Can adopting cooperative governance models build a better world? That’s the case guest author Martin Lowery makes in this week’s Principle 6 newsletter.
“Is it naive to imagine that the cooperative business model could lead the way to demonstrating a better, more effective governance approach to solving the very significant problems that the world faces today?” Lowery writes.
Read the full newsletter below, then consider how cooperatives across sectors can work together to build a new approach to global problem solving. NCBA CLUSA is on a mission to document Principle 6 collaborations across the country so we can identify trends, document best practices and share this knowledge with you—our fellow cooperators!
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Principle 6 Newsletter – Cooperative Governance: A Model for the World?
October 26, 2022
Boards sit atop almost all corporate forms of organization—profit and nonprofit—and often over governmental agencies as well… In all kinds of human activity, we find formally constituted, empowered groups deciding courses of action and future conditions toward which some body of people will aspire. – John Carver, “Boards That Make A Difference,” 1997
The very existence of the board as an institution is rooted in the wise belief that the effective oversight of an organization exceeds the capabilities of any individual and that collective knowledge and deliberation are better suited to this task. – Stephen Bainbridge, “Why a Board? Group Decision Making in Corporate Governance,” Vanderbilt Law Review, 2002
Economist Jeffrey Sachs in Common Wealth: Economics for a Crowded Planet identifies population growth, poverty and greenhouse gas impacts as the three most critical issues of our time. He then suggests that we need “a new approach to global problem solving based on cooperation among nations.”
Sachs next delivers a one-two punch to contemporary governance models. The task is daunting, says Sachs, in large part because “our very methods of governance are not well suited to the challenges of sustainable development.” He calls for a “new model of twenty-first century cooperation”—a model that needs to reflect “an increased role for businesses and civil-society organizations.”
Is it too bold to demand an increased role for cooperatives in addressing these pressing needs? Is it naive to imagine that the cooperative business model could lead the way to demonstrating a better, more effective governance approach to solving the very significant problems that the world faces today?
Unfortunately, there are some who argue against the potential power of cooperation to successfully address global crises. In his 1968 paper published in the journal Science and entitled “The Tragedy of the Commons,” Garrett Hardin, a microbiologist, presented an argument against cooperation as the ultimate solution to commonly shared natural resources.
Hardin imagined the case of farmers using a common feeding ground. Initially, farmers grazing their animals in such a common grazing area, he argued, consume its resources based on their needs, ideally working in everyone’s collective best interest. Yet as populations grow and many more citizens graze their animals on the commons, individual self-interest overcomes the collective best interest. Maximizing individual self-interest then leads to overgrazing and the destruction of the commons, and everyone suffers in the long-term.
Economist Mancur Olson in The Logic of Collective Action posited the same idea: “Unless the numbers of individuals is quite small, or unless there is coercion or some other special device to make individuals act in their common interest, rational, self-interested individuals will not act to achieve their common or group interests.”
This challenge is not without consequences. Over the past ten years under the umbrella of the International Cooperative Alliance, cooperatives have been invited to participate in lead-up discussions to the annual G20 summits in Australia, Argentina, Japan, Italy and Indonesia. Cooperatives have offered ideas in multiple forums regarding pressing issues such as healthcare, economic disparity, affordable energy and housing, financial systems, workers rights, human trafficking and ethical value chains, to name a few.
Future G20 summits are scheduled for India in 2023 and Brazil in 2024. Each of these lead-up discussions creates an opportunity to demonstrate the ability of cooperative governance to address global issues.
Yet skepticism abounds. Some will continue to question whether cooperatives are anything other than small, marginally effective entities with no ability to scale.
Cooperatives have an enormous ability to scale their enterprises through the creation of sectoral, regional and national cooperative structures as well as partnerships of common interest. Cooperative governance excels at all levels to ensure fair and equitable decision-making on behalf of all members. This is most certainly not well understood.
Cooperative governance excels at all levels to ensure fair and equitable decision-making on behalf of all members.
Hardin and Olson are, of course, presenting theoretical arguments. Nonetheless, any plausible counter argument would need to be grounded in practical experience, in the demonstrated power of the cooperative values and principles to achieve results based on mutual trust and reciprocity.
First and foremost, we must believe in ourselves and recommit to being grounded in the cooperative values of self-help, self-responsibility, democracy, equality, equity and solidarity. We must also be steadfast in supporting the ethical values of honesty, openness, social responsibility and caring for others. Cooperative boards across all sectors and regions must embrace these values as essential to effective cooperative governance.
Our ability to demonstrate the uniqueness of cooperative governance and the results that effective cooperative governance is capable of achieving could very well make the difference in positioning the locally owned and democratically controlled cooperative governance model as a highly desirable approach to building a better world.