Cover Story

The Cooperative Century
by Bill Sherrod, Managing Editor

Dawn of a New DayDawn of a New Day

In the shrinking world of the new millennium, cooperation will become ever more important in all phases of life — political, economic and societal. As natural aggregators, cooperative businesses will play a key role in giving extraordinary buying power to ordinary folks.

The year 2000 has arrived. We are poised at the brink of a new century, a new millennium. The nation’s economy thunders forward like a supercharged locomotive. Prospects for the future are breathtaking for all aboard.

The future. It’s exciting. And it’s frightening in some ways, because things today seem to change so fast that it’s hard to become accustomed to something before it’s passť. So, many of us find it difficult to be certain of anything.

This uncertainty translates into a dark lining to the silver cloud of our optimism. The very technology which drives our world forward at such a frenetic pace also, in many instances, serves to confuse and alienate us.

We find ourselves in an age of high times, but also an age of societal polarization, high-pressure niche marketing, and increasing personal isolation. In this environment, cooperative businesses are a unifying agent, dissolving artificial barriers and bringing people together to meet defined needs.

Old Concept, Contemporary Application

It’s ironic that a concept conceived in a decidedly low-tech era serves us so well today. The first successful cooperative was organized in 1752 when Benjamin Franklin formed the Philadephia Contributionship for Insurance of Houses from Loss by Fire — the oldest continuing cooperative in the U.S.

The modern cooperative business movement is generally traced to formation of the Rochdale Equitable Pioneers Society in 1844 in Rochdale, England. The Rochdale pioneers established a set of principles for their food cooperative which have since spread and been adopted by cooperative ventures around the globe. In the century and a half since the Rochdale movement, these ideas have evolved and been condensed into a set of seven principles which form the framework of contemporary cooperative business ventures.

These principles were reviewed and adopted in 1995 by the International Cooperative Alliance (ICA) to form the general foundation of modern cooperatives worldwide. They are: 1) voluntary and open membership; 2) democratic member control; 3) member economic participation; 4) autonomy and independence; 5) education, training and information; 6) cooperation among cooperatives; and 7) concern for community.

The ICA also defined a cooperative as "an autonomous association of persons united voluntarily to meet their common economic, societal and cultural needs and aspirations through a jointly owned and democratically controlled enterprise."

Skeptics might note that this all sounds very pie-in-the-sky, even archaic in an age when virtually any place in the world is as near as a quick point and click. But reality contradicts this dot-com assumption. Cooperatives today expand almost exponentially: there are more kinds of cooperatives doing a larger volume of business in more parts of the world than ever before.

Electric cooperatives, for example, are forming in places where they’ve never existed — New York City and California, to name two. In the headlong rush to restructure the electric utility industry, smaller customers have been left in the dust as large commercial electric utilities scramble to secure the largest industrial and commercial customers. The large utilities’ logic is sound — their purpose is to generate maximum profit for their shareholders. Since there is much more profit in a large industrial customer than in a small business or residential customer, the best rates are offered to the biggest users. So what does the small guy do? Aggregate —band together with other small guys and become a big user — in other words, form a cooperative.

Electricity is only one of many products or services offered through cooperative business ventures. Most people are familiar with farmer cooperatives, but not everyone knows that approximately 30 percent of all farmers’ products in the U.S. are marketed through cooperatives. And the products range from Land O’Lakes dairy products to Sunkist citrus fruits and Ocean Spray juices.

According to the National Cooperative Business Association:

bulletMore than 20 cooperatives have annual sales in excess of $1 billion;
bulletCredit unions, which are cooperative businesses, have more than 76 million members and assets in excess of $100 billion;
bulletElectric Cooperatives operate more than half of the electric distribution lines in the United States and provide electricity for 26 million people;
bulletThere are approximately one million cooperative housing units serving households with a range of income levels and housing needs;
bulletMore than 50 million Americans are served by insurance companies owned by or closely affiliated with cooperatives.

Consumer-owned and controlled cooperatives pioneered prepaid, group practice health care. Today cooperative health maintenance organizations (HMOs) provide health care services to nearly 1.4 million American families.

Food cooperatives have been innovators in the marketplace in the areas of unit pricing, consumer protection and nutritional labeling.

Retailer-owned food and hardware cooperatives make it possible for hundreds of independent store owners to successfully compete with large chains.

Cooperative Possibilites are Limitless

Electricity, finance, food and farm products, housing, hardware and insurance are all examples of goods and services offered through cooperative businesses. But the cooperative business principles can be applied to virtually any enterprise. The women of Smith Island, Md., adjacent to Tangier Island in the Chesapeake Bay, formed a crab-processing cooperative to maintain the solvency and increase the profitability of the seafood industry on which their island’s economy is based. Pre-school and child-care cooperatives have been formed in communities where there was a need for child care among families with two working parents. The variety of endeavors to which the cooperative principles can be applied is virtually limitless.

Equally as important as these principles are the values which undergird them. According to the ICA’s statement of cooperative identity, "Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others."

Similar lofty principles and values are cited within the mission statements of any number of businesses. Often, however, the intent of the language becomes lost in the day-to-day struggle to retain fiscal viability in today’s roaring economy. Corporate business structure, by its very definition, must pay to the shareholder, who has helped capitalize a business, a fair return on his or her investment.

A cooperative business venture is a simpler creature: the user, or customer, is also the shareholder, so there is one less layer of fiscal burden on the business. Put another way, the corporate business entity exists to provide profit for its shareholders by competitively selling goods or services to its customers, while the cooperative business entity exists only to provide goods or services to its members.

This is nothing new, but the climate of today is different than it has ever been. Mergers, acquisitions, profound shifts in the ways of doing business and in society itself — all driven by quantum advances in technology — have had the effect of creating a feeling of personal isolation, of being a number in a vast sea of digital information. Research indicates that people are profoundly troubled by the perception that human values are being overwhelmed, inundated in the tsunami of exponentially accelerating societal change.

It’s a climate much like that which prevailed in the early days of the industrial revolution, when the world, as it had been known before then, changed forever. That’s the climate that gave rise to the modern cooperative, an idea more fertile today, with greater potential to enrich the human experience, than ever before.

In this, the first year of the new century, Cooperative Living magazine will examine a different type of cooperative business in Virginia within the pages of each issue, beginning with the February edition.

For Further Info...

If you’re interested in further information on co-ops in general, a good source of information is the National Cooperative Business Association, at 1401 New York Ave. NW, Washington, D.C. 20005-2160. The NCBA’s website can be found at http://www.cooperative.org. The e-mail address is ncba@ncba.org.

 

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