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By Ron Gaydos
Editor’s note: Regular readers of The Homepage may know that a coalition of Hazelwood community groups is working to open a cooperative grocery store on the 4800 block of Second Avenue. This article is the second in a series exploring the seven principles of cooperative businesses. The first was published in the September issue.
In the late 1930s, Spanish dictator Francisco Franco’s repression of Basque people inflicted desperate times in the Basque Country. So in 1956, a priest named Jose Arizmendi organized a cooperative to help people learn skills and make things they needed. Their first product was a paraffin heater for cooking.
Fast forward to 2016 and the Mondragon Cooperatives, which Arizmendi founded, is a $12 billion network of 120 cooperatives employing over 70,000 workers. Workers elect their management and vote in the major decisions of each cooperative, as well as in the seven governing councils in the Mondragon Corporation.
As Mondragon General Council President Inigo Ucin puts it, Mondragon is “a business model with a difference, based on inter-company cooperation, people playing a leading role and commitment to developing our environment. It’s a fair, equitable and supportive proposal, and we sum it up in our slogan ‘Humanity at Work.’”
Cooperatives are business enterprises managed and led by all of their workers or members rather than through a top-down organizational structure. There is no “boss” whose word is final in a cooperative, but they do have rules, policies and procedures put in place by members. These ensure smooth operations. Any efficient business needs predictable and fair rules, and cooperatives are more likely to have them.
This article explores democratic member control, one of the fundamental cooperative principles, and what it means to workers and consumers. Here are all seven of the fundamental cooperative principles:
Voluntary and open membership
Democratic member control
Members’ economic participation
Autonomous and independent operation
Education, training and open information
Cooperation among cooperatives
Concern for community
Democratic decision-making is one of the most important pieces of the cooperative puzzle and one of the features that most clearly distinguishes cooperatives from conventional, hierarchical businesses.
Early examples in the United States include a mutual aid agency for firefighting, utopian communities and a labor organization.
Benjamin Franklin co-founded the Union Fire Company in 1736 as one of the first volunteer fire departments in the United States. The members wrote the rules for working together.
The nine Harmonist communities in Ohio, Pennsylvania and New York state were productive farming and craft-making communities from the early 1800s into the 20th century. They were democratically run without hierarchy.
In Philadelphia, the Knights of Labor started as a secret society of tailors finding ways to improve their working conditions. Eventually they ended the secrecy and publicly fought for the eight-hour work day, abolition of child labor and equal pay for equal work. By 1886 the Knights of Labor consisted of 2,600 cooperative businesses with 800,000 production worker members. They gave all their members a vote on major decisions concerning their organization.
In the late 19th and early 20th centuries there were successful cooperative manufacturing plants, department stores, and even farming communities like Norvelt and PennCraft here in the Pittsburgh region. But conventional corporations were taking a dominant role in the life and welfare of their host communities. Many people got used to being taken care of by Big Steel, Big Coal or Big Oil.
As the buying and selling of stores and factories became more important than the production of goods, corporations stepped away from local communities. Operations became increasingly controlled from remote headquarters. Paternalistic, authoritarian management philosophies became the norm, so most of us have to relearn the democratic process for decision-making at work.
The Fourth River Workers Guild in Pittsburgh is a modern business that takes democratic decision making seriously. Fourth River is a six-member construction and permaculture landscaping company that practices a consent-based governing process. They are committed to arriving at decisions that every member can live and work with. Member Dave Stokes once said, “If we have an idea, we give it to the group and let everyone accept, reject or work with it.” (Watch a video about Fourth River Workers Guild at https://tinyurl.com/fourthrivervideo.)
Fourth River and Mondragon are good modern examples of democratic businesses. Each member has responsibility for their own production and an interest in the production of the whole. There is an incentive to be creative, efficient and competent in many aspects of the business. Those who have a stake in the results are the ones creating those results.
This helps them achieve the core goals of any business: profitability and stability. Members determine their own working conditions. Members own the company and determine what to do with profits. Democratic member control gives cooperative members a strong sense of belonging. Ownership and leadership changes come from within and only when necessary for the good of the cooperative and its members.
The triple-bottom-line approach — business for people, planet, and profit — keeps the company focused on its business, and locally oriented and responsive, which makes the community more resilient.
We’ve let our collective knowledge of democratic governance in business fade into history, but it’s coming back. We have a lot to relearn, but it’s worth it to today’s cooperative members.
Ron Gaydos is the cooperative development director of the Keystone Development Center and a co-founder of the Pittsburgh Chamber of Cooperatives.