introduction to the co-operative movement, umass amherst
TRANSCRIPT
Introduction to theCo.operativeMovementProfessor Erbin Crowell, [email protected]
ECON 105: Introduc?on to Poli?cal Economy (2015)University of MassachuseHs, Amherst
Week 1: Introduc?on to the Course L What is a CoLop?
Resources• Course Reader available at Collec?ve Copies, 71 S.Pleasant St., Amherst, MA; 413L256L6425. (±$16);Amherst@collec?vecopies.coop). Collec&ve Copies is oneof the longest lived and successful worker co7ops in the
Valley. When you stop in to pick up your reader, I
encourage you to take a minute to look around.
• Nadeau, E.G. (2012). The Co7opera&ve Solu&on. Availableat the UMASS Amherst Bookstore Annex or online,($13.50).• Other assignments include PDFs available on Moodle,online video and internet resources.
• In class lecture, guest lecture and video resources.
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MyBackground• 10 years with Equal Exchange, Fair Trade CoLopera?ve• Staff with CoLopera?ve Development Ins?tute, Coopera?veFund of New England
• Founding Staff Developer, Valley Alliance of Worker CoLops
• Master of Management: CoLopera?ves & Credit Unions, SaintMary’s University, Nova Sco?a
• Board of Directors Experience: Equal Exchange, Coopera?veFund of New England, an ESOP Company , New EnglandFarmers Union, & Na?onal CoLopera?ve Business Associa?on
• Execu?ve Director, Neighboring Food CoLop Associa?on• Adjunct Lecturer, Universi?es of Connec?cut andMassachuseHs, Amherst
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Why Study Co.operation in anIntroduction to Political Economy?“Unlike mainstream economists, poli?caleconomists have always tried to situate the studyof economics within the broader project ofunderstanding how society func5ons” (Hahnel,2002)
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Why Study Co.operation in anIntroduction to Political Economy?
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Economic
SocialPoli?cal
Course DescriptionOYen described as a “third way” or economicalterna?ve to both capitalism and state socialism,co6opera5vism has also been claimed by both ofthese philosophies. Recently, the declara?on of2012 as the United Na?ons Interna?onal Year ofCoLops has raised the profile of coLopera?veenterprise as a tool for social and economicdevelopment that represents a unique set ofvalues, principles, structure and legal iden?ty.
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Course DescriptionThis course will focus on the degree to which coLopera?on as a business model and a socialmovement offers a viable economic alterna5veand tool for social jus?ce, economic democracyand ecological sustainability.
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Course DescriptionOur goal is to acquaint students with the historicalcontext and ideas that gave rise to the coLopera?ve movement; the evolu5on of coLopera?ve enterprise; compara5ve models andprac?ce; the relevance of the coLopera?vealterna?ve to contemporary economic and socialissues such as globaliza?on, climate change andthe global financial crisis; and case studies in coLopera?ve enterprise.
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Key Questions• What are the origins of the coLopera?ve movement?• How do the condi5ons that gave rise to the coLopera?vemovement compare with contemporary issues?
• What are the different forms of coLopera?ve enterprise?• What is the concept of a co6opera5ve economy or “CoLopera?ve Commonwealth”?
• How might the coLopera?ve model be applied moreeffec?vely to contemporary challenges andopportuni5es?
• Do coLopera?ve principles represent a viable alterna5veto capitalist and stateLbased economic approaches?
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Course Outline1. What is a CoLop?2. Is the Economy
Working for You?3. Early History &
Philosophy4. Growth &
Development5. Sectors & Industries6. Global Development7. CoLopera?ve
Economies8. CoLops & Educa?on
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Engraving by Walter Crane (1845L1914).From Co7op: the People’s Business (Birchall, 1994)
Course OutlineSpring Break9. The UN Year of CoLops10. CoLops & Other Social
Movements11. CoLops in New England12. Promise of CoL
opera?on: Challenges& Opportuni?es
13. Promise II: A CoLopera?ve Decade?
14. Final Papers ECON10
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Interna?onal CoLopera?ve Alliance (ICA)
Why Studythe Co.operativeMovement?• Global – 1 billion people are members (morethan directly own corporate stock).
• Relevant – Employ 100 million people (morethan mul?na?onal corpora?ons).
• Dis5nct – An economic model with a uniquehistory, principles, values, and legal structure.
• Flexible – Operates in every aspect of theeconomy, across cultures and states.• Resilient – CoLopera?ve sector survived andgrew during global recession.
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UnitedNationsInternational Year of Co.ops• CoLops “in their various forms, promote thefullest possible par?cipa?on in the economic andsocial development of all people, includingwomen, youth, older persons, persons withdisabili?es and indigenous peoples, arebecoming a major factor of economic and socialdevelopment and contribute to the eradica5onof poverty.”
United Na?ons Resolu?on 64/136 (2010)
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UnitedNationsInternational Year of Co.ops
Contribu?on of CoLopera?ve Enterprise to:• Poverty Reduc?on• EmploymentGenera?on• Social Integra?on• Fairness &Globaliza?on• Conflict Resolu?on• Food Security
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UMASS Co.operative Legacy
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W.E.B. DuBois Murray Lincoln
Murray Lincoln (1892.1966)• Ohio Farm Bureau CoLopera?ve Associa?on
• Founder of Na?onwideInsurance (a mutualenterprise)
• President, Na?onal CoLopera?ve BusinessAssocia?on, 1941L’65
• First President of CARE (CoLopera?ve for Assistance &Relief Everywhere)
• Board, Interna?onal CoLopera?ve Alliance
• CoLopera?ve Hall of Fame(inducted 1976)
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Murray Lincoln (1892.1966)• b. Raynham, MA• UMASS Alumnus(MassachuseHsAgricultural College,1914)• Murray D. LincolnCampus Center namedfor him in 1970• “I believe we can makethis world over throughco7opera&on – that iswhy I am thrilled to bein the movement.”
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The Lincoln Campus Center, UMASS Amherst.(Erbin Crowell, 2013)
PortraitofMurrayLincolnLincoln Campus Center Hotel Lobby, UMASS Amherst
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Murray Lincoln (1892.1966)“People have withintheir own hands thetools and the power tofashion their ownsocial and economicdes?nies, if they willonly organizethemselves to usethem.”
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Portrait of Murray Lincoln, UMASS Amherst.(Erbin Crowell, 2013)
W. E. B. Du Bois (1868.1963)• b. Great Barrington, MA• First African American toreceive doctorate fromHarvard• Scholar, Civil RightsAc?vist, Socialist, PanLAfricanist• Niagara Movement(1905)• CoLfounded NAACP(1909)• UMASS Amherst Librarynamed for Du Bois(1994)
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W.E.B. DuBois Library, UMASS Amherst.
W. E. B. Du Bois (1868.1963)Economic Co7opera&onamong Negro Americans(1907):• “The crisis [amongAfrican Americans]arises not so muchbecause of idleness oreven lack of skill as byreason of the fact thatthey unwivngly standhesita?ng at the crossroads…”
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W. E. B. Du Bois (1868.1963)“…one way leading tothe old trodden ways ofgrasping fierceindividualis5ccompe55on, where theshrewd, cunning, skilledand rich among themwill prey upon theignorance and simplicityof the mass of the raceand get wealth at theexpense of the generalwell being…”
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W. E. B. Du Bois (1868.1963)“…the other wayleading to co6opera5on in capitaland labor, the massingof small savings, thewide distribu?on ofcapital and a moregeneral equality ofwealth and comfort.”
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UMASS Student RunBusinesses
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People’s Market, Student Union, UMASS Amherst. (Erbin Crowell, 2015)
UMASS Student RunBusinesses• Established 1975• Collec?vely managednonLprofit businesses• Mission: To “providecoLcurricular trainingand educa5on inco6opera5vemanagement, life skillsand business skills in asuppor?ve and diversesevng.”• umass.edu/rso/csb/
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UMASS Student RunBusinesses• 7 businesses• 145 student posi?ons• $709,719 revenue(‘13)• First businessfounded 1971 (SylvanSnack Bar)• Bike CoLop andCampus Design &Copy, 1990
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UMASS Bike CoLop, UMASS Amherst.(Erbin Crowell, 2014)
UMASS Five CollegeFederal Credit Union
• Founded 1967 by fiveUMASS Employees• Open to students andemployees for fivecolleges, andaffiliated businessesand organiza?ons• 26,000 members• $378 million in assets(2013)
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UMASSFive Credit Union (Erbin Crowell, 2014)
Co.ops in our Region• Credit Unions• Food CoLops• Worker coLops• Farmer CoLops• Ar?san CoLops• Housing CoLops• Valley Alliance ofWorker CoLops• Neighboring Food CoLop Associa?on• Valley CoLopera?veBusiness Associa?on
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McCusker’s CoLop Market (Franklin Community CoLop),Shelburne Falls, MA. (Erbin Crowell, 2014)
Co.ops in our Region
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New England & NewYork• 8,860 coLopera?ves• 9.5 million members• 55,000 employees• $2 billion in wages• $14 billion in revenue• $100 billion in assets
(University of WI Center on CoLops)
UMASS Co.operativeEnterprise Collaborative
• UMass Amherst Economicsstudents and faculty
• Valley Alliance of WorkerCoopera?ves
• Neighboring Food CoLopAssocia?on
• CoLopera?ve Fund of NewEngland
• Grassroots EconomicOrganizing
• Community EconomiesCollec?ve
• The Center for PopularEconomics
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UMASS Co.operativeEnterprise Collaborative
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• ECON 105: “Introduc?onto the CoLopera?veMovement”• ECON 397: “TheEconomics of CoLopera?ve Enterprises”• UndergraduateCer5ficate in AppliedEconomic Research onCoLopera?ve Enterprises• Internships with local coLopera?ve enterprises
Mondragón University, Spain
But,What is a Co.op?
• An expression of human collabora?on
• A complex social movement
• A legal business structure• A compe??ve model of enterprise
• A viable alterna?ve to capital & stateLbased economic approaches
• All of the above?
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Video: Go Co.op!• Basin Electric Power CoLopera?ve• Cabot Creamery CoLop(AgriLMark)• Equal Exchange• Government EmployeesCredit Union (GECU)• Greenbelt Homes• GroupHealth CoLop• Ocean Beach People'sOrganic Food Market• Ya Ya Bike
(2007)
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hUp://s.coop/gocoopvideo
Video: Go Co.op!
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CO6OP What Does It Do? Who Are the Members?
Basin Electric Power Co6opera5ve
Cabot Creamery Co6op(Agri6Mark)
Equal Exchange
Government EmployeesCredit Union (GECU)
Greenbelt Homes
GroupHealth Co6op
Ocean Beach People'sOrganic Food Market
Ya Ya Bike
“Survival of the…Nicest?”Johnson, E. M. (2013)• “…Human evolu?onhas predisposed us towork collabora?velyand given us anintui?ve sense thatcoopera?on deservesequal rewards.”
Q: What do you think?
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Photo by Harlan Harris, Yes! Magazine, 2013
Implications for our Economy• “Corporate workplaces probably aren’t in sync withour evolu?onary roots and may not be good for ourlongLterm success as humans…• “Moreover, the structure of corpora?ons is a recipefor worker aliena?on and dissa?sfac?on…• Because coLops “focus on maximizing value for theirmembers, the coLopera?ve is operated by and forthe local community — a goal much more consistentwith our evolu?onary heritage.”
Q: Is this a compelling argument? If so, why is the
investor7owned corporate model seen as dominant?
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“Tales of the Unexpected”Ransom, D. (2004)Role of coLops as aneconomic alterna?ve:• fair trade & globaliza?on• empowerment ofmarginalizedcommuni?es, and• the development ofinnova?ve newindustries.
Q: If co7ops are soinfluen&al, why are theyseen as fringe oralterna&ve.
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New Interna?onalist, 2004
“A Co.operative Solution”Lod et al (2006)• “CoLops are morefinancially successfulthan observers mayrealize, but their realvalue comes from theirability to keep alive the‘social contract’ ofcommuni5es.”
Q: Were you surprised byanything in this ar&cle?
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Strategy + Business Magazine, 2006
The Challenge ofStakeholder Loyalty• “Studies on loyalty have found that companieslose half their customers in five years, half oftheir employees in four years, and half theirshareholders each year. This low level of loyaltycan reduce a company’s performance by 25% to50% or even more.” (Côté D. (2003): 5)
Q: How is the co7opera&ve structure relevant to
this basic challenge to business success? ECON10
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“Co.operatives:Principles & Practice”
Cropp & Zeuli (2004)• Legal defini?on: “Acoopera?ve is a userLowned, userLcontrolledbusiness thatdistributes benefits onthe basis of use.”
Q: What are the socialand economicimplica&ons of thisstructure?
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A CoLop Service Sta?on in Oklahoma.(Erbin Crowell, 2014)
Member or “User” Focus• Member/User Owned: The people who use the coLop’s services also own it.• Member/User Controlled: The people who use thecoLop’s service also control it on a democra?c basis(one member, one vote).• Member/User Benefi5ng: The people who use thecoLop’s services receive benefits such as goods,services, or employment, and may receive a share ofsurplus (or profit) based on their use of the coLop.
Q: How does this compare with “conven&onal”
business models?
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International Co.operative AllianceDefini5on:A coLopera?ve is anautonomous associa5onof persons unitedvoluntarily to meet theircommon economic,social, and culturalneeds and aspira?onsthrough a jointlyLownedand democra?callyLcontrolled enterprise.www.ica.coop
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International Co.operative AlliancePrinciples:1. Voluntary and Open
Membership2. Democra?c Member
Control3. Member Economic
Par?cipa?on4. Autonomy and
Independence5. Educa?on, Training and
Informa?on6. CoLopera?on among CoL
opera?ves7. Concern for Community
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International Co.operative AllianceValues:CoLopera?ves are basedon the values of self6help, self6responsibility,democracy, equality,equity and solidarity. Inthe tradi?on of theirfounders, coLopera?vemembers believe in theethical values ofhonesty, openness,social responsibility andcaring for others.
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The CoLop Flag. (Interna?onal CoLopera?ve Alliance)
The Basic Idea• A business that is equitably owned anddemocra5cally controlled by its members fortheir common good, the good of the communityand to accomplish a shared goal or purpose.
• Any surplus (or profit) is reinvested in thebusiness or distributed among members inpropor5on to their USE of the business.• What do we mean by “use” or “patronage”? EC
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“Use” or PatronageThe economic rela?onship of the member tothe enterprise (broadly):
• Purchase of products or services from thebusiness
• Amount of product processed, sold ormarketed through the business
• Labor contributed to the opera?on of thebusiness
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Flexibility: Purpose or ActivityCoLops can be organized to enable people to:• Purchase needed products or services as agroup.
• Produce a product or service together.• Process and add value to raw materials producedby members.• Market products produced by members or bythe coLop.• Employ people and provide a livelihood.
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Flexibility: Key StakeholderCoLops can be organized around the interests of:• Community Members: Owned and governedgenerally by members of a community.• Consumer Members: People who purchasegoods or services together.• Producer Members: Producers who aggregate,process and market their products together.• Worker Members: Employees of the enterprisewho contribute their labor to the business.• Mul5stakeholder: A combina?on of formallyrecognized member groups.
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Flexibility: Sector or Industry• Credit Unions• Agricultural CoLops• Food CoLops• Consumer Goods• Worker CoLops• Housing CoLops
• Health & Insurance• Fishing CoLops• Communica?ons
• U?li?es CoLops• Ar?san CoLops• Etc.
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Interna?onal CoLopera?ve Alliance
Flexibility: ScaleCoLopera?ve model enables people with limitedfinancial, poli?cal or social assets to aggregatethese resources, control them democra?cally,reach scale and compete with much largereconomic actors.
CoLops can be scaled according to need from• Small worker or ar?san coLops, to• Largemul?billion dollar agricultural and financialenterprises
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MEMBERS
BOARD OF DIRECTORS
MANAGEMENT
EMPLOYEES
CONSUMERS ORPRODUCERS
ABasic Co.op Structure
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Consumer orProducer Co6opWorker Co6op
Mul5stakeholder or“Solidarity” Co6ops
include a combina?on ofmember types, each witha formal and dis?nct
“user” rela?onship withthe enterprise.
Collec5vesflaHen organiza?onal
layers, oYen emphasizingconsensus and groupdecisionLmaking.
Community Co6ops usuallyhave general membershipthat may have a variety ofrela?onships to the coLop.
Elect
Hire & Supervise
Hire & Supervise
Provide Product or Service
Basic*Structure*of*a**Federated*or*Secondary*Co.op*
Primary'Co6op'
Individual'Member'
Individual'Member'
Individual'Member'
Individual'Member'
ECON'105:'Introdu
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Primary'Co6op'
Individual'Member'
Individual'Member'
Individual'Member'
Individual'Member'
FEDERATED'OR'SECONDARY'CO6OP'
A'co6opera5ve'“federa5on”'or'
“secondary”'co6op'is'essen5ally'a'co6opera5ve'
of'co6ops.'
In a “hybrid” or “combination” co-
operative, members may be both individuals and
primary co-ops.
Ownership & Control
SomeBasic DistinctionsAUributes Co6opera5ve
EnterpriseCapital or InvestorOwned Corpora5on
Core Purpose To meet memberLdefined needs and goals
To generate return oncapital invested
Principles Collec?ve selfLhelp,democracy, equality,equity, solidarity, etc.
Individual profit mo?ve,maximiza?on ofshareholder wealth
Ownership By members By capital / investors
Control By members, democra?c(one member L one vote)
By capital / investorsaccording to number ofshares held
Distribu5on of Surplusor Profit
Operate “at cost,”surplus (income aboveexpenses) reinvested ordistributed to membersaccording to “use”
Return on capital isunlimited, profitsdistributed toshareholders accordingto investment
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What are the Implicationsof these BasicModels for…• Poli?cal Democracy
• Economic Equality & Equity
• Local Economies• Interna?onal Development
• Ecological Sustainability• Community Stability & Resilience
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Week2: ISTHEECONOMYWORKINGFORYOU?ECON 105: Introduc?on to the CoLopera?ve Movement
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Occupy Wall Street Protest, 2011. (Photo by Louis Lanzano)