Co-operatives

“Founded on the principles of private initiative, entrepreneurship and self-employment, underpinned by the values of democracy, equality and solidarity, the co-operative movement can help pave the way to a more just and inclusive economic order.” - Kofi Annan

A co-operative (often shortened to co-op or coop) is a business owned and run by and for its members. The definition, principles and values of co-operatives are laid out by the International Co-operative Alliance (ICA).

A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Self-help, self-responsibility, democracy, equality, equity and solidarity.

In 1844 in England, the Rochdale Pioneers founded a consumer co-op that started the modern co-operative movement. They produced a set of co-operative principles that have been amended over time, and now form the basis of the ICA’s ‘Statement of Co-operative Identity’. The seven principles are:

• voluntary and open membership
• democratic member control
• member economic participation
• autonomy and independence
• education, training and information
• co-operation among co-operatives
• concern for community

There are three main categories of co-operative, with various sub-groups:

1. worker co-ops: owned by employees
2. consumer co-ops: owned by customers (housing co-ops, credit unions, food purchasing co-ops and social centres/clubs are sub-categories of consumer co-op)
3. producer (or marketing) co-ops: owned by independent producers (farmers, for example) to market their produce

'Multi-stakeholder co-ops' are hybrids that can bind together different interest groups in one co-op - such as workers, consumers, investors etc. Often, different stakeholders in a co-op have different objectives. A good example is a credit union, where borrowers want low interest rates and savers want higher interest rates. A multi-stakeholder co-op can ensure that different viewpoints are taken into consideration. The Ecological Land Co-op is a multi-stakeholder co-op in which 50% of voting rights are held by ecological land managers, 25% by investors and 25% by staff and volunteers.

Platform co-ops are online marketplaces that are owned and controlled by their members, and are formalised into co-operatives.

Fire the boss.

Worker co-ops are not just employee-owned businesses – they are democratically managed by their workers. The John Lewis Partnership (including Waitrose) is a well-known employee-owned business. Employees either own shares in the company, or in a trust of some kind, which owns shares in the company (maybe all of them), and shares are not publicly traded. When the company does well, employees benefit financially. Workers have much more control in co-ops – they either make decisions directly, or decide who’s going to make them. Employee-owned businesses are fellow-travellers, however, along with mutual societies, although neither are true co-ops, which subscribe to the principles and values above.

Structures of co-ops can vary enormously. In the UK, there is no one legal structure that co-ops have to adhere to. If an organisation’s constitution matches the above definition, values and principles, and the members consider themselves part of the co-operative movement, then they are. Elsewhere (e.g. Germany), there are much more specific definitions and legal structures.

What is a co-operative?

Co-ops are run democratically – i.e. one member / one vote; some raise capital by asking members to invest by buying shares; some choose to distribute profits to members, and some are in ‘common ownership’, and don’t.

There are over 2.6 million co-ops worldwide, with over 1 billion members and employing 250 million people.

Democracy for workers and consumers: members can influence the affairs of the co-op, and the decisions that are made. The smaller the co-op, the more influence an individual member has.

They can also provide more interesting work, as workers are involved (although they don’t have to be) in the business decisions affecting their jobs.

Consumer co-ops can allow people to access things (or more of things) more easily or more cheaply than they could alone. However, consumer co-ops vary enormously in their adherence to co-operative principles and values.

Some people hear the word co-operation and think that it represents the opposite of competition and a free market. This isn’t the case. Co-operatives are not about eliminating competition. A co-operative restaurant will be in competition with other restaurants, even other co-operative restaurants. Competition keeps standards high and prices reasonable. The opposite of competition is not co-operation, it's monopoly. Currently, the economy is tending towards monopoly – multinational corporations dominate most sectors, destroying both the free market and competition.

And here are a few other things they don’t do: suck money out of our communities to pay shareholders; concentrate wealth in very few hands; avoid taxes, so that the rest of us have to pay more; or employ sweatshop labour.

Unicorn Grocery in Manchester. Worker co-op; everyone gets paid the same; they own 21 acres of land just outside Manchester on which they grow a lot of the food they sell; fantastic produce and information boards; creche; they have no intention of having more than one shop, but they provide a ‘Grow a Grocery’ guide to help others set up a similar co-op grocery in their own town.

Compared to the commons, co-ops may be less able to challenge the status quo, for the following reasons:

• They don't have strong enough asset locks.  The Co-op Bank is no longer a co-op. It’s owned by various hedge funds and asset management companies. Although Co-op Energy is still owned by Midcounties Co-op, its energy supply and billing is run by Octopus Energy.
• They have to go into debt to bring infrastructure into co-operative ownership; for example, to buy housing stock, housing co-ops have to obtain mortgages from, go into debt with and pay compound interest to corporate financial institutions – the kinds of institutions that co-ops were designed to replace.
• Principle 6 (of the international co-operative principles) is co-operation between co-operatives, which has happened, but (apart from in places like the Basque Country and Emilia Romagna) not to the extent of federation to present a realistic alternative.
• more here.

Use your local co-ops. See here. There are different consumer societies, of which the Co-op Group is the largest. With the Co-op Group and a lot of the larger co-ops, dividends paid to members are in direct proportion to the amount of money spent. This tends to benefit those with the most money, and is therefore not ideal. Also, co-operative principles are often forgotten in large co-ops. A good guide is to ask the staff. Are they members? Do they know much about the co-op, or about co-operative principles and values?

Switch to a credit union for local savings and loans.

Switch to the Phone Co-op for your broadband, landlines and mobile (it’s not possible to get phones themselves from a co-op, but they’re coming).

At the moment, there’s no way to get your electricity and gas directly from a co-op, but although Co-op Energy is no longer a co-op, they purchase their energy directly from community energy groups. At some point, it may be possible to purchase electricity directly from a local community energy scheme, but it’s not possible yet. However, Co-op Energy purchases electricity from community energy schemes, and you can choose the type of renewable energy you want (wind, solar, hydro etc.) and from where. Switching couldn’t be simpler – just sign up online or by phone. You’ll receive a welcome letter, and then after a ‘cooling off’ period to give you time to change your mind, Co-op Energy will contact your current (no pun intended) supplier and do everything for you. They arrange a switchover date – usually 4-6 weeks from signing up. You provide a meter reading on that date, receive a final bill from your previous supplier, and you’re switched to co-operative energy. Sign up here.

Plus, closely related to co-ops, you can shop with John Lewis / Waitrose, and switch your mortgage and savings account (and current account, in some cases) to a building society.

You can also join the Worker Co-op Solidarity Fund. Individuals can join for a pound a week, and a fund builds up to promote the co-operative movement.

Loomio is a tool developed by the Enspiral co-operative, that helps groups make decisions collectively.

If you’d like to set up a co-op, there are various places you can go for help. Co-operatives UK have lots of resources, including their business support service, the Hive.

There's a step-by-step guide to starting a co-op, which is the best place to start.

There are co-op development agencies all over the country – search online. They have advisors to help you set up. They charge, but there’s usually a free first consultation, and they often look for funding to pay for their time. The Hive have a fund that pays for co-op development advice. You can apply if your business idea is reasonably well-developed.

If you have a local, high-profile co-op, it might be worth contacting them to let them know that you have an idea for a co-op, and to ask if there might be anyone you can go along and chat with. Most people in the co-op movement would like there to be more co-ops, so you might find someone happy to help.

Platform 6 have produced a huge list of useful co-operative development resources.

Existing businesses can become co-ops. The organisations mentioned above can help you with this too. The process has to be open and voluntary – i.e. no-one should suddenly find themselves part of a co-op that they weren’t consulted about forming.

A co-op in which all workers or consumers are members is called a fully-mutual co-op. However, co-ops can have workers or consumers who are not members. Some people may not want the responsibility of co-running a co-op, but if the business converts, they can keep their job without being a member. In that case, they won’t have a say in the decisions that affect their job.

• UK Co-operative Directory
• Co-operative World Map
• Step-by-step guide to starting a co-op

Thanks to Cath Muller of Radical Routes for information.

Mark Simmonds works at Co-op Culture, offering advice and support for co-operatives and co-op start-ups. He's a a founder member of the Fox and Goose Co-operative Pub, Pennine Community Power, Platform 6 Development Co-operative and currently occupies the co-operative development seat on the board of Co-operatives UK.

Date on Lowimpact:2017-06-22