives who have educated themselves in the cooperative model and identified it as a strategic means for wealth generation. I also met with cooperative worker owners who proudly conveyed their experience as start up entrepreneurs. Furthermore, I also met with representatives of well-established institutions who, by doing business with these cooperatives, show enormous solidarity with their local community.

Q: Who is part of the study group?  How did they get involved?

CJET: The group is composed of 8 participants and 10 guests. Among these participants there are first and second year MIT graduate students and staff from MIT CoLab. Among the guests, there are leaders of not for profit organizations and MIT alumni. The group formation and growth was based upon informal conversations about the cooperative model as a means for building community wealth.

Q: What are the aspirations of the group for this year?

CJET: This year, the group’s aspirations are diverse and ambitious. Popular education materials curricula for cooperative development, business model for trash pickers, and the creation of an aquaponics and landscaping worker-owned cooperative are just some examples of what participants would like to achieve. My personal goal is for the study group to achieve sustainability within MIT. Even though participants are thinking about their personal goals, the group comes together to further discuss how these goals develop group goals.

How can cooperatives transform regional economies?

Last year, CoLab worked with MIT alumnus, Nick Iuviene, to better understand the relationship between shared wealth generation and democracy. Drawing on lessons from Cleveland, Ohio and Mondragon, Spain, Nick wrote his 2010 masters thesis on how to build a platform for economic democracy in the Bronx, New York.In order to further articulate and illustrate the lessons of his thesis, CoLab created a guide called, “Sustainable Economic Democracy: Worker Cooperatives for the 21st Century.” This guide explores how worker cooperatives, when configured in a network, can promote progressive, place-based, endogenous economic growth. Here, we present two successful cooperative network models, Mondragon and Evergreen, and then offer a general framework for how to grow a cooperative network in any city. This guide is one of several products generated through the Collaborative Thesis Project.

Post by Amy Stitely, U.S. Green Hub Program Director at CoLab.

10 responses to “Cooperatives, Shared Wealth, and Democracy”

  1. Stefanie says:

    Amy, thanks for creating this post! This is a great description of the study group.

    In some late night speculating last night, Ang and I were talking about our coop excitement. These are broad strokes, but this is what we were thinking. It seems like the sixties and seventies were all about shifting the dominant paradigm, with the Civil Rights movement as inspiration and the eighties and the nineties were about resisting the conservative backlash & institutionalizing this energy through the creation of nonprofits. Maybe cooperatives are a big part of where our generation is heading– as we look for creative structures outside of nonprofits for wealth generation and try to act out the change we want to see.

  2. Amy Stitely says:

    Stef – it’s true. Our generation is struggling to find our mechanism for change. Especially economic change. I graduated college in the 90s. As the economy polarized its way out of the 80s recession – alot of my peers went into the non-profit sector. At that time, the public sector was dead (drained and empty after 12 years of neoliberalism) and the private sector was being reorganized into mega corporations. So, many of us chose to work on philanthropic change projects through non-profits. We burnt ourselves out, funneling dollars from the wealthy to the streets, while skimming off small salaries for our own childless, asset-less livelihoods.

    But, something always felt funny about it. One, we were in a constant state of begging, and two, our “programs” weren’t actually making anyone richer (the communities we served nor ourselves).

    If you read the guide that is posted, you will see that the Cleveland folks have married the old American philanthropic, non-profit model to the European cooperative network model. The result: Evergreen! Perhaps a taste of things to come.

    Philanthropy is not the “wrong” solution. It’s just an “incomplete” one in terms of generating lasting economic change. Maybe the Evergreen folks will show us how we can build “up” from the non-profit model into a new, democratically controlled enterprise model that reverses this trend of extreme inequity. All eyes are on Cleveland and our fingers are crossed!

  3. Jordi Sanchez-Cuenca says:

    Thanks Amy for the interesting post.

    I’d like to mention one succesful case in Spain: the Cooperative Mondragón. It’s the 7th largest enterprise in Spain, and it still keeps the original principles of cooperation, participation, social responsibility and innovation. Here’s the link:

    http://www.mondragon-corporation.com/language/en-US/ENG.aspx

  4. Jordi Sanchez-Cuenca says:

    Amy, I just saw that you also mention Mondragón…

    One more thing, though: these large cooperatives might be intimidating for small local initiatives, which have also become in many instances the way out of poverty for millions. What can you say about the conceptual differences between local and international cooperatives?

  5. I’m thrilled to see CoLab continue its focus on the cooperative business model of wealth-creation and democratic control.

    As someone who has participated in the U.S. “co-op movement” since 1994, I’ve often heard current cooperative business leaders express concern about training & succession. Business and law schools, in particular, do not offer courses on how to incorporate and manage the cooperative businesses, and finding the capital required for start-up and expansion is a major challenge.

    I hope this study group will generate further interest in cooperatives within other departments and educational institutions.

    Count me in!

  6. Amy Stitely says:

    @Holly Jo. Given your long time commitment to cooperatives and your ties to Colab as an alum, I do hope that we find ways to share in the process of our cooperative explorations. I know you will soon be working for the Democracy Collaborative (Cleveland’s Evergreen is based on their cooperative framework). Let’s touch base as you settle in. We have a lot to learn from them and you!

    @Jordi. I don’t have a fully formed response to your question about cooperative scales and cooperative contexts, but thanks for putting forward a challenging question. In terms of scale, Mondragon and Evergreen are not the norm in the cooperative landscape. I cannot speak for the ‘developing’ world context, but in the US, more than half of the cooperatives are small businesses.

    Evergreen (which is modeled after Mondragon) is striving to link a collection of small cooperative businesses into a larger network that impacts a targeted area of six neighborhoods in Cleveland. This is a “planning” model because it has spatial targets. That is one reason we’ve taken an interest in it.

    This is not to say bigger is better, but in the US, the private corporate markets are so strong, that small cooperatives (and small businesses) are seriously challenged to compete. A theory is that larger, network cooperatives that strive to a regional scale (Mondragon styled) are more viable than single enterprises. However, that is just a theory, and Evergreen is now testing it.

    In Europe, where the tradition of cooperatives is deeper (by centuries) – we see something different. Italy’s Legacoop and Spain’s Mondragon are products of a long-running cooperative movement.

    In the ‘developing’ world, where markets are more fluid, cooperatives obviously take on different shapes. I am not that familiar with these models, but I imagine that the start-up time is shorter and that self-organization is key. I hope someone else will jump in on this conversation and talk about the wastepicker cooperatives in Brazil or other examples.

    My parting thought, Mondragon is a 60 plus year old enterprise. And for the first 13 years, there was only a school. No businesses were formed until after the first decade! The guide in this post looks at the growth of Mondragon and compares it to the startup Evergreen. Check it out if you have time! 30 pages.

  7. Dear Jordi,

    On your question: “What can you say about the conceptual differences between local and international cooperatives?

    This is a hard question to answer in a few words. From my own knowledge, I understand that cooperatives are subject to regulations domestically and/or internationally in the same fashion as other business models. These regulations add another layer of complexity to how they can operate. For instance, I understand that Mondragon has affiliates in the U.S. but I am not sure how these work in comparison to the ones in Spain. It may be the case that the Mondragon coops in the U.S. have restrictions that unable them to operate in the same manner as in Spain. This is a good query to research on.

    Thanks for you comment and question and I hope the study group discusses it soon during one of our session. If this is the case we will provide this information to you.

    Carlos

  8. Joe says:

    Hi MIT people, looks like a really interesting and promising discussion group. I wanted to contribute two links to the conversation – first I abridged reposted this entry to http://www.American.coop which is a collection of essays, articles, and videos on the worker cooperative movement in the United States. (The video of the Lynn Benander class was previously posted). There are hundreds of small businesses that are worthy of notice in your conversations and a lot of literature spread throughout different disciplines that you might find there and consider for discussion.

    Secondly I hoped to draw your attention to my workplace, the Arizmendi Association in the San Francisco Bay Area as an example of a networked cooperative development model. The Association, founded by a study group in the mid-1990s, now has 6 member cooperatives with over 150 member workers and collective income coming up on $10 million annually. The members share a secondary cooperative that provides financial, legal, and educational services. Unlike Evergreen (which I have high hopes for) the Association has never taken grant funding, instead Building up capacity slowly from member cooperatives surpluses. Check it out at http://www.Arizmendi.coop

    Good luck with your explorations!

  9. Amy Stitely says:

    Hi Joe. Thanks so much for the repost and the links. We really appreciate it.The American Worker Cooperative site is a great resource.

    Now that I’m looking at the Arizmendi Association, I realize that we might have contrasted it with Evergreen in another version of this guide where we looked at American network cooperatives. The network model seems to be working quite well for you guys! Congratulations on the sustained growth.

    I wonder what you think about the tradeoffs/benefits of taking foundation grant start-up money versus building up slowly through member surpluses.

    Also, about the tradeoff/benefits of specializing in a single sector (ie bakery goods) versus diversifying.

    Would love to hear your thoughts on these two issues if you get a chance to comment again.

  10. Joe says:

    I wonder what you think about the tradeoffs/benefits of taking foundation grant start-up money versus building up slowly through member surpluses

    The obvious advantage of grant funding is speed and scale. There are other advantages, too. WAGES uses grant funding to provide business training for a much longer period than Arizmendi does in their incubation of cooperatives, and they feel that longer period is necessary to their model, since many of the workers in their cooperatives come in with little business experience. I think one of the advantages of not using grant money is that you can to some degree focus on making sure the business needs of the workplace are met first, and then let the successful business focus on expanding its social mission – as business allows. The historical position we are in is that many ideologically-driven cooperatives have not had a good business plan, so there is a balancing of priorities that needs to take place in order for the model to continue to grow.

    I am not against grant-funding for cooperatives (let there be more of it!) but the other trade-off that comes to mind is the question of how much direct democratic experience the worker can have if a funder retains board membership without oversight for a long length of time. If you follow Rousseau and Mill in that participatory democracy has an educative function that socializes democratic attitudes in the citizenry, then the workers really need to control the thing for the benefits to occur. But my sense is that other benefits of cooperatives – like economic stabilization and asset-building – are higher priorities for some of the projects that take more grant funding.

    Also, about the tradeoff/benefits of specializing in a single sector (ie bakery goods) versus diversifying.

    I’m going to send that one to “further reading” since it is covered pretty comprehensively elsewhere. Janet Saglio answered well in the 1990s about ICA’s work and I wrote a little bit on it more recently. The quick answer is that you might as well take keep using a good business plan if you have one, as do many chain stores have taught us.