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October 1, 2018

Editor's Choice: Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy

By: Dylan Schleicher @ 10:39 AM – Filed under: Big Ideas & New Perspectives, Current Events & Public Affairs, Innovation & Creativity, Leadership & Strategy, Management & Workplace Culture

Everythingeveryone

Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy by Nathan Schneider, Nation Books, 304 pages, Hardcover, September 2018, ISBN 9781568589596

As a journalist reporting on Occupy Wall Street and Spain’s 15M Million anti-austerity movement, Nathan Schneider noticed that, as those movements waned, another began to take shape. “Once their uprisings simmered,” writes Schneider in his new book, Everything for Everyone, “the protesters had to figure out how to make a living in the economy they hadn’t yet transformed, and they started creating co-ops.”

Co-ops are, of course, not a new phenomenon. Co-ops pioneered the organic and the fair-trade movements of today. And in small towns and rural America, co-ops are a common sight and essential economic entity. They’re quite often the first thing you see, in the form of a grain elevator, when you approach a town. My mother has worked at a farmers co-op in Walworth County here in Wisconsin for over thirty years. Everyone in town always simply referred to it as “the co-op,” so I always thought it was the name of the store, not all the attached infrastructure of grain elevators, or the fertilizer trucks that came and went to farms across the county—let alone the name of the business model it all operated on.

Witnessing the protesters begin their own co-ops sparked an interest in the cooperative businesses that led Schneider back to his own family, specifically to his grandfather’s life in Colorado when that state was more wild, human life there less buffered from that wild by modern amenities. His grandfather, who would work his way up to become the director of Liberty Distributors, played a part in bringing those amenities. Liberty, which operated as a co-op, became one of the largest hardware firms in the country under his watch, and would go on to merge with Sentry Hardware in 1991 to form Distribution America, which according to the company website, “is ranked as the largest independent distribution network in America.” Fully funded by Member/Owners, the company now operates in all 50 states, South America, and the Caribbean—demonstrating the scale cooperatives can operate on.

Just as was the case of Schneider’s grandfather business, cooperatives are usually born of a necessity not being met by market forces—at least as we’ve come to commonly describe them, as being an investor backed, profit-driven competition between companies looking to win market share. Rather:

 

Co-ops tend to take hold when the order of things is in flux, when people have to figure out how to do what no one will do for them. Farmers had to get their own electricity when investors wouldn’t bring it; small hardware stores organized co-ops to compete with big boxes before buying local was in fashion. Before employers and governments offered insurance, people set it up for themselves.

 

But Schneider begins the book even further back, looking at the push and pull between competition and cooperation in human society more broadly, resisting the temptation to “abuse our ignorance of the prehistoric past” for either extreme. Instead, he cites examples of cooperative precedents—“from lending circles referred to in Confucian texts to African merchant’s caravans,” from the ancient Jewish Essene communes around the Mediterranean Sea to the Islamic principle of “waaf, a set of shared property held in perpetuity for the common good, and takaful, a system of mutual insurance.” It is perhaps not surprising that someone who wrote a book about God would cite such religious communities, and he also explores the cooperative tradition as it “appeared with particular vividness in the Christian church’s early days,” as when the followers of Jesus sold their property and possessions to divide them up according to need (Chapter 2 in the Book of Acts), or the tradition found in the formation of monasteries. He brings it up to date with more modern experiments, like the unMonastery—a group tech-savvy, entrepreneurial minds trying to set up an open-source alternative to the current order that lived in the cave dwellings in Matera, Italy, which had been inhabited for nine thousand years before they were cleared in the wake of World War II. He discusses a renewed interest in professional guilds, as well as their the historic strengths and weaknesses. These are largely works-in-progress, so you get a glimpse of the struggles they’ve met, solutions devised, and the failures to learn from.

What it all comes back to is the need for alternatives in an economy in flux, full of uncertainty, and not working for so many. Which brings Schnieder to the Reformation, a previous time of budding technology and globalization. He explains how, as the information and communication technology of the printing press and colonial expedition spread at the time of the Reformation, “an economy of corporations and capital began to decimate the guilds and the commons” of an earlier economic age:

 

The cataclysm of this process is difficult to appreciate now, centuries later—unless we compare it to the mix of splendor and squalor in the global economic cataclysms now underway.

 

Although we are “better off having left behind” the particulars of those feudal societies, he contends that “some nostalgia has value” in searching for alternative forms of organizing work and the social contract. After all, economic injustice didn’t end with the fall of feudalism. In fact, Schneider is concerned that “authoritarian and neo-feudal tendencies have found fresh appeal in many quarters” today. Using the next great economic leap and upheaval—the industrial revolution and the machinery that powered it—as an example, Schneider writes:

 

This was machinery that could have been labor saving and life improving. But the early industrial free-for-all brought about such conditions as fourteen-hour workdays, child labor, and wages conducive to little more than permanent indebtedness.

 

It was in this era that the beginning of the modern co-op movement begins. He documents the beginning of the Cooperative Wholesale Society in 1863 London. It is a co-op of co-ops, formed to meet the challenge of scale in an industrial economy while allowing individual co-ops to remain small, autonomous, and responsive to their members and communities. It is still thriving today:

 

The CWS has evolved into the Cooperative Group, or the Co-op, a massive consumer federation that includes grocery stores, the Cooperative Bank, the Phone Co-op for telecommunications, and appliance business, insurance, and funeral services.

 

Its evolution is also indicative of a larger economic reality:

 

British cooperation has ultimately accompanied, rather than replaced, the investor-owned corporate order. But the breadth of the Co-op’s offerings bear witness to the old and comprehensive idea of local co-ops linking into a commonwealth.

 

In fact,

 

As much as 10 percent of the world’s total employment happens through co-ops. According to the United Nations, the world’s 2.6 million co-ops count over 1 billion members and clients among them, plus $20 trillion in assets, with revenue that adds up to 4.3 percent of global GDP. The country with the largest total number of co-op memberships—though many members don’t know themselves as such—is the United States, home to more than forty thousand cooperative businesses.

 

Perhaps ironically, research has even shown cooperative enterprises actually have a significant competitive advantage in many ways:

  • Co-ops can establish missing markets by reorganizing supply or demand to meet unmet needs
  • Leaner startup costs can result from volunteerism and sweat equity
  • Productivity benefits arise when members experience direct benefits from their co-ops success
  • Co-ops offer protection from exploitation for members, resulting in greater trust and loyalty
  • Information sharing within an organization becomes easier with shared ownership
  • Co-ops face a lower chance of failure, especially after the startup phase, and greater resilience in downturns due to risk adversity and shared sacrifice
  • There can be savings in transaction and contracting costs through co-ownership among clients 

Unfortunately, compared to the reams of literature on other business models, research on co-ops has been scarce, and sparsely funded. Even in agricultural economics, where co-ops form so much of the essential infrastructure, co-ops have received very little official study—despite the fact that the Department of Agriculture has long supported such research, despite the fact that support for co-ops was part of both the Republican and Democratic party platforms in 2016. Schneider tells us how, when the University of Wisconsin’s Center for Cooperatives, one of the premier programs in the country, was searching for a current faculty director, it had trouble finding a qualified candidate due to a lack of such study:

 

Brent Hueth, the agricultural economist who ended up getting the job, had been studying co-ops largely in isolation. “I pretty much stumbled into it on my own,” he says.

 

That is perhaps because, although co-ops shore up our economy in “economic environments where the investor-owned model doesn’t get the job done,” it is not itself a model that creates the kind of personal fortunes whose donations most schools—especially business schools—are founded upon:

 

Keeping the Madison center open and funded hasn’t been easy: the co-op sector doesn’t have access to the kinds of wealthy benefactors that furnish MBA programs with names and fortunes. “Cooperatives create a lot of wealth, but it doesn’t get concentrated in a small number of people,” Huerth says.

 

The movement does have contradictions. Rural electric cooperatives have long been politically conservative institutions that aimed to overturn environmental regulations, while also leading—in some places—the race to deliver renewable energy. Funding of co-op research is almost nonexistent, but lack of participation in locally owned member co-ops ends up creating financially flush cooperatives, with “billions of dollars in ‘capital credits’ that co-ops collectively hold—excess revenues technically owned by members, but which often go unclaimed, serving as a pool of interest-free financing.” This is especially troubling in a state like Mississippi, which is both the nation’s poorest, and “unusually dense with electric cooperatives,” with nearly half the state’s residents getting their power from a co-op they may not know they actually own. It is a clear example of the fact that co-ops can exploit their customers as much as any corporation if member participation and education is lax. That is the reason you’ll find both education and participation on the list of cooperative principles. The International Cooperative Alliance, which first met in 1895, approved its most recent principles a century later, in 1995. They are:

  1. Voluntary and open membership
  2. Democratic member control
  3. Member economic participation
  4. Autonomy and independence
  5. Education, training, and information
  6. Cooperation among cooperatives
  7. Concern for community

Schneider ends with a discussion of universal basic income, the idea that we can alleviate poverty and inequality by simply handing out money to every citizen. It’s an enticing idea, but while it may end abject poverty, it may also put an end to people’s power and participation in decisions about their economic lives. He relates a conversation he overheard with Ed Whitfield, co-director of the Fund for Democratic Communities:

 

I heard him point out that when his ancestors shed off slavery and demanded forty acres and a mule, they wanted the means of production, not just the means of consumption. They wanted a hand in shaping the economy, not just a portion of its output. To keep their freedom from being snatched away again, they knew they had to be owners.

 

He worries that the democratization of society that tech utopians have promised is only one of access to a product, not access to membership and participation in the process. “Democracy is a process,” he reminds us, “not a product.” It requires participation, something that is built into the cooperative business model:  

 

Co-ops have served as test runs for the social contracts that may later be taken for granted, and they’re doing so again.

 

There are countless examples and experiments in self-governance offered in the book, from The New York City Network of Worker Cooperative (NYC NOWC, pronounces nick knock), to New Era Windows Cooperative, which workers formed on Chicago’s Goose Island when Bank of America cut its credit line to the existing factory there. He tells the story of Green Taxi Cooperative, a member-owned taxi co-op in Denver, and the challenges it has faced. He introduces us to an activist on the run from the law trying to set up FairCoop, an egalitarian, cooperative alternative to our current financial institutions. There is Stocksy United, a cooperative stock photo platform founded by an executive of iStock frustrated with how the company was compensating artists for the work they profited from—helping bridge the cooperative model and the new platform economy. He introduces us to platform co-ops, and co-ops that obtain and sell user data in more transparent ways for the benefit of causes larger than shareholder value, and so much more. What it all demonstrates is that co-ops are a viable, currently working ad available model for business—whether those co-ops are worker-owners, producer-owned, or consumer-owned, or some new combination or variation of those that sprout up in an economy once again in flux and upheaval:

 

Serious businesspeople nowadays tend to regard any alternative to the investor-owned corporation as aberrant or impossible. But the alternative actually preceded the models that prevail today. In Britain, the first legislation for co-ops passed four years before joint-stock companies got their own law.

 

It is a reminder that co-op owners and operators are also "serious businesspeople" contributing energy, ideas, and resources to the economy. Not only is it possible, it is already happening. “Just as cooperatives co-created the industrial world,” Schneider shows us in Everything for Everyone that, “they are [already] at work on what comes next.”


 

About Dylan Schleicher


Dylan Schleicher has been a part of the 800-CEO-READ claque since 2003. Even though he's stayed on at the company, he has not stayed put. After beginning in shipping & receiving, he joined customer service and accounting before moving into his current, highly elliptical orbit of duties overseeing the ChangeThis and In the Books websites, the company's annual review of books, and in-house design. He lives with his wife and two children in the Washington Heights neighborhood on Milwaukee's West Side.