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In this week’s Principle 6 Newsletter, individual businesses or cooperative economy?

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The foundations of what we know as cooperative principles were created by these experiments in alternative economies.

How do co-ops move from running their individual businesses to becoming a collective force for broad economic transformation? By working together, Mike Mercer writes in a new issue of the Principle 6 Newsletter.

“If there is to be anything like a cooperative economy, co-ops will have to collaborate in communities. They will have to promote each other. And new co-ops will need to be formed and nurtured. Co-ops will have to join arms across sectors to solve critical needs in the community,” Mercer writes.

“Most important,” he continues, “co-ops will have to regard the development of a local cooperative economy to be strategically essential to the success of their individual businesses.”

Read the full issue of Principle 6 Newsletter below to find out. And while you’re thinking about “cooperation among cooperatives,” take a moment to consider how you and your cooperative practice this principle. 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 – Credit Union Business and the Cooperative Economy

Issue 23 – June 9, 2021

If finance and market do not create value and values, if they do not create work, if they do not respect and care for the environment, they are simply uncivil; they destroy the economy and civilizations, as we continue to see in this time of crisis. The market economy will survive only if it is able to move beyond this form of individualistic, financial capitalism, towards a civil and civilizing economy. – “Civil Economy,” Bruni and Zamagni, 2016

Today, the global co-operative movement appears to have arrived at a crossroads. With the collapse of communism, and with the capitalist system in crisis and facing unceasing demands for reform, the case for the expansion of economic democracy has never been more relevant or more urgent. To what extent an alternative will prove possible will depend on many factors, not the least of which is the willingness of co-operative leaders, thinkers and practitioners to take up the challenge at an unprecedented level of action both locally and globally. In its own quiet way, the co-operative vision continues to thrive and hold the keys to the emergence of an economic model that is capable of remaking and humanizing the current capitalist system. – “Humanizing the Economy,” John Restakis, 2010

Cooperative movement?

We’re told that U.S. credit unions got their start as a social movement. Some say Ed Filene just wanted working folks to be able to buy things on credit in the discount basement of his Boston store. Notwithstanding, the story goes, folks like Roy Bergengren traveled the country convincing employers and communities that credit unions were a liberating thing for employees and constituents. Associations were quickly created to carry on the missionary work. This new “movement” solved for systemic savings, affordable credit, and banking at work. It was a practical exercise in democracy. The people had to make it work by electing a board from their tribe. The notion of “movement” certainly sounds plausible. At least back then.

Today, there are over 375 credit unions with more than $1 billion under management. With average savings balances of perhaps $10,000 per member, these credit unions typically serve 100,000 members, or more. For a large part of the group, many more. And, there are another 300 credit unions that could reach $1 billion in assets during the next decade. In this crowd, one doesn’t hear the word “movement” that often. More often, it’s credit union “industry.” We’ve been down the nomenclature path before. Not going there this time.

In this crowd, one doesn’t hear the word “movement” that often. More often, it’s credit union “industry.”

These days, many credit union leaders think of themselves as fundamentally running a business. True, a business owned by the members. A business that exists to create tangible value for the members. The credit union is a place that also creates an excellent working environment for employees. Community involvement and charitable giving figure in the mix from time to time. Efficiency, market share, wallet share, growth, capital sufficiency and the like dominate the KPIs. Strategic relevance is often the long-term aspiration. Keeping the regulators happy is a tactical objective. All good things. For sustainability, necessary things.

Prior to the time of the Rochdale co-ops (mid-1800s), the concepts of cooperative thinking were applied at the community level. As members of the community, people were encouraged to embrace commonality of ownership across the entire fabric of the community. Check out the history of New Harmony Indiana to see an American version of what became known as a Utopian community. New Harmony and similar communities did not last long. Still, the foundations of what we know as cooperative principles were created by these experiments in alternative economies.

The foundations of what we know as cooperative principles were created by these experiments in alternative economies.

The significant innovation with the so-called Rochdale co-ops was that cooperative values and principles were applied to a narrowly focused business that was financed and governed by the members/users, not enabled by the benevolence of wealthy industrialists. In many cases, these co-ops began as small stores. Eventually, the stores got together to form secondary supply co-ops. In time, the principles were applied to all lines of work and commerce. “Running a business” became a significant catalyst for the sustainability and growth of what we now call the cooperative movement.

So, in our time, thousands of cooperative leaders have been diligently running their businesses, many very successfully. It has been this way for decades. Cooperative businesses now touch many aspects of daily life in the U.S. and around the world. Economic downturns have illustrated the resilience of cooperative businesses. In fact, as wealth and income get more concentrated in the “free” market and as politics become more polarized and paralyzed, the calls for something different/better/fairer are growing in intensity. More than a few are looking to the cooperative business model as a great foundation for improvement. The true believers are talking about the emergence of a cooperative economy that would run alongside government and for-profit decision-making. Displacing, not replacing (the dream of the Utopians).

As wealth and income get more concentrated in the “free” market and as politics become more polarized and paralyzed, the calls for something different/better/fairer are growing in intensity.

If there is to be anything like a cooperative economy, co-ops will have to collaborate in communities. They will have to promote each other. And new co-ops will need to be formed and nurtured. Co-ops will have to join arms across sectors to solve critical needs in the community. Most important, co-ops will have to regard the development of a local cooperative economy to be strategically essential to the success of their individual businesses. Not so parenthetically, credit unions would need to project themselves more as financial co-ops and less as member-owned community banks.

Fortunately, running the credit union business and contributing to the development of a cooperative economy in the community need not be viewed as mutually exclusive elements of strategy. But, for all co-ops, building a beneficial cooperative economic alternative would not be a spectator sport. Leadership and vision are the causal ingredients.

Referring to the musings of Eduard Bernstein in his magisterial work, Humanizing the Economy, John Restakis offers the following insight:

The task of transforming the co-operative movement from one of merely local or sectoral influence to a force for broad economic transformation raised a problem of…above all, an autonomous co-operative culture capable of inspiring leaders to lead and followers to follow.

Stay tuned,
Mike

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