When discussing sustainability, one usually thinks in terms of the environment and especially climate change and pollution. However, the principles of sustainability can be applied to economics as well. When the Green Party states that it supports community economics as part of its 10 Key Values, I propose that this is another way of describing economic sustainability. Like ecological sustainability, economic sustainability is both the decentralization of structures of control as well as an understanding that various components interact to achieve a type of dynamic equilibrium. For a community economy, this means a local democratic decision-making process and the interdependence of residents in the roles of workers, consumers, and taxpayers. The corporate model does not achieve this sustainability for the obvious reasons that corporations do not run on democratic principles either internally or externally, and that the benefits to corporations requires the disruption of the community equilibrium that results in profits taken away from the community. Community economics as economic sustainability can best be demonstrated by the existence of cooperatives, both historically and in the present situation. In fact, cooperatives can be seen as the authentic alternative to the corporate model through its democratic empowerment that was lacking in much of the Cold War debate between capitalism and communism in the last century. In other words, it can be said that cooperatives offer a real and practical solution to the question of how workers can control the means of production as an end to exploitation. I will begin with a short history of cooperatives and their principles, continue through how to grow and develop cooperatives in this county and the nation, and finish with the best way to transition existing business forms into a cooperative model.
In order to promote economic democracy it is necessary to establish guidelines for cooperative business practices that allow workers to have control over their own economic destiny. The Rochdale Principles that were established in the early 19th century for the first cooperatives in England set the standard for how cooperatives are organized. The Rochdale Society Of Equitable Pioneers was a group of 28 weavers and other artisans in Rochdale, England who formed in 1844. The mechanical methodology of the Industrial Revolution was forcing more and more skilled artisans into poverty while at the same time absorbing displaced agrarian workers after the enclosure of common land into positions of passive operators of the factory machines. The Rochdale Pioneers banded together to open their own store selling food items they could not otherwise afford. There had been previous attempts to form cooperatives, but they had not lasted long. Learning from these past attempts, they set up the Rochdale Principles, and began to accumulate money over four months to begin their enterprise. They opened their store on December 21st, 1844 with a very small selection of goods. Within three months, they slowly expanded their selection and gained a reputation for selling high quality products. After ten years, the British cooperative movement had grown to nearly 1,000 cooperatives.
Another person influential to the growth of cooperatives was Robert Owen who lived from 1771 to 1858. He made his fortune in the cotton trade and later believed in putting his workers in a good environment with access to education for themselves and their children. Owen put these ideas into practice with the cotton mills of New Lanark, Scotland. From this point he developed the idea of forming “villages of cooperation” where workers would remove themselves from poverty by growing their own food, making their own clothes, and ultimately become self-governing. He tried to form such communities in Orbiston in Scotland and in New Harmony, Indiana in the United States but both communities eventually failed. In his work, Owen overlapped the idea of the commune and the idea of the cooperative, presenting the need to have the community form around the cooperative enterprise in an integrated way.
Although Owen inspired the cooperative movement to an extent, William King took his ideas and made them more practical. King lived from 1786 to 1865 and believed in starting small, understanding that the working class would need to set up cooperatives for themselves. He therefore saw his role as one of instruction and information. He founded a monthly periodical called The Cooperator, the first edition of which appeared on May 1, 1828. It was a combination of cooperative philosophy and practical advice about running a business using cooperative principles. King advised people not to cut themselves off from society, but rather to form a society within a society. He also advocated that the first cooperatives to be formed should be shops since people go to the store to buy food and other necessities on a very regular basis. His long-term contribution was such things as having a weekly account audit, having 3 trustees, and not having cooperative meetings in pubs, thus having the need for a meeting place of the cooperative’s own ownership.
Over time, various cooperatives banded together in larger organizations, beginning with the Cooperative Society and then the Cooperative Wholesale Society. As cooperatives entered the 20th century, the movement entered into and out of various leftist political endeavors such as Guild Socialism just before the Bolshevik Revolution in Russia. However, the relationship of cooperatives and communes in the 1800’s had diminished the large-scale influence of cooperatives in a global socialist or communist project, as exemplified by Marx’s classification of these efforts as “utopian socialism”. The Cold War also kept the cooperative movement out of the realm of pure communism, but cooperatives eventually formed various federations internationally and nationally up to the present day. Today, the best example of a successful cooperative is the Mondragon Cooperative in the Basque region of Spain. The Rochdale Principles were developed as:
1. Open, voluntary membership. Membership in a cooperative business should be voluntary and available without artificial restriction or social, political, racial, or religious discrimination to all persons who can make use of its services and are willing to accept the responsibilities of membership.
2. Democratic control. Cooperative businesses are democratic organizations. Their affairs should be administered by persons elected or appointed in a manner agreed to by the members and accountable to the members. Members should enjoy equal rights of voting and participation in decisions affecting the cooperative.
3. Limited return on equity capital. Share capital should receive a strictly limited rate of interest. This means that cooperatives do not seek speculative investments that care more about profits than people. Investments in the cooperative are for the good of the whole.
4. Net surplus belongs to user-owners. The net savings from the operations of a cooperative belong to the members of that cooperative and should be distributed in an equitable manner. This usually means one of three things: setting aside money for the development of the cooperative, providing a service to the members, or distributing money to the members in proportion to their transactions with the cooperative.
5. Education. All cooperative businesses should make provision for the education of their members, officers, and employees and of the general public in the principles and techniques of cooperation, both economic and democratic. Members who understand the social vision of cooperatives, and who understand how they work, can and do play a more active role in controlling their business.
6. Cooperation among cooperatives. All cooperative organizations, to best serve their member’s interests and their communities, should actively cooperate in every practical way with other cooperatives at local, national, and international levels. The same way that cooperatives seek to aid and protect their members through the implementation of these principles, cooperatives can do the same for each other.
A final principle can be created in order to strengthen local efforts to form cooperatives. It is vital that the community and the businesses within it are connected in such a way as to empower citizens and workers. Therefore the boundaries between these two identities must be dissolved in order to fully implement the multiple roles of consumer, producer, owner, taxpayer, and voter to their full positive effect. A local mutual enterprise exchange can be established in each community where part of the shares entitled to individual members of cooperatives can be directly bartered with other shares from other members of cooperatives, which would expand community ownership in an equal and just way, outside of the artificial and eventually unequal process of the “free market”.
When starting a cooperative, one must take into account the legal requirements to do so. While the United States has a clear process where a cooperative charter can be formed, the financial support falls under the power of the banking system. Banking has become a private business that oversees public goods as well as the economic destiny of most communities. The centralization of the banking structure has made it more difficult for communities to create their own systems of loans and credits that would assist in their own preservation and sustainability. The banking system has even become autonomous from the executive branch of the federal government and has made it less accountable to the democratic process through the Federal Reserve. There must not only be reform of the central national aspects of banking, but an allowance of local endeavors that would make it possible for economic empowerment and the end of debt and dependency. It is through local banking measures that one can best support cooperatives. New banking measures can include:
1. A micro-credit system for small targeted business loans. It would be managed through mutual banks chartered by the community with no interest on the loans. The system would facilitate money from the public toward these small loans.
2. A community investment fund for larger general business loans. It would be managed by cooperative banks chartered by the state with no interest on the loans. The cooperative banks would purchase one share of stock from each business within the community as a base collateral for initial loans. The banks would accept property and future labor as collateral, but the amount would be no greater than 50% of the value of the property. The community investment fund would encourage capital loans with a less collateral requirement, and the largest loans would be given to cooperative businesses and the self-employed. Loans would be used from the money returns from previous loans.
3. An affinity credit to supplement micro-credit and the community investment fund while offering an alternative to credit cards. Each participant has direct connections to those who they trust. Debt and credit can be exchanged between strangers through trusted intermediaries. Each participant loans or repays to those they trust as intermediaries. A directory would be used to determine connections of trust and intermediaries.
Considering the prevalence of multinational corporations and their entrenched power, it can appear daunting when trying to establish cooperatives in one’s own community. However, there is a method that can allow a transition from the present business situation to a more cooperative form. The use and formation of Employee Stock Ownership Plans, gradually becoming part of the everyday aspect of businesses and known also as ESOPs, can be a tool for what can be called capital homesteading. The ESOP, which can be considered a cousin to the cooperative, was originally invented by Louis Kelso. Kelso was a man who ironically believed employees should be the primary stockholders of companies in order to save capitalism from the threat of communism. Workers who had a stake in their companies supposedly would not be tempted by the alternative of communism. He also developed this plan in order to deal with the increasing mechanization of the workplace, where ESOPs would give workers the ability to be consumers and economically stable even if machines would replace them in factories. The importance of the ESOP in relation to the cooperative can be implemented by capital homesteading in such a way as to:
1. Develop immanent direct democracy procedures.
2. Maintain oversight of cooperatives and employee stock ownership plans to insure a democratic and community-based process.
3. Issue grants that allow the collective purchase of land, buildings, and equipment by workers displaced by corporations leaving the community.
4. Stipulate that profits from any businesses would be defined as rent for the collective ownership structure.
5. Create individual stock ownership plans through local banks for members of the community to support cooperatives.
6. Create consumer stock ownership plans for public services that are managed according to the cooperative structure.
Cooperatives are created by people as solutions to specific problems within their community. Their formation arises out of a human desire for economic stability and autonomy, and is expressed as a new way of looking at economic relationships within a larger social field. The current mode of capitalism in its corporate form is in direct opposition to this human desire, and instead concentrates on treating labor as just another resource or equipment that is used cheaply and efficiently. Just as in ecological sustainability there is a recognition that matter never leaves a system but must be recycled or redistributed, economic sustainability understands that human needs are a constant that must be addressed regardless of profit margins or cost cutting. The cooperative alternative synchronizes human desire with the overall operation of the social field.
Transitioning to a cooperative model also means the restoring of the social from the long-term influence of capitalism. Originally there was a local nature of knowledge and law where the relationship between humans and objects was defined by particular cases in space and time. In this case contracts were a limited form of law that defined these relationships, and private property was the result as a way to manage these relationships. With the rise of multinational corporations that have a global reach of power and influence, various techniques and methods expand human influence and action. There is now an interdependence between subjective human action and the surrounding objective reality. There is not only an environmental impact but a political and social impact by corporations. The commons can be a practical result of this interdependence between humans and their world. The transition to a cooperative model will also allow a complete realization of the commons as the most proper way to deal with the process of globalization. Cooperatives can not only sustain a community but offer an economic alternative on a world-wide scale.