Policy Statement on Cooperative Enterprise
The following is an excerpt. To read the full article, download the PDF. This article was originally written in 2012.
Introduction
Cooperative enterprises — producer, consumer, agricultural, service, and banking — form the core of a PROUT economy, in which the majority of manufacturing and service enterprises would be organized as worker owned and managed cooperatives.
Cooperatives are the preferred form of enterprise in the PROUT economy because they provide the most empowering arrangement for human beings to work together. Human beings have to work jointly with others so that everyone can move forward collectively. Only those economic activities that cannot be done collectively should be done individually, or under state control. If individuality dominates human life, it will adversely affect the common welfare.
The core value of a cooperative enterprise system is "coordinated cooperation," in which free human beings with equal rights and mutual respect work together for their common welfare. This differs from "subordinated cooperation," where people work individually or collectively, but are under other people's supervision. Subordinated cooperation occurred in state socialist communes that were formed through forced collectivization. True coordinated cooperation does not exist as a prevailing value in any present economic system.
The cooperative system cannot function effectively in an environment of exploitation, corruption, and materialism, nor where they are forced to compete with large corporations for markets and supplies. For cooperatives to succeed, there must be morality among the worker-members, strong management of the enterprise, and community support for the cooperative system. Furthermore, cooperatives need ready access to suppliers and markets for their goods and services. And the members of a cooperative must be able to work in a collective spirit and must share similar material aspirations.
In sum, developing a well-functioning cooperative sector requires:
1] people with moral and cooperative values, similar material needs, and mutual respect for each other;
2] appropriate organizational and management structures; and
3] a conducive political, social, and economic environment to support small and medium scale cooperative industry and the development of a local economy.
This PROUT Institute policy statement offers a PROUT perspective on developing cooperative enterprises. It examines their principles, advantages, internal organizational structures, supportive infrastructure, and wider environmental factors necessary for their development. It then addresses difficult questions of strategic priorities.
Principles of Cooperative Enterprise
Worker cooperatives are firms that are controlled and owned by their members, who are also the workers. The following principles, established by the International Cooperative Alliance, provide a framework for the functioning of cooperative enterprises.
1] Membership is open and voluntary. Workers are able to become members, usually by nominal holdings of share capital.
2] There is democratic control at all levels of the enterprise, on the basis of one member, one vote.
3] Interest paid on share capital is limited.
4] Workers share in any surplus, usually in proportion to each member's work contribution.
5] Some part of cooperatives' surpluses is devoted to worker education.
6] Cooperatives cooperate among themselves.
Cooperatives differ fundamentally from private firms. Control of the firm is based on rights derived from a worker's labor contribution, rather than on property rights established by capital investment.
Advantages of Cooperatives
In addition to fostering collective cooperation, cooperatives have the following advantages.
1] Cooperatives are inherently just enterprises: they broaden the base of property ownership and distribution of wealth. This is particularly important for creating democratic institutions and true political equality. Otherwise, those who have the wealth control access to resources, the media, and political power, which acts to corrupt democracy.
2] Cooperatives have demonstrated that they can outperform comparable private sector firms if they have access to sufficient means of production — i.e., capital, labor, and entrepreneurial and managerial talent. Productivity increases for two reasons. First, workers have greater motivation and morale because of greater individual rewards and because of elimination of the conflict between labor and management. Second, there is greater flow and use of information concerning production efficiency and there is greater scope to bring forward and use workers’ insights for improving production.
3] Cooperatives enhance worker satisfaction and job fulfillment because of participation in decision-making, equitable sharing of profits, greater opportunity for self-expression and dignity, and an environment of mutual respect and social equity. Cooperatives are one component of what is known as "psycho-economy", a branch of economics recognized in PROUT that is concerned (among other things) with increasing the psychic rewards of individual and collective work activity.
4] Cooperatives provide greater job security than private enterprise. In cooperatives, when it becomes necessary to cut back on production, workers are not immediately fired or laid off. Cooperative members can collectively arrange to reduce work hours or wages in order to maintain the employment of all members of the enterprise.
5] Cooperatives are one component of PROUT’s economic system that contributes to local control of the economy. Worker-controlled businesses stay where workers live and are locally owned. This eliminates problems of outside ownership and of profits flowing out of the local economy to outside owners, as occurs in capitalist economies.
The above is an excerpt. To read the full article, download the PDF.