In this week’s Principle 6 Newsletter, guest author Maurice Smith considers the notion of exceptionalism, arguing that it “tends to engender complacency” and urging credit unions and other cooperatives to work toward concrete expressions of our shared values and principles.
“If one is the best, what motivation is there to become better? The hunger to make improvements, hone infrastructure and strive for greater achievement can feel less urgent. The risk of exceptionalism is that it dulls the incentive for progress,” Smith writes.
While you’re thinking about exceptionalism, take a moment to consider how “cooperation among cooperatives” could spur a new commitment to moving forward. 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!
Principle 6 Newsletter – Credit Union Exceptionalism
February 23, 2022
Credit Unions are cooperatives. They are different from other types of financial institutions. Our member-based approach to financial empowerment, not-for-profit motivation and core principles elevates us to a high standard.
Is this enough?
We ask Congress to treat credit unions differently. We say the regulations that are intended to corral bad actors unjustifiably apply to credit unions. Credit unions do not employ practices that decimate communities, rob households of dignity and treat consumers unfairly. Is this enough?
We ask members to regard us as being different from our for-profit counterparts. We emphasize the unique mission and purpose of cooperative finance as evidence of our helpful role in the marketplace. Is this enough?
I believe cooperatives are unique. I wholeheartedly subscribe to the ideal of communities supporting one another through a values-based system of economic participation. The Credit Union Cooperative Movement is alive with testimonies of inspiring institutions and commitment to service. Is this enough?
I submit that the credit union experiment remains a test case for financial equality. It is insufficient to tout exceptionalism alone without a body of evidence to support the supposition that cooperative finance is the superior model. Let’s examine this notion a bit further.
The essence of exceptionalism is the impression that one is different from and better than the norm. The uniqueness is so apparent that its very existence warrants unparalleled treatment and regard.
The word exceptionalism is often referenced in United States history for its approach to foreign policy. The idea is the U.S. is inherently different from our foreign counterparts. Our national pride convinces us to believe that the American values and systems are superior to other forms of government.
A tricky outcome of exceptionalism is that it tends to engender complacency. If one is the best, what motivation is there to become better? The hunger to make improvements, hone infrastructure and strive for greater achievement can feel less urgent. The risk of exceptionalism is that it dulls the incentive for progression.
A tricky outcome of exceptionalism is that it tends to engender complacency.
Let’s scrutinize credit union exceptionalism. We believers of the movement hold fast to the principles that bind us at a core philosophical level. We don’t debate ownership. We agree that our focus on members rises above all other interests. We know our purpose and recognize the greater good of financial empowerment.
It is inherently problematic to draw a line around universal credit union exceptionalism because of the democratic, self-governing nature of credit unions. Each cooperative defines and practices its own style of self-governing. The diversity of fields of membership, industries, communities, political influences, societal norms and demographics necessarily mean each credit union is unique. Each is free to exercise its values in ways that feel genuine for its membership.
But being exceptional in principles is not enough. There are shearing forces that could reduce credit union cooperatives to a mere commodity provider if we are not intentional about who we are and what we do for members.
Credit union exceptionalism is challenged by new financial models that have adopted our message. To the untrained observer, one would believe that every newfangled technology provider is driven by cooperative ideals. The hype and marketing polish is appealing on the surface. Below the waterline, the exceptionalism of these providers does not endure.
Being exceptional in principles is not enough.
The credit union movement is going through an industrialization stage. The quest for operational efficiency, market share, and managing to financial industry norms threatens to dilute the credit union distinction. If cooperatives act like other organizations, no amount of rhetoric will be able to cure the loss of distinction.
One of the exceptional features of a cooperative is the sense of community. We believe that the communal benefits of combining efforts and resources help advance the standard of being for the whole. A community provides benefits for its participants that would be elusive if forced to go it alone.
However, participation in a community necessarily comes with tradeoffs. In a community, not all citizens are equally situated. Some have greater wealth, productivity and participation in the community’s life. The core function of the community is to have diverse participants commune with each other for the greater good of the whole.
A well-balanced community is diverse. It has borrowers and savers. The community includes people on each end of a political divide. The community values each person for their contributions and aspirations. It provides empathy for misfortune.
The adage of there being safety in numbers is fitting for credit union cooperatives. The commitment to cooperation is our greatest strength. By leaning into who we are and what we represent, we can prove that self-professed exceptionalism is deserved. We must prove with our actions that we are who we profess to be.
We must prove with our actions that we are who we profess to be.
Despite the challenges, credit unions share common ground for philosophical exceptionalism. We are different. We exercise a superior model for consumers and main street businesses. We must not rest on our laurels. We have work ahead to be the exception called for in our model.