Income equality is getting worse. Can the co-op model solve this problem?

Co-ops are more pervasive than you think. They just suffer from a marketing problem.

  • The cooperative model accounts for $154B every year in America.
  • America leads the world with cooperatives, with over 30,000 businesses operating under this model.
  • Co-op advocate Nathan Schneider believes this model can help level the economic playing field.

What is a Co-operative?

Nathan Schneider plays a game at strip malls. The activist-journalist and University of Colorado Boulder media studies professor tries to guess how many businesses were directly or indirectly inspired by co-ops. The number is higher than you'd expect.

Whether it's organic food or fair trade coffee or Visa labels in the windows of the small business or chains like Dairy Queen and Best Western, cooperatives are built into their model.

Reading Ours to Hack and Own, a book on the cooperative tradition that Schneider co-edited, I learned that the nation with the largest number of cooperatives is right here. America has over 30,000 businesses built under this model. Co-ops account for $154 billion every year in the U.S. I met Schneider because I too work for one, and during our talk he educated me on the vast influence of cooperatives on American businesses, a fact I had never stopped to contemplate.

While there are a number of variables in the cooperative model, the basic principles, followed by co-ops around the world, were created by the Rochdale Society of Equitable Pioneers in 1844:

  • Voluntary and open membership
  • Democratic member control
  • Economic participation by members
  • Autonomy and independence
  • Education, training, and information
  • Cooperative among cooperatives
  • Concern for community

The Next Economy: Worker-Led, for Public Interest

According to Worldwatch Institute, in 2012 one billion people around the planet were part of a cooperative. The 300 largest co-ops are worth $2.2 trillion. Dating the cooperative model to an origin point is impossible since tribes generally worked under this model. The problem, Schneider says, is that players in the capitalist model take credit for the work that cooperatives have done. For example, credit cards.

Visa, he says, was originally Bank Americard. This early Visa credit card, founded in 1958, was not working under the guidance of Bank of America. A decade later, Dee Hock founded a network of banks that ran under the cooperative model.

That was what made the credit card phenomenon really work. After the cooperatives built that industry, it got demutualized, privatized, turned into this kind of rapacious and exploitative industry. But it was actually the cooperative movement that enabled that feature of capitalism to grow.

While researching his latest book, Everything for Everyone, Schneider discovered his grandfather, a "farm boy from Colorado," was the director of a large national purchasing cooperative in the hardware industry. Growing up, he knew his grandfather ran a company called Liberty Distributors; he just didn't know it was a co-op. This is a persistent problem with co-ops, Schneider says. Few people, for example, know that large companies like Land O'Lakes, ShopRite, and ACE Hardware are co-ops. The most publicized, REI, is predominantly reserved for outdoor fanatics.

Whereas the co-op model might inspire thoughts of conformity, Schneider argues that it actually promotes individuality through participation. Regional cooperatives match the environment in which they are founded and service, whereas chain stores demand subservience from customers. It might seem convenient that I can go into a Home Depot anywhere in America and know where everything is shelved, but this mindset is antithetical to the co-op model.

Liberty was all about using the cooperative model to enable local stores to be more individualistic, to actually enable them to have more control over how they branded themselves and what stock they carried. The hardware store in my town that's a member of ACE Hardware is much more tailored to the culture of the town than the Home Depot conglomerate down the road. The corporate model expects a kind of mass conformity; the cooperative model is a strategy for enabling businesses to help people be their fuller selves.

Corporate responsibility? Don’t make me laugh.

This model can help level the economic playing field in a country like America, which is suffering from staggering income inequality. While Schneider's grandfather never became super wealthy, he was actively engaged in a community in which the rewards of the profession were distributed equitably. Self-help books about economic empowerment and business success proclaim that anyone can become the next Steve Jobs or Bill Gates with a dream and drive, but Schneider recognizes such a promise as nonsense. The capitalist playing field is limited to few winners while forcing small businesses—the romantic 'Main Street' model of suburban America—to shutter their windows.

Schneider points out that even in a time of extreme party-line politics, the Main Street Employee Ownership Act, which argued for employee ownership through a cooperative model, received bipartisan support when signed into law in August 2018. While Schneider says that Republicans are more likely to work with electrical and agricultural co-ops in rural states, both parties need to better educate themselves on the history and importance of this model moving forward. Unfettered capitalism espoused by paid lobbyists is not doing the citizenry any favors.

This is especially problematic, Schneider says, during a time when so much wealth is locked into smaller technology companies that are poorly understood by government.

We have an incredibly widespread accountability problem. Our businesses, especially the dominant ones, are just not accountable the way we need them to be. We can drag them in front of Congress as many times as we want, but they're clearly on their own agenda; we need a different strategy. And another difficulty here that we're in is that we're no longer in the realm of national companies. We need governance that is transnational; we can't just rely on a hodgepodge of national regulations to deal with the emerging digital economy.

Honoring value creators is the way to move forward, according to Schneider. One thing is certain: we're currently not headed in that direction. Empowering members and consumers instead of treating them as a flock will benefit the greatest number of people. Forty years into the trickle-down experiment have shown its utter failure. When will we come to terms with this fact?

--

Stay in touch with Derek on Twitter and Facebook.

Befriend your ideological opposite. It’s fun.

Step inside the unlikely friendship of a former ACLU president and an ultra-conservative Supreme Court Justice.

Sponsored by Charles Koch Foundation
  • Former president of the ACLU Nadine Strossen and Supreme Court Justice Antonin Scalia were unlikely friends. They debated each other at events all over the world, and because of that developed a deep and rewarding friendship – despite their immense differences.
  • Scalia, a famous conservative, was invited to circles that were not his "home territory", such as the ACLU, to debate his views. Here, Strossen expresses her gratitude and respect for his commitment to the exchange of ideas.
  • "It's really sad that people seem to think that if you disagree with somebody on some issues you can't be mutually respectful, you can't enjoy each other's company, you can't learn from each other and grow in yourself," says Strossen.
  • The opinions expressed in this video do not necessarily reflect the views of the Charles Koch Foundation, which encourages the expression of diverse viewpoints within a culture of civil discourse and mutual respect.
Keep reading Show less

3 ways to find a meaningful job, or find purpose in the job you already have

Learn how to redesign your job for maximum reward.

Videos
  • Broaching the question "What is my purpose?" is daunting – it's a grandiose idea, but research can make it a little more approachable if work is where you find your meaning. It turns out you can redesign your job to have maximum purpose.
  • There are 3 ways people find meaning at work, what Aaron Hurst calls the three elevations of impact. About a third of the population finds meaning at an individual level, from seeing the direct impact of their work on other people. Another third of people find their purpose at an organizational level. And the last third of people find meaning at a social level.
  • "What's interesting about these three elevations of impact is they enable us to find meaning in any job if we approach it the right way. And it shows how accessible purpose can be when we take responsibility for it in our work," says Hurst.
Keep reading Show less

Physicist advances a radical theory of gravity

Erik Verlinde has been compared to Einstein for completely rethinking the nature of gravity.

Photo by Willeke Duijvekam
Surprising Science
  • The Dutch physicist Erik Verlinde's hypothesis describes gravity as an "emergent" force not fundamental.
  • The scientist thinks his ideas describe the universe better than existing models, without resorting to "dark matter".
  • While some question his previous papers, Verlinde is reworking his ideas as a full-fledged theory.
Keep reading Show less

UPS has been discreetly using self-driving trucks to deliver cargo

TuSimple, an autonomous trucking company, has also engaged in test programs with the United States Postal Service and Amazon.


PAUL RATJE / Contributor
Technology & Innovation
  • This week, UPS announced that it's working with autonomous trucking startup TuSimple on a pilot project to deliver cargo in Arizona using self-driving trucks.
  • UPS has also acquired a minority stake in TuSimple.
  • TuSimple hopes its trucks will be fully autonomous — without a human driver — by late 2020, though regulatory questions remain.
Keep reading Show less