Co-operative economics is a field of economics that incorporates co-operative studies and political economy toward the study and management of co-operatives.
Co-operative federalism versus co-operative individualism
A major historical debate in co-operative economics has been between co-operative federalism and co-operative individualism. In an Owenite village of cooperation or a commune,
the residents would be both the producers and consumers of its
products. However, for co-operative enterprise other than communes, the
producers and consumers of its products are two different groups of
people, and usually only one of these groups is given the status of
members (or co-owners).
We can define two different modes of co-operative business enterprise: consumers' cooperative,
in which the consumers of a co-operative's goods and services are
defined as its members (including retail food co-operatives, credit
unions, etc.), and worker cooperatives
and producer co-operatives. In worker cooperatives, the producers or
workers producing or marketing goods and services are organized into a
co-op effort and are its members. Worker cooperatives are owned by their
workers, for example by the owners of the farm, the cheese production,
etc., wherever production is taking place. These farms are not required,
and are rarely in actuality, owned by workers. (Some consider worker
cooperatives, which are owned and run exclusively by their worker owners
as a third class, others view this as part of the producer category.)
This in turn led to a debate between those who support consumer co-operatives (known as the Co-operative Federalists) and those who favor worker co-operatives (pejoratively labelled ‘Individualist' co-operativists by the Federalists).
Co-operative federalism
Co-operative
Federalism is the school of thought favouring consumer co-operative
societies. Historically, its proponents have included JTW Mitchell and Charles Gide, as well as Paul Lambart and Beatrice Webb. The co-operative federalists argue that consumers should form co-operative wholesale societies (Co-operative Federations in which all members are co-operators, the best historical example of which being CWS in the United Kingdom),
and that these co-operative wholesale societies should undertake
purchasing farms or factories. They argue that profits (or surpluses)
from these co-operative wholesale societies should be paid as dividends to the member co-operators, rather than to their workers.
Co-operative Individualism
Co-operative
Individualism is the school of thought favouring workers'
co-operatives. The most notable proponents of workers' co-operatives
being, in Britain, the Christian Socialists, and later writers like Joseph Reeves, who put this forth as a path to State Socialism. Where the Co-operative Federalists argue for federations in which consumer co-operators federate, and receive the monetary dividends, rather, in co-operative wholesale societies the profits (or surpluses) would be paid as dividends to their workers. The Mondragón Co-operatives
are an economic model commonly cited by Co-operative Individualists,
and a lot of the Co-operative Individualist literature deals with these
societies. This one in Spain has drawn so much attention because in 2010
it was the seventh-largest corporation. It consists of about 250
different worker cooperative businesses. The business model they provide
includes "extensive integration and solidarity with employees", worker
involvement in policy and committees, a "transparent" wage system, and
of course "full practice of democratic control". These two schools of thought are not necessarily in opposition, and that hybrids of the two positions are possible.
James Warbasse's work, and more recently Johnston Birchall's,
provide perspectives on the breadth of co-operative development
nationally and internationally. Benjamin Ward provided a formal
treatment to begin an evaluation of "market syndicalism." Jaroslav
Vanek wrote a comprehensive work in an attempt to address cooperativism
in economic terms and a "labor-managed economy." David Ellerman began by considering legal philosophic aspects of co-operatives, developing the "labor theory of property."
In 2007 he used the classical economic premise in formulating his
argument deconstructing the myth of capital rights to ownership.
Anna Milford has constructed a detailed theoretical examination of
co-operatives in controlled buyer markets (monopsony), and the
implications for Fair Trade strategies.
Other schools
Retailers' cooperatives
In addition to customer vs. worker ownership, retailers' cooperatives also utilize organizations of already constituted corporations as collective owners of the produce.
Socialism and left-wing anarchism
Socialists and left-anarchists, such as anarcho-communists and anarcho-syndicalists,
view society as one big cooperative, and feel that goods produced by
all should be distributed equitably to all members of the society, not
necessarily through a market. All the members of a society are
considered to be both producers and consumers. State socialists tend to favor government administration of the economy, while left-anarchists and libertarian socialists favor non-governmental coordination, either locally, or through labor unions and worker cooperatives.
Although there is some debate as Bakunin and the collectivists favored
market distribution using currency, collectivizing production, not
consumption. Left libertarians collectivize neither but define their
leftness as inalienable rights to the commons, not collective ownership
of it, thus rejecting Lockean homesteading.
Utopian socialists feel socialism can be achieved without class struggle and that cooperatives should only include those who voluntarily choose to participate in them. Some participants in the kibbutz movement and other intentional communities fall into this category.
Co-operative commonwealth
In some Co-operative economics literature, the aim is the achievement of a Co-operative Commonwealth; a society based on cooperative and socialist
principles. Co-operative economists - Federalist, Individualist, and
otherwise - have presented the extension of their economic model to its
natural limits as a goal.
This ideal was widely supported in early-twentieth century U.S.
and Canadian leftist circles. This ideal, and the language behind it,
were central to the formation of the Co-operative Commonwealth Federation party in 1932, which became Canada's largest left-wing political party, and continues to this day as the New Democratic Party. They were also important to the economic principles of the Farmer-Labor Party of the United States, particularly in the FLP's Minnesota affiliate,
where advocacy for a Co-operative Commonwealth formed the central theme
of the Party's platform from 1934, until the Minnesota FLP merged with
the state Democratic Party to form the Democratic–Farmer–Labor Party in 1944.
Co-operative Commonwealth ideas were also developed in Great Britain and Ireland from the 1880s by William Morris, which also inspired the guild socialist movement for associative democracy from 1906 right through the 1920s. Guild socialist thinkers included Bertrand Russell, R.H. Tawney and G.D.H. Cole.
Employee ownership
Some economists have argued that economic democracy could be achieved by combining employee ownership on a national scale (including worker cooperatives) within a free market
apparatus. Tom Winters argues that "as with the free market more
generally, it is not free trade itself that creates inequality, it’s how
free trade is used, who benefits from it and who does not."
Cooperative microeconomics
According
to Hervé Moulin, cooperation from a game-theoretic point of view ("in
the economic tradition") is the mutual assistance between egoists. He
distinguishes three modes of such cooperation, which are easily
remembered using the (incomplete) motto of the French Revolution:
- liberty: decentralised behaviour, where the collective outcome results from the strategic decisions of selfish agents;
- equality: arbitration (by a mechanical formula or benevolent dictator) about actions on the basis of normative principles;
- brotherhood: direct agreement between agents after face-to-face bargaining.
These modes are present in every cooperative institution but their virtues are often logically incompatible.
