Month: June 2014

Co-ops Explained in Sixty Seconds

A co-op can be difficult to explain. But KingBird Content has ventured to do it in sixty seconds. See the video below for the most essential aspects of co-operatives. Information collected in this video comes from the ICA definition of a co-op, and the ideas of Janelle Orsi, Marjorie Kelly, and Stacey Cordeiro. (more…)

Elinor Ostrom for Worker Co-operatives

In my previous CommonBound conference blog entry I described the workshop I attended with Marjorie Kelly and Janelle Orsi. I wanted to also write about their idea of applying Elinor Ostrom‘s “design principles” of stable local common pool resource management (CPR) to the governance of co-ops. Ostrom won a Nobel prize in 2009 for economics. Kelly and Orsi gave a handout on her principles, and how these principles can apply to co-ops. I’ve taken directly from the handout below. CPR is about common resources, therefore, the concepts don’t translate directly to worker co-ops, but still offer interesting possibilities for governance design. Workers as stakeholders correlate in this instance as “resource appropriators” in an enterprise. In bold font is the principle from Ostrom, also found on Ostrom’s Wikipedia page. Following each principle is a suggested application to co-ops from Kelly and Orsi.

1. Clearly defined boundaries (effective exclusion of external un-entitled parties). How can a worker co-op clearly define who is a member and how to become a member? What should be the barriers to entry? How can members resign or be expelled?

2. Rule regarding the appropriation and provision of common resources that are adapted to local conditions. Adopt rules about how much people are entitled to work and about ideal working conditions? Adopt rules that prevent some workers from capitalizing off the labor of others? How will this vary based on local conditions, i.e., the type of business?

3. Collective-choice arrangements that allow most resource appropriators to participate in the decision-making process. How can worker co-ops enable all workers to participate in the decision-making process? Collective governance? Distributed governance structures? Holacracy?

4. Effective monitoring by monitors who are part of or accountable to the appropriators. Designate someone who makes sure that the rules are being followed, that the co-op is in good health, and that the values of the co-op are being upheld?

5. A scale of graduated sanctions for resource appropriators who violate community rules. What could sanctions look like in the context of a worker co-op? Cutting hours? Reducing decision-making power temporarily? Put someone on toilet-cleaning duty?

6. Mechanisms of conflict resolution that are cheap and of easy access. How can a worker co-op make conflict resolution cheap and easy? Internal conflict resolution training? Internal conflict resolution team? Agreements with other cooperatives to mediate one another’s conflicts? Agreements with local community mediation centers?

7. Self-determination of the community recognized by higher-level authorities. Self-determination partially means that outside investors can’t control the co-op. Self-determination is limited by government-imposed regulations dictating the ways that co-ops can structure relationships between employer/employee, investor/business, etc.

8. In the case of large common-pool resources, organization in the form of multiple layers of nested enterprises, with small local CPRs at the base level. Create semi-autonomous circles of management within a larger co-operative? Nest co-operatives within larger networks of co-operatives? Co-ops of co-ops?

A Conference for a New Economy (and Co-ops)

June 6th through 8th I attended CommonBound, a conference to consider directions for a new economy, organized by the New Economy Coalition (NEC). A significant part of the future outlook is co-operatives.

One workshop I was lucky enough to attend was run by Marjorie Kelly and Janelle Orsi on social enterprises. Marjorie Kelly has been a pioneering writer on ownership; I noticed that her concepts of generative and extractive economies, were used widely elsewhere at this conference and appear to be integrated into the narrative for economic change. Janelle Orsi is an attorney and writer, well-known for her work based on sustainability, equity, and sharing. Their workshop demonstrated that local interests can suffer without local investment: if Wall Street controls a company, is there any incentive to invest in local communities? It’s a question that came up again elsewhere at the conference. How can co-ops afford to support business ideas like serving less profitable clientele and communities? The answer: democratic ownership and decision-making. Such an ownership structure allows for investment of surplus income that may not be strictly for profit. Equal Exchange was mentioned as a leader in this area with the ability to focus resources on ethical food production that might be a financial risk, e.g., supporting banana farmers.

Governance makes it happen. Governance is the management structure of an organization, also known as bylaws. The importance of governance was a guiding message from the Kelly/Orsi workshop. The composition of governance is critical and should be set up with careful consideration. But it can, and will most likely, be difficult work. A later workshop described the work involved in converting to a co-op that took 18 months for the landscape company, A Yard and a Half Landscaping, located in Waltham Massachusetts. That same workshop featured Cero a new Boston-based co-op that will collect restaurant waste and has wrangled with start up challenges for over a year.

Co-ops come in all shapes and sizes, but it is the governance that defines their organizational principles. Stacey Cordeiro of the Boston Center for Community Ownership outlined this in a workshop on co-ops. As Janelle Orsi described, a co-op can start to be defined by a tax status provided by the U.S. government called “Subchapter T.” It will provide a co-op with a tax structure supplied by the IRS, and start to provide bylaws for its management. Cordeiro outlined three components of Subchapter T as: 1. Subordination of capital. 2. One member, one vote, and 3. Operating at cost.

Co-ops are part of a movement to include all walks of life. Melissa Hoover and Joe Rinehart from the US Federation of Worker Cooperatives presented and discussed diversity in co-op development, and the importance of a venue for multi-language interaction. Co-ops can be all-inclusive and need to consider new approaches to inclusion. The CommonBound conference made an effort and was successful in bringing a diverse group of people together. NEC generously and wisely offered scholarships which helped me to attend the conference.

Co-ops are helping to change the world, but like any other part of change, they are hard work. Designing the governance of a co-op is a good example. Co-ops compel people to work together democratically to form and then run a co-op — the development of a democracy is work, and then the democracy it creates is work. A contradiction perhaps, but I don’t think anyone wants a work-free future. We’re looking for an inclusive future where we’re all doing work we love.