What are cooperatives?
A cooperative (“coop“) or co-operative (“co-op“) is an autonomous association of persons who voluntarily cooperate for their mutual, social, economic, and cultural benefit. (Statement on the Cooperative Identity. International Cooperative Alliance). Cooperatives include non-profit community organizations and businesses that are owned and managed by the people who use its services (a consumer cooperative) or by the people who work there (a worker cooperative) or by the people who live there (a housing cooperative), hybrids such as worker cooperatives that are also consumer cooperatives or credit unions, multi-stakeholder cooperatives such as those that bring together civil society and local actors to deliver community needs, and second and third tier cooperatives whose members are other cooperatives. (Wikipedia.org)
What are Redd Piper’s Cooperatives?
The fictional character in the book recreated cooperatives from the way they are typically characterized as above. Redd’s cooperatives were very large industrial enterprises that typically make thousands of products and employ tens of thousands of worker/owners. They come into the cooperative as either owners of their jobs or renters paying into job ownership. They can never be fired except for extraordinary circumstances and share in the profits of the co-op. They may also invest all or part of their profits back into the enterprise and become an owner of the cooperative as well as their job. (See About Take the Pilgrim Road for a more in depth look at Redd Piper’s cooperatives.)
In a typical business model such as corporations or small businesses, an employee has no stake in the company. They sell their labor for a wage or salary and in many instances they can be fired or laid off for no reason. In a cooperative they don’t sell their labor. They invest it in themselves. They have ownership.
Are Cooperatives a Form of Socialism or Communism?
Socialism has different definitions but they generally embody some form of government control. Cooperatism, or the cooperative business model, does not rely on any form of government control, although in a socialist country or a country with a strong regulatory body, there may be controls on cooperatives as with any other business model. But the concept of cooperatives does not require government control.
Communism, according to Karl Marx, means worker control (the Dictatorship of the Proletariat). Cooperatives are based on ownership. If communism results in the end of class struggle with the proletariat eliminating private ownership then cooperatives may end class struggle with cooperative ownership winning out, but that is not the aim of cooperatives.
Cooperatives are a form of capitalism without the corruption. It is a democratic as opposed to a coercive business model.
What Advantages do Cooperatives Offer?
Cooperatives exist to reflect the needs of the worker/owners and are democratic by nature. While cooperatives must still be run like any other business they are often run without any formal management structure. Decisions are typically made by approval of all the members.
In Redd Piper’s cooperatives the structure evolved throughout the novel, moving from the “Detroit Model” to the “Northwest Model”. Initially, they were run in the interest of a small group of investors who used the workers to make money for themselves. As these cooperatives evolved into the “Northwest Model” the worker/owners gained more power and the enterprise was run more democratically with all worker/owners having a vote on all decisions that affect them.
Redd Piper’s cooperatives had one important advantage that real life cooperatives don’t typically have–they out-competed all other forms of business ownership, including corporations. They did this mainly by eliminating labor costs. Labor was paid out of profit rather than wages or salary.
What if the Cooperative has no Profits?
When the cooperative enterprise is first started there are no profits. Worker/owners are paid by the investment pool (a pool of money from the investors to pay expenses) as a loan. It would be just enough to live on. After that they would be paid based on expected profits from the cooperative enterprise. If profits are low the profit share to the labor force would be low, but this would be better than layoffs.
What do You Mean by Profits?
In this case profits are really the gross margins that result from profits as a percentage of revenue. For example if a company did one million dollars in sales and had half a million dollars in expenditures (rent, utilities, parts, materials, etc.) then its gross margin would be half million (revenue-expenditures) / one million (revenue). This results in a gross margin of fifty percent. Profits would then be half a million dollars minus some additional expenditures such as depreciation costs. These would be distributed according to the corporate charter or some agreement that everyone agrees on.
Are Cooperatives the Solution to What Ails Us?
Cooperatives can make an enormous difference in how we live and relate to each other. If we can have not just cooperatives, but Redd Piper cooperatives, then we could make cooperatives the standard business model. Corporations would struggle to compete, shareholders would abandon them and invest in cooperatives instead. The labor force would be an ownership force. Who would vote to move to China, India, South America, and so forth? Who would vote to be laid off? The enterprise would be run in the interest of each owner with democratic decision-making. In a corporation decisions are made in the interests of the shareholders (and by shareholders I mean those who own a significant percentage of corporate ownership, not the average small investor).
Imagine if we took over every company that laid off its workforce and moved out-of-state or out of the country we could virtually end unemployment. And every new job in manufacturing creates about 2.2 additional jobs according to the College of Urban Planning & Public Affairs in Chicago. ( http://www.uic.edu/cuppa/cued/CUED_Manufacturing_Jobs_May2013.pdf)
This is doable. We can work to end unemployment, end labor oppression, keep jobs in America, reduce the income inequity that exists today where there are tens and even hundreds of times the earnings of the average Joe compared to his CEO. Now, sure, top managers, engineers, experienced craftsmen will all make the most money but not dozens or even hundreds of times as much. Furthermore, cooperatives give everyone a say in their future. Labor demands will be met; not shareholder demands.
Let me hear from you!