CONTENTS
SUMMARY
NON-COOPERATIVE INSTITUTIONS
COOPERATIVE INSTITUTIONS
SUMMARY
While “coercion” can feel like a big word, it is present in many of our relationships, even those we may conceive of as friendly or cooperative. In any dynamic in which there is a power imbalance, there is nearly always some element of coercion – no matter the best intentions of those involved. Some such relationships can be managed for general benefit while successfully avoiding any ill effects; some examples of effective management of imbalanced relationships are included below and in the key issue section “Relationships of Solidarity”. However, managing power dynamics is a tricky balancing act of trust and integrity. As a result, how these relationships are to be perceived and engaged with is necessarily different from those relationships in which power is clearly shared, values are aligned, and there is faith in all parties.
NON-COOPERATIVE INSTITUTIONS
Interacting at some time or another with a regulatory entity, profit-maximizing vendor or supplier, financier, or other institution that does not adhere to the Cooperative Identity or any comparable philosophy is inevitable for most cooperatives. “Virtually all cooperatives must function in the marketplace” (MacPherson, 1998, p233). In this context, the marketplace is the network of capitalist exchange monitored and moderated by the nation-state system. Government and conventional banks are central to maintaining the world’s predominant economic marketplace and are, by far, the most notable non-cooperative institutions that most cooperatives must interact with at sometime during their start-up and operation. Navigating these relationships is more challenging for cooperatives than conventional enterprises, as they can result in mandating the adoption of structures or practices that can degrade the Cooperative Identity.
Government
In the words of cooperative scholar A F Laidlaw, “The strong embrace of governments ends with the kiss of death for cooperatives” (1980, 69). Nearly all cooperatives in the world exist within a legal jurisdiction that technically requires for them to register with the government and - subsequently - be monitored and regulated (e.g. taxed) in perpetuity. Many cooperatives; however, choose not to register or incorporate for various reasons, two such main responses being either a prohibitive level of bureaucracy involved, or an ethic of “non-participation” in exploitative systems. The latter reason speaks to the “master’s tools” concept, which - when applied to the cooperative context - implies that a cooperative commonwealth or society cannot be built using the tools of capitalism or empire. While engagement with a government entity may not seem to degrade Cooperative Identity - some examples of which are outlined in “Relationships of Solidarity,” it can be a slippery slope. The most common way in which governmental relationships can have a cumulative degrading effect are, first, by requiring the adoption of a governance structure incongruent with the cooperative’s membership, culture, and activities. Secondly, an issue that is most applicable in countries with explicitly repressive regimes, governments degrade the Cooperative Identity by threatening audits or censure for conducting activities or speaking on issues considered to threaten the government’s authority or reputation. An example of a more severe audit is when a government seeks to stifle ideological challenges that paint them as oppressive, repressive, or immoral (e.g. anti-State viewpoints) by threatening the closure of the cooperative or even punishment for individuals. More common and less extreme audits can take the form of a local municipality aggressively pursuing minor code infractions by a cooperative because they deem it undesirable (e.g. student housing cooperatives having more residents than is allowed by zoning codes, but are compliant with building safety and health codes).
Financial Relationships
Just as with government entities, relationships with financiers – individual or institutional – can be key examples of the “master’s tools” for cooperatives. Not all financial institutions themselves are inherently coercive, as governments are in their constant assertion of authority and right to violence; however financial institutions and individual funders can structure relationships with recipient cooperatives coercively. Financial relationships can be broadly broken down into two categories - loans or credits that must be repaid (sometimes with interest) and grants that do not need to be repaid. Most financial relationships are moderated by agreements or contracts between the two parties that establish a meaningful level of “control” and “ownership” of the cooperative by an outside party (i.e. the lender or grantmaker). Funders may condition their financial participation by dictating how the money is to be spent and requiring it be tracked and reported a certain way, no matter the needs or capacities of the cooperative. Perhaps unsurprisingly, most such funders are “capitalist realists,” capitalists, or others who seek to maintain the status quo, which gives greater meaning to the sentiment and title of a powerful collection of essays on the non-profit industrial complex, “the revolution will not be funded.”1 While a funder may not have a vote in the cooperative, voting is not the most significant nor most powerful expression of democracy and self-determination: “the democratic character of cooperatives appears and must be tested in many ways besides membership meetings [...] democracy [can be embedded] in both structure and operation” (Laidlaw, 1980, 36-37).2 Financial relationships that mandate control of the fundee by the funder is standard practice in the public and private sectors, across grant-making and financing. In fact, in most modern cultures throughout the world, people consider it ethical and reasonable that someone giving money to someone else gets to dictate how it is to be used, in defiance of the logic that the recipient is mostly likely to be successful if they are able to manage the money as they are familiar and practiced, as well as the logic that the recipient is both the best assessor of their own needs and how to use money to meet those needs.
- Ineligibility: Many financiers refuse to provide loans or credit to cooperatives, often by claiming insufficient knowledge of the model (i.e. they don’t know “how” to fund the cooperative) or simply not recognizing the model as legitimate (i.e. since the organization does not prioritize profit above all else, they do not think it is viable). Most frequently, financiers providing loans or other forms of credit will compel an individual within the cooperative to sign a “personal guarantee” in order for the cooperative to be considered eligible. A personal guarantee places all of the cooperative’s liability on the signing individual, meaning that the individual would be personally responsible for paying back any money borrowed, rather than allowing the cooperative to be liable as an organization. This is in stark contrast to how conventional corporations, in many jurisdictions internationally, are granted “personhood” which, in turn, serves to protect executives and Board Directors from liability for mismanagement or malfeasance within the corporation - which is often perpetrated by these same individuals (read more about this in the section on “Corporatism” in “Words Mean Things''). This, then, is contradictory in the context of cooperative enterprises because it obfuscates the real reason why financiers refuse to give to cooperatives – due to a cooperative’s ownership and governance structure, as well as its non-compliance with capitalist frameworks, it is harder for the financier to exercise direct control. Essentially, the cooperative model is inherently incongruent with how most conventional funding relationships are structured, as it inherently rejects and resists coercion by outside parties.
- 1 The Revolution Will Not Be Funded: Beyond the Non-Profit Industrial Complex. Cambridge, Mass: South End Press, 2007.
- 2 In the course of Laidlaw’s discussion of cooperative democracy, he lays out eighteen distinct ways in which democratic character can be assessed in cooperatives beyond membership voting. These reasons range from gender representation in all roles of the cooperatives, considerations for subsidiary cooperatives or initiatives, transparency of information, a rejection of the “expert” paradigm, and other powerful and accessible measures.
COOPERATIVE INSTITUTIONS
Despite relationships between cooperatives and cooperators seeming to be safely assumed to be ones of solidarity, there are times when these dynamics or the cooperatives themselves have been corrupted through uncooperative practices or behaviors. Many times, the corrupting practices or behaviors are not undertaken out of malice, rather they are acted upon with good intentions but via a perspective on cooperativism that is uninformed or unexamined. Many of these missteps can be understood through the framework of “capitalist realism,” outlined in the “Words Mean Things” section. Those relationships coopyouth have with cooperative institutions and elders that are corrupted to the point of coercion typically involve questions of governance and capital, just as the most common coercive relationships with non-cooperative entities revolve around those same issues of governance and capital.