Are Cooperatives Socialist?
How we can all benefit from economic democracy
The basic concept of a cooperative where the ownership is held by the employees and/or consumers sounds like a form of socialism. But is it really? There are some unique aspects of how cooperatives fit into a world where modern economics is mainly fueled by capitalism and you might be surprised to find cooperatives, born in socialism and economic democracy can work well within capitalism.
A cooperative is a special form of corporation that places ownership and/or control of the corporation in the hands of the employees or patrons of the corporation. These cooperatives can be oriented as a worker, consumer, producer, or hybrid co-ops. REI is probably one of the best-known hybrid coops working in the consumer retail space but food coops are also very popular.
Roots
The history of cooperatives goes back to Scottish weavers in 1761 who banded together to reduce the cost of food. Their efforts expanded to include education and improved working hours as well.
The Industrial Revolution and the rise of Capitalism put a great deal of pressure on the working classes. Artisan skills began to be replaced with rote factory work and working conditions were declining spawning philosophical thought about the ideals of liberal democracy, Socialism, and the cooperative movement.
In 1844 a group of artisans and tradespeople founded The Rochdale Society of Equitable Pioneers. The group was quite successful and developed the Rochdale Principles which continue to guide many cooperatives today. The intellectual conversations of the era led also to Karl Marx and Friedrich Engels publishing their Communist Manifesto in 1848.
The goals set forth by the Rochdale Society were:
- The establishment of a store.
- Creation of residences.
- Engage in manufacturing and employ for members in need.
- Procure land for agricultural employment of members.
- Put efforts into production, distribution, education, and government for self-sufficiency and assisting other cooperatives.
- Promoting sobriety.
By the end of the century, cooperatives had spread over the entirety of the United Kingdom.
Economic Democracy
Cooperatives are democratic institutions where each member has one vote in board of director elections and matters that qualify for a full membership vote. With other corporations, the number of votes a shareholder gets is based on the number of shares they own.
Though the concept of “by the people for the people” is common to both the cooperative movement and socialism, there are key differences. Socialism strives to be the basis of the governing state while cooperatives work to apply democratic principles in any economic system that is not pure Collectivism and allows private ownership. The simple truth is, cooperatives are just a form of business ownership in a capitalist economic system.
It is important to note that cooperatives involve much more than groceries of camping gear. Agricultural cooperatives, like Sunkist and Blue Diamond bring the farmer closer to the consumer. While a third of electricity production and delivery in the US is from utility cooperatives. Credit unions are also a form of cooperative.
Most modern cooperatives are based on the following seven pillars (https://ncbaclusa.coop/resources/7-cooperative-principles/).
1. VOLUNTARY & OPEN MEMBERSHIP — Anyone can join a co-op — they don’t discriminate based on gender, social, racial, political, or religious factors.
2. DEMOCRATIC MEMBER CONTROL — Members control their business by deciding how it’s run and who leads it.
3. MEMBERS’ ECONOMIC PARTICIPATION — All co-op members invest in their cooperative. This means people, not shareholders, benefit from a co-op’s profits.
4. AUTONOMY & INDEPENDENCE — When making business deals or raising money, co-ops never compromise their autonomy or democratic member control.
5. EDUCATION, TRAINING AND INFORMATION — Co-ops provide education, training, and information so their members can contribute effectively to the success of their co-op.
6. COOPERATION AMONG COOPERATIVES — Co-ops believe working together is the best strategy to empower their members and build a stronger co-op economy.
7. CONCERN FOR COMMUNITY — Co-ops are community-minded. They contribute to the sustainable development of their communities by sourcing and investing locally.
Better for you, better for all
Because cooperatives use Socialist ideals and economic democracy while remaining competitive in a capitalist economy, member/owners stand to benefit in almost every way.
- Profits are used to reduce costs to members.
- Retail coops typically give back 2 to 3 times more into the community than their corporate counterparts.
- Workers are often owners and thus have a stake in the health of the business.
- Cooperation among cooperatives allows competitiveness with larger corporations with strong buying power.
- Local economies benefit from a high level of local spending.
My own experience with cooperatives started with my grandfather’s apple orchard. The stacks of dusty apple boxes stamped with Sebastopol Cooperative Cannery waiting for the harvest were often raided for treehouse lumber. The California Teachers Credit Union where my parents banked and I got my first checking account was also a type of cooperative. In college, I became a member of REI when I purchased a sleeping bag, thinking at the time that a coop just a good loyalty program.
It was not until 2020 I gained a deeper understanding of how cooperatives make the world a better place by volunteering on the board of the local food coop. The democratic principles and socialist ideals make it the most “woke” grocery store in the region. Employees and customers alike are active in bringing economic equality, health education, and wholesome food to the community. I encourage you to seek out your local coop options for groceries, retail shopping, banking, and even services.
