tag:theconversation.com,2011:/ca/topics/co-operatives-27052/articlesCo-operatives – The Conversation2024-01-16T22:32:37Ztag:theconversation.com,2011:article/2206382024-01-16T22:32:37Z2024-01-16T22:32:37ZWheat Pool 2.0: The time might be ripe for a revival of Prairie co-ops<p>When <a href="https://www.reuters.com/markets/deals/bunge-merge-with-viterra-form-18-billion-agriculture-trader-2023-06-13/">Bunge announced its intention to purchase Viterra</a> — the Regina-based grain handling subsidiary of Swiss mining giant Glencore — in June 2023, it represented another milestone in the slow, but steady, erasure of Saskatchewan’s long history with the wheat pool co-operative.</p>
<p>The Saskatchewan Wheat Pool, the once-mighty agricultural co-operative that became Viterra, is remembered by its iconic, but decaying, grain elevators that still dot much of the province’s rural landscape.</p>
<p>The timing of the announcement is ironic for two reasons. First, it coincides with what would have been the Wheat Pool’s 100th anniversary. </p>
<p>Second, it’s occurring during a period when Saskatchewan and Prairie farmers are facing power imbalances in the market not dissimilar to those that gave rise to co-operative wheat pools in <a href="https://www.thecanadianencyclopedia.ca/en/article/saskatchewan-wheat-pool">Saskatchewan</a> and <a href="https://www.thecanadianencyclopedia.ca/en/article/alberta-wheat-pool">Alberta</a> in 1923, and <a href="https://www.mhs.mb.ca/docs/business/manitobapool.shtml">Manitoba</a> in 1924.</p>
<p>The Saskatchewan Wheat Pool’s origin story is instructive. As journalist Garry Fairbairn described in the preface to his <a href="https://cbra.library.utoronto.ca/items/show/36552">book on the Pool’s 60th anniversary</a> in 1983, the Pool was founded by 45,000 farmers engaged in “individual acts of desperation, hope, and faith (that) combined to create an enduring co-operative empire and corporate democracy.” </p>
<p>As Fairbairn goes on to note:</p>
<blockquote>
<p>“Some organizations, like some calves, are born with casual ease, their arrival scarcely noticed until one sunny morning finds them already routinely grazing on a gentle sloe. Others come only after a raw, hard struggle, a grim rancher straining to pull the calf from a desperate cow. The birth of the Saskatchewan Wheat Pool was definitely in the second category.”</p>
</blockquote>
<p>As different as the wheat pool’s origins and Bunge’s purchase may seem, they both represent a response to the same underlying desire: control. Bunge, headquartered in Missouri, wants more of it; the wheat pool founders, based all over the province, wanted some of it.</p>
<h2>Increasingly consolidated industry</h2>
<p>The logic that compels a company like Bunge to integrate Viterra into its supply chain is the same logic that evokes nostalgia among farmers old enough to remember the wheat pools, and action among younger farmers with the energy to do something about it.</p>
<p>Once the Viterra takeover is complete, Bunge will be the top player in Canada’s grain trade (and third in the world), joining a small — <a href="https://www.nfu.ca/bunge-viterra-merger-has-drastic-implications-for-cdn-farmers/">and shrinking</a> — number of companies with market power and the ability to impose prices and shift the risks of the market onto producers.</p>
<p>The <a href="https://www.nfu.ca/bunge-viterra-merger-has-drastic-implications-for-cdn-farmers">top five companies already control 90 per cent</a> of the global grain trade; six of them sell 70 per cent of all agrochemicals and four of those also sell 60 per cent of all the seed.</p>
<p>Already, there are indications — albeit anecdotal — that grain handling firms are exerting market power, with many farmers feeling like they have no choice but to <a href="https://apas.ca/news/listing/one-sided-grain-contracts-need-to-change">sign grain delivery contracts</a> where they end up bearing significant financial risks and most of the costs of climate change and market uncertainty.</p>
<p>The result? Farmers <a href="https://www.winnipegfreepress.com/business/2023/07/29/read-the-fine-print-caution-needed-in-grain-contracts">owing money on contracts they were unable to fulfill because of events out of their control</a>. </p>
<p>With the rise of <a href="https://www.fao.org/digital-agriculture/en/">digital agriculture</a> and <a href="https://www.itworldcanada.com/article/data-governance-and-regulating-data-in-agriculture/536332">little to no regulations or laws for agricultural data governance in Canada</a>, we could see agricultural data issues as well, as supply firms amass and use data from customers to exert market power.</p>
<h2>The view from Australia</h2>
<p>To get a glimpse into what was lost when the Wheat Pool became Viterra, we can look to Australia. Like Canada, farmers in Australia no longer have a national wheat marketing board. It was eliminated in 2008, a few years before Canada’s. Unlike in Canada, however, <a href="https://www.country-guide.ca/guide-business/australias-approach-to-grain-pools/">Australian farmers held on to their co-operative grain handling company</a>, Co-operative Bulk Handling (CBH).</p>
<p>Well into its 90th year, CBH has prospered despite a difficult operating environment not dissimilar to Canada’s, as well as periodic <a href="https://bccm.coop/about-co-ops-mutuals/case-studies/cbh-group/">challenges to its mutuality</a>. With a 62 per cent share of the grain handling business and AU$4 billion in annual revenue, CBH had a record annual profit of $497 million in 2022 and has reported <a href="https://www.cbh.com.au/media-releases/2023/10/best-year-on-record-for-cbh-supply-chain">record-breaking supply chain performance</a> for its 2023 harvest.</p>
<p>Those results belong to CBH’s Australian farmer-members. <a href="https://www.cbh.com.au/our-co-operative/what-we-do">CBH’s success</a> can be attributed to its efforts to support its members by investment in the infrastructure — rail transport, port terminals, marketing, exporting and processing — needed to lower grain handling costs for its producer members. </p>
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<img alt="A man in shorts, a tee-shirt and a baseball hat standing in a field of wheat" src="https://images.theconversation.com/files/569151/original/file-20240112-19-32g57e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/569151/original/file-20240112-19-32g57e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/569151/original/file-20240112-19-32g57e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/569151/original/file-20240112-19-32g57e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/569151/original/file-20240112-19-32g57e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/569151/original/file-20240112-19-32g57e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/569151/original/file-20240112-19-32g57e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A grain farmer tests wheat for moisture before harvest in Moree, a major agricultural area in New South Wales, Australia, in November 2012.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>As a result, CBH says average post-farmgate costs for its members are <a href="https://www.country-guide.ca/guide-business/australias-approach-to-grain-pools/">15 per cent lower</a> than for Australian farmers who rely on multinational corporations — including companies like Bunge and Viterra — for storage, movement, marketing and export. </p>
<p>Through CBH, Australian farmers don’t just have a powerful corporate entity looking out for their financial interests, but a company that can help them navigate government lobbying and relationships with agricultural input providers and their growing arsenal of data being used to power artificial intelligence applications.</p>
<h2>Co-operative green shoots</h2>
<p>Of course, Canada’s agriculture sector today is vastly different than it was when the wheat pool came into being. While there are places in rural Prairies Canada that are prospering — especially those proximate to urban centres — the <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220511/dq220511a-eng.htm">long-term trends remain</a>. </p>
<p>These trends include dwindling populations, aging farmers, increasing farm size as producers pursue scale to amass some negotiating power (competing with <a href="https://theconversation.com/growing-farmland-inequality-in-the-prairies-poses-problems-for-all-canadians-196777">investors buying up shares of farmland</a>), and increasing challenges for anyone or any producer left behind.</p>
<p>But while perhaps dormant, the co-operative impulse is not gone and may indeed be ripe for a reawakening. There are some promising signs in both old and new technologies and from existing farmer co-operatives.</p>
<p>In Alberta, farmers have worked together to purchase their own <a href="https://battleriverrailway.ca/">short-line railway</a> to ensure they could continue to ship their crops at reasonable prices. In the Platte region of Nebraska, farmers have organized a <a href="https://www.gisc.coop/nebraska-tpnrd/">data co-operative</a> to measure, count, aggregate and interpret data on their water usage. </p>
<p>In western Canada in 2010, a group of independent seed, crop protection and fertilizer retailers came together to form a co-operative — now called <a href="https://www.winfieldunited.ca/en/">WinField United Canada</a> — and a division of Land O'Lakes, one of the largest agricultural co-operatives in the United States.</p>
<p>For farmers and policymakers, the lesson should be clear: even as Saskatchewan contemplates the loss of another corporate sector headquarters, perhaps the best hope for the future of the province’s economy and its farmers can be found by looking back to the past and an organizational model that when governed properly, is rooted, resilient and responsive.</p>
<p><em>Jeremy Welter co-authored this article. He is a fourth-generation farmer, small-business owner and director on the board of the Agricultural Producers Association of Saskatchewan.</em></p><img src="https://counter.theconversation.com/content/220638/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc-Andre Pigeon receives funding from the co-operative and credit union sectors as well as funding from government funding bodies for his research into co-operatives and credit unions. </span></em></p><p class="fine-print"><em><span>Natalie Kallio receives funding from the co-operative and credit union sectors as well as from government funding bodies for research into co-operatives.</span></em></p>One hundred years after the founding of the once-mighty Saskatchewan Wheat Pool, the time might be ripe for a revival of Prairie farmer co-operatives.Marc-Andre Pigeon, Assistant Professor, Johnson Shoyama Graduate School of Public Policy, University of SaskatchewanNatalie Kallio, Professional Research Associate, Canadian Centre for the Study of Co-operatives, University of SaskatchewanLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1954142023-01-04T18:59:39Z2023-01-04T18:59:39ZHow the philosophy of the past can help us imagine the economy of the future<figure><img src="https://images.theconversation.com/files/502486/original/file-20221221-13-u2pgfg.jpg?ixlib=rb-1.1.0&rect=8%2C8%2C5542%2C3692&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">It's more necessary than ever before to re-examine the fundamentals of our economic order.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>The economy keeps making headlines for all the wrong reasons — stories about <a href="https://www.cbc.ca/news/business/food-price-report-1.6670597">rising prices</a>, <a href="https://www.cbc.ca/player/play/2041999427744">supply shortages</a> and a looming <a href="https://www.theguardian.com/business/2022/sep/23/unprecedented-events-creating-extremely-severe-risk-of-global-recession-economist-adam-tooze">recession</a> have been frequently making the front page these days. </p>
<p>The <a href="https://www.brookings.edu/blog/future-development/2022/03/18/inflation-could-wreak-vengeance-on-the-worlds-poor/">current economic crisis is deepening the long-standing issue of social inequality,</a> widening the gap between the rich and poor — a problem that was already accelerated by the <a href="https://www.penguinrandomhouse.com/books/301357/crashed-by-adam-tooze/">Great Recession of 2008</a> and the <a href="https://www.cbpp.org/research/poverty-and-inequality/tracking-the-covid-19-economys-effects-on-food-housing-and">economic shock brought on by the COVID-19 pandemic</a>. </p>
<p>The richest country in the world, <a href="https://www.cbo.gov/system/files/2021-08/57061-Distribution-Household-Income.pdf">the U.S.</a>, is among the most drastic examples of this trend. <a href="https://www.cfr.org/backgrounder/us-inequality-debate">Today, American CEOs earn 940 per cent more than their counterparts did in 1978</a>. A typical worker, on the other hand, only goes home with 12 per cent more money than workers from 1978 did.</p>
<p>As a <a href="https://www.epi.org/publication/ceo-compensation-2018/">report by the Economic Policy Institute</a> demonstrates, rising CEO pay does not reflect a change in the value of skills — it represents a shift in power. Over decades, American politics has undermined the bargaining power of workers by <a href="https://www.usatoday.com/story/money/cars/2014/02/20/no-south-carolina-union-jobs/5642031/">discouraging</a> and <a href="https://www.fastcompany.com/90775158/anti-union-bills-bubble-up-in-congress-despite-growing-voter-support-for-organized-labor">obstructing</a> self-organizing efforts, such as <a href="https://dx.doi.org/10.1111/j.1467-8543.2006.00518.x">unionization</a>. </p>
<figure class="align-center ">
<img alt="A man speaks into a megaphone in front of a crowd of protesters holding signs" src="https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/502482/original/file-20221221-23-3rf8m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Amazon Labor Union protested at the site of the DealBook Summit in New York on Nov. 30, 2022, accusing Andy Jassy, the CEO of Amazon, of union-busting.</span>
<span class="attribution"><span class="source">(AP Photo/Seth Wenig)</span></span>
</figcaption>
</figure>
<p>The growing wealth of a minority at the expense of the majority means power is concentrated in the hands of a few people, <a href="https://inequality.org/facts/gender-inequality/#gender-wealth-gaps">mostly men</a>. It’s not surprising that figures such as <a href="https://www.cnn.com/specials/politics/january-6-insurrection">Donald Trump</a>, <a href="https://www.theguardian.com/technology/2019/mar/17/the-cambridge-analytica-scandal-changed-the-world-but-it-didnt-change-facebook">Mark Zuckerberg</a> and <a href="https://www.brookings.edu/blog/how-we-rise/2022/11/23/why-is-elon-musks-twitter-takeover-increasing-hate-speech/">Elon Musk</a> have a disproportional impact on our communities — sometimes with devastating consequences that threaten our democratic institutions.</p>
<h2>Economics with a human face</h2>
<p>It’s more necessary than ever before to re-examine the fundamentals of our economic order. The search for alternative economic models, however, is made difficult by conventional thinking patterns.</p>
<p>Many believe <a href="https://education.nationalgeographic.org/resource/socialism">we are facing a stark choice</a> between a capitalist market economy on the one hand and a socialist-planned economy on the other. </p>
<p>Although we live in a world that defines economic models in absolutist terms, it doesn’t have to be this way. We argue that the psychological and social perspectives on economy that were developed by 19th-century philosophers such as <a href="https://plato.stanford.edu/entries/hegel/">Georg Wilhelm Friedrich Hegel</a>, <a href="https://www.mqup.ca/john-stuart-mill--socialist-products-9780228005742.php">John Stuart Mill</a> and <a href="https://www.thoughtco.com/georg-simmel-3026490">Georg Simmel</a> can help us re-imagine economics with a human face. </p>
<p>These thinkers were convinced that a good economic order had to incorporate elements of classic capitalism (such as a <a href="https://www.britannica.com/topic/free-market">free market</a> in goods and services) with elements of classic socialism (such as <a href="https://democracycollaborative.org/programs/cwb">collective ownership</a> of the <a href="https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100145887">means of production</a>). This is what we call <a href="https://economicpluralism.com/">economic pluralism</a>. </p>
<h2>Hegel and the problem of affluence</h2>
<p>Hegel is a good example of an economic pluralist thinker. In his <a href="https://www.cambridge.org/highereducation/books/hegel-elements-of-the-philosophy-of-right/09AE6110FE96266A206924435BAF85C5#overview">1820 <em>Philosophy of Right</em></a>, he presented an <a href="https://doi.org/10.1111/ejop.12336">extensive reflection on the modern economy</a>. He discussed the market and its operating principles, social inequality and even the formation of desires through advertisements and consumer culture. </p>
<figure class="align-right ">
<img alt="An oil painting of an older white man with grey hair wearing a white cravat and a fur coat" src="https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=781&fit=crop&dpr=1 600w, https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=781&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=781&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=982&fit=crop&dpr=1 754w, https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=982&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/502247/original/file-20221220-18-jgdche.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=982&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Georg Wilhelm Friedrich Hegel was a German philosopher and one of the founding figures of modern western philosophy.</span>
<span class="attribution"><span class="source">(Jakob Schlesinger)</span></span>
</figcaption>
</figure>
<p>Among the many topics he examined was the <a href="https://doi.org/10.1017/apa.2021.7">problem of affluence</a>. Hegel was not just worried about the poverty created by the modern market economy, but also about the concentration of extreme wealth in few hands.</p>
<p>Writing hundreds of years before modern multi-billionaires arrived on the scene, <a href="https://www.worldcat.org/title/philosophie-des-rechts-die-vorlesung-von-181920-in-einer-nachschrift/oclc/885459313">Hegel already argued that</a> “both of these sides, poverty and affluence, represent the scourge (Verderben) of Civil Society.”</p>
<p>Hegel’s analysis is even more prescient: He believed affluence created the counter-intuitive tendency among the affluent to feel victimized and disenfranchized by society. As a result, the affluent perceived all social demands, like taxes, as unjustified incursions into their personal freedom. </p>
<p>Hegel thought this sense of victimization could lead to an unexpected bond between those at the very top of the economic pyramid and those at the bottom — a bond that overcame differences in lifestyle and mutual antipathy to form an alliance that attacks civil society from both sides. The phenomenon of <a href="https://www.politico.com/news/2020/09/22/donald-trump-union-support-snub-joe-biden-418329">Trump’s MAGA alliance</a> is an interesting modern example of this.</p>
<h2>Re-imagining the economy</h2>
<p>Unlike some later socialists, Hegel did not think problems of affluence were best rectified by introducing a planned economy that enforces wealth equality. Instead, his approach was pluralistic. </p>
<p>He made a case for a free market exchange paired with co-operative modes of production, which are — in some respects — similar to <a href="https://www.newyorker.com/business/currency/how-mondragon-became-the-worlds-largest-co-op">modern-day worker co-operatives</a>. </p>
<p>If most economic production in society was organized co-operatively, Hegel believed, wealthier subjects would be embedded in economic decision-making with others, replacing the detrimental “bond of victimization” between the rich and poor with a collective identity based on shared economic agency.</p>
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<img alt="A group of people, some holding constriction hats, standing around a whiteboard having a discussion" src="https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/502483/original/file-20221221-14-jdfiqa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Worker co-operatives could help us imagine a more just and human-centric economic future.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>When reimagining our current economic order, we can take a page out of Hegel’s handbook by focusing on <a href="https://www.mondragon-corporation.com/en/about-us/">worker co-operatives</a>: economic ventures that are <a href="https://institute.coop/what-worker-cooperative">co-owned by workers</a> that make productive decisions together, often — albeit not always — in a democratic manner.</p>
<p>Under what conditions are such co-operative modes of production successful? How can the state incentivize these forms of production within the existing market economy? And are these worker co-operatives really a way to achieve economic justice? These are the questions that, inspired by the past, might help us imagine a new, pluralist, more equal and human-centric economic future.</p><img src="https://counter.theconversation.com/content/195414/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>This article is an output of our project "Economic Pluralism: Past and Present" which received funding from SSHRC (Social Sciences and Humanities Research Council). </span></em></p><p class="fine-print"><em><span>.</span></em></p>Psychological and social perspectives on economy that were developed by 19th-century philosophers can help us re-imagine economics with a human face.Johannes Steizinger, Associate Professor of Philosophy, McMaster UniversityHelen McCabe, Assistant Professor in Political Theory, University of NottinghamThimo Heisenberg, Assistant Professor of Philosophy, Bryn Mawr CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1968662022-12-21T22:27:25Z2022-12-21T22:27:25ZLooking forward into the past: Lessons for the future of Medicare on its 60th anniversary<figure><img src="https://images.theconversation.com/files/502285/original/file-20221221-13-qhlr9y.jpeg?ixlib=rb-1.1.0&rect=36%2C51%2C1595%2C1003&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Former Saskatchewan Premier and national New Democratic Party leader T.C. (Tommy) Douglas in 1965. Douglas was instrumental in the creation of Medicare.</span> <span class="attribution"><span class="source">The Canadian Press</span></span></figcaption></figure><p>It is the <a href="https://esask.uregina.ca/entry/medicare.jsp">60th anniversary</a> of Medicare, but no one seems to care.</p>
<p>It is, after all, hard to be enthusiastic about a system in crisis. Patients can’t find doctors (<a href="https://angusreid.org/canada-health-care-family-doctors-shortage/">almost one in five Canadian adults</a>). Those who have doctors have a hard time getting in to see them (<a href="https://angusreid.org/canada-health-care-family-doctors-shortage/">only 18 per cent can get an appointment within a day or two</a>). </p>
<p>Doctors are burned out, <a href="https://www.cma.ca/news-releases-and-statements/critical-family-physician-shortage-must-be-addressed-cma">leaving their practices with no one to replace them</a>. New physicians want to focus on patient care, <a href="https://thestarphoenix.com/opinion/columnists/murray-mandryk-sask-family-doctor-shortage-requires-new-approach/wcm/fcc52f2e-16df-4f34-84b1-8459a8552d40">not the business of health care</a>. </p>
<p>This is, of course, just the beginning of the problem. The premiers want more money from Ottawa and Ottawa wants more data from the provinces. <a href="https://calgary.ctvnews.ca/premier-under-fire-for-health-savings-account-comments-calls-it-spin-1.6162665">Alberta is making health proposals that some say are a short step away from privatized health care</a>, and the <a href="https://www.cbc.ca/news/politics/health-care-funding-premiers-federal-government-1.6644857">recent meeting between federal and provincial health ministers</a> ended in a stalemate.</p>
<h2>The dawn of Medicare</h2>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/502313/original/file-20221221-13-toye3c.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A man at a podium gesturing with his hand, and a line of people in business clothes behind him, with provincial flags" src="https://images.theconversation.com/files/502313/original/file-20221221-13-toye3c.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/502313/original/file-20221221-13-toye3c.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/502313/original/file-20221221-13-toye3c.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/502313/original/file-20221221-13-toye3c.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/502313/original/file-20221221-13-toye3c.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/502313/original/file-20221221-13-toye3c.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/502313/original/file-20221221-13-toye3c.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">B.C. Health Minister Adrian Dix, right, is flanked by his provincial and territorial counterparts as he responds to questions at a news conference without federal Health Minister Jean-Yves Duclos after the second of two days of meetings, in Vancouver on Nov. 8.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Darryl Dyck</span></span>
</figcaption>
</figure>
<p>These seem like intractable problems. But our research suggests part of the solution might be found back in 1962, when the model that would grow into our current health-care system was launched in Saskatchewan, spreading to other provinces over the next few years.</p>
<p>At the dawn of Medicare, the proposed new model resulted in a strike by Saskatchewan doctors worried about “socialized medicine.” </p>
<p>Faced with the prospect of losing access to their doctors, almost 15,000 families (representing 50,000 people) formed 34 community clinic associations, raising over $325,000 (almost $3 million today) over less than a year for <a href="https://harvest.usask.ca/handle/10388/etd-04122010-091353">health-care clinics</a> that patients would own and govern based on <a href="https://www.ica.coop/en/whats-co-op/co-operative-identity-values-principles">democratic co-operative principles</a>.</p>
<p>The clinics adopted a philosophy of care that rejected many of the tenets of conventional medicine, which <a href="https://www.uregina.ca/library/services/archives/collections/faculty-staff/rands.html">Stan Rands</a>, a clinic organizer, described as focused on “physiological and biochemical causes of disease” and dependence on “equipment and tests for the diagnosis and treatment of illness.” The result, he argued, was that it was “<a href="https://www.academia.edu/8520847/Privilege_and_Policy_A_History_of_Community_Clinics_in_Saskatchewan_by_Stan_Rands">ill-equipped to deal with the human and social manifestations of illness or disease</a>.”</p>
<h2>The community co-operative clinic model</h2>
<p>Based on this philosophy, the clinics implemented what were, at the time, radical measures. Instead of being paid on a fee-for-service basis, doctors were paid salaries. Instead of sole practitioner businesses, doctors worked as part of a team deeply engaged and responsive to their communities because the clinics were run by patients. Instead of treating symptoms, the team treated patients holistically, probing the physical and <a href="https://drgabormate.com/book/the-myth-of-normal/">social factors</a> that we now know lead to illness.</p>
<p>Although the clinics strengthened the government’s hand in reaching a settlement with the striking doctors, <a href="https://harvest.usask.ca/handle/10388/etd-04122010-091353">the province never embraced the co-operative clinic model</a>. Instead, the clinics would spend years struggling to be understood by policymakers who tended to favour a conventional system based on fee-for-service, doctor-led Medicare. </p>
<figure class="align-center ">
<img alt="A woman in a white coat, stethoscope and face mask talking to a woman and child in face masks, with a man in a white coat in the background" src="https://images.theconversation.com/files/502312/original/file-20221221-17-79ciiy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/502312/original/file-20221221-17-79ciiy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/502312/original/file-20221221-17-79ciiy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/502312/original/file-20221221-17-79ciiy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/502312/original/file-20221221-17-79ciiy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/502312/original/file-20221221-17-79ciiy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/502312/original/file-20221221-17-79ciiy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Community co-op clinics are run by patients instead of sole practitioners. Doctors work as part of a team deeply engaged and responsive to their communities.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Many clinics folded shortly after Medicare was introduced; today, only four remain, with large clinics in <a href="https://www.saskatooncommunityclinic.ca/our-coop-model/">Saskatoon</a>, <a href="https://www.reginacommunityclinic.ca/about-rcc/">Regina</a> and <a href="https://www.coophealth.com/coop-model">Prince Albert</a>, and one smaller rural clinic operating in Wynyard. Even the 2002 <a href="https://publications.gc.ca/collections/Collection/CP32-85-2002E.pdf">Commission on the Future of Health Care in Canada</a>, led by former NDP premier of Saskatchewan Roy Romanow, ignored the sector’s efforts to put its model on the agenda.</p>
<p>Away from the spotlight, the remaining co-operative clinics went about living their philosophy. They hired social workers, offered mental health services, brought in physiotherapists, set up pharmacies, offered in-house minor surgeries, performed house calls, operated forerunners to modern-day telehealth, and set up shop in disadvantaged, poorly served communities like Saskatoon’s west side.</p>
<h2>The future of co-op clinics</h2>
<p>Meanwhile, there are signs that the philosophy of team-based, patient-focused, community-based care may be gaining ground. In 2017, for example, Ontario’s <a href="http://www.matawa.on.ca/corporations/matawa-health-co-operative/">Matawa First Nation</a> opened the country’s first <a href="http://www.matawa.on.ca/corporations/matawa-health-co-operative/">Indigenous-run co-operative clinic</a>. </p>
<p>The provincial government in Ontario operates a large network of <a href="https://www.allianceon.org/news/Association-Ontario-Health-Centres-now-Alliance-Healthier-Communities">not-for-profit community clinics</a> similar in structure to Saskatchewan’s clinics but lacking explicit democratic co-operative control. In addition, <a href="https://theconversation.com/with-family-doctors-heading-for-the-exits-addressing-the-crisis-in-primary-care-is-key-to-easing-pressure-on-emergency-rooms-189199">some Canadian doctors</a> are now advocating for a different model.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-doctor-wont-see-you-now-why-access-to-care-is-in-critical-condition-169818">The doctor won't see you now: Why access to care is in critical condition</a>
</strong>
</em>
</p>
<hr>
<p>Elsewhere, there are indications that citizens may be tired of waiting for policymakers to act. As the <em>Globe and Mail</em> recently <a href="https://www.theglobeandmail.com/canada/article-how-a-small-community-on-vancouver-island-responded-to-a-looming/">reported</a>, residents of the Saanich Peninsula, on the southeast coast of Vancouver Island, raised money to open two medical clinics and recruit doctors who could take over from physicians at, or near, retirement. As Dale Henley, the co-chair of the non-profit that owns and operates the clinics told the <em>Globe and Mail</em>, </p>
<blockquote>
<p>“I think we’ve got to do a little more ourselves. We can’t just keep looking at governments all the time, because they’re not that good at it.”</p>
</blockquote>
<p>As we look back on 60 years of Medicare and contemplate its many challenges, it may be time for communities to heed Henley’s call and once again voice their desire in words and action for access to the kind of holistic care pioneered by the co-operative clinics. Maybe this time, policymakers will listen.</p><img src="https://counter.theconversation.com/content/196866/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc-Andre Pigeon is the director of the Canadian Centre for the Study of Co-operatives. It receives funding from the co-operative
and credit union sector. The research into the co-operative clinics is funded, in part, by the Saskatoon Community Clinic, one of the clinics being investigated in this research. </span></em></p><p class="fine-print"><em><span>Natalie Kallio is a Professional Research Associate at the Canadian Centre for the Study of Co-operatives, which receives funding from the co-operative and credit union sector. This research is funded, in part, by the Saskatoon Community Clinic, one of the clinics being studied.</span></em></p><p class="fine-print"><em><span>Haizhen Mou does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>At the dawn of Medicare, Saskatchewan’s community co-op clinics pioneered team-based, holistic care. Now, with the health system in crisis 60 years later, it may be time to return to that care model.Marc-Andre Pigeon, Assistant Professor, Johnson Shoyama Graduate School of Public Policy, University of SaskatchewanHaizhen Mou, Professor, Johnson Shoyama Graduate School of Public Policy, University of SaskatchewanNatalie Kallio, Professional Research Associate, Canadian Centre for the Study of Co-operatives, University of SaskatchewanLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1822182022-06-03T00:30:11Z2022-06-03T00:30:11ZOur business schools have a blindspot that’s hindering a more co-operative culture<figure><img src="https://images.theconversation.com/files/466874/original/file-20220603-19-s8wy6g.png?ixlib=rb-1.1.0&rect=0%2C0%2C3452%2C1848&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p><a href="https://tranby.edu.au/about-us/">Tranby</a> is an Indigenous adult education school in the inner-city Sydney suburb of Glebe. Founded in 1957, its graduates include Eddie Mabo, who went on to win the most significant land rights legal battle in Australian history – overturning the <a href="https://theconversation.com/australian-politics-explainer-the-mabo-decision-and-native-title-74147">fiction of terra nullius</a>. </p>
<p>What makes Tranby special is not just being Australia’s oldest not-for-profit independent Indigenous education provider. It is the type of education it provides – teaching the skills needed to manage organisations and communities democratically.</p>
<p>It teaches co-operation, and the skills to run co-operative organisations. </p>
<p>This makes it a rarity in business education. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/462935/original/file-20220513-16-ie8n95.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/462935/original/file-20220513-16-ie8n95.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/462935/original/file-20220513-16-ie8n95.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/462935/original/file-20220513-16-ie8n95.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/462935/original/file-20220513-16-ie8n95.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/462935/original/file-20220513-16-ie8n95.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/462935/original/file-20220513-16-ie8n95.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Tranby Aboriginal Co-Operative is Australia’s oldest Indigenous adult dducation provider.</span>
<span class="attribution"><a class="source" href="https://tranby.edu.au/">Tranby</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>Though co-operatives exist throughout Australian society, making a hugely valuable economic contribution, their distinctive nature and management requirements are largely ignored by university business schools. </p>
<p>This neglect is costing us all.</p>
<h2>Part of the social fabric</h2>
<p>Australia has a rich history of communities forming co-operatives to provide services where for-profit businesses or the state have been unwilling or unable. </p>
<p>They run shops and schools, offer banking and mortgage services, and provide housing and health services. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/more-affordable-housing-with-less-homelessness-is-possible-if-only-australia-would-learn-from-nordic-nations-182049">More affordable housing with less homelessness is possible – if only Australia would learn from Nordic nations</a>
</strong>
</em>
</p>
<hr>
<p>The first co-operative in Australia is thought to be the Brisbane Co-operative Society, which set up a store <a href="https://fed.coop/co-operatives-in-australia-a-manual/part-one-understanding-co-operatives/a-short-history-of-co-operatives/">in 1859</a>. </p>
<p>Over the next century came many agricultural co-ops. In the 1950s and 1960s, co-workers and communities pooled funds to form building societies and credit unions when banks were <a href="https://trove.nla.gov.au/newspaper/article/248213980?searchTerm=credit%20union">unwilling to lend money</a>.</p>
<p>More recently regional communities have established co-operatives to replace <a href="http://www.kerryanderson.com.au/blog/2019/12/14/royal-reopening">shuttered businesses</a>, to spearhead <a href="https://www.hepburnwind.com.au/about/in%20Victoria">renewable energy</a> and <a href="https://earthworkerenergy.coop/">manufacturing</a> projects, and to provide better conditions for <a href="https://redgumcleaning.coop/">cleaners</a> and <a href="https://lifecoop.com.au/">care workers</a>.</p>
<figure class="align-center ">
<img alt="When the northern Victorian town of Sea Lake was left without a pub after one hotel shut and the other burnt down, locals formed a co-operative to reopen and run the Royal Hotel." src="https://images.theconversation.com/files/465628/original/file-20220527-14-clxtv4.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/465628/original/file-20220527-14-clxtv4.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/465628/original/file-20220527-14-clxtv4.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/465628/original/file-20220527-14-clxtv4.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/465628/original/file-20220527-14-clxtv4.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/465628/original/file-20220527-14-clxtv4.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/465628/original/file-20220527-14-clxtv4.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">When the northern Victorian town of Sea Lake was left without a pub after one hotel shut and the other burnt down, locals formed a co-operative to reopen and run the Royal Hotel.</span>
<span class="attribution"><a class="source" href="http://www.kerryanderson.com.au/blog/2019/12/14/royal-reopening">Kerry Anderson</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Co-ops range in size from small neighbourhood operations, such the <a href="https://www.gymeapreschool.com.au/">Gymea</a> community preschool in Sydney to major enterprises such as Cooperative Bulk Handling in Western Australia, which reported a <a href="https://www.cbh.com.au/media-releases/2021/12/cbh-group-annual-results-2021">$133 million surplus</a> in 2021. </p>
<p>All up there are more than <a href="https://coops4dev.coop/sites/default/files/2021-01/Australia%20Key%20Figures%20National%20Report.pdf">1,700</a> in Australia. It’s possible you’re a member of one – or a closely aligned “mutual” organisation (such as the NRMA or RACV). About <a href="https://australiainstitute.org.au/report/who-knew-australians-were-so-co-operative-the-size-and-scope-of-mutually-owned-co-ops-in-australia/">eight in ten</a> Australians are, yet fewer than two in ten realise it.</p>
<h2>Improving co-operative education</h2>
<p>This general lack of recognition is reflected by the sector’s almost complete invisibility in educational courses. </p>
<p>In 2016 a <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Cooperatives/Report">Senate committee inquiry</a> found neglect of co-operative and mutual businesses in high-school and university courses was a clear impediment for the sector. </p>
<p>It could easily be concluded this neglect has also actively damaged the sector – notably through the 1980s and 1990s with “<a href="https://www.rba.gov.au/publications/bulletin/1999/jan/1.html">demutualisation</a>”
of big member-owned organisations such as AMP and the St George Bank. </p>
<p>This effectively involved privatising these organisations for the benefit of existing members, who got windfall profits at the expense of future members. </p>
<p>Demutualisation was pushed by managers and consultants educated in business, but not in the distinctive values of <a href="https://www.cambridge.org/core/journals/business-and-politics/article/abs/resistance-is-not-futile-cooperatives-demutualization-agriculture-and-neoliberalism-in-australia/31CAEE1EC5818C381527CA195082CB96">co-operative business</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-amp-and-ioof-went-rogue-102569">Why AMP and IOOF went rogue</a>
</strong>
</em>
</p>
<hr>
<p>They often regarded the co-operative and mutual structure as less competitive than an investor-shareholder model focused on maximising profits. </p>
<p>Subsequent developments have proven how flawed these assumptions were. <a href="https://theconversation.com/why-amp-and-ioof-went-rogue-102569">AMP</a>, for example, featured heavily among the wrongdoings exposed by the Hayne royal commission into financial services. No co-operative or mutual business did.</p>
<h2>Levelling the playing field</h2>
<p>The Senate inquiry report recommended the federal government look to improve understanding of co-operatives and mutual through secondary school curriculum. It also recommended universities include topics on co-operatives in their business and law programs. </p>
<p>In 2017 the University of Newcastle established Australia’s first postgraduate program in co-operative management and organisation. </p>
<p>But it <a href="https://bccm.coop/wp-content/uploads/2021/07/Developing-a-Pedagogy-for-Co-operative-Education-in-Australia-Report.pdf">axed the program</a> in 2020 due to pandemic-related cutbacks and insufficient student numbers.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-its-time-for-business-schools-to-radically-rethink-the-mba-55722">Why it's time for business schools to radically rethink the MBA</a>
</strong>
</em>
</p>
<hr>
<p>Now, apart from the University of Sydney’s <a href="https://www.sydney.edu.au/business/our-research/research-groups/co-operatives-research-group.html">Co-operatives Research Group</a> and the University of Western Australia’s <a href="https://www.able.uwa.edu.au/centres/ceru">Co-operative Enterprise Research Unit</a>, the landscape is bare.</p>
<p>What’s needed are both specialist courses and recognition within general business or law courses. You’d be hard placed to find a business degree that gives co-operatives more than fleeting attention. </p>
<p>The focus instead is on individual entrepreneurship, investor-owned businesses and vague ideas of social business. </p>
<h2>Economic viability with social responsibility</h2>
<p>The 2016 Senate inquiry report noted co-operatives have an important economic role to play. They increase competition in highly concentrated markets (such as banking). They provide services in areas where investor-owned or state enterprises do not work.</p>
<p>It singled out <a href="https://tranby.edu.au">Tranby College</a> as an excellent example of what can be achieved – both for members and the broader community:</p>
<blockquote>
<p>Evidence suggests the co-operative model is ideal in delivering services in remote areas, such as Indigenous communities, where issues can be complex and service provision through the private sector is often not suitable or available.</p>
</blockquote>
<p>As former United Nations secretary-General Ban Ki-moon <a href="https://social.un.org/coopsyear/">has said</a>, co-operatives show “it is possible to pursue both economic viability and social responsibility”.</p>
<p>It is important students at all levels be aware of what makes co-operative businesses different and valuable. </p>
<p>Hopefully the Albanese government will not neglect them. They have a lot to offer communities and reinforce democratic values.</p><img src="https://counter.theconversation.com/content/182218/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gregory Patmore received funding from the Australian Research Council Discovery Program (DP170100573) for the main research underlying this contribution and has received funding from the Business Council of Co-operatives and Mutuals for a specific project on COVID-19 and co-operatives. </span></em></p>Australia has a rich history of community co-ops – from small neighbourhood preschools, to major enterprises with $100 million-plus profits. So why do our business schools largely ignore them?Gregory Patmore, Emeritus Professor of Business and Labour History, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1827542022-05-13T02:51:25Z2022-05-13T02:51:25ZWe all lose when charities compete with each other. They should join forces<figure><img src="https://images.theconversation.com/files/462934/original/file-20220513-12-s96mpo.jpg?ixlib=rb-1.1.0&rect=0%2C154%2C788%2C393&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>You want to help Ukrainians in need. Should you donate to UNICEF, UNHCR, Red Cross, World Vision, Caritas, Save the Children or some other charitable organisation? </p>
<p>There are so many charities, and charitable causes, to choose from. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-to-responsibly-donate-to-ukrainian-causes-178391">How to responsibly donate to Ukrainian causes</a>
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<p>Australia, for example, has more than 57,500 registered charities (for a population of 25 million). The UK (population 67 million) has more <a href="https://www.civilsociety.co.uk/voices/there-are-more-than-twice-as-many-charities-in-the-uk-as-you-ve-been-told.html">more than 200,000</a>. The US (population 350 million) has close to <a href="https://nccs.urban.org/publication/nonprofit-sector-brief-2019#finances">1.5 million</a>.</p>
<p>They’re vying against direct competitors as well as every other charity and cause. Suicide prevention is up against wilderness conservation. Cancer research against climate change activism. Refugee aid against the arts.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/celebrity-charities-just-compete-with-all-other-charities-so-why-start-one-70711">Celebrity charities just compete with all other charities – so why start one?</a>
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</em>
</p>
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<p>Not all actively fundraise – in Australia only <a href="https://fia.org.au/wp-content/uploads/2020/04/FIA-Infographic.pdf">about 40% do</a> – but that still leaves thousands competing for your money. </p>
<p>And that competition is hurting them.</p>
<h2>The downsides of competition</h2>
<p>Research by University of Washington economist Bijetri Bose suggests greater competition among non-profits marginally increases aggregate donations but <a href="https://econ.washington.edu/sites/econ/files/old-site-uploads/2014/11/Bose_jmpaper.pdf">reduces average donations</a> per organisation. Fundraising costs also escalate with greater competition.</p>
<p>There are concerns aggressive marketing, from phone calls to junk mail to “edgy” advertising, is turning people off donating to any charity. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/charities-are-contributing-to-growing-mistrust-of-mental-health-text-support-heres-why-179056">Charities are contributing to growing mistrust of mental-health text support — here's why</a>
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<p>A classic example is the UK <a href="https://pancreaticcanceraction.org/">Pancreatic Cancer Action’s</a> “I wish I had” campaign. It compared the 3% survival rate for pancreatic cancer to 97% for testicular cancer and 85% for breast cancer. The campaign attracted attention, but not <a href="https://www.theguardian.com/voluntary-sector-network/2014/feb/12/pancreatic-cancer-action-controversial-advert">in the way</a> the organisation hoped.</p>
<figure class="align-center ">
<img alt="The UK Pancreatic Cancer Action's 'I wish I had breast cancer' campaign proved controversial." src="https://images.theconversation.com/files/462373/original/file-20220511-24-gk9ng9.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/462373/original/file-20220511-24-gk9ng9.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=360&fit=crop&dpr=1 600w, https://images.theconversation.com/files/462373/original/file-20220511-24-gk9ng9.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=360&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/462373/original/file-20220511-24-gk9ng9.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=360&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/462373/original/file-20220511-24-gk9ng9.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=453&fit=crop&dpr=1 754w, https://images.theconversation.com/files/462373/original/file-20220511-24-gk9ng9.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=453&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/462373/original/file-20220511-24-gk9ng9.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=453&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The UK Pancreatic Cancer Action’s ‘I wish I had breast cancer’ campaign proved controversial.</span>
<span class="attribution"><span class="source">UK Pancreatic Cancer Action</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Though there’s no hard data proving competition is contributing to donor fatigue, there is strong anecdotal evidence. </p>
<p>The UK’s Fundraising Regulator has been cracking down on aggressive fundraising since a 2015 case in which a 92-year-old woman committed suicide after receiving <a href="https://www.bbc.com/news/uk-40490936">466 mailings from 99 charities</a> in a year. Last month it updated its service to stop direct marketing communications from charities, allowing people to block <a href="https://www.fundraisingregulator.org.uk/more-from-us/news/fundraising-regulator-strengthens-fundraising-preference-service-following">ten charities at a time</a>.</p>
<p>In the US, the Indiana University Lilly Family School of Philanthropy has found that even though total donations have been increasing, the share of Americans donating has declined – from two-thirds in 2000 <a href="https://philanthropy.iupui.edu/news-events/news-item/latest-data-shows-new-low-in-share-of-americans-who-donated-to-charity.html?id=363">to half in 2018</a>. </p>
<p>The report doesn’t speculate on the causes, but given the well-established phenomenon of choice overload, it’s reasonable to assume too much competition plays a part.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/does-choice-overload-you-it-depends-on-your-personality-take-the-test-122196">Does choice overload you? It depends on your personality – take the test</a>
</strong>
</em>
</p>
<hr>
<h2>Unfair competition</h2>
<p>As well as the issues already mentioned, competition generally disadvantages smaller charities.</p>
<p>This was highlighted in <a href="https://www.civilsociety.co.uk/news/charities-competitive-behaviours-in-contracting-negatively-impacting-beneficiaries.html">a 2020 report</a> by Britain’s National Council for Voluntary Organisations, warning of competitive behaviour’s “negative impact on the sector, people and places”. </p>
<p>The report’s focus was mostly on competition in bidding for government service contract. but its conclusions also apply to competition for public donations </p>
<p>The “uncool” causes also lose out. This is well-known in conservation fundraising, where large and cute animals outdo <a href="https://www.smithsonianmag.com/science-nature/are-ugly-animals-lost-cause-180963807/">ugly ones</a>. </p>
<figure class="align-center ">
<img alt="WWF advertisement featuring dolpphins." src="https://images.theconversation.com/files/462699/original/file-20220512-23-exx33b.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/462699/original/file-20220512-23-exx33b.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=300&fit=crop&dpr=1 600w, https://images.theconversation.com/files/462699/original/file-20220512-23-exx33b.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=300&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/462699/original/file-20220512-23-exx33b.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=300&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/462699/original/file-20220512-23-exx33b.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=377&fit=crop&dpr=1 754w, https://images.theconversation.com/files/462699/original/file-20220512-23-exx33b.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=377&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/462699/original/file-20220512-23-exx33b.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=377&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Most people would rather save dolphins than blobfish.</span>
<span class="attribution"><span class="source">WWF</span></span>
</figcaption>
</figure>
<p>It also occurs <a href="http://eprints.gla.ac.uk/77283/">with diseases</a>. The breast cancer lobby in Australia, for example, has been likened to a “<a href="https://www.smh.com.au/lifestyle/health-and-wellness/pink-steamrolls-all-on-path-to-cancer-kudos-20110108-19j9n.html">pink steamroller</a>”, diverting funding and public awareness away from other forms of cancer. </p>
<p>Celebrity power has contributed to this. Breast cancer survivor <a href="https://www.theguardian.com/film/2020/oct/26/olivia-newton-john-i-dont-wish-cancer-on-anyone-else-but-for-me-it-has-been-a-gift">Olivia Newton-John</a>, for example, has been a passionate fundraiser for research, establishing the <a href="https://www.onjcancercentre.org/">Olivia Newton-John Cancer Wellness & Research Centre</a>.</p>
<figure class="align-center ">
<img alt="Olivia Newton-John addresses the Victorian Comprehensive Cancer Centre Research Conference in Melbourne in September 2019." src="https://images.theconversation.com/files/462687/original/file-20220512-5542-pm0lu1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/462687/original/file-20220512-5542-pm0lu1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=429&fit=crop&dpr=1 600w, https://images.theconversation.com/files/462687/original/file-20220512-5542-pm0lu1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=429&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/462687/original/file-20220512-5542-pm0lu1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=429&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/462687/original/file-20220512-5542-pm0lu1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=539&fit=crop&dpr=1 754w, https://images.theconversation.com/files/462687/original/file-20220512-5542-pm0lu1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=539&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/462687/original/file-20220512-5542-pm0lu1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=539&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Olivia Newton-John addresses the Victorian Comprehensive Cancer Centre Research Conference in Melbourne in September 2019.</span>
<span class="attribution"><span class="source">David Crosling/AAP</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>So too has champion cricketer Glenn McGrath, who established the <a href="https://www.mcgrathfoundation.com.au/">McGrath Foundation</a> after his wife Jane died of breast cancer. The foundation has a high-profile association with Cricket Australia, which hosts the annual <a href="https://www.pinktest.com.au/">Sydney Pink Test</a> to raise money for breast cancer services.</p>
<h2>Is more co-operation possible?</h2>
<p>Could charities compete less and co-operate more? </p>
<p>Co-operative marketing structures are common in sectors such as agriculture. They are also used in retailing, where small independent stores, travel agents and newsagencies have pooled their marketing resources to compete with large corporate rivals.</p>
<p>Applying this approach would mean, for example, that cancer charities – breast, bowel, leukaemia, lung, myeloma, ovarian, pancreatic and prostate – would fund campaigns coordinated by an umbrella organisation. Proceeds could then be split more equitably, based on expert input about research and support needs. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-market-is-not-our-master-only-state-led-business-cooperation-will-drive-real-economic-recovery-141532">The market is not our master — only state-led business cooperation will drive real economic recovery</a>
</strong>
</em>
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<p>The benefits of greater co-operation have been <a href="https://www.charityconnect.co.uk/post/5-ways-charities-can-benefit-from-collaboration/145">talked about for years</a> with no much progress made. </p>
<p>But there’s nothing like an idea whose time has come, and with every passing year the case for charitable co-operation grows.</p><img src="https://counter.theconversation.com/content/182754/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Competition is hurting charities and the causes for which they raise funds. There must be a better way.David Waller, Associate Professor, University of Technology SydneyPhillip Morgan, Associate lecturer, University of NewcastleLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1820492022-04-28T20:01:13Z2022-04-28T20:01:13ZMore affordable housing with less homelessness is possible – if only Australia would learn from Nordic nations<figure><img src="https://images.theconversation.com/files/460189/original/file-20220428-16-c4pif4.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5445%2C2759&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Housing is expensive in Australia. But it doesn’t have to be this way. Higher quality, more affordable housing is a matter of policy choice.</p>
<p>A key problem is Australia’s housing market is too skewed towards treating housing as a financial asset, rather than a basic human need. </p>
<p>There is almost a universal consensus among economists, for example, that negative gearing <a href="https://theconversation.com/vital-signs-why-now-is-the-right-time-to-clamp-down-on-negative-gearing-107370">favours the interests of investors</a> to the detriment of others, but both major parties are scared to change the policy.</p>
<p>One way to break the policy stalemate is to consider policies shown to have worked in other countries. To facilitate this, the Nordic Policy Centre – a collaboration between The Australia Institute and Deakin University – has <a href="https://australiainstitute.org.au/report/homes-for-people/">published an overview</a> of housing and homelessness policies in Sweden, Norway, Denmark and Finland.</p>
<p>Of particular note among the wide range of housing policies in these nations is the prominence of housing co-operatives, which assist both renters and those wanting to own a secure, high-quality home.</p>
<h2>Why Nordic countries?</h2>
<p>Why look at the Nordic countries?</p>
<p>One reason is their relative success in tackling homelessness. </p>
<p>Finland is the world leader in this. There, the number of people experiencing homelessness has fallen from more than 16,000 people in the late 1980s to about 4,500 people in 2020. This represents a homelessness rate of less than one per 1,000 (Finland’s population is about 5.5 million) compared with nearly five per 1,000 in Australia.</p>
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<p>Homelessness, granted, is more complicated than just the cost of housing. It involves family and relationship trauma, physical and mental health issues, and substance use. </p>
<p>The Finns’ achievement is due to a range of policy responses including strong outreach services. </p>
<p>But underpinnning these responses is the Finnish government’s “<a href="https://housingfirsteurope.eu/countries/finland/">Housing First</a>” principle, adopted in 2007, which says people have a right to decent housing and to useful social services. It’s a seemingly simple concept, but radically inclusive compared with how other countries deal with the homeless. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/we-identified-whos-most-at-risk-of-homelessness-and-where-they-are-now-we-must-act-before-its-too-late-172501">We identified who's most at risk of homelessness and where they are. Now we must act, before it's too late</a>
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</em>
</p>
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<h2>Vibrant co-operative sectors</h2>
<p>In Australia, housing co-operatives might conjure up images of small hippie communes. This is an unfair characterisation, borne of the fact the sector is so tiny and unknown. </p>
<p>All up, co-operative housing comprises less than 1% of the Australian housing sector, with about <a href="https://researchdirect.westernsydney.edu.au/islandora/object/uws:53637/">200 housing co-operatives</a> mostly focused on providing affordable rental housing. </p>
<p>In Nordic countries, however, housing co-operatives are a mainstream option for both renters and owners. </p>
<p>Sweden’s co-operative sector amounts to 22% of total housing stock. Norway’s represent 15% nationwide, and 40% in the capital, Oslo. In Denmark, more than 20% of the population lives in co-operative housing. </p>
<figure class="align-center ">
<img alt="Housing in Denmark" src="https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=309&fit=crop&dpr=1 600w, https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=309&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=309&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=389&fit=crop&dpr=1 754w, https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=389&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=389&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Denmark has more than 120 housing co-operatives, providing about 230,000 rental units.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<h2>How co-operative housing works</h2>
<p>Co-operatives take a variety of forms. But the key features are that they are democratically organised and exist to serve a real economic or social need of their members.</p>
<p>Rental housing co-operatives exist to provide housing, not accrue wealth. They pool common resources to own and manage affordable rental accommodation. Tenants are generally required to become members and encouraged to be actively involved in decision-making, management and maintenance. Any revenue from rents is reinvested in new housing projects or upgrading older buildings. </p>
<p>In Denmark, rental co-operative housing – known as <em>Almenboliger</em> – plays a critical role in providing affordable housing for a range of people, including the elderly and those with disabilities. Its non-profit orientation as well as supportive government policies – such as lower-interest loans – enable co-operatives to reduce construction costs and offer lower rents. </p>
<p>In Norway, national law allows 10% of units in a housing co-operative complex to be bought or used by local government authorities to house people who can’t afford alternatives. Housing co-operatives in Oslo have been vital for securing decent housing for immigrants and for older people. </p>
<h2>A path to home ownership</h2>
<p>Just as important in terms of lessons for Australia is that Nordic housing co-operatives also play a big role in helping people buy a home.</p>
<p>So-called “equity-based” housing co-operatives in Sweden, Norway and Denmark help reduce the cost of home ownership. This generally involves the co-operative building or buying an apartment or unit block, then allowing members to buy individual homes, while the co-operative retains ownership of common areas. </p>
<p>Members own their individual dwellings and co-own and manage shared spaces with other co-op members. The structure is similar to strata title in Australia, with individual ownership of some parts of a property and shared ownership of others. The big difference is strata title is often “investor-owned”, while a housing co-operative is “user-owned”. </p>
<p>The result is that members can buy a home for about 20% less than what it would cost them otherwise.</p>
<h2>More collaboration needed</h2>
<p>Not everything the Nordic countries do can be replicated in Australian conditions. But one thing we can certainly learn is the importance of collaboration between different tiers of government and civil society organisations. </p>
<p>Australia’s superannuation funds, for example, have the means to invest in low-returning, but very safe, affordable housing assets. Government policies should support them doing this through co-operative structures that help to fill the gap between market and state.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/as-home-prices-soar-we-have-an-inquiry-almost-designed-not-to-tell-us-why-168959">As home prices soar, we have an inquiry almost designed not to tell us why</a>
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<p>There’s no quick fix. Emulating any Nordic housing policy achievements will take decades. Finland’s <a href="https://ysaatio.fi/en/hom">critical organisation</a> for tackling homelessness, for example, was established in 1985. </p>
<p>But better housing options are there in plain sight, waiting for policy makers and other stakeholders to take them. If they want to.</p>
<hr>
<p><em>Correction: This article has been amended to correct the statistics on the homelessness rates in Finland and Australia. The correct rates are one per 1,000 in Finland and nearly five per 1,000 in Australia. The original article stated one per 100,000 and neaerly five per 100,000.</em></p><img src="https://counter.theconversation.com/content/182049/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors acknowledge and thank Rod Campbell for his assistance in preparing this article.
</span></em></p><p class="fine-print"><em><span>Heather Hoist is Victoria's Commissioner for Residential Tenancies. She writes here in a personal capacity.</span></em></p><p class="fine-print"><em><span>Sidsel Grimstad is chief investigator on an Australian Research Council and housing co-operative sector funded project, Articulating Value in Housing Co-operatives (2021-2023).</span></em></p>In Norway, Sweden, Finland and Denmark, housing co-operatives help both renters and those wanting to own a secure, high-quality home. Better housing options for Australia are waiting in plain sight.Andrew Scott, Professor of Politics and Policy, Deakin UniversityHeather Holst, Adjunct lecturer, UNSW SydneySidsel Grimstad, Senior lecturer, University of NewcastleLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1644772021-08-03T14:47:53Z2021-08-03T14:47:53ZCanada’s small businesses could be saved by converting them to co-operatives<figure><img src="https://images.theconversation.com/files/413413/original/file-20210727-21-cwwscj.jpg?ixlib=rb-1.1.0&rect=39%2C0%2C4368%2C2896&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The COVID-19 crisis has demonstrated that our communities must be self-sustaining rather than reliant on volatile global value chains. Co-operatives bring resiliency self-determination to local economies. </span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Most of Canada’s <a href="https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03126.html#how-SME">1.2 million small- and medium-sized enterprises</a> have been affected by COVID-19. A substantial number of them remain <a href="https://content.cfib-fcei.ca/sites/default/files/2021-02/SME-Debt-and-Profitability.pdf">heavily indebted</a> as pandemic restrictions ease, while <a href="https://economics.td.com/ca-cfib">workforce shortages and supply-chain disruptions</a> are still a problem.</p>
<p>The pandemic has added to the looming succession crisis for these companies due to the growing number of owners nearing retirement who don’t have a formal plan in place for the continuity of their businesses.</p>
<p>This coming succession crunch, part of what’s known as “<a href="https://www.forbes.com/sites/sarazeffgeber/2020/11/28/the-new-silver-tsunami/?sh=472e9bb96d69">the silver tsunami</a>,” was already being <a href="https://content.cfib-fcei.ca/sites/default/files/article/documents/rr3277_0.pdf">discussed by the early 2010s in Canada</a>. Economic experts in <a href="https://nebula.wsimg.com/39cbf55b5770b4a1c05ed7b3f95f32ae?AccessKeyId=980CF231281E274931F9&disposition=0&alloworigin=1">the United States</a> and <a href="https://cadmus.eui.eu/handle/1814/18116">the European Union</a> have also been warning of a similar phenomenon on the horizon for more than a decade.</p>
<figure class="align-center ">
<img alt="A white haired bearded man in a farmer's field with a younger woman looking at a laptop." src="https://images.theconversation.com/files/414348/original/file-20210803-21-304xau.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/414348/original/file-20210803-21-304xau.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=391&fit=crop&dpr=1 600w, https://images.theconversation.com/files/414348/original/file-20210803-21-304xau.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=391&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/414348/original/file-20210803-21-304xau.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=391&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/414348/original/file-20210803-21-304xau.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=491&fit=crop&dpr=1 754w, https://images.theconversation.com/files/414348/original/file-20210803-21-304xau.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=491&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/414348/original/file-20210803-21-304xau.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=491&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The so-called silver tsunami means owners of small- and medium-sized enterprises are pondering succession plans, but few have one in place.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>At stake before the pandemic was <a href="https://content.cfib-fcei.ca/sites/default/files/2018-11/Getting-the-transition-right-succession-planning-report.pdf">$1.5 trillion in business assets</a> and the future of a <a href="https://www.theglobeandmail.com/globe-investor/retirement/the-boomer-shift-how-canadas-economy-is-headed-for-majorchange/article27159892/">large swath of Canada’s workforce</a> because so many Canadians are employed by small- and medium-sized companies.</p>
<p>Overall, Canadian business owners <a href="https://content.cfib-fcei.ca/sites/default/files/2018-11/Getting-the-transition-right-succession-planning-report.pdf">aren’t prepared for succession</a> or for the impacts of crises on their companies. Jobs and the socio-economic well-being of Canadian communities are potentially at risk.</p>
<h2>The co-operative solution</h2>
<p>In Canada, a research team I lead recently published <a href="https://8dcc0d1e-6766-44ed-aac2-decdbe17ca29.filesusr.com/ugd/51eec9_0979bf0c39624ad3bd93fa74efd07643.pdf">a report on succession at these companies</a> and found that business owners first think of transferring their companies to their children or other family members (43 per cent). Retiring owners or those with businesses at risk also seek to sell to third-party investors (24 per cent). </p>
<p>But, as our research also shows, less than half of retirement-aged owners (48 per cent) are familiar with the intricacies of succession, while only 14 per cent have formal succession plans in place. </p>
<p>Another succession option is the strategy of <a href="https://www.oise.utoronto.ca/clsew/UserFiles/File/CoopConvert/1.English-BCCs-evidence_from_the_litterature_-_what_enables_conversion_to_co-operatives_in_canada.pdf">business conversions to co-operatives</a> — selling or transferring companies to employees or other community stakeholders who then <a href="https://canada.coop/wp-content/uploads/2021/05/conversions_to_co-operatives_-_background_information_5_feb._2021_.pdf">create co-operatives</a> and continue the business’s activities.</p>
<p>These converted businesses can take on <a href="https://www.coopconvert.ca/copy-of-about">different member ownership forms</a>, such as worker, consumer, multi-stakeholder or producer co-ops. More than 200 of them, of all these different types, already exist in Canada.</p>
<p>As my earlier research on <a href="https://www.euricse.eu/publications/italys-worker-buyouts-in-times-of-crisis/">Italy’s worker buyouts</a> and <a href="https://www.haymarketbooks.org/books/1585-workers-self-management-in-argentina">Argentina’s worker-recuperated companies</a> has shown, businesses that convert to co-operatives represent a tried-and-true rescue and succession strategy. However, our new study shows that in Canada it’s still <a href="https://atkinsonfoundation.ca/site/uploads/2018/12/AF_CoopPlanningReport_110918-FINAL.pdf">a largely overlooked option</a> by most owners of small- and medium-sized enterprises and employees, unions and policy-makers.</p>
<h2>An overall lack of understanding of co-ops</h2>
<p>The combination of a lack of succession planning and the failure to consider the co-operative-conversion solution is tied to a related finding from our research — only 30 per cent of Canadian small business owners are familiar with co-ops, and many of them have mistaken ideas about them. Those include misconceptions about inefficiency due to the democratic governance of co-ops and assumptions that they lack competitiveness.</p>
<p>Decades of research into the co-operative model’s advantages and strengths shows that these concerns are unfounded. Co-operatives offer <a href="https://fernwoodpublishing.ca/book/cooperatives_in_a_postgrowth_era">stable business models</a> that <a href="https://www.euricse.eu/jeod_articles/invited-paper-worker-cooperatives-good-sustainable-jobs-in-the-community/">provide good jobs</a>. They are often better than conventional businesses in terms of <a href="https://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_ent/documents/publication/wcms_108416.pdf">responding to and surviving crises</a> because they <a href="https://neweconomics.org/uploads/files/co-ops-unleashed.pdf">source capital locally rather than with distant shareholders</a>, <a href="https://www.euricse.eu/jeod_articles/editorial-the-cooperative-advantage-for-community-development/">meet local community needs</a>, and <a href="https://www.academia.edu/44641480/Co_operatives_territories_and_social_capital_Reconsidering_a_theoretical_framework">foster trust</a> and mutual aid.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/banking-co-ops-run-by-black-women-have-a-longtime-legacy-of-helping-people-155796">Banking co-ops run by Black women have a longtime legacy of helping people</a>
</strong>
</em>
</p>
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<p>During economic downturns, for instance, co-op members will often <a href="https://www.ess-europe.eu/sites/default/files/report_cecop_2012_en_web.pdf">amend wages and revenue distribution rather than lay off employees</a>.</p>
<p>The overall lack of knowledge of the co-op model is not surprising. There is <a href="https://base.socioeco.org/docs/paper-mainstreaming-sse-12-november-2016-edit-untfsse.pdf">systemic bias against solidarity-based economic activity</a> by mainstream economists and business pundits, and a related <a href="https://eric.ed.gov/?id=EJ1132676">lack of co-op content in post-secondary business and economics courses</a>.</p>
<p>At the same time, Canada already has <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/191213/dq191213c-eng.htm">almost 6,000 non-financial co-ops</a>, making up, <a href="https://canada.coop/wp-content/uploads/2021/04/coop_gdp_report_english_web.pdf">according to a recent study</a>, 3.4 per cent of its GDP ($61.2 billion). That’s significantly more than the telecommunication sector’s and mining sector’s 1.8 per cent of GDP respectively, and the auto parts and manufacturing sector’s 0.9 per cent of GDP.</p>
<p>There is no doubt that co-ops are competitive and sustainable businesses. It should then be in the interest of business owners, employees, unions, local communities, as well as policy-makers, to know more about the co-op option for succession and business survival purposes.</p>
<h2>Pathways for conversion to co-ops</h2>
<p>Part of this should include a renewed education campaign about Canada’s already established pathways for businesses to convert to co-ops. Co-operative advocates like the <a href="https://canadianworker.coop/employee-succession-the-co-op-solution/">Canadian Worker Co-op Federation</a> and <a href="https://ontario.coop/business-succession">provincial associations like the one in Ontario</a> have long been leading the way. But business schools and mainstream media need to step up, too. How-to resources and conversion diagnostic tools need to be made readily available, and case studies of the co-op model should be promoted.</p>
<p>Examples of Canadian businesses that have successfully converted to co-ops include Ontario’s <a href="https://www.arontheatre.com/">Aron Theatre Co-operative</a>, <a href="https://www.moonbeamcoop.com/home">Épicerie Co-op Grocery</a>, and <a href="https://arisearchitects.com/">Arise Architects</a>; <a href="https://battleriverrailway.ca/">Battle River Railway</a> in Alberta; and <a href="https://www.glitterbeancafe.com/">Glitter Bean Café</a> in Halifax.</p>
<p>Most of them are in Québec, however, due to <a href="https://chantier.qc.ca/discover-social-economy/definition/?lang=en">favourable social economic policies</a> related to co-op development, the role of unions and labour funds in the conversion process and the unique forms of co-operative businesses found there. </p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/413416/original/file-20210727-18-1slpfvi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Delivery automobiles with the St-Hubert logo in a parking lot." src="https://images.theconversation.com/files/413416/original/file-20210727-18-1slpfvi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/413416/original/file-20210727-18-1slpfvi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/413416/original/file-20210727-18-1slpfvi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/413416/original/file-20210727-18-1slpfvi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/413416/original/file-20210727-18-1slpfvi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/413416/original/file-20210727-18-1slpfvi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/413416/original/file-20210727-18-1slpfvi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Delivery automobiles are seen at the St-Hubert restaurant in Laval, Québec.</span>
<span class="attribution"><span class="source">Laurent Bélanger/Creative Commons</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>These include <a href="https://community-wealth.org/sites/clone.community-wealth.org/files/downloads/tool-oeoc-multistakeholder-coop.pdf">multi-stakeholder solidarity co-ops</a>, and <a href="https://canadianworker.coop/about/related-types-of-co-ops/">worker-shareholder co-ops</a>, where the worker co-op co-owns the firm with more traditional investors. Examples of conversions to co-ops in Québec include dozens in the <a href="https://www.fcfq.coop/">funeral sector</a>, the <a href="https://fcpq.coop/">ambulance sector</a>, the recently formed newspaper co-op <a href="https://www.ledevoir.com/culture/medias/590335/les-medias-regionaux-de-cn2i-lancent-un-abonnement-numerique">CN2i</a>, and even a <a href="https://www.newswire.ca/fr/news-releases/les-cooperatives-de-travailleurs-dans-la-restauration---un-modele-qui-fonctionne--617809733.html">co-op St-Hubert franchise</a> in Laval.</p>
<p>Canada’s co-ops stepped up to respond to community needs during the COVID-19 crisis more quickly and had immediate local impact compared to government and corporate responses.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/canadas-co-operatives-helping-communities-during-and-after-the-coronavirus-135477">Canada’s co-operatives: Helping communities during and after the coronavirus</a>
</strong>
</em>
</p>
<hr>
<p>The COVID-19 crisis has demonstrated that <a href="https://www.resilience.org/stories/2020-04-07/comparative-resilience-8-principles-for-post-covid-reconstruction/">our communities must be self-sustaining rather than reliant on volatile global supply chains</a>. Co-ops <a href="https://doi-org.myaccess.library.utoronto.ca/10.1177/0973005221991624">bring resiliency</a> and <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8206912/">self-determination</a> to local economies. </p>
<p>The co-operative model needs therefore to be seriously considered and nurtured as viable responses to closing firms and lost jobs as a result of the pandemic and the looming business succession crunch.</p><img src="https://counter.theconversation.com/content/164477/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marcelo Vieta receives funding from the Social Sciences and Humanities Research Council of Canada (SSHRC) for the Conversion to Co-operatives Project (CoopConvert), which has assisted in funding the research reported on in this article.</span></em></p>The co-operative business model needs to be seriously considered and nurtured as a viable response to closing companies and lost jobs as a result of the pandemic.Marcelo Vieta, Associate Professor, Adult Education and Community Development, Ontario Institute for Studies in Education, University of TorontoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1465132020-09-29T14:33:24Z2020-09-29T14:33:24ZThe MEC debacle is a predictable and avoidable governance failure<figure><img src="https://images.theconversation.com/files/360326/original/file-20200928-14-1q3mr9t.JPG?ixlib=rb-1.1.0&rect=293%2C53%2C3700%2C2449&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The outside of a Mountain Equipment Co-op is seen in North Vancouver.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Jonathan Hayward</span></span></figcaption></figure><p>When news broke about Mountain Equipment Co-op (MEC) being sold to an investor in the United States, the reaction among many of its 5.4 million member-owners was surprise, anger and disappointment. </p>
<p>More than 130,000 members have so far signed <a href="https://www.change.org/p/mountain-equipment-coop-stop-the-privatization-of-mountain-equipment-co-op">a petition</a> to reverse the sale, while <a href="https://www.gofundme.com/f/save-mec-legal-fund">a group of members</a> has raised more than $100,000 to give members a voice at MEC’s Companies Creditors Arrangement Act (CCAA) proceedings. </p>
<p>Unfortunately, these efforts are too little, too late. MEC began eroding its membership’s democratic voice years ago, which put in motion the process that’s led to its demise as a co-operative. It was all sadly predictable. </p>
<p>Researchers have shown that <a href="https://usaskstudies.coop/documents/books,-booklets,-proceedings/big-co-ops-final.pdf">big co-operatives often fail</a> when they drift away from <a href="https://www.ica.coop/en/cooperatives/cooperative-identity">co-operative principles</a> <a href="https://thewalrus.ca/how-mec-lost-touch-with-its-roots/">and values</a>, especially democratic representation. </p>
<h2>No understanding of co-ops</h2>
<p>MEC made all the classic mistakes. It built a leadership team that lacked any obvious understanding of co-operatives and fostered a culture that started to see member involvement as a problem rather than a strength.</p>
<p>There is also evidence of management hubris, over-investment and lax board oversight — three more troubling signs, according to the same research on the failure of big co-operatives.</p>
<p>MEC’s slide arguably started in 2012, when it dropped the word “co-op” from its marketing and adopted <a href="https://www.vancourier.com/mountain-equipment-co-op-ballot-criticized-as-undemocratic-1.388689">a rule</a> to disqualify board of director candidates that the board felt weren’t up to the job. Today, only one of the bios for MEC’s board makes an implicit reference to co-operative experience.</p>
<p>In justifying these changes, the board said it needed board members with experience running companies as big and complicated as MEC to face off against online competitors like Amazon or big outdoor retailers like Sail in eastern Canada or Cabela’s in western Canada. The assumption was that the average board member just wouldn’t be able to cut it, even if they had ample experience on boards and in business. </p>
<h2>Diversity of perspectives</h2>
<p>This shift is peculiar because boards of big co-operatives like MEC can hire the advice they need. There’s also <a href="https://hbr.org/2019/03/when-and-why-diversity-improves-your-boards-performance">compelling research</a> showing that a diversity of perspectives can improve board decision-making. Recruiting people from the same professional background is misguided.</p>
<p>And as others researchers <a href="https://usaskstudies.coop/documents/books,-booklets,-proceedings/co-op-atlantic-final.pdf">have emphasized</a>, co-operative governance is mostly about setting the organization’s direction, maintaining legitimacy with members and ensuring the organization has a strong workplace culture and good relationships with the community. Experience at a big private company provides no obvious advantage when it comes to these assets. </p>
<p>MEC’s demise as a co-operative business seems to correlate with these governance shifts away from democratic input. Consider the graph below:</p>
<figure class="align-center ">
<img alt="A graph plotting MEC's leverage ratio from 2000 to 2019." src="https://images.theconversation.com/files/359920/original/file-20200925-24-bg3tq7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/359920/original/file-20200925-24-bg3tq7.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=331&fit=crop&dpr=1 600w, https://images.theconversation.com/files/359920/original/file-20200925-24-bg3tq7.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=331&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/359920/original/file-20200925-24-bg3tq7.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=331&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/359920/original/file-20200925-24-bg3tq7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=416&fit=crop&dpr=1 754w, https://images.theconversation.com/files/359920/original/file-20200925-24-bg3tq7.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=416&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/359920/original/file-20200925-24-bg3tq7.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=416&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">MEC Leverage Ratio over 20 years.</span>
<span class="attribution"><span class="source">Authors' calculations</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>It shows the evolution of MEC’s leverage ratio, a measure of risk that we calculate as the ratio of the money owed by MEC (total liabilities) relative to how much money members had accumulated in the business (member equity). Until MEC started making big governance changes in 2012, the ratio was low and stable. Then it started climbing, settling near 100 per in 2018-19. </p>
<h2>Expansion to blame for debt?</h2>
<p>There is reason to believe that the debt resulted from MEC’s expansion strategy. </p>
<p>In 2012, <a href="http://marketingmag.ca/brands/mec-expands-product-base-plans-marcom-changes-47923/">MEC announced</a> it was adding 1,400 new products to its stores. In subsequent years, MEC opened a “<a href="https://www.mec.ca/en/explore/new-hq-press-release">stunning</a>” new headquarters in Vancouver and expanded into smaller Canadian markets like <a href="https://www.mec.ca/en/explore/mec-north-york-opening">North York</a>, <a href="https://www.mec.ca/en/explore/kelowna-grand-opening-press-release">Kelowna</a>, <a href="https://www.mec.ca/en/explore/mec-kitchener-open-press-release">Kitchener</a> and <a href="https://www.mec.ca/en/explore/mec-laval-ouverture">Laval</a> while expanding its presence in places like <a href="https://www.mec.ca/en/explore/south-edmonton-opening">Edmonton</a> and <a href="https://www.mec.ca/en/explore/mec-calgary-south-and-west">Calgary</a>. Plans were also underway to open a store in <a href="https://www.mec.ca/en/explore/mec-in-saskatoon-press-release">Saskatoon</a>.</p>
<p>In analyzing the sale of MEC to U.S.-based Kingswood Capital Management, <a href="https://twitter.com/ScottPiatkowski/status/1307371456385421316?s=09">one observer</a> concluded that the new owners will almost certainly close several MEC stores to make the business viable and suggests, as a result, that the sale is a bad and unnecessary deal. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1307371456385421316"}"></div></p>
<p>Could the MEC board have also closed stores? It wouldn’t have been easy. Some members would have objected. </p>
<p>But a more determined and democratically selected board might have had <a href="https://anserj.ca/index.php/cjnser/article/view/323/248">the legitimacy</a> to make tough decisions and in the process, retain the loyalty and good will of a big group of upset members. </p>
<h2>The loss of legitimacy</h2>
<p>After news of the sale, MEC’s board chairwoman <a href="https://www.mec.ca/en/article/a-message-from-mecs-board-of-directors">explained the decision</a> to sell the business. </p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/360359/original/file-20200928-24-hv9ug3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A woman with blonde hair and glasses smiles" src="https://images.theconversation.com/files/360359/original/file-20200928-24-hv9ug3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/360359/original/file-20200928-24-hv9ug3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/360359/original/file-20200928-24-hv9ug3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/360359/original/file-20200928-24-hv9ug3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/360359/original/file-20200928-24-hv9ug3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/360359/original/file-20200928-24-hv9ug3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/360359/original/file-20200928-24-hv9ug3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Judi Richardson, MEC’s board chairwoman.</span>
<span class="attribution"><span class="source">Mountain Equipment Co-op</span></span>
</figcaption>
</figure>
<p>If anything, her message underlines the board’s disinterest in what remained of MEC’s democratic process. Judi Richardson wrote that “things will look a little different” after the sale, for example, as if democratic control is trivial. The letter also dismisses the possibility that members might have helped to recapitalize the co-op. </p>
<p>The recent petition and fund-raising efforts suggest MEC could have tapped into a reservoir of good will. But the board’s skepticism about this solution is probably justified, because any such effort would have signalled to creditors that MEC was in trouble. That’s not something any board wants to do. </p>
<p>More fundamentally, the good will we see today is probably not deep enough to raise millions of dollars in capital, especially in the midst of CCAA proceedings. It’s easy to sign a petition or give a few dollars to a GoFundMe campaign, but it’s another thing to put big money into an organization that won’t give you any real democratic voice. </p>
<p>And maybe that’s the ultimate price that co-operatives pay when they make it harder for ordinary members to have a say. They lose their membership’s voice, loyalty — and ultimately, their business. </p>
<p><em>This piece was co-authored by <a href="https://theconversation.com/profiles/anthony-piscitelli-1160060">Anthony Piscitelli</a>, a professor for the Conestoga College Public Service Program.</em></p><img src="https://counter.theconversation.com/content/146513/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc-Andre Pigeon does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>MEC built a leadership team that lacked any obvious understanding of co-operatives and fostered a culture that started to see member involvement as a problem rather than a strength.Marc-Andre Pigeon, Assistant Professor, Johnson Shoyama Graduate School of Public Policy, University of SaskatchewanLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1469472020-09-28T15:35:11Z2020-09-28T15:35:11ZThe value of the Mountain Equipment Co-op sale lies in its customer data<figure><img src="https://images.theconversation.com/files/360059/original/file-20200925-20-8h7fr5.jpg?ixlib=rb-1.1.0&rect=40%2C0%2C4545%2C2844&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A Mountain Equipment Co-op store in Montréal . </span> <span class="attribution"><span class="source">(THE CANADIAN PRESS/Paul Chiasson)</span></span></figcaption></figure><p>Imagine a world where, as a retailer, you have complete and detailed information on every single transaction made by each of your five million customers — for decades.</p>
<p>This is what private investment firm Kingswood Capital Management acquired when it <a href="https://thelogic.co/news/kingswood-capital-management-won-the-bidding-for-mec-can-it-win-over-sceptical-mec-loyalists/">bought Canadian retailer Mountain Equipment Co-op (MEC)</a>. Not a brand, not a chain of <a href="https://www.bnnbloomberg.ca/mec-cuts-costs-boosts-perks-in-effort-to-turn-around-struggling-retailer-1.1376702">22 struggling stores</a>, certainly not customer loyalty and definitely not a successful private branding sporting goods franchise. </p>
<p>Kingswood bought access to, and control of, an unparalleled treasure trove of consumption data and purchase histories. That and detailed, verified personal information including name, age, address, telephone number and email.</p>
<h2>Membership-based retail</h2>
<p>MEC is a co-operative, open only to its members. Membership is easily obtained by purchasing a $5 share, which confers a lifetime membership in the co-op. When making purchases online or in person, members must provide their membership number. This is duly recorded on the transaction.</p>
<p><a href="https://www.mec.ca/en/explore/privacy-policy">MEC’s privacy policy</a> runs the usual several pages of legalese. It outlines the data gathered, the 15 purposes for which these data will be used, storage policies, use of third-party analytics and ad services and the promise that personal information will not be disclosed other than for the identified purposes. MEC also commits to removing any and all information from its databases should members request it.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-good-governance-can-stop-toxic-bro-behaviour-at-companies-145826">How good governance can stop toxic 'bro behaviour' at companies</a>
</strong>
</em>
</p>
<hr>
<p>Unfortunately, the data collection purposes are deliberately wide and vague, including:</p>
<blockquote>
<p>To enable MEC to deliver a high standard of service to our members and prospective members;</p>
<p>To understand the product and service needs of our members and prospective members;</p>
<p>To develop and manage products and services to meet the needs of our members and non-members.</p>
</blockquote>
<p>MEC is no worse and certainly no better than companies that ask consumers to provide data about themselves in return for some benefit, like reward or affinity programs.</p>
<h2>Data as commodity</h2>
<p>In an earlier article, a co-author and I demystified the plethora of <a href="https://iveybusinessjournal.com/publication/data-theft-or-loss-ten-things-your-lawyer-must-tell-you-about-handling-information/">privacy legislation and offered proscriptions to organizations on how to carefully and responsibly handle data in the burgeoning e-commerce age</a>. </p>
<p>MEC, like many other retailers, mines the data customers willingly provide them to improve services, but more importantly, to inform brand promotions and increase sales. This is the world of data analytics, and the promise of data mining.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-art-and-science-of-analyzing-big-data-112933">The art and science of analyzing Big Data</a>
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</em>
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<p>Until now, MEC’s members have gone along based on trust and a belief that the organization’s decision-makers, as custodians, act in the best interests of the enterprise and its members.</p>
<p>This trust has been broken. Things are about to change.</p>
<h2>Betrayal and legacy</h2>
<p>A change.org petition, “Save MEC,” <a href="https://www.change.org/p/members-of-mec-anyone-who-has-purchased-anything-from-mec-save-mec">has gathered over 138,000 signatures at the time of writing</a>. The comments included with the signatures underscore feelings of betrayal and a loss of trust in the organization. </p>
<p>The petition has <a href="https://www.gofundme.com/f/save-mec-legal-fund">raised over $100,000 to cover legal costs</a> and is <a href="https://www.theglobeandmail.com/business/article-group-of-co-op-member-raise-funds-to-fight-mec-sale/">seeking intervener status before the courts to block the sale</a>.</p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/5txS4Gd4-Cc?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">A Breakfast Television news report on the thousands who have rallied together to try and stop the sale of MEC.</span></figcaption>
</figure>
<p>Kingswood Capital will be transforming MEC into a for-profit retail chain, virtually indistinguishable from all of its many local, provincial and national competitors. In doing so, it will rationalize and cut costs (<a href="https://www.retail-insider.com/retail-insider/2020/9/mec-files-for-creditor-protection-amid-acquisition-by-kingswood-capital">the fund has committed to keeping 17 stores open, thus closing at least five stores</a>). </p>
<p>However, MEC’s longer-term success lies in effectively differentiating itself, mainly by leveraging its base of 5.1 million legacy customers.</p>
<h2>Spinning data into profit</h2>
<p>The path to doing so lies in aggressively mining its customer data for all its worth, not only to Kingswood Capital’s own ends, but by also dividing these data into attractive offerings for other marketers, ad services, social media and online advertisers. Churning and repeatedly selling such data is the real value of the five million records that Kingswood bought.</p>
<p>In its 2018-19 annual report, <a href="https://www.mec.ca/en/explore/current-mec-annual-report">MEC reported a net worth of roughly $189 million</a>, this before accumulating up to $92 million in debt by November 2020, when the sale is supposed to close. Kingswood reportedly paid <a href="https://www.theglobeandmail.com/business/article-monitor-urges-bc-supreme-court-to-approve-us-private-equity/">just around $150 million</a> for the troubled co-op. At a value of $10 per member record, for 5.1 million members, Kingswood just has to sell this database a mere three times to recoup its investment. Selling it five times — an incredibly low number in today’s data-driven e-commerce economy — nearly doubles the investment.</p>
<p>While these numbers might be simplistic, it remains that even the most rudimentary analysis shows that the true value of MEC lies not in its stores, merchandise, brand or even its remaining employees. It’s all about the data.</p>
<p>Kingswood, in acquiring this iconic Canadian organization, figured out what MEC’s board never did: that the true value of an organization lies in a full and up-to-date database that evolves from a passionate community of loyal members who willingly, constantly and consistently give valuable information.</p><img src="https://counter.theconversation.com/content/146947/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Parent has been a member of MEC for over 30 years.</span></em></p>Since its inception, Mountain Equipment Co-op has collected information on every single transaction of each of its five million members. In the current digital economy, this data is a goldmine.Michael Parent, Professor, Management Information Systems, Simon Fraser UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1354772020-04-19T12:24:15Z2020-04-19T12:24:15ZCanada’s co-operatives: Helping communities during and after the coronavirus<figure><img src="https://images.theconversation.com/files/327350/original/file-20200412-196246-tr2prm.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C1920%2C1279&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Post-pandemic, co-operatives can scale up to promote the values of mutuality, inclusivity, economic justice and organizational democracy towards a transitioned Canadian economy.</span> <span class="attribution"><span class="source">(Pixabay)</span></span></figcaption></figure><p>As the epidemiological impacts of COVID-19 grow exponentially, so do business closures, unemployment rates, poverty, housing and food insecurities. </p>
<p>It’s not surprising to <a href="http://www.coopresearch.coop/">researchers of co-operatives and community economic development</a> that the outbreak of COVID-19 spurred Canada’s co-operative sector to immediately step up and respond to the needs of communities — in many cases, sooner and more concretely than <a href="https://www.mccarthy.ca/en/insights/articles/covid-19-economic-relief-measures-announced-date">the federal, provincial and local governments</a> as well as large corporations. </p>
<p>For example, grocery co-ops innovated employee safety and salary top-up while worker co-ops quickly shifted to producing medical products, and credit unions offered far-reaching grants to community groups, loan deferrals and even <a href="https://www.vancity.com/AboutVancity/News/MediaReleases/VancityCutsCreditCardInterestRatesTo0_Apr08_2020/">zero-interest credit cards</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/327863/original/file-20200414-117573-1ss80fs.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/327863/original/file-20200414-117573-1ss80fs.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=342&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327863/original/file-20200414-117573-1ss80fs.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=342&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327863/original/file-20200414-117573-1ss80fs.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=342&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327863/original/file-20200414-117573-1ss80fs.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=429&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327863/original/file-20200414-117573-1ss80fs.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=429&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327863/original/file-20200414-117573-1ss80fs.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=429&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Co-op Morell is a grocery co-op in Prince Edward Island.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>The co-op sector can also be an integral part of the socio-economic rebuilding to come.</p>
<p>There are more than <a href="https://canada.coop/sites/canada.coop/files/factsheet_coop_success_en.pdf">31.8 million memberships</a> in co-operative enterprises in Canada that are present in most communities. Well-known Canadian co-ops include <a href="https://www.mec.ca/en/">MEC</a>, <a href="https://www.agropur.com/en">Agropur Coopérative</a> and <a href="https://www.cooperators.ca/">The Co-operators</a>.</p>
<p>While <a href="https://www.thecanadianencyclopedia.ca/en/article/co-operative-movement">co-operatives have a significant history in this country</a>, their relevance during the current COVID-19 crisis has been especially consequential for members, communities and businesses. </p>
<p>Post-pandemic, will co-operatives and community economic organizations become leaders in rebuilding Canada’s economy to be more equitable and humane? Can the COVID-19 crisis be a call to a <a href="https://www.resilience.org/stories/2020-04-07/comparative-resilience-8-principles-for-post-covid-reconstruction/">much-needed economic transition</a>?</p>
<h2>Co-operatives for communities, by communities</h2>
<p>Canada’s co-operatives are a part of a global movement of <a href="https://www.ica.coop/en/cooperatives/facts-and-figures">more than three million co-ops and a billion members</a>. Co-operatives are businesses co-owned by interested members rather than disconnected shareholders, rooting capital in local communities. Rather than prioritizing profit above all, co-operatives tend to <a href="http://dc.msvu.ca:8080/xmlui/handle/10587/1613">focus on member and community needs first</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-misunderstood-world-of-the-co-operative-enterprise-6015">The misunderstood world of the co-operative enterprise</a>
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</em>
</p>
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<p>They are <a href="https://www.ica.coop/en/cooperatives/cooperative-identity">guided by values and principles</a> of inclusivity, economic democracy, education and concern for community. They work towards fostering <a href="https://doi.org/10.1007/s11187-013-9494-8">strong bonds of trust</a> with stakeholders and provide more equitable places <a href="https://doi.org/10.1007/s13162-016-0083-2">to shop</a> <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2437929">and work</a>. These features have been called “<a href="https://www.euricse.eu/jeod_articles/editorial-the-cooperative-advantage-for-community-development/">the co-operative advantage</a>.” </p>
<p><a href="https://dx.doi.org/10.2139/ssrn.2196031">Community care</a> is at the heart of most of the millions of co-operatives the world over, including Canada’s. </p>
<p>Today, co-operatives are present across <a href="https://www.ic.gc.ca/eic/site/106.nsf/eng/h_00151.html#section2">most of Canada’s economic sectors</a>, making up <a href="https://canada.coop/sites/canada.coop/files/factsheet_coop_success_en.pdf">3.4 per cent of its GDP</a> and generating almost <a href="https://canada.coop/sites/canada.coop/files/coop_gdp_report_english_web.pdf">$86 billion in business activity</a>.</p>
<h2>Co-ops’ quick responses during COVID-19</h2>
<p>By their very nature, co-operatives are already one step ahead of many other organizations for responding to crises because of the connected and action-oriented role they play in communities. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1245686212150558720"}"></div></p>
<p>Co-operatives are <a href="https://www.routledge.com/Cooperatives-and-the-World-of-Work-1st-Edition/Roelants-Eum-Esim-Novkovic-Katajamaki/p/book/9780367250850">stable employers</a>, communication conduits of communities’ needs, places where community members meet and create and venues for <a href="https://doi.org/10.1111/tsq.12138%22%22">participatory democracy</a>. This is why co-operatives have been able to rise quickly to the challenges COVID-19 has thrown at communities.</p>
<p>Canada’s consumer co-operatives — co-owned by people who buy and use their goods and services — were among the first businesses to secure employees’ incomes, set aside shopping time for vulnerable groups and contribute free goods and services to marginalized and at-risk people. </p>
<p>For instance, as early as mid-March, <a href="https://ici.radio-canada.ca/nouvelle/1689896/livraison-epicerie-covid19-alina-sainte-luce-bonenfant">Coopérative Alina in Rimouski, Qué.,</a> established bicycle-delivered lunch menus and nightly car-delivered services, whereas larger Canadian stores were still scaling up delivery in late March. </p>
<p>Also by mid-March, <a href="https://globalnews.ca/news/6732377/coronavirus-calgary-co-op-safety-measures-hours/">Calgary Co-op</a>, one of the first grocery stores to offer differentiated hours for seniors shopping, raised front-line team members’ salaries by $2.50 an hour, retroactive to March 8. To compare, the federal government’s <a href="https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html">Canada Emergency Wage Subsidy</a> was announced on April 1, and is retroactive to March 15.</p>
<p>Canada’s consumer co-ops are also leading inter-community co-operation. Québec’s <a href="https://www.tvanouvelles.ca/2020/03/25/des-aides-pour-boucler-son-budget-en-temps-de-covid-19">Associations co-opératives d’économie familiale</a> have been working with local groups to help people who find themselves without pay and cash due to the COVID-19 crisis. The <a href="https://chfcanada.coop/housing-co-ops-and-covid-19/">Co-operative Housing Federation of Canada</a>, meanwhile, by March 17 had co-ordinated, along with the co-op housing sector, rental relief and mortgage payment assistance with credit unions.</p>
<h2>Helping vulnerable groups</h2>
<p><a href="https://doi.org/10.1007/978-1-137-26317-9_21">Worker co-ops</a> — businesses co-owned by employees — have been in step with <a href="https://www.ilo.org/global/topics/cooperatives/news/WCMS_740254/lang--en/index.htm">international trends</a> by supplying vulnerable groups and other local businesses or community associations with vital goods or services, often free of charge.</p>
<p>Montreal-based <a href="https://ici.radio-canada.ca/nouvelle/1681682/couturieres-couture-quebec-coronavirus-covid-masques-blouses">Co-op Couturières Pop</a> is now primarily producing much-needed hospital garments and face masks. Worker-owned microbrewery <a href="https://www.lhebdodustmaurice.com/covid-19-huit-initiatives-prises-par-le-trou-du-diable/">Le Trou du Diable</a> in Shawinigan, Qué., has topped up employee salaries by $5 an hour, continued to honour advertising purchases and even bought new ad space on local newspaper websites in order to help sustain the papers’ precarious revenue stream during the pandemic.</p>
<p>Canada’s <a href="https://www.ratehub.ca/blog/banks-vs-credit-unions-in-canada/">credit unions</a> — financial institutions co-owned by savers and service users — have also stepped up more significantly compared to the <a href="https://edmontonjournal.com/opinion/columnists/opinion-banks-must-do-more-to-help-canadians-weather-covid-19/">commercial banking sector</a>, which has been more cautious responding to the <a href="https://www.theglobeandmail.com/canada/article-covid-19-disruptions-could-send-many-canadian-households-into-a/">everyday financial difficulties brought on by COVID-19</a>. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/327462/original/file-20200413-125133-174z05a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/327462/original/file-20200413-125133-174z05a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/327462/original/file-20200413-125133-174z05a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=248&fit=crop&dpr=1 600w, https://images.theconversation.com/files/327462/original/file-20200413-125133-174z05a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=248&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/327462/original/file-20200413-125133-174z05a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=248&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/327462/original/file-20200413-125133-174z05a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=312&fit=crop&dpr=1 754w, https://images.theconversation.com/files/327462/original/file-20200413-125133-174z05a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=312&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/327462/original/file-20200413-125133-174z05a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=312&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Desjardins Group has offered credit relief to its members.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Ryan Remiorz</span></span>
</figcaption>
</figure>
<p>By March 16, <a href="https://www.journaldequebec.com/2020/04/02/covid-19-desjardins-baisse-le-taux-de-ses-cartes-de-credit">Desjardins Group</a>, North America’s largest credit union federation, offered credit relief on a per-needed basis to members in addition to reduced credit card rates. <a href="https://theprovince.com/news/covid-19-vancity-cuts-credit-card-interest-for-those-facing-financial-difficulty/wcm/f7686c76-b75f-41ba-bf72-e2083e466443">Vancity Credit Union</a> went even further, deferring payments and reducing credit card interest rates for people most affected by the pandemic to zero; as of April 9, no commercial bank in Canada had gone this far in offering credit relief.</p>
<p>By March 18, Vancity Credit Union had also partnered with charities to form the <a href="https://www.vancouverfoundation.ca/whats-new/communityresponsefund">Community Response Fund</a>; as of <a href="https://www.vancouverfoundation.ca/whats-new/community-response-fund-update">April 8</a>, donations to the relief fund totalled $6 million and helped 33 non-profits and charities.</p>
<p>And by March 19, <a href="https://www.interior-news.com/news/covid-19-northern-savings-credit-union-offers-deferrals-for-mortgages-other-loans/">Northern Savings Credit Union</a> was offering credit deferral, <a href="https://www.ladysmithchronicle.com/news/ldcu-offers-no-interest-loans-for-members-in-need/">Ladysmith Credit Union</a> offered interest-free loans by late March, and by April 3 <a href="http://www.digitaljournal.com/pr/4641901#ixzz6IwQOXsrR">Libro Credit Union</a> contributed $320,000 to United Way emergency response programs.</p>
<p>Co-operatives can respond quickly because they already know what their members and communities need and want. They already have in place the necessary values, systems and operations to meet those member and community needs.</p>
<h2>Imagining a more co-operative economy</h2>
<p>It’s possible for existing co-operatives and support organizations, and their community-based responses to the crisis, to scale up. They have during other periods of crisis <a href="https://www.thecanadianencyclopedia.ca/en/article/antigonish-movement">in Canada</a>. Post-pandemic, they can promote the values of mutuality, inclusivity, economic justice and organizational democracy towards a new Canadian economy.</p>
<p><a href="https://mailchi.mp/canada.coop/covid19">But that means co-operatives must continue to be included in supportive funding packages</a> during the pandemic. To scale up further also requires new business and economic development legislation and policies to facilitate co-operative start-ups, or the conversion of <a href="http://www.coopconvert.ca/">troubled businesses and those with succession challenges into new co-ops</a>. </p>
<p>The <a href="https://canadianworker.coop/a-proposal-for-shining-light-into-this-darkness-with-the-solidarity-co-operative-movement/">worker co-operative</a> and <a href="https://docs.google.com/document/d/e/2PACX-1vQE_-Tfcq6t9lt_iVXaPT9gKP1Di5_JjTYnCMCdSw5NOSZ99NdGkzt_OaVwHU-5Ow/pub">community economic development</a> sectors have already delivered proposals <a href="https://mailchi.mp/canada.coop/covid19#EN">to the federal government to make this happen.</a></p>
<p>Co-operatives can and should be key to Canada’s economic rebuilding and rethinking — now and following the COVID-19 pandemic. <a href="https://canada.coop/en/news/release-study-co-operatives-and-mutuals-age-uncertainty">Canadians, in fact, are very open to co-operative business models and values</a>. </p>
<p>After addressing the immediate challenges of COVID-19 co-operatively, the time for a new and more co-operative economy for Canada is ready for seizing.</p><img src="https://counter.theconversation.com/content/135477/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marcelo Vieta (University of Toronto) leads a Partnership Development Grant project funded by the Social Sciences and Humanities Research Council of Canada, which includes a capacity-building partnership with Co-operatives and Mutuals Canada and IRECUS (Université de Sherbrooke ).</span></em></p><p class="fine-print"><em><span>Fiona Duguid (Cape Breton University) is a lead researcher on a Partnership Development Grant project funded by the Social Sciences and Humanities Research Council of Canada, which includes a capacity-building partnership with Co-operatives and Mutuals Canada and IRECUS (Université de Sherbrooke ). </span></em></p>Co-operatives can and should be key to Canada’s economic rebuilding and rethinking — now and following the COVID-19 pandemic.Marcelo Vieta, Assistant Professor, Adult Education and Community Development, Ontario Institute for Studies in Education, University of TorontoFiona Duguid, Adjunct Professor of Community Economic Development in the MBA Program, Cape Breton UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1269922019-11-15T23:25:59Z2019-11-15T23:25:59ZWhat the battle over control of PG&E means for US utility customers<figure><img src="https://images.theconversation.com/files/301860/original/file-20191114-26243-1qpj71n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">PG&E is the largest U.S. utility.</span> <span class="attribution"><span class="source">AP Photo/Jeff Chiu</span></span></figcaption></figure><p>There’s a battle raging over the ownership of PG&E Corp., one of the nation’s largest utilities, with cities, hedge fund managers and even customers all in the running.</p>
<p><a href="https://www.nytimes.com/2019/10/29/business/energy-environment/pge-bankruptcy.html">Growing liabilities</a> linked to its role in several deadly wildfires in California forced the company to <a href="https://www.cnn.com/2019/01/29/business/pge-bankruptcy-fires/index.html">file for bankruptcy in January</a>. It hopes to soon reemerge with a <a href="https://www.bloomberg.com/news/articles/2019-09-09/pg-e-files-plan-to-exit-largest-ever-utility-bankruptcy-in-u-s">stronger balance sheet</a>. The state’s governor has threatened a government takeover if it <a href="https://www.usnews.com/news/business/articles/2019-11-01/california-seeks-quick-fix-to-utility-bankruptcy">doesn’t come up with a viable plan</a> that not only keeps the company solvent but also improves safety from wildfire. </p>
<p>Meanwhile, a group of creditors have submitted their own plan to take control of the utility. And <a href="https://www.nytimes.com/2019/11/05/business/energy-environment/pge-california-mayors.html">dozens of mayors and county leaders</a> are behind an effort to turn PG&E into a customer-owned cooperative, driven by anger over how the company has managed the power grid – including <a href="https://www.nytimes.com/2019/11/05/business/energy-environment/pge-california-mayors.html">the use of intentional blackouts</a> in recent months to prevent wildfires. <a href="https://www.usatoday.com/story/news/nation/2019/11/18/california-pg-e-power-outages-blackouts/4236049002/">Another round of power cuts</a> is likely to add pressure to the embattled utility. </p>
<p>PG&E’s troubles may be unique, but it <a href="https://theconversation.com/many-electric-utilities-are-struggling-will-more-go-bankrupt-113458">isn’t the only U.S. utility facing challenges</a> to a 20th-century business model that’s been buffeted by new technologies and changes in the ways that people consume electricity. Utilities in locations as diverse as <a href="https://www.adn.com/alaska-news/anchorage/2019/10/29/anchorage-chugach-electric-agree-to-terms-on-999-million-sale-of-electric-utility/">Alaska</a>, <a href="https://www.firstcoastnews.com/article/news/local/could-a-jea-sale-involve-splitting-utilities/77-3c39cf58-3440-4c7d-9b02-88f8d8d9861d">Florida</a>, <a href="https://www.postandcourier.com/business/santee-cooper-paying-down-bond-debt-ahead-of-sc-legislative/article_0544f094-f424-11e9-82f7-4b13d46921e8.html">South Carolina</a> and <a href="https://www.elpasotimes.com/story/news/2019/11/06/el-paso-electric-proposed-sale-has-problems-puc-report-finds/4170577002/">Texas</a> are considering changing their ownership structure.</p>
<p>As the <a href="https://scholar.google.com/citations?hl=en&user=yxN_35oAAAAJ">director of energy studies</a> at the University of Florida’s Public Utility Research Center, I’ve had the opportunity to <a href="https://www.dupontfund.org/jea-valuation-assessment-for-potential-sale-released/">study the impacts of changes in utility ownership</a> and what they mean for customers. </p>
<p>The possible paths of PG&E offer some clues. </p>
<h2>Cleaning the balance sheet</h2>
<p>The most likely scenario at this point is that PG&E – which <a href="https://www.nytimes.com/2019/10/18/business/energy-environment/pge-blackout-california.html">serves some 16 million people</a> from the <a href="https://www.pge.com/mybusiness/customerservice/otherrequests/treetrimming/territory/">forests of Northern California</a> to the outskirts of Los Angeles – remains largely the same.</p>
<p>That’s what happened the last time the utility went through bankruptcy, in 2001, as a result of the <a href="https://www.ferc.gov/industries/electric/indus-act/wec/chron/print.asp">California power crisis</a>. It exited bankruptcy three years later following the approval of a <a href="http://docs.cpuc.ca.gov/PublishedDocs/WORD_PDF/FINAL_DECISION/32684.PDF">settlement agreement</a> with the <a href="https://www.cpuc.ca.gov/">California Public Utilities Commission</a> in which about US$7.2 billion of the costs of the bankruptcy were assigned to the utility’s customers.</p>
<p>So the baseline case for PG&E is that it stays pretty much the same as it was before – with the same ownership and regulatory structure – but with a cleaner balance sheet that resolves its current obligations. </p>
<p>This time around, <a href="https://www.bloomberg.com/news/articles/2019-09-09/pg-e-files-plan-to-exit-largest-ever-utility-bankruptcy-in-u-s">part of PG&E’s plan</a> would be to raise over US$30 billion from new debt and equity and cap how much it owes victims of wildfires in agreement with the bankruptcy judge and creditors. The state regulator would then decide how much of this debt and equity to pass on to consumers. </p>
<p>The 2001 bankruptcy cost the average customer $1,300 to $1,600. The California legislature is considering absorbing those extra costs, which just means taxpayers would pick up the tab.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/301861/original/file-20191114-26202-1r6gfhh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/301861/original/file-20191114-26202-1r6gfhh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=327&fit=crop&dpr=1 600w, https://images.theconversation.com/files/301861/original/file-20191114-26202-1r6gfhh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=327&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/301861/original/file-20191114-26202-1r6gfhh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=327&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/301861/original/file-20191114-26202-1r6gfhh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=411&fit=crop&dpr=1 754w, https://images.theconversation.com/files/301861/original/file-20191114-26202-1r6gfhh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=411&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/301861/original/file-20191114-26202-1r6gfhh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=411&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Authorities say PG&E equipment was responsible for the Camp Fire, the deadliest and most destructive wildfire in California history.</span>
<span class="attribution"><span class="source">AP Photo/Noah Berger</span></span>
</figcaption>
</figure>
<h2>Under new management</h2>
<p>Another possibility would be the sale of PG&E to a new private investor – either to an existing utility or to a hedge fund or similar investor not currently involved in the utility business. </p>
<p>For example, a <a href="https://www.bloomberg.com/news/articles/2019-11-11/pg-e-offering-13-5-billion-in-compensation-to-wildfire-victims">group of PG&E creditors</a> led by Pacific Investment Management Co. and Elliott Management Corp. have proposed a competing restructuring plan that would wipe out existing shareholders, take the company private and set up a $12.75 billion fund for wildfire victims. </p>
<p>While this would change the name on the masthead, it wouldn’t change the utility’s regulatory structure at all. Responsibility for oversight regarding <a href="https://theconversation.com/why-doesnt-the-u-s-bury-its-power-lines-104829">rate setting, capital investment and utility operation standards</a> would still lie with the state regulator.</p>
<p>The potential impact on customers, however, could be significant. If a new owner were to pay more than the net book value of PG&E’s assets, that might be passed on to customers in the form of higher rates in the future. Ultimately, the state regulator would help determine the specific treatment of the so-called acquisition premium. </p>
<h2>Municipal control</h2>
<p>Others are pushing for <a href="https://www.publicpower.org/">more radical changes</a> to PG&E. </p>
<p>In early September, San Francisco, for example, <a href="https://www.foxbusiness.com/economy/san-francisco-offer-pge">offered $2.5 billion</a> to buy the company’s electricity assets in the city. Last month, PG&E <a href="https://www.reuters.com/article/us-pg-e-us-sanfrancisco-assets/pge-turns-down-san-franciscos-2-5-billion-offer-to-buy-assets-idUSKBN1WQ2SO">rejected the offer</a>, saying it undervalued the assets. </p>
<p>In California and other states, cities do have the <a href="https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=CONS&article=XI">right</a> to take control of the assets of PG&E through eminent domain. But the process can be complex, time-consuming and costly.</p>
<p>For example, when Winter Park, Florida, took control of the local assets of its main power provider in 2005, the city estimated the value of the physical assets at $15.8 million. The eventual purchase price of the system determined by the arbitrator was <a href="https://doee.dc.gov/sites/default/files/dc/sites/ddoe/publication/attachments/An%20Analysis%20of%20Municipalization%20and%20Related%20Utility%20Practices.pdf">just over $42 million</a>. In addition, the city incurred legal and technical support costs during the process. The amount of these costs is not known, but the city issued almost $49 million in bonds to cover all of the costs of the acquisition. The process also took several years because the utility fought the city’s plan. </p>
<p>In the case of PG&E, state regulators would have the <a href="https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=PUC&division=1.&title=&part=1.&chapter=8.&article=">responsibility for determining a fair price</a> the city should pay for the assets. Once approved, responsibility for setting utility rates and conditions for safety and reliability would then lie with the local government or a locally appointed utility board instead of with the state regulator.</p>
<p>The upshot of this is that whether costs go up or down – which can depend – advocates for municipal takeover can at least say there’s local control. </p>
<h2>Customer ownership</h2>
<p>A twist on the city taking control is forming a cooperative in which customers own the utility.</p>
<p>The mayor of San Jose is <a href="https://www.mercurynews.com/2019/11/09/mayors-ambitious-plan-for-pge-fix-would-put-state-on-uncharted-electricity-path/">spearheading an effort to form a cooperative</a> to assume control of PG&E – which, if it happens, would become the largest in the U.S. Under an <a href="https://www.electric.coop/">electric cooperative</a>, the utility functions as a non-profit entity and each member customer has a say in its operation. Rate setting responsibilities lie with a board appointed by the members with any excess revenues returned to the members at the end of each year.</p>
<p>There’s an open question over whether customers are permitted to opt out of ownership – and simply be a paying customer without any capital obligations. Opting out, of course, would mean not having a say in the utility’s operation nor a share of excess revenues. </p>
<h2>Deep frustration</h2>
<p>These proposals, which stem from <a href="https://ktla.com/2019/10/24/californians-are-furious-at-pge-over-power-shutoffs-some-are-taking-their-anger-out-on-employees/">deep frustration</a> with promises for better service made following the 2001 bankruptcy and PG&E’s responses to wildfires, would represent a major change in the status quo for PG&E, which normally answers to shareholders and regulators as any other public utility would. </p>
<p>Yet it’s impotant to note that changing ownership models only affects the flow of money and responsibility, not electricity. Regardless, the utility will continue to provide service for its customers.</p>
<p>Any preference for one model over another depends on where people want the money to flow and where they prefer that responsibility to lie. </p>
<p>Ultimately, the research doesn’t suggest there’s an optimal model. Each can result in lower or higher costs depending on how the utility is run and many other factors. What really matters is what a community values most. </p>
<p><em>This is an updated version of an article originally published on Nov. 15.</em></p>
<p>[ <em><a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=expertise">Expertise in your inbox. Sign up for The Conversation’s newsletter and get a digest of academic takes on today’s news, every day.</a></em> ]</p><img src="https://counter.theconversation.com/content/126992/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Theodore Kury is the Director of Energy Studies at the University of Florida’s Public Utility Research Center, which is sponsored in part by the Florida electric and gas utilities and the Florida Public Service Commission. In 2018, he was principal investigator on a grant from the Jessie Ball duPont Fund to study the value of municipal utilities in a changing marketplace. That work informs portions of this piece. However, the Center maintains sole editorial control of this and any other work.</span></em></p>Customers, cities and investors are all eager for a piece of PG&E, but it isn’t the only US utility that may have new owners soon.Theodore J. Kury, Director of Energy Studies, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/866782017-11-02T04:29:16Z2017-11-02T04:29:16ZThe Murray Goulburn dilemma – co-operatives are dying out but they’re still needed<figure><img src="https://images.theconversation.com/files/192936/original/file-20171102-19883-gpio1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">There are a number of examples of what were once co-operatives restructuring into, or being taken over by, listed companies.</span> <span class="attribution"><span class="source">Tim Green/Flckr</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Canadian diary company Saputo’s bid for Murray Goulburn is just the latest example of how co-operatives are disappearing in the Australian business landscape. But despite this pressure for co-operatives to fold into the dominant corporation model, these business models are still worthy.</p>
<p>Co-operatives have a long history because they have the advantage of minimising conflicts of interest between producers and owners. Producer co-operatives are set up to be <a href="http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1301.0%7E2012%7EMain%20Features%7ECo-operatives%20in%20Australia%20-%20an%20overview%7E285">centred on the interests of their producer members</a> whereas corporations are motivated by shareholders. Unless all shareholders are also producers, a conflict can arise.</p>
<p>Natural selection plays a part in markets so this comparative advantage could see new types of co-operatives emerge in the market. But the organisation of new, large scale, co-operative ventures is likely to be difficult for busy farmers without extensive cash. </p>
<h2>Why are producer co-operatives disappearing?</h2>
<p>Australia’s farmers don’t receive subsidies to the extent that European and American farmers do and are often cash strapped, lacking surplus capital to invest. Because of this, co-operative managers argue for the need to look elsewhere for more capital to invest in <a href="http://www.mgc.com.au/media/15498/mg_capital_structure_web.pdf">manufacturing and supply chains</a>.</p>
<p>Co-operatives such as Murray Goulburn have gone to private equity markets but this has diluted their co-operative structure while creating other problems such as conflict between producers and investors. This is exemplified by the <a href="http://www.smh.com.au/business/class-action-against-filed-against-dairy-giant-murray-goulburn-20160516-govz40.html">current investor class action</a>. </p>
<p>Co-operatives also struggle with banks who are <a href="http://ageconsearch.umn.edu/record/232672">reluctant to lend</a> as they do not understand or even distrust the co-operative structure. Some also argue that increasingly globalised free trade and excess production <a href="https://books.google.com.au/books/about/Hungry_for_Trade.html?id=EGMPQhNpOL8C&redir_esc=y">has depressed agricultural prices</a> which impacts the market power of farmer co-operatives to hold out for a good price. </p>
<p>Regulators also have an interest in transforming co-operative structures <a href="http://www.asic.gov.au/media/4268116/cp283-published-25-may-2017.pdf">into the corporate form for ease</a> of regulation.</p>
<h2>Farmer co-operatives are changing</h2>
<p>The once proud farmers co-operatives have transformed in Australia. While agricultural co-operatives <a href="http://www.farminstitute.org.au/ag-forum/australian-farmers-persistently-refuse-to-cooperate">maintain their popularity overseas</a>, in Australia there are a number of examples of co-operatives restructuring into, or being taken over by, listed companies. </p>
<p>Some examples include former customer co-operative <a href="https://www.incitecpivot.com.au/about-us/about-incitec-pivot-limited/history">Pivot</a> and former producer co-operatives such as <a href="http://www.wesfarmers.com.au/who-we-are/our-history/the-wesfarmers-story-begins">Wesfarmers</a>, <a href="http://www.wcbf.com.au/About-Us/History">Warrnambool Cheese and Butter</a> (now owned by the Canadian Saputo) and Bega Cheese (<a href="https://www.accc.gov.au/system/files/Bega%2520Cheese%2520Limited.pdf">ASX listed in 2011</a>). </p>
<p>Even the former Australian Wheat Board was briefly a partly co-operative company, between its time as a government selling desk and its takeover by a Canadian firm.<br>
Yet some major co-operatives continue in business such as <a href="https://www.cbh.com.au/">CBH Group</a> (a bulk handling co-operative) and <a href="http://www.norco.com.au/">Norco</a> and there are a number of <a href="https://www.coopdevelopment.org.au/topcoopsau.html">other agricultural co-operatives</a>.</p>
<p>Some agricultural producer co-operatives have to a greater or lesser degree experimented with doses of private non-farmer equity in the hope of survival. Unfortunately the attractions of city capital have inevitably brought conflicts with the old farmer members and an end to the purist model. </p>
<h2>Conflict between the corporation and the co-operative</h2>
<p>There are some logical reasons why a co-operative structure would transform into a corporation, apart from the ability to raise capital. A business having a corporation type structure allows greater transparency on the health of the business, through a listed share price. It also provides greater liquidity and gives members the ability to exit the business (by selling their shares).</p>
<p>However there is a conflict in producer co-operatives between the objectives of paying farmers the best price and generating highest returns for non-farmer investors. For example, the greater the difference between sale price and farmgate price of produce, the greater the revenue for the corporation.</p>
<p>Though this provides an incentive to maximise the sale price of produce to retailers (which is good for farmers) there may also be a theoretical incentive to minimise farmgate price, as this also increases the returns to non-farmer investors. </p>
<p>There are also competition issues in the corporation model as farmer-owned processors could generally rely on their farmer ownership to avoid price exploitation by the distributor/processor.</p>
<p>However once the processor becomes externally owned, there is the temptation to use that market power against farmer suppliers (in the way <a href="http://www.tandfonline.com/doi/abs/10.5172/rsj.2012.21.3.250">some powerful supermarket players do</a>). The ACCC then is left as the only protector in ensuring there is sufficient competition between processors to prevent this. </p>
<p>Another problem in corporations is the focus on short-term capital. This is where people, such as day traders and speculators, seek quick returns and short term share price gains. This could be detrimental to the long term producer interests of maximising farmgate price and reinvesting in the co-operative. </p>
<p>There’s also a lack of <a href="http://www.sciencedirect.com/science/article/pii/S1053535708000243">intergenerational equity</a> in the corporatisation of co-operatives. Current members and insiders may get <a href="http://www.smh.com.au/business/how-to-steal-a-mutual-20101010-16eca.html">windfall gains</a> at the expense of services to future suppliers or customers. </p>
<p>This is because businesses built up over a long period by predecessor farmers, that would otherwise pass to the next generation, have their value crystallised and “cashed out” at an earlier point in time. This means the next generation are likely (in a corporation) to lose the advantageous service arrangements, supplied by the co-operative in the past.</p>
<p>Because of all of these issues in transforming co-operatives to corporations, policymakers need to be careful that their settings are fair to co-operative models, to even the playing field.</p>
<p>Farmers also need to think carefully about what structures will preserve their long-term interests. Given that rural produce (not including mining) accounted for A$4.1 billion in exports out of a <a href="http://www.abs.gov.au/ausstats/abs@.nsf/39433889d406eeb9ca2570610019e9a5/6939d66e306d0410ca2572eb001effc9!OpenDocument">total of A$32.9 billion in goods and services exports</a> in September 2017 (or 12.5% of total exports) Australia needs to get these structures right.</p><img src="https://counter.theconversation.com/content/86678/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Duffy does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Despite the pressure for co-operatives to fold into the dominant corporation model, these business models are still worthy.Michael Duffy, Lecturer and Researcher, Monash Business School, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/824012017-09-05T09:31:03Z2017-09-05T09:31:03ZCosta Rica’s Banco Popular shows how banks can be democratic, green – and financially sustainable<figure><img src="https://images.theconversation.com/files/184529/original/file-20170904-17912-puiaxz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Thomas Marois</span>, <span class="license">Author provided</span></span></figcaption></figure><p>A decade on from the 2007-08 global financial crisis, the majority of private banks <a href="https://theconversation.com/how-to-reshape-the-financial-system-first-ditch-the-idea-of-the-free-market-80908">have changed very little</a>. Most remain solely concerned with maximising their returns, while sustainable or social goals remain subservient to this. For conventional economists, anything else remains an impossible or distant dream.</p>
<p>But there is hope for a different kind of bank – one that is run democratically and with sustainable principles at its core. Costa Rica’s cooperative Banco Popular and of Communal Development (or BPDC) illustrates a viable and desirable alternative to the average private bank. While not without its own challenges, it offers a number of lessons for the rest of the world.</p>
<p>Banco Popular was established in <a href="https://www.youtube.com/watch?v=49G4q8lkcq4&feature=youtu.be">1969 by the Costa Rican government</a> to promote economic development. The bank emerged from a tradition of <a href="http://www.nacion.com/ocio/artes/Nuevo-repasa-revoluciones-sociales-ticas_0_1441255877.html">solidarity</a>, and continues to reflect that today. Its mission is to serve the social and sustainable welfare of Costa Ricans. </p>
<p>BPDC is a distinctive, public-like cooperative bank that is worker-owned and controlled. Any worker holding a savings account for over a year has the right to share ownership in it. It combines commercial and developmental functions with clients that include workers, peasants, micro-, small- and medium-sized enterprises, as well as communal, cooperative, and municipal development associations. </p>
<p>Since 2000, the bank has grown into a large financial conglomerate (Costa Rica’s third largest bank), offering the gamut of banking, pension, stock market, investment and insurance services. It has 103 branches nationwide and employs 4,300 people. Assets exceeded US$5.4 billion in 2016 with a net income of US$68m. Its <a href="https://orbisbanks.bvdinfo.com/version-2017420/Report.serv?_CID=792&context=1SBI6S6TVJPXTHO">return on assets averages around 1.5%</a>, showing high returns for a retail bank. </p>
<p>The bank benefits from a unique form of permanent capitalisation: employers contribute 0.5% and workers 1% of their monthly wages to it. After a year, 1.25% of these “obligatory savings” are transferred to each worker’s individual pension fund. The BPDC keeps the remaining 0.25% as a capital contribution.</p>
<p>The BPDC qualitatively differs from typical private banks. Its <a href="https://www.bancopopular.fi.cr/BPOP/getmedia/4fc9f0eb-f8c3-4d14-88e1-76cfc2877d0b/Reporte-de-Sostenibilidad-Conglomerado-Financiero-Banco-Popular-2016;">current mandate</a> incorporates a triple bottom line: the economic; the environmental; and the social. Earning financial returns is placed on a par with serving the environmental and social good.</p>
<h2>Democratic decision-making</h2>
<p>The BPDC is perhaps the most democratic bank in the world. It has a workers’ assembly as its highest governing body which represents the 1.2m workers-cum-savers serviced by the bank (20% of the population). The assembly is made up of 290 representatives selected from a wide range of <a href="https://www.bancopopular.fi.cr/BPOP/Nosotros/Asamblea-de-Trabajadores/Sectores-Sociales.aspx">social and economic sectors</a>. It gives strategic direction to the bank’s board of directors, which is composed of four members from the assembly and three from the government.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/184541/original/file-20170904-31235-cyl00e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/184541/original/file-20170904-31235-cyl00e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/184541/original/file-20170904-31235-cyl00e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/184541/original/file-20170904-31235-cyl00e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/184541/original/file-20170904-31235-cyl00e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/184541/original/file-20170904-31235-cyl00e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/184541/original/file-20170904-31235-cyl00e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">People power.</span>
<span class="attribution"><span class="source">shutterstock.com</span></span>
</figcaption>
</figure>
<p>Popular consultation is a crucial part of the bank’s decision-making process. Its <a href="https://www.bancopopular.fi.cr/BPOP/getmedia/302d558a-3b0a-4cc0-bbb3-5421c3d939d4/08-Gobierno-Corporativo-JDN-2016-(version-FINAL-30-03-2017);">2017-2020 strategic plan</a> was informed by a three-year nationwide consultation, which reached nearly 1,500 participants across 11 regions.</p>
<p>The bank also puts a strong emphasis on gender equity. So at least 50% of the bank’s board must be women, earning the bank the distinction of being the first public organisation in Central America to establish at least 50% women in its decision-making bodies. The bank also has a Permanent Women’s Commission that makes gender equality a priority across the conglomerate.</p>
<p>What the BPDC is has much to do with its makeup.</p>
<h2>Acting sustainability</h2>
<p>The Banco Popular did not start out very green. But it has become a defining characteristic since 2014 when the left-leaning Citizens’ Action Party came to power and focused on making the economy <a href="http://www.unrisd.org/thinkpiece-utting2">promote social and environmental good</a>, as opposed to pure profit. </p>
<p>The bank has since developed speciality lending products, like eco-savings and eco-credits to help businesses fund more environmentally friendly projects. For example, earlier this year the bank helped finance the purchase and installation of residential solar energy panels. </p>
<p>On the developmental side, the BPDC supports local communal associations to provide sustainable water supply systems. It also works with regional energy cooperatives to finance everything from hydroelectric energy generation and energy-efficiency retrofitting, to conservation projects involving vulnerable nature areas.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/184513/original/file-20170904-16064-913a26.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/184513/original/file-20170904-16064-913a26.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/184513/original/file-20170904-16064-913a26.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/184513/original/file-20170904-16064-913a26.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/184513/original/file-20170904-16064-913a26.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/184513/original/file-20170904-16064-913a26.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/184513/original/file-20170904-16064-913a26.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A national park reclamation project part-financed by Banco Popular.</span>
<span class="attribution"><span class="source">Thomas Marois</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>The bank has also started to green itself. It tracks its own consumption of energy, strategises how to reduce its carbon impact, and reports this annually following the international, independent <a href="http://www.globalreporting.org">Global Reporting Initiative</a>. The bank’s pensions division has been certified as “carbon neutral” for four years running. </p>
<h2>Room for improvement</h2>
<p>Clearly, there is much to commend the Banco Popular as a model of alternative banking. But it is not perfect. Since its inception nearly 50 years ago, the bank has been the object of intense political power struggles and it came close to near collapse during the 1980s. Calls to privatise it are ever-present. </p>
<p>The struggle over effective control rages. Should the BPDC move towards complete worker control of its board or maintain continued government oversight, but with greater popular representation? The problem goes to the heart of how the public interest can and should be democratically represented in the bank.</p>
<p>Operationally, the Bank’s green portfolio needs expanding to be more sustainable. This will demand innovative thinking around green projects that have some kind of financial return. But how its green impact is practically measured has yet to be resolved.</p>
<p>Finally, there are burning strategic questions. The BPDC is relatively profitable. From a solidarity perspective, is this socially justifiable? Still, earning good returns enables the bank to fund more social projects through its subsidiary <a href="https://www.bancopopular.fi.cr/BPOP/Banca-Social">Social Bank</a>. Some might argue that the whole of the bank’s operations be geared towards this.</p>
<p>These hitches of governance, greenness and socialness are important, but the beauty of the BPDC is that they are resolvable within the democratic processes of the bank and Costa Rican society. For those banking on alternatives to the private profit-maximising dogma of most banks, the Banco Popular offers hope and direction.</p><img src="https://counter.theconversation.com/content/82401/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thomas Marois received funding in part from Transnational Institute, Amsterdam. </span></em></p>There is hope for a different kind of bank – that serves the public and shareholder good.Thomas Marois, Senior Lecturer in Development Studies, SOAS, University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/806762017-07-14T05:14:39Z2017-07-14T05:14:39ZWhy the ecocity needs to be a just city<figure><img src="https://images.theconversation.com/files/177781/original/file-20170711-13828-i39l02.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Why is it easier to imagine a green ecocity than a just city where everyone belongs?</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/the_yes_man/8239707008/in/photolist-dy7DPW-6LfMVo-kGQvse-aeF62p-4Fk28f-oBT992-5S57XJ-24LTL5-gt3FUt-3Lbvy-e2X1jd-Z6GDQ-9fcaum-cqTKCq-5s9HRw-khc9re-5BHNKA-ar9rrm-47K9Dq-8Tnn1w-RYRuew-4CiXHZ-qXdfZa-GGBC-nbAuGs-nGsGWv-7N8UH9-xs26s-qaXuWK-ap6TRH-9NFVNX-iJYKMV-7fP5dL-pCYRsM-9WrrJA-3cjrwC-ahxhw9-8FEePh-5GJ4mV-Z6GCJ-6nThy9-9NH11D-7bJDsC-5REt1J-dxXm8W-iJjkB7-LFqL9-zQt3LE-4yN2FZ-57CQyi">the yes man/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p><em>This is one of a <a href="https://theconversation.com/au/topics/ecocity-summit-40496">series</a> of articles to coincide with the 2017 <a href="https://www.ecocity2017.com/">Ecocity World Summit</a> in Melbourne.</em></p>
<hr>
<p>Why is it easier to imagine an ecocity – full of lush green spaces and buildings, footpaths and bike lanes, outdoor goat yoga and dog parks – than a just city where everyone belongs? Why is it difficult to imagine a city where there are no great disparities of income or of access to convivial life because these have been equitably distributed? </p>
<p>The prospects for rebuilding the city along ecological lines is enchanting. But ecocities, like smart cities, frequently devolve into a <a href="https://theconversation.com/creative-city-smart-city-whose-city-is-it-78258">techno-fetishist fantasy</a>, (un)wittingly abetting gentrification – from the <a href="http://theconversation.com/suburbanising-the-centre-the-baird-governments-anti-urban-agenda-for-sydney-55754?sa=pg2&sq=gentrification+public+housing+sydney&sr=1">sell-off of public housing</a> in cities like Sydney to violent <a href="http://theconversation.com/will-habitat-iii-defend-the-human-right-to-the-city-57576">informal housing eradication</a> in places like Jakarta. </p>
<p>Part of what’s required here is to connect the currents of imagination shaping the ecological future of cities with other conversations that are more focused on the future of employment and industry and the possibilities for greater equity. Thinking these disparate ideas together will take some work. Fortunately, it’s well under way in cities around Australia and the world. </p>
<p>The <a href="http://www.futurework.org.au/">Centre For Future Work</a> and the <a href="http://www.tai.org.au/">Australia Institute</a> organised a <a href="http://evatt.org.au/events/national-manufacturing-summit-2017.html">summit</a> last month at Parliament House to consider the future of manufacturing in Australia. Much of the day was spent exploring how targeted government procurement practices can help rebuild a sector that could play a vital role in building ecocities alongside new employment opportunities. </p>
<h2>Co-operative ways to build community wealth</h2>
<p>Non-profit institutions and the private sector can play a similar role. The <a href="http://community-wealth.org/content/cleveland-model-how-evergreen-cooperatives-are-building-community-wealth">Evergreen Cooperative Initiative in Cleveland</a>, closing in on its tenth year, used the demand for services from hospitals and universities to start worker co-operatives. </p>
<p>These meet the need for green laundry services, food and energy while creating ownership opportunities for low-income residents. Guaranteed downstream markets increase business viability. This ensures easier access to start-up capital. </p>
<p>Dozens of US cities have developed similar initiatives in the past decade. Among these are union-supported initiatives in <a href="http://wvxu.org/post/cincinnati-co-op-movement-growing#stream/0">Cincinnati</a>, Ohio, municipal initiatives in <a href="http://www.eastbaytimes.com/2012/03/03/worker-co-ops-get-mayors-support-in-richmond/">Richmond, California</a>, and multi-stakeholder co-operatives in <a href="http://wellspring.coop/">Springfield, Massachusetts</a>. </p>
<p>In each instance the guiding principle is that worker co-operatives are tied to place by the people who work in and own them. They distribute profits in ways that benefit worker-owners, other local businesses and the broader community. </p>
<p>In Australia, <a href="http://earthworkercooperative.com.au/">Earthworker Coo-perative</a> has tirelessly pursued a similar initiative. It aims to connect Australian manufacturing capacity, eco-friendly technologies, unions and the environmental movement as a basis for starting worker co-operatives ready to meet the demand for green technology. </p>
<p>Organisations like the <a href="http://mercury.org.au/">Mercury Co-Operative</a> and the <a href="http://bccm.coop/">Business Council of Co-operatives and Mutuals</a> are working to support and spread co-operative ownership in Australia. </p>
<p>In September, a second <a href="https://www.earthlaws.org.au/?p=4291">New Economy Conference</a>, open to the public, will consider what sort of legal and social changes are needed to support efforts like Earthworker. </p>
<p>More ambitiously, even the emergent disruptive technologies that are enabling the “gig economy” can be repurposed for co-operation and community wealth creation. </p>
<p>While new platform technologies concentrate wealth in companies like Uber and Airbnb, these could just as easily function on a co-operative basis, sustaining communities in the process. Such ideas are being actively considered in <a href="https://participate.melbourne.vic.gov.au/future/why-sharing-cities-make-sense-prosperous-and-sustainable-future">Melbourne</a> and in Sydney at last year’s <a href="http://socialenterprise.com.au/projects/creatives-get-mutual/">Vivid festival</a>.</p>
<p>These efforts to encourage social procurement, build co-operatives and develop new forms of sharing work readily combine with the ecocity agenda. In themselves they are not sufficient to ensure that ecocities are also equitable cities. As Labor senator Kim Carr pointed out in last month’s summit, what ideas like this do is fully open the question of what an economy is for. </p>
<p>In Australia, this question is an eminently urban one. Continuing to ask this question, and keeping the answer open, is one way of ensuring that ecocities are not merely oases for the wealthy.</p>
<hr>
<p><em>You can read other articles in the series <a href="https://theconversation.com/au/topics/ecocity-summit-40496">here</a>. The <a href="https://www.ecocity2017.com/">Ecocity World Summit</a> is being hosted by the University of Melbourne, Western Sydney University, the Victorian government and the City of Melbourne in Melbourne from July 12-14.</em></p><img src="https://counter.theconversation.com/content/80676/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Healy receives funding from the Australian Research Council. </span></em></p>What is an economy for? And how do we build a community where everyone belongs? We need to answer questions like these to create good, sustainable cities.Stephen Healy, Senior Research Fellow, Institute for Culture and Society, Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/664882016-11-22T02:41:35Z2016-11-22T02:41:35ZReinventing density: how baugruppen are pioneering the self-made city<figure><img src="https://images.theconversation.com/files/145201/original/image-20161109-19060-1q8vu1h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Apartment layouts at Ritter Strasse 50, initiated by ifau and Jesko Fezer with Heide and Von Beckerath, are highly individualised.</span> <span class="attribution"><span class="source">Andrea Kroth</span>, <span class="license">Author provided</span></span></figcaption></figure><p><em>This is the second piece in our series, <a href="https://theconversation.com/au/topics/reinventing-density-33081">Reinventing density</a>, co-published with <a href="http://www.alva.uwa.edu.au/community/futurewest">Future West (Australian Urbanism)</a>.</em></p>
<hr>
<p>Profit-driven developments shape the housing markets of most major cities today. However, new models exist that offer greater choice and lower costs, foster cohesive neighbourhoods and enable adaptable, customised living solutions.</p>
<p>These alternatives have been diverse and of a high architectural standard. They also allow self-determination: they are initiated by the people who will dwell in them.</p>
<p>Baugruppe – German for “building group” – stands for a long tradition of self-initiated, community-oriented living and the shared responsibility of building. The concept has taken off in Berlin. There is no “typical model” – every project differs in its financing, social make-up, the wishes and desires of the group, and the project’s resulting architectural and urban qualities.</p>
<p>The most significant and innovative built examples, particularly in Berlin, have been initiated by architects for a specific group of clients who were all looking to live in the buildings. </p>
<p>On the surface, these are practical solutions, where single-family homes are stacked and combined to optimise the use of an urban site. </p>
<p>On closer inspection, it is clear that close collaboration between architects and clients has resulted in projects packed with special features and spaces that foster social interaction – such as <a href="http://www.archdaily.com/593154/r50-nil-cohousing-ifau-und-jesko-fezer-heide-and-von-beckerath">Ritter Strasse 50</a> and <a href="http://www.archdaily.com/587590/coop-housing-project-at-the-river-spreefeld-carpaneto-architekten-fatkoehl-architekten-bararchitekten">Spreefeld</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/140057/original/image-20161003-8030-ji86qa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/140057/original/image-20161003-8030-ji86qa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=480&fit=crop&dpr=1 600w, https://images.theconversation.com/files/140057/original/image-20161003-8030-ji86qa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=480&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/140057/original/image-20161003-8030-ji86qa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=480&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/140057/original/image-20161003-8030-ji86qa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=603&fit=crop&dpr=1 754w, https://images.theconversation.com/files/140057/original/image-20161003-8030-ji86qa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=603&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/140057/original/image-20161003-8030-ji86qa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=603&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Communal spaces throughout baugruppe Spreefeld include playrooms, office space, terraces and a teenager club.</span>
<span class="attribution"><span class="source">Andrea Kroth, Author provided</span></span>
</figcaption>
</figure>
<p>Baugruppe adds to urban vitality by considering social issues of inclusion and community and by incorporating mixed-use elements that fuel urban interaction. Green, open and community spaces have proven vital parts of good neighbourhoods and are important here. Common spaces such as rooftop terraces, function rooms, playrooms, guest rooms and even saunas also help to bring people together.</p>
<p>Every baugruppe project in Berlin has a shared garden, which is often also open to the public.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/140056/original/image-20161003-23434-17orwct.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/140056/original/image-20161003-23434-17orwct.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=480&fit=crop&dpr=1 600w, https://images.theconversation.com/files/140056/original/image-20161003-23434-17orwct.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=480&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/140056/original/image-20161003-23434-17orwct.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=480&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/140056/original/image-20161003-23434-17orwct.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=603&fit=crop&dpr=1 754w, https://images.theconversation.com/files/140056/original/image-20161003-23434-17orwct.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=603&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/140056/original/image-20161003-23434-17orwct.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=603&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Permeable solitary blocks through to the River Spree create public access at Spreefeld.</span>
<span class="attribution"><span class="source">Andrea Kroth, Author provided</span></span>
</figcaption>
</figure>
<p>The entire neighbourhood profits from the green and surrounding urban spaces. The experience helps foster a sense of community identity and encourages people to take responsibility for the place they live in.</p>
<h2>Affordable and sustainable</h2>
<p>Long-term affordability helps to create stable neighbourhoods. Alternative models for financing and ownership have offered a new level of long-term affordability within a non-profit ideology.</p>
<p>In collective projects, the future users decide what to invest in and where money can be best saved. This redefines the quality-to-price relationship. </p>
<p>One example of this is the co-op association <a href="http://www.archdaily.com/587590/coop-housing-project-at-the-river-spreefeld-carpaneto-architekten-fatkoehl-architekten-bararchitekten">Spreefeld</a>. This project diverges from the traditional owner-occupier baugruppe model: here, a land grant or a leasehold contract guarantees the long-term use of land in return for rent. It also ensures that what is built and established there meets certain criteria and ideals.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/140058/original/image-20161003-9918-3ssn0c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/140058/original/image-20161003-9918-3ssn0c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/140058/original/image-20161003-9918-3ssn0c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/140058/original/image-20161003-9918-3ssn0c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/140058/original/image-20161003-9918-3ssn0c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/140058/original/image-20161003-9918-3ssn0c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/140058/original/image-20161003-9918-3ssn0c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/140058/original/image-20161003-9918-3ssn0c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Architect Florian Koehl worked closely with owners to design fold-out balconies at Strelitzer Strasse 53.</span>
<span class="attribution"><span class="source">Andrea Kroth, Author provided</span></span>
</figcaption>
</figure>
<p>Personalised solutions, and spaces that can be adapted to suit changing needs over time, allow people with special needs to find a place in the city. For example, these spaces can allow multi-generation living, barrier-free standards, or an environmentally aware way of life.</p>
<p>The <a href="http://fatkoehl.com/index.php?article_id=6">Strelitzer Strasse 53</a> project, on which architect Florian Koehl worked closely with the owner group, includes fold-out balconies, as city planning regulations prohibited real ones.</p>
<p>This inspired many other baugruppen to try new ideas. Such projects show the architect’s role expanding from that of designer to that of initiator, developer, moderator of engagement processes and project manager.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/140052/original/image-20161003-9918-39a44q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/140052/original/image-20161003-9918-39a44q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=476&fit=crop&dpr=1 600w, https://images.theconversation.com/files/140052/original/image-20161003-9918-39a44q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=476&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/140052/original/image-20161003-9918-39a44q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=476&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/140052/original/image-20161003-9918-39a44q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=598&fit=crop&dpr=1 754w, https://images.theconversation.com/files/140052/original/image-20161003-9918-39a44q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=598&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/140052/original/image-20161003-9918-39a44q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=598&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">At Urban Living 01, Abcarius and Burns Architecture Design created an operable facade to get around a ban of balconies.</span>
<span class="attribution"><span class="source">Andrea Kroth, Author provided</span></span>
</figcaption>
</figure>
<p>Baugruppe projects are leading the way in environmental sustainability by employing, for example, high-rise timber construction or passive design. Users and owners willingly explore new technology, carefully balancing its pros and cons. Several different types of multi-storey wooden construction solutions are now certified in Germany as a result of baugruppe experimentation.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/140059/original/image-20161003-23434-szibyf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/140059/original/image-20161003-23434-szibyf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=475&fit=crop&dpr=1 600w, https://images.theconversation.com/files/140059/original/image-20161003-23434-szibyf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=475&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/140059/original/image-20161003-23434-szibyf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=475&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/140059/original/image-20161003-23434-szibyf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=596&fit=crop&dpr=1 754w, https://images.theconversation.com/files/140059/original/image-20161003-23434-szibyf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=596&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/140059/original/image-20161003-23434-szibyf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=596&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Balconies become backyards at 3xGruen, by Atelier Pk, RoedigSchop and Rozynski-Sturm Architects.</span>
<span class="attribution"><span class="source">Stefan Mueller, Author provided</span></span>
</figcaption>
</figure>
<h2>Co-operating to create better lives</h2>
<p>It is time that our cities are determined by the people who live in them. High-quality solutions that improve the surrounding communities should become standard. This requires the architectural profession, as well as policymakers, to value such solutions.</p>
<p>Often, the largest challenge for groups is buying a site. Specifically, they must organise the loan quickly enough to beat other investors to the table. Governments could allow payment on a site to be deferred until the groups are fully formed and have planning approval.</p>
<p>By designating public land for development, the social, cultural and urban planning goals of the city can be realised through private initiatives and long-term self-administration.</p>
<p>Goals such as social mix, mixed use, environmental standards or non-profit constraints can all be regulated within land allocation policies. England, Finland and many other countries are re-establishing policy to facilitate baugruppe building.</p>
<p>Baugruppen can help cities meet the challenge of providing an adequate supply of suitable, affordable housing in a sustainable way. By transforming themselves from consumers into pioneers, the people who make up the collectives have succeeded in developing affordable projects that allow a high quality of life and add value to the community.</p>
<hr>
<p><em>The Conversation is co-publishing articles with <a href="http://www.alva.uwa.edu.au/community/futurewest">Future West (Australian Urbanism)</a>, produced by the University of Western Australia’s Faculty of Architecture, Landscape and Visual Arts. These articles look towards the future of urbanism, taking Perth and Western Australia as its reference point. You can read other articles <a href="https://theconversation.com/au/topics/future-west-30248">here</a>.</em></p><img src="https://counter.theconversation.com/content/66488/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kristien Ring does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Citizens can switch from being consumers to pioneers who drive new designs for living. The German baugruppe model is a leading example.Kristien Ring, Assistant Professor, University of South Florida, and 2016 Visiting Fellow, Institute of Advanced Studies, The University of Western AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/585172016-05-05T10:44:42Z2016-05-05T10:44:42ZHow a John Lewis style co-op could save the Port Talbot steelworks<p>It’s had lots of owners, who haven’t always taken good care of it; it’s home to an exceptionally complex and dangerous industrial process; it’s dirty and smelly; and it can be difficult to sell what it produces. Why would anyone want to buy a steelworks? And in particular, why would the 4,000 people currently working at Port Talbot steelworks want to buy it from Tata? </p>
<p>The <a href="http://www.walesonline.co.uk/business/business-news/man-who-wants-save-port-11285616">recent bid</a> by Excalibur Steel UK – along with the offer of an ownership stake for employees – and previous <a href="http://www.theguardian.com/business/2016/apr/19/senior-port-talbot-staff-buyout-plan-tata-steel-plant">talk of a management buy-out</a> raised the possibility of a co-operative structure could be put in place at the steelworks. </p>
<p>Employees had already been coming forward to commit to investing some of the money they’d earned there over the years, in a gesture of faith in themselves and UK-based steel-making. And the people of South Wales have form in this area – some of those made redundant from Tower Colliery in 1994 bought it and ran it successfully <a href="http://www.gaianeconomics.org/tower.htm">for another 13 years</a> (in the face of great political scepticism and resistance).</p>
<p>In terms of other organisations the steelworkers can learn from, politicians and business school educators regularly hold up the employee-owned John Lewis Partnership as an <a href="http://www.managementtoday.co.uk/go/johnlewis">exemplar of good business</a>. And not just in the commercial sense, even though its turnover and profits often rise <a href="http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9540329/John-Lewis-and-Waitrose-profits-rise-60pc.html">even during recessions</a>. </p>
<p>It is also good for the people who shop there (it’s repeatedly near the top of <a href="http://www.thisismoney.co.uk/money/news/article-3235361/Consumer-favourite-Direct-loses-crown-Lush-battle-brands.html">customer service polls</a>) and, above all, it is <a href="http://www.cityam.com/213284/and-britains-twenty-most-attractive-employers-are-john-lewis-bmw-british-airways">good for the people who work there</a> (especially when the company does well and bonuses are distributed). Management <a href="http://www.sciencedirect.com/science/article/pii/S1053535708000243">research</a> always concludes that partnerships like John Lewis and co-operatives are the most functional, reliable, and ethical organisational forms we have available to us. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/120371/original/image-20160427-30979-1ugmhm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/120371/original/image-20160427-30979-1ugmhm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/120371/original/image-20160427-30979-1ugmhm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/120371/original/image-20160427-30979-1ugmhm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/120371/original/image-20160427-30979-1ugmhm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/120371/original/image-20160427-30979-1ugmhm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/120371/original/image-20160427-30979-1ugmhm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Staff-owned and successful.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/declarationend/5730844671/in/photolist-9Jq5sK-BrF7Jh-a74tWT-CeCoGs-kp9KQz-4ctq7J-4gYLwj-4XtHTa-hU8cfM-7hz4B5-bWeAJp-kpatt2-r9cEh-kp9Q1D-nSJN2A-6Ec3vh-fiyYE3-9oxikC-9jRMp4-cdAUr3-omvsPQ-ixdJfQ-6vRiZ5-aSmh24-CeBoqN-hLe2uu-3yNjoq-5McnC5-2PRpRo-4pmxAR-4Gi1rc-hLek7x-cqZY3s-6sQSce-7bXE5o-bzKaxs-dVYBxo-kpbZsj-pZkFoS-fh64w8-7bXUhA-fSo2j-hLdZ7o-r5moEH-7bY11N-5haRzH-wRc4y-nxNz1S-nx3GS3-fBbNYo">Andy K/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>So perhaps we should all imagine owning the organisation we work for, even a small part of it (as may happen if Excalibur Steel UK are successful). The financial and human benefits are something Andrew Pendleton, an expert in human resource management at Durham University, has been emphasising <a href="https://www.dur.ac.uk/research/directory/staff/?id=13491">for a number of years</a>. Employee share ownership plans like those Pendleton researches are, however, a mediated form of ownership, with the stock market and share dealers in between you and your workplace. What if we really owned where we worked – the buildings, the machines, the raw materials, the inventory, and (most important of all) the way it’s organised and managed? </p>
<h2>A rare breed</h2>
<p>Some people do already do this in organisations called <a href="http://www.pbs.org/newshour/bb/brewery-workers-pour-hearts-business-given-stake/">democratic co-operatives</a> – but they are a surprisingly rare breed. A small number of recurring examples are held up by researchers: <a href="http://www.theguardian.com/world/2013/mar/07/mondragon-spains-giant-cooperative">Mondragon</a>, an industrial company in the Basque region of Spain, parts of the British Co-operative Group, kibbutzes in Israel, Indian Coffee Houses, and a few small and medium-sized US craft breweries. </p>
<p>Their rarity is perhaps because they are relatively difficult to start and maintain. Some, like Mondragon, offer a similar style of structured work environment to other big companies and are relatively expensive to join. They’re also not encouraged by legal and political structures, which favour more conventional owner-manager or incorporated forms. Plus, buying an established organisation like the steelworks can be expensive and legally complex. </p>
<p>What’s missing for this initiative is structured support – in terms of both financing, expertise, and goodwill. John Spedan Lewis gave the business that his family had founded to its employees at a moment when it was in good financial health and well-established in its market. He also trusted the employees to do a good job. Port Talbot steelworks is not in that position in any respect. For those who have worked so hard to maintain steel-making in South Wales in recent years, restart help is needed, both financially and in terms of practical encouragement to take control. </p>
<h2>The best alternative</h2>
<p>Co-operatives don’t solve all problems. They don’t guarantee that everyone will be really happy in their work. Members still have colleagues they don’t get along with, are still subject to difficult Monday mornings, and are probably still not paid as much as they’d like. Co-operatives also don’t do away with the worst aspects of capitalism either, such as <a href="http://www.theguardian.com/books/2015/jul/17/postcapitalism-end-of-capitalism-begun">dysfunctional markets</a> or <a href="http://www.theguardian.com/environment/georgemonbiot/2014/jul/24/price-nature-neoliberal-capital-road-ruin">environmental degradation</a>, especially if we all continue to consent to it as the way we organise society and the economy as a whole. </p>
<p>But co-owned organisations do achieve an alternative to many of the dysfunctions of contemporary shareholder-owned companies. They provide greater democracy and employee voice, along with more controlled and equitable distribution of profits. </p>
<p>What is more, the alternatives to the Port Talbot management buyout are not attractive – yet more temporary owners in the vein of Corus and Tata, reluctant (and also very temporary) state ownership, or closure. All that’s needed is will from the employees, goodwill from Tata and the British government, and cash (probably surprisingly little, if we remember BMW selling the enormous Longbridge plant <a href="http://news.bbc.co.uk/1/hi/business/741701.stm">for £10</a>). Then, finally, the people who built and have laboured in the steelworks could have the opportunity to organise and manage themselves. It’s difficult to imagine they would do a worse job than any other owner.</p><img src="https://counter.theconversation.com/content/58517/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Scott Taylor does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>John Lewis shows how co-ops can be an exemplar of good business – both financially and for their customers and employees.Scott Taylor, Reader in Leadership & Organization Studies, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.