Cooperative Enterprises and Civic Engagement: A Historical Understanding
How worker cooperatives arose, subsided, and now present immense opportunity for democratic prosperity
An original essay produced during my graduate school studies
Introduction
Over the past decade there is a growing acknowledgement of the profound economic inequities in American society. The stagnation of wages and the corresponding inability to obtain basic sustenance and shelter has stoked economic, cultural and political tensions. The intentional exclusion of wage earners from engaging in the financial and operational decisions of corporations, and the continued siphoning of wealth to the richest class has stirred animosity between the wealthy plutocratic owners and middle class laborers. Intensifying economic and social inequities have created the current opportunity to explore alternative models of enterprise and economics. The American public has slowly come to acknowledge that the current capitalist system is designed to be implicitly extractive, hegemonic and oppressive. These common themes of class stratification and struggle have spurred a variety of grassroots civic movements. Although our culture has recently and incrementally recognized the benefit of supporting localized wealth circulation, profiteering international corporations still dominate our economic system. While we once valued low prices and convenience above all else, civilian consumers are increasingly embracing the logic that supporting small businesses contributes to the vitality of local communities.
Corporations continue to dominate the market, neglect the negative externalities of their activities, and exacerbate the economic inequities that burden a large population of Americans. An emerging cultural consciousness is assessing our existing economic structures and political effectiveness to identify where unjust hegemony exists and how it can be reformed. A promising alternative to the unsustainability and responsibility of extractive shareholder corporations are worker owned cooperatives. Cooperative labor associations have taken a variety of forms throughout the past few centuries and have evolved into a contemporary amalgamation of enterprises, associations and institutions. Although there is empirical proof and historical knowledge that worker owned cooperatives are more democratic, productive, socially responsible and foster a more impassioned commitment by workers, cooperatives are not prominently known or idealized in American culture. Furthermore, their participation in political advocacy has inadequately matched the influence exerted by opposing corporate lobbyists. In this paper I briefly review how the worker cooperative movement has evolved overtime and how they’ve organized their campaigns to manifest civic power. Additionally, I’ll provide theories on why cooperatives aren’t more eminent in mainstream contemporary American culture, and how they can elevate their advocacy efforts to foster a more sustainable and equitable economic system.
The Cooperative Advantage
It has been well documented that member-owned cooperatives and worker-owned enterprises have more democratic governing structures and more equitably distribute prosperity. The principles, organizational structures and operational procedures were established by cooperative enterprises who unified around a mission and democratic bylaws. Common cooperative values and visions are well articulated by national and international cooperative federations that aid in the development of these socially conscious business entities. The decentralized arrangement of power facilitates a democratic platform from which workers, consumers, and community members can elect representatives who deliberate on business decisions that adhere to their equitable and just bylaws. Cooperative enterprises are a socially equitable institution that can exist within a capitalist economy, but have typically functioned within mutual aid societies such as indigenous cultures, impoverished populations, and peasant organizations in the global south. The socially responsible, equitably prosperous, and democratically governed business model is more optimal and fundamentally distinct from conglomerate corporations directed by maximizing shareholder profit.
Although cooperative enterprises inherently facilitate a more efficient economy and a healthier and more egalitarian society, they have often been incapable of securing sufficient acclaim in America’s cultural or political spheres (Orr, S., Johnson, J., 2017). It’s worth investigating why these equitable enterprise arrangements have not attracted more substantial recognition or praise from the public. Additionally, analyzing how these cooperatives have interacted with governments to advocate for supportive policies can illuminate why they haven’t developed a more robust presence in our cultural, economic and political landscapes. Cooperative economic ecosystems can be promoted as an integrated solution to a host of contemporary social struggles and we should more avidly advocate for the reciprocal empowerment they generate.
Progression of the Cooperative Labor Movement
Over the course of world history the common working class have struggled to attain the political power necessary to influence governments and mitigate the economic dominance perpetrated by the plutocratic elite. Rigid feudal socio-economic structures disintegrated as the Enlightenment and Renaissance periods proliferated liberal thought and laws that allowed for a dynamic market to emerge. As the private labor sector diversified, peasants migrated away from agrarian lifestyles and towards cities with greater earning opportunities through craft guilds or merchant trade (Guilds). Market dominating companies and land development continued to be invested in and directed by the wealthy class who organized their enterprises to exploit resources and people for the profit of shareholder. As laborers confronted these entrenched political and economic powers of the elite, they organized their efforts to demand fair compensation and working conditions.
In order to enshrine these rights into law workers formed representative groups to advocate for policy change and balance the playing field which had traditionally favored the wealthy capital holders. Although these collective campaigns had disparate flares of success in the political realm, certain milestones of progress did advance workers rights to unionize and ability to organize cooperative businesses. Organized unions first originated as craft guilds that developed sophisticated local solidarity networks of laborers who selected representatives that were empowered to negotiate contracts with capital holding employers. Guilds eventually evolved into 19th century trade unions and cooperative associations who all strengthened worker power by developing educational programs, electing leadership, and regulating mutual funds that invested in ventures to propagate the cooperative ecosystem (Measuring the Cooperative Difference). These democratic principles and mutual aid networks proved to be a successful system for generating circular wealth distribution that cultivated community prosperity. As cooperative business models became more widely acknowledged a cohort of Scottish entrepreneurs named the Rochdale Society of Equitable Pioneers published the Rochdale Principles in 1844 codifying a set of bylaws that cooperatives should be founded under and adhere to. This effort to standardize the structure and values of cooperative enterprises empowered others with instruction on how to replicate those equitable operations in their own community. The cooperative arrangement demonstrated an organizational model that was significantly more appealing than the unaccountable industrial corporations increasingly dominating the economy.
America was undergoing a transition in the mid 19th century as it shifted from an agrarian society to an industrialized urban nation. The Civil War caused major economic upheaval as workers joined the military and regular commercial operations were disrupted. In the aftermath of the Civil War President Andrew Johnson commissioned a group to survey and devise repairative programs for the economy. This initiative helped to establish agricultural partnerships and formal associations which came to be known as the National Grange. Regional farmers and consumers organized local grange associations that fostered networks of mutually beneficial exchange. The National Grange became an esteemed fraternal association that emphasized its democratic leadership by encouraging youths and women to participate, even requiring a number of elected positions to be held by women. Grange Halls became community institutions that empowered individuals to obtain civic or professional education in addition to develop and coordinate cooperative enterprise. The Grange proved to be an effective organizational structure for facilitating democratic economic exchanges while also educating the community and equipping them with knowledge and critical perspectives that further enabled civic collaboration. The core functions of coordinating economics, and informing the public on civic issues was an early example of how education and organizing can create a cycle of political engagement and advocacy Alinsky describes (Alinsky, S., 1989). As a result of the popularity of these institutions, cooperative businesses became more formally recognized as a distinct alternative to the exclusive shareholder owned corporations growing throughout the country. The National Grange network collected member dues which enabled them to start legislative advocacy campaigns and support electoral races. The Grange movement’s advocacy was incapable of penetrating the national economic playing field adequately enough for cooperatives to compete with monopolistic corporations. Unfortunately due to fiscal mismanagement and structural instability caused by its rapid growth, the Grange only had around 20 years of prominence before its massive decline further reduced by the economic depression of 1892 (History of Cooperatives).
The Granger movement had a profound impact on the public’s knowledge of how to organize economic cooperatives and advocate for civic and political changes. With greater capabilities to form collective partnerships workers became adept at forming a variety of federations and associations that gave technical assistance to entrepreneurs who wanted to develop their own mutually prosperous cooperatives. Concurrent cooperative efforts included the National Labor Union, the Farmers Alliance and the Knights of Labor, all of which had varying degrees of success at influencing policy and electoral politics (Curl., J, 2012). Formal alliances proved to be more effective at organizing regional initiatives that introduced farmers and entrepreneurs to cooperative business practices and advocacy tactics for achieving progressive economic and political agendas.To oppose the entrenched plutocratic powers of industrial capitalists, cooperative federations and unions had to relentlessly struggle for economic justice. Labor advocates organized enterprises and trade unions across sectors to represent their interests against employers who were unethically treating and compensating workers. But unrefined administrative functions, fiscal mismanagement, depressions, political failures and public missteps all lead to the faltering and downfall of the majority of these cooperative associations. As certain associations dissolved, new organizations took root such as the International Cooperative Alliance which was first established in 1895 and continues strong to this day.
This international institution supported the development of cooperative enterprises by advising on administrative procedures, operational tools, and to a minor degree — policy advocacy. The primary outlet for the International Cooperative Alliance to this day remains the United Nation. While the U.N. is a vital institution it’s advocacy efforts are often provided as recommendations to the highest echelons of a country’s political class, who are often intertwined and relatively beholden to corporate executives averse to cooperative economics. The advocacy efforts and resources developed by the ICA have been discussed by U.N. organized working groups but have not had a substantial impact on the political environment for local advocates and cooperatives. Cooperative associations have struggled for a decade to catalyze the development of new co-ops but haven’t allocated their resources towards strong robust advocacy campaigns .The National Cooperative Business Associations, founded in 1916 primarily focuses on developing the cooperative ecosystem and supplements those efforts with a “nice-to-have” advocacy effort that shared policy efforts. Besides outlining their policy priorities over the past 50 years these prominent associations haven’t engaged in major campaigns, direct action advocacy, or collaborative partnership with other labor activists or social justice groups. The reluctance to aggressively advocate for economic democracy in political spheres has allowed corporate lobbyists — who do aggressively work to shape political dynamics — to continue to manipulate the prevailing ideologies that elected officials are exposed aligned with.
Cooperative business models became even more appreciated as an equitable, democratic, and viable alternative to the private corporations that were ascending in prominence and power in America’s political and commercial economy. In the early 20th century many minority lead cooperative communities were derived from the scholarship of W. E. B. Du Bois who published comprehensive studies of black cooperatives and mutual aid societies. The resulting Negro Cooperative Guild focused on empowering black farmers and entrepreneurs to operationalize a cooperative business, but were hesitant to engage politically — likely as to minimize blowback they might encounter from the bigoted community or entrenched businesses (Nembhard, J., 2013 ). Perhaps the more egregious instance of a cooperative community being suppressed is the 1921 Tulsa Massacre in the Greenwood district known as “black wall street” because their collective of cooperatives circulated wealth and generated distributed prosperity. The cooperative economy in that district was destroyed by a riot fueled by racism, hegemonic, and oppressive capitalist government. The devastation of this cooperative community has been a largely forgotten episode in American history causing the brilliance renown and replication of this thriving cooperative system to be eradicated. Prominent cooperative associations and labor activists continued to dissipate as the national economic instability of the 1930’s inhibited participation in any economic endeavor let alone member-owned enterprises or supplemental associations.
The Great Depression of the 1930’s and the following slew of New Deal initiatives and did provide workers with political advancements and economic opportunities. With new laws like the National Labor Relations Act and the corresponding National Labor Relations Board official institutions supported organized labor efforts by assisting with the moderation of collective bargaining negotiations between corporate employers and workers. Although these newly established policies empowered trade unions with legal procedures the cooperative enterprises, associations and mutual aid socialist organizations were not equally uplifted. The Rural Electric Administration developed in 1935 was a political institution that elevated the cooperative economy for rural consumers and electricity generators. This major cooperative effort was perhaps the last of its kind as the awareness and importance of cooperatives faded away while capitalist manufacturing moved into the foreground of cultural consciousness.
The manufacturing mobilization of World War II demonstrated corporations’ aptitude for efficiently producing material goods at the massive scale required for the war effort. This validation of industry as a mechanism for freedom earned corporations recognition as patriotic institutions who were critical to the economic growth and political supremacy of the United States. The increased consumerism in the post-war society afforded manufacturing corporations with even more exaltation by the American public. Simultaneously the leverage of the stock market and expansion of manual and administrative employment opportunities fostered a deep cultural admiration for the shareholder dominated capitalist model of business.
After WWII the U.S. began to reconfigure its economic ideology and shifted to forget cooperatives and glorify American corporate capitalism. This change in ideology also fomented hostility towards the theories of socialism and communism which were associated with the authoritarian devastation of Germany and Russia. Cooperatives had already been losing ground in America’s cultural consciousness and then became even more suppressed by monopolistic corporations who marginalized them to primarily exist in rural areas for the coordination of agricultural products and energy distribution. The decades-old festering tensions between labor collectives and capitalist owners continued and led to a continued subjugation of collective labor power by way of legal enforcement, public rhetoric and political influence.
The seemingly minimal existence of rural cooperatives, and a lack of engagement in politics or social narratives lead them to lose recognition while not attracting new support from politicians or the mainstream culture. As a result of worker-owned businesses not adequately defending their principles, they were susceptible to being stigmatized as perpetuating a style of socialism that existed in opposition to American capitalism. American patriotism became synonymous with capitalism; and therefore any alternative non-capitalist enterprise was conflated as being socialist or communist. Any ideology that resembled a socialist or Marxian critique of capitalism was demonized as being anti-American. Socialist and communist political parties existed in America and advocated for cooperative business arrangements up until WWII when conservative rhetoric and corporate propaganda began to portray socialism as being incompatible with capitalism which was the superior system for economic growth. After WWII these socialist and communist political parties and civic groups continued to be eradicated in fear of being publicly ostracized or troubled with governmental investigations.
The political crusade against communists and socialists instilled a distrust of cooperatively owned business that further demeaned their standing within America’s economy (Ratner, C., 2017). An intentional campaign of exclusion befuddled the cooperative movement in post-WWII America, and labor activism focused on trade unions that was a form of collective organizing that operated within the shareholder dominant corporate regime. Although national and international cooperative associations supported the inception and operations of local enterprises, a reluctance to engage in civic action and a default position of political neutrality swept over the established cooperative institutions. This timidity to advocate for explicit government support of cooperatives resulted in a downfall of new member-owned businesses. The political neutrality of cooperative associations inhibited the public’s awareness of their equitable and democratic merits.
Cooperative Capabilities and Opportunities in the 21st Century
Cooperative businesses maintain a low profile in mainstream American culture even while making substantial contributions to the American and global economies. Associations can coordinate these cooperatives together to broadcast a new host of marketing campaigns, and state and local advocacy efforts in order to design policies that elevate economic democracy. The International Cooperative Alliance calculates statistics on cooperatives and has found they generate $2.2 trillion in revenue globally and employ as much as 10% of the world’s total employment giving them a base of financial and human resources capable at advancing political issues. The United Nation counts that there are 2 million co-op enterprises that maintain over 1 billion members and clients around the world — a potential network for coordinating advocacy and campaign outreach. These cooperatives possess $20 trillion in assets that can be leveraged in alignment with their social justice initiatives. A national survey found that nearly 80% of American consumers would choose to buy from a cooperative over other options if they had the choice.
That choice has not been robustly advertised in America’s system of exchange that has detached consumers from the source of the products. Consumers have recently shifted their purchasing preferences to favor local small enterprises because they have been educated on and now acknowledge the value of circulating wealth. Marketing and advocacy campaigns to have stores partner with cooperatives to prominently display their products can facilitate values aligned purchasing experiences for customers. Major companies such as Welch’s and Land O’ Lakes have cooperative ownership models but haven’t proudly promoted that distinct identity in their brand communications. Cooperative brands can engage in a collective marketing campaign that raises awareness about their vision for democratic equity and social resilience. Cooperatives can design their advertisements and packaging to more vigorously promote their core purpose of economic democracy. Other major companies such as Organic Valley and Ace’s Hardware also have various worker ownership structures, but haven’t fervently incorporated that mission into their national marketing strategy. There seems to be a reluctance of some cooperatives, especially major national brands, to display alignment with ideologies that could be deemed so egalitarian that they’re socialist. They also want to avoid being perceived as a threat to the bottom line of the entrenched shareholder owned corporations. In contrast the successful Mondragon Cooperative network within the Basque region of France takes a zealous approach to policy advocacy by regularly engaging in political thought and publicly promoting the democratic prosperity that their cooperative model generates (Wolff, R. 2012). Although American cooperative business and associations do have policy advocacy functions they have not earned enough of a foothold in America’s political consciousness to earn them the recognition or support they have potential to receive.
A lack of importance on advocacy has stalled any progress for the cooperative movement for decades. The most significant policy changes over the last 50 years have been advanced by the U.S Federation of Workers Cooperatives which was founded in 2004. This association has promoted the cooperative agenda through a bi-partisan Congressional Cooperative Business Caucus and the Interagency Workinggroup on Cooperative Development which were only founded in 2015. The nonprofit federation directly collaborates with federal politicians to align the efforts of the U.S. Small Business Administration, Department of Labor, Department of Commerce, and IRS to design policies to explicitly support cooperatives. One example of a hurdle that still exists is the IRS’s inability to determine what constitutes a cooperative enterprise and therefore what financial support and taxation those enterprises can access. The Main Street Employee Ownership act passed the U.S. congress in 2018 and directed the Small Business Administration to provide education, outreach, reporting, and better loan access to employee owned businesses (Wolff, R. 2012). This was perhaps the most substantial and specific support of worker cooperatives in a century, creating an incredible opportunity for cooperatives to elevate their interwoven economic, social and political ideologies.
One method for raising awareness of cooperative concepts is to collaborate with academics to develop educational materials on cooperatives for all levels of education. A range of resources can be designed for both introductory economics courses and university postgraduate business studies. Programming can contain a variety of themes including the history of the labor movements struggles for social change, the ideology of cooperatives and unions, how they generate democracy and communal benefits as compared to privately owned corporations, and the practical strategies for starting or operating a cooperative. These tenets of cooperative models can be instituted into business education across the country. This enlightenment can elevate the consciousness of the next generation who can acknowledge the merits of an inherently more democratic and regenerative economic system.
To achieve any of these reformations we need a major enlightenment of our cultural consciousness that can create space for imagining alternative futures that are more democratic, sustainable and equitable than the ones we are currently experiencing. We have the opportunity to illustrate an altruistic vision that can be attained if we choose to pivot our social values, economic structures, and political leaders. The importance of the conscious choice towards sustainability and cooperative systems can not be lost in this endeavor. The case must be presented and supported by a diverse range of individuals who have varying degrees of clout amongst existing social and economic and political circles. Principled criticism of our current system and logical merits of an optimal cooperative system can build the necessary momentum to sustain a movement that can overtake the existing exploitation mentalities that we operate under. Beyond the component of social awareness is the need for cooperative associations to form a comprehensive strategic plan that can leverage the interlocking network of cooperative associations, enterprises, and labor unions to orchestrate a synergized advocacy that can pressure our political officials to foster a more cooperative economy and society.
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