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In this week’s Principle 6 Newsletter, the benefits of being unconventional

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Image show many hands coming together, each holding a different piece of a puzzle.
Credit unions try to identify as being “not-for-profit,” a difficult distinction.

In this week’s issue of the Principle 6 Newsletter, republished below, Mike Mercer urges credit unions and other cooperatives to embrace what makes them unconventional. In a world increasingly taking sides along the capitalism/socialism divide, the cooperative difference holds significant appeal.

“Co-ops do not concentrate wealth in the hands of a few. Nor do they stand at the public trough for habitual handouts. Co-ops can bravely present themselves to people as something different, aligned with the interests of those being served,” he writes.

Read the full issue of Principle 6 Newsletter below. 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!

Share your example of Principle 6

 

Principle 6 Newsletter – Virtue-US

Issue 16 – February 24, 2021

The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries.” – widely attributed to Winston Churchill

“…an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.” – definition of capitalism, Merriam-Webster Dictionary

“Socialism is a political, social and economic philosophy encompassing a range of economic and social systems characterized by social ownership of the means of production and democratic control or workers’ self-management of enterprises. Social ownership can be public, collective, cooperative, or of equity.” – excerpt, definition of socialism, Wikipedia.

“…co-operatives create wealth for the many members of co-operatives who engage in co-operative businesses as service users, producers, independent business owners, consumers, and workers, not solely for the few who are rich enough to invest capital in investor-owned enterprises.” – Guidance Notes, International Co-operative Alliance, 2015

No-one has ever seriously accused a cooperative of being a capitalist (or “for-profit”) institution. Well, to be fair, cooperatives occasionally accuse sister co-ops of behaving like for-profit organizations. But, that’s mostly just internal name calling. And bank lobbyists are trained to characterize credit unions as profit-hoarding banks with unfair government privilege. Notwithstanding, as Mona Lisa Vito (of My Cousin Vinny) would say, “nobody could evah confuse a co-op with a capitalist enterprise!”

In contrast, it is not uncommon for cooperatives to be grouped under the banner of socialist institutions. In Europe, there is a body of thought building up around the virtues of the “social economy.” In fact, there is a plan in the EU to support enterprises that don’t place return on capital at the top of their priorities. Included are cooperatives, mutuals, associations and foundations. Check out the Action Plan for the Social Economy.

The polar ice caps will have to melt before Americans would embrace the concept of a social economy. It would have to be called something else. Perhaps the inclusive economy? Notwithstanding, the social economy organization types already exist here in abundance. In the U.S., co-ops usually register as corporations but are often regarded as being more akin to non-profits. Credit unions try to identify as being “not-for-profit,” a difficult distinction.

Credit unions try to identify as being “not-for-profit,” a difficult distinction.

In the mid-1800s, the seeds of three economic systems were planted in central England during the industrial revolution. Capitalism was turned loose with the invention of the limited liability company. Friedrich Engels relocated to Manchester as he collaborated with Karl Marx about a communal alternative to capitalism. And a group of poor weavers banded together in Rochdale to organize an early version of the cooperative enterprise. A century later, after WWII, Winston Churchill spoke often about the “vice” of capitalism, the “virtue” (tongue in cheek) of socialism and the immorality of communism. Mercifully, a search on “cooperatives” at the International Churchill Society website leads to no results.

Today, we are in the midst of a digital/data revolution, likely as disruptive to society as the industrial revolution. Once again, all aspects of working life are being subjected to rapid change. A popular topic on the speaking circuit is ‘The Future of Work.” That’s because, increasingly, the old skills don’t apply. And, the old economics are being questioned as well. The present value of future earnings apparently has little to do with stock valuations. And, a decade of mammoth fiscal and monetary stimulus will supposedly not lead to inflation or devaluation. We live in a time of anxiety when the old conventions are unmoored, where predictability is illusive.

These are the days when being unconventional can be intelligent strategy. Credit unions and co-ops should illuminate the benefit of being neither capitalist nor socialist. At least not the ugly caricatures of each; big business and big government. Co-ops do not concentrate wealth in the hands of a few. Nor do they stand at the public trough for habitual handouts. Co-ops can bravely present themselves to people as something different, aligned with the interests of those being served. Not extracting profit or redistributing income. Rather, providing benefit in proportion to patronage. Responsive not to capital, but to needs at the service-user level.

Co-ops can bravely present themselves to people as something different, aligned with the interests of those being served.

The “virtue” of cooperatives is their mission—to enhance the well-being of members in some meaningful way. One “vice” of cooperatives might be that scale can lead to detached ownership connections with members. Especially in large consumer co-ops, engagement in democratic process tends to diminish as the dispersion of members grows. Another vice might be that co-ops don’t sufficiently emphasize their inherent member centricity in practice or pronouncement. Even so, co-ops have a fortunate uniqueness compared with other economic forms of organization. Benefits are distributed according to service usage, not capital holdings or political favor. To most working folks today, that is a distinction that should be of considerable appeal.

If Churchill added co-ops to his famous quote, the third line might have been:

“The inherent vice of cooperatives is that they are quietly virtuous”

Said with the pen of a 21st century co-op soundbite maker… co-ops are Virtue-US.

Time to make some noise!

Stay tuned,
Mike

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