|Omar Freilla wants to see worker co-ops, like ReBuilders Source, everywhere. ReBuilders Source, owned and operated by workers from the South Bronx, sells salvaged building materials that would otherwise be destined for a landfill. Photo by Erica McDonald for YES! Magazine|
Difficult times call for creative strategies. Time and again during periods of economic hardship and market failure, cooperatively owned businesses have emerged as a democratic, grassroots, and DIY response. It happened during the economic upheavals of the 19th century and again during the Great Depression.
Today, as the current economic crisis deepens, co-ops are again coming to the fore as producers and consumers seek stable sources of employment, goods, and services. There are no easy numbers to quantify this growth, but signs of a new upsurge are becoming clearer. The farmer-owned agricultural cooperative Land O’Lakes, for instance, chalked up its strong performance in 2008 to its co-op status.
Others, especially the recently laid off, want in on the action. Melissa Hoover, the executive director of the U.S. Federation of Worker-Owned Cooperatives, says that over the past year her organization has seen “a spike in calls requesting technical assistance, information, and loans to start a co-op.” Adam Schwartz at the National Cooperative Business Association echoes that and adds that he’s seen especially strong growth in food co-ops. These are “traditionally an urban phenomenon,” he says, “but now we’re also seeing it in small towns in Indiana or Colorado.”
Another sign of growth is the rise of the co-op internet suffix. The .coop domain, which can only be used by active cooperatives, has gained 5,800 addresses since its inception in 2000.
Nonprofits Take the Lead
The pattern of co-ops proliferating in tough times seems to be repeating. Yet the current upsurge is not identical to the ones that came before. While political parties or social movements spearheaded earlier surges, nonprofits are taking the lead today. “I think it’s really telling that the growth is coming from the nonprofit sector,” Hoover says, because “social movement energy has been funneled into nonprofits.”
Consider the case of Green Worker Cooperatives, a nonprofit created by South Bronx native Omar Freilla. Through his organization, Freilla aims to cultivate a whole network of worker-owned green businesses in his hometown, the traditional dumping ground for New York City. The first of these co-ops, ReBuilders Source, began operations last year as a discount retailer of used and surplus building materials. The idea is to provide an alternative to the landfill for some of the 1,900 tons of construction waste that pass through the South Bronx every day.
Freilla seeks not only to cut waste but also to incubate an attitude of self-sufficiency. “I’ve seen a great deal of personal growth among the four members of ReBuilders Source,” he says. “There is something very real and very different about not just being your own boss, but being your own boss together with other people.”
ReBuilders Source is only the beginning of Freilla’s vision, which is to see worker co-ops everywhere in the South Bronx. And other nonprofits are working for the same thing. An organization in Brooklyn called The Center for Family Life has founded three co-ops since 2006 that focus on cleaning, home-repair, and child care. And in Cleveland, a partnership among local nonprofits, hospitals, and a university has helped to organize the Evergreen Cooperative businesses, poised to become the largest family of co-ops in the country.
Worker-owned cooperatives such as ReBuilders Source are one of four different types of cooperative, each of which addresses a particular shortcoming of the mainstream economic system.
Worker-owned cooperatives like ReBuilders Source and the Equal Exchange coffee company offer workers more control over decisions and allow them to share in the profits. Producer cooperatives such as Sunkist, Land O’Lakes, and Organic Valley share processing and marketing costs to get better prices in commodity markets. And purchasing cooperatives like Ace and True Value pool their buying power to get lower prices.
Consumer cooperatives, though, constitute the great majority of co-op memberships in the United States. This type ranges from the tiniest cooperative grocery stores, day-care services, and housing projects to huge credit unions, utilities, retailers, and financial service companies. Each one allows consumers to reduce their costs and achieve social and environmental benefits by owning the firms that supply them with goods and services.
Credit unions in particular represent one of the steadiest sources of growth for the co-op movement. This should come as no surprise, as financial security is essential to the livelihood of families, and credit unions generally opt for sound long-term investments over the financial shenanigans that recently brought down a slew of private banks in a domino-like cascade.
So while the number of individual credit unions has fallen since 1969, membership and total assets have grown consistently over the same period. Studies by the Credit Union National Association show that the number of credit union members in the U.S. doubled to about 89 million over the past 30 years, while total credit union assets doubled to a whopping $825 billion in just 10 years.
While credit unions represent a particularly successful part of the co-op sector, a new study by the University of Wisconsin’s Center for Cooperatives points to a long-term gradual growth throughout the movement. There are now almost 30,000 cooperative businesses in the U.S., and they generate about $500 billion in revenue and $25 billion in wages. The Center also found 350 million co-op memberships, with all but 10 million of them in consumer cooperatives.
More Than Money
The cooperative model presents a stark contrast with conventional corporations, and not only in terms of its financial stability. Co-ops offer shared ownership and democratic control. Those who benefit from the enterprise own it, and own it as equals: one member, one vote. The purpose of the enterprise is to benefit its members, not to use their economic activity as the basis for someone else’s returns.
Most co-ops also embrace the seven principles spelled out by the International Co-operative Alliance (ICA):
- Voluntary and open membership
- Democratic member control
- Member economic participation
- Autonomy and independence
- Education and training
- Cooperation among cooperatives
- Concern for community
As Ivano Barberini, president of the ICA, observed in a March 2009 “Open Letter to the Governments of the G20,” this model presents a true and viable alternative, a “secure, stable and sustainable model of business owned and controlled by 800 million people worldwide.”
Building a Movement
Co-ops are attractive for their economic stability and their enlightened principles. Yet there are obstacles to their continued growth. Co-ops, like other democratic institutions, can be messy, slow, conflicted, and political. In addition, cooperatives have historically had difficulties accessing capital through conventional sources of either debt or equity. And there is a huge ongoing need for education aimed at helping members sharpen their business and management skills, while deepening their understanding of and commitment to co-op values.
Dedicated boosters of the co-op movement are striving to tackle these dilemmas. On the problem of capital funds, for instance, the National Cooperative Business Association is about to launch a cooperative equity fund, in which people would be able to invest money to help co-ops grow. Cleveland’s Evergreen businesses are launching a fund designed to do the same thing on the local level.
Despite the difficulties, co-ops seem like an idea whose time has come—again. In purely economic terms, they neatly align the interests of ownership, production, and consumption in a way that investor-led capitalism does not. And they firmly ground those economic interests in the larger field of social welfare and democratic values. Cooperatives are not a panacea. In fact, they are likely to be far more difficult to run than the top-down, single-bottom-line focused companies of the 20th century. But they offer us several hundred years of experience that may better guide us in the 21st.
|James Trimarco and Jill Bamburg wrote this article as part of The New Economy, the Summer 2009 issue of YES! Magazine. James is a YES! consulting editor and freelance writer. Jill is a co-founder and member of the core faculty at the and a member of the board of the Positive Futures Network, publisher of YES! Magazine.|