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Co-ops are key to a thriving economy

By October 15, 2010

Special to The Enterprise

A few central themes dominate the master narrative about the making of the United States Ñ the immigrant, the rugged individual battling nature and hostile forces, and the benefits of competition.

The value of cooperation is typically a subtext or a sidebar in this narrative. But, on closer inspection, cooperation emerges as the sine qua non of successful nation-building, and it defies logic to see how little credit is accorded to cooperation as vital to the project of building viable societies.

Without cooperation, families founder, communities descend into chaos and governments gridlock. Sports fans have witnessed teams with genuine ÒstarsÓ caught up in their own performances lose to teams with lesser talents who cooperate better with each other.

The social instinct for cooperation has informed the creation and development of a variety of civic institutions, including mutual aid societies, labor unions and a variety of nonprofit organizations. All have contributed to the enhancement of the quality of life in Western societies.

October has been designated National Cooperative Month in recognition of the key roles that cooperatives have played, and continue to play in our society.

Varied scope and size

From fairly modest beginnings in 1752 when Benjamin Franklin organized the Philadelphia Contributorship for the Insurance of Houses from Loss by Fire, cooperatives have grown to become a key segment of our economy and society.

Today, cooperatives are found in a wide variety of economic and community activities, including business services; credit and financial services; child care; equipment, hardware and farm supplies; electricity, telephone, Internet, satellite and cable television services; food and grocery services; funeral services; health care; housing; insurance; legal and professional services; and marketing of agricultural and other products.

A 2005 survey found 21,637 cooperatives in six main activity areas. They had more than 130 million members and employed more than 500,000 people, with a total payroll of more than $15 billion per year and revenues of $230 billion.

Agricultural cooperatives did a gross business of more than $111 billion per year, serving 2.8 million members. The Farm Credit System had assets of $125 billion and outstanding loans of $96 billion. Credit Unions had assets of $668 billion, outstanding loans of $443 billion and served 86 million members.

Electric utilities served 37 million people who were distributed over three-quarters of the U.S. land mass. Housing cooperatives had a total budget of more than $11 billion. Food and grocery co-ops generated $33 billion with a payroll of $1.8 billion.

Locally, cooperatives are a prominent feature of the Davis community (http://www.community.coop/davis) and are found in various sectors. There are several housing co-ops; The Artery, an artist and artisanal co-op; Davis Parent Nursery School; and a number of credit unions Ñ Golden 1, Yolo Federal, USE and Travis Federal.

In the food and grocery sector, there is the Davis Food Co-op, located on ÒToad Lane,Ó in honor of a cooperative food store founded in 1844 that inspired the modern cooperative movement. That store was at 31 Toad Lane in Rochdale, England.

Begun as a buying club in the mid-1970s, the Davis Food Co-op has grown up to become a 10,000-member food cooperative with sales of approximately $20 million per year and more than 100 employees. The DFC has pioneered many cutting-edge innovations in the food marketing and sustainable products arenas, and serves the wider Davis community through its educational programs and partnerships with local community organizations.

U.S., global prospects

In recognition of the historic and prospective role of cooperatives in the global economy, the United Nations has designated 2012 as the International Year of Cooperatives, stating that ÒÉ under the umbrella of the World Council of Credit Unions, 49,000 credit unions serve 177 million members in 96 countries, and 4,200 banks under the European Association of Cooperative Banks serve 149 million clients; agricultural cooperatives account for 80 to 90 percent of milk production in Norway, New Zealand and the United States; 71 percent of fishery production in the Republic of Korea; and 40 percent of agriculture in Brazil; in Bangladesh, rural electric cooperatives serve 28 million people.Ó

During 2012, the United Nations expects that a series of regional conferences will raise awareness of cooperatives and seek ways to leverage their contribution to socioeconomic development. Recently, the government of Cuba announced its intention to reduce the size of its workforce by more than 500,000 people. In doing so, it also indicated an interest in cooperative development as an alternative approach to development and employment. It might want to examine the record and methods of the Mondragon Cooperative Corp. in Spain.

The Mondragon Corp. was founded in 1956 by a priest Ñ Jose Maria Arizmendiarrieta. It started with a modest technical college and a workshop producing paraffin heaters. Today, Mondragon ranks as the seventh largest Spanish company, operates 256 companies, provides employment for 85,000 people, and had sales of 85 billion euros. Worker-members own the cooperative and it is run on a one-person, one-vote principle.

There are four main areas of activity Ñ finance, industry, retail and knowledge. In the retail sector alone, Mondragon operates 2,400 stores, 58 gas stations, 40 sporting goods stores, 289 perfume stores, seven leisure and culture outlets and 40 goods depots. The cooperative is involved in banking, insurance, car manufacture, furniture and business consulting.

Mondragon demonstrates that cooperatives can be a large part of the solution to the challenges of economic development. As our industrial economies reduce employment, and large corporations hoard cash in preference to expanding employment, we need to look again at the positive roles of cooperatives of all types in providing goods, services and employment for our people.

Ñ Desmond Jolly of Davis is an economist and member of the board of directors of the Davis Food Co-op.

Desmond Jolly

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