ALTERNATIVE CHOICES: COOPERATIVE ENTERPRISES
When there is little economic growth, there is high unemployment in Europe, the
USA, and all other capitalist countries in the G8/G20/G70. The International Labour Organisation reported today, Jan 22 2013, that there are 197,000,000 unemployed people across the world.
The EU Minister for Industry suggested in January 2013 that more and more individuals should start up their own businesses rather than depend on finding jobs with existing enterprises. It would be a good idea for governments to sponsor more groups to start up cooperative enterprises.
Given that joint stock corporations enrich their primary shareholding investors, [that is 11 million people out of 7 billion,] and their efforts exploit the resources of the earth to exhaustion, the only viable future is a cooperative economy.
An aspect of a cooperative economy is that enterprises are developed in the light of local needs. It is unlikely that their efforts will destroy the local environments and render their lives impossible!
Once the plan for a cooperative has been drawn up, the members must decide about funding. They need to determine how they are going to get the money required to operate their enterprise. Where is the money going to come from? Of course, some of the money will be generated by the donations of the members. Indeed, if the enterprise is small scale, this may be enough. Or as it develops, micro-finance credit will provide support. Any cooperative that utilizes machinery, trucks, workers, premises, sales, distribution, most of the funding will come from investors, banks, and credit unions as grants and loans in the form of new money. The initial costs of starting up a cooperative, or any enterprise for that matter, are far greater than can be supported by one person. The start up costs will be the same for a capitalist enterprise as for a cooperative. The fundamental, and significant, difference is that the one is controlled by shareholders, and the other is controlled by every member.
When new cooperative enterprises can be sponsored by governments and their agencies, the cooperators will have to apply for start-up help, funding, along with micro-finance and grant-aid, and low interest loans and trust funds. From the start, the cooperative members have to decide how to market the enterprise, and the format of the publicity, as well as who was going to write and design the application brochures or web-sites or videos for ‘YouTube’ or Vimeos. These marketing activities are best done by members
as the more money that is spent on outside experts, the higher the initial costs would be. Whenever possible it is important to utilize the resources of the cooperative. The brochures can be designed and developed by the cooperative team. But specialists like publishers and printers will have to be used at a cost. Of course, the printers could be a cooperative or part of the network of cooperatives.
It is worth remembering that the initial members will be experts in the services offered by the cooperative, skilled in retail or agricultural or social or financial or manufacturing activities which will form the basis of the co-op. As the cooperative expands, a wider range of members will take part including workers, customers, suppliers. It is essential that all cooperatives are organized as a cooperative democracy - one member, one vote. There are no shareholders forming boards of directors. There are members forming management committees.
It is important for all members to realize that cooperative enterprises are subject to specific legislation and financial regulation. All the members will have to become familiar with the laws relating to public liability, and the regulation of finances for cooperative enterprises.
Legally speaking, what is a cooperative? It is an organization that is legally owned and mutually controlled by those who make up the cooperative. Members are most often producers, consumers, or employees related to the enterprise. Cooperatives can exist in a variety of legal forms. They can be incorporated and limited by guarantee, shares, or partnerships, or they can be unincorporated. To be ‘incorporated’ the cooperative is registered as a legal entity with limited liability. If a company is ‘unincorporated’ it means that there is unlimited liability: that is, the owners are liable for the assets, debts and properties and products of the corporation. In some European countries, such as
Sweden and , cooperatives can be incorporated, limited companies or unincorporated associations. While in the Finland , state-specific laws govern the legal structure of cooperatives as either unincorporated structured limited liability companies, partnerships, or non-capital stock corporations or in the case of incorporated co-ops, the variations allow for varying degrees of return and amounts of control, most often based on members' participation in the co-op. United States
, in January 2012, Parliament introduced the new UK Coop Bill, aiming to rationalise all previous legislation in to a coherent system and to facilitate the creation of cooperatives in the future. Clearly, all members of a cooperative are required to become familiar with all these different laws relating to cooperative enterprises. It could be argued that a significant step would be to make the legal matters simpler! As it is at the moment, all cooperatives must be in contact with corporate lawyers. UK
‘Incorporation’ requires the cooperative corporation to specify how it will be organised.
While all members contribute initial funding as a membership fee, their power in the enterprise will not depend on their money donations but on their status as a member. One member, one vote.
It may be that there will be individual investors. But they will not be share-holders,they will be members of the cooperative.
In order to concur with the laws of incorporation, the cooperative management committee will organize the cooperative so that the members will have a clear picture of objectives, and procedures and purposes. The management structure should enable the enterprise to operate at the lowest costs, by using the skills of the members and linking with partners as part of a cooperative network. There is no place for a chief executive officer nor a board of directors. The important aspect of the cooperative is that it is run by the members in committee. What sort of members will there be? organisers, suppliers, managers, customers, workers, investors, lawyers, accountants. The workers and organizers cannot be expected to work for nothing. They will be paid a fee or a salary for their time, or wages and expenses, as agreed by the unions. Customer members will be subject to discounts according to how much they spend. Investors, along with all members, will receive a dividend each year linked to patronage, and profits.
Given that the profits are distributed to all members, rather than a handful of share-holders, no one member will become richer than any other members. It is not part of the ethos of the cooperative that the few benefit at the expense of the many. The enterprise will have a finance section which keeps a tally on revenue, payments, and dividends.
As I have mentioned before, small enterprises may not require complex support mechanisms. But medium to large corporations will certainly have to develop a business model, a management structure, and support mechanisms in order to function. Whatever their size, all cooperatives will have to accord with the legal demands.
All cooperatives will need the services of banks, not only to lend money, but also to provide retail services such as deposits, money transfers, credit cards, payments. It is recommended that cooperatives do not use commercial banks, but credit unions.
A Credit Union is a profit sharing, democratically run financial co-operative which offers convenient savings and low interest loans to its members. The members own and manage their credit union themselves. The three main aims of a Credit Union are:
- To encourage its members to save regularly.
- To provide loans to members at very low rates of interest.
- To provide members with help and support on managing their financial affairs (if required).
Commercial Banks, like Barclays, Lloyds, Santander, Morgan Stanley, Goldman Sachs are committed to investment schemes that are designed to make as much profit as possible for their shareholders. As we saw in 2008, when these banks put all their monies into speculative investments, and the schemes collapsed, the banks went bankrupt. Some Credit Unions did go ‘bust’. They had been tempted to put their members savings into speculative schemes that failed!
that our lands are being covered with waste products, and our rivers are being poisoned with sewage and untreated industrial waters. Cooperatives can be a force for change and the protection of our environments.