Today I went to regional symposium on cooperative development. It was mostly practical management information about how to run various types of businesses. But one thing that struck me was the seven principles of cooperative development (see the link below). What have a lot of theoretical discussion in these channels about collective action, game theory, finding better attractors and so forth. At the symposium, I got to wondering … from a metatheoretical standpoint, is something missing in these principles of cooperative development? Do these principles need more complex theoretical elaboration? Or is the barrier to a more cooperative socio-economic model implementation, pure and simple?
I thought quite a bit about producer cooperatives over the years in various forms.
Here are one set of notes I made:
Here’s another deck from 2016 that is more about coliving
Overall, I’m quite skeptical about producer co-ops. One reason is simply their rarity in the world: while there are many consumer co-ops, there are relatively few producer co-ops, and I think there are reasons for this related to deep features of their structure. These problems have been remarked on by socialists themselves, including Sidney and Beatrice Webb, and many others over the last century.
At root, the difficulties relate to questions of incentives, but I think they ultimately go deeper, into ontological and cultural questions. Producer co-ops are possible, but I suspect that for them to work widely and sustainably would require a significant ontological and cultural shift. As a result, they can end up being proposed today as a structural solution to what is, at bottom, an ontological and cultural problem.
Thanks for the thoughtful response. Agreed that democratic workplaces are hard to manage, so why bother attempting that model now? I’d like to frame a response with an outline of some generalized ideas about social change.
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Social structures change for structural reasons.
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Cultures are profoundly influenced by social structure.
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Creative cultural innovations create an expanded palette of behavioral options, but again, mass adoption of any of these innovations will occur in the context of structural feedback.
The work of Sydney and Beatrice Webb occurred in the late 19th and early 20th century. History shows that for structural reasons prevalent in that era, coops did not succeed at scale. Is there anything about current structures that suggests a revision of their analysis for future-oriented initiatives?
Without going into a long meta-historical analysis here, I refer to the considerable body of work by Nate Hagens in the Great Simplification podcast series as baseline data about pressures on current structures. The two main variables are energy and population. Per Hagens, we are nearing a tipping point in the “carbon pulse” in which cheap fossil energy provides the economy with what amounts to very cheap labor to automate production and transportation. Fossil energy is not going away, but it is simply getting more expensive. The knock-on effects of the decline of the carbon pulse include downward pressures on GDP and populations. Also, there is the accumulated environmental damage of prior carbon discharge. Where all this hits geo-politics is in the likelihood of collapse of current credit systems and a global deflationary episode along the lines of 1929.
A few days ago I asked AI simply, “what historical circumstances favor the development of coops?” That answer is on the link below. Note the similarity to Hagens’s Great Simplification analysis.
Now of course, Hagens might be wrong. Cheap, abundant fusion energy may be just around the corner. AI may teach us how to terraform Earth and return it to Edenic conditions. Continued concentration of capital may lead to highly efficient, wise, and judicious planetary governance by techo-oligarchs. I can’t prove it won’t happen. But everyone has to go with their gut on how the world works and what’s the best preparation for the outcomes most likely to transpire. My gut says Hagens is painting the most plausible empirical picture of what future decades might look like. As per the AI analysis above, that sort of world favors coops.
Hmm. Maybe one’s attitude to co-ops reflects one’s personal belief and values system? Which would go along with the idea that ontological and cultural factors play a big part.
However, compare that with, say, trying to solve “trust” problems with technology, as in DAOs etc. When I see thoughtful people going along with any of these approaches to “solutions”, I see them as integrally looking at the culture and (sometimes at least, if we’re lucky) the ontological scene.
And compare with the status quo. Do current structures work “widely and sustainably”? I would say, from what I see as the evidence, clearly not sustainably. And widely, only because of cultural norms and historical precedent. What, Rufus, do you see as the “ontological and cultural problem”, and do your proposed solutions actually conflict with all things cooperative?
The fact that there are people who have studied these things and come to their own conclusions points to data points, not a universal truth, because the subject matter we’re dealing with is truly complex, and not amenable to a single-individual silver bullet.
Personally (for my own reasons!) I am a great supporter of and believer in cooperative approaches generally. Some people go with their own version of “anarchism”, which is fine if understood correctly. I co-founded a worker co-op in 2015, which was admittedly in consultancy, thus avoiding several of the challenges you have pointed to, but also managed pretty well in terms of governance and collaboration. My own experience here, and with Quaker governance, strongly suggest that non-hierarchical governance can indeed work very well. Sure, participants need to have the requisite skills and abilities and values and culture, similarly to the way that the current system needs people to go along with certain values and beliefs.
Better theories may help theoreticians, but ultimately it’s practice that counts. The one of the co-op principles that seems to me least practiced in reality is principle 6 — we are all embedded in such a competitive and dissociated society that genuine cooperation is hard to achieve, at that level.
The people I talk most with at present tend to frame things in terms of commons, and the observational and theoretical work of Elinor Ostrom, and subsequent people in her tradition. I see the Commons as a clearer framework, with Ostrom having shown that it works. What is known as Ostrom’s law is “A resource arrangement that works in practice can work in theory.” (See Wikipedia)
A critique of Commons, or indeed cooperatives, seems to be only helpful if one puts it alongside a critique of the status quo, and of any other suggested alternative approaches.
Interestingly, the symposium I attended yesterday was precisely this - coops helping coops. Some of the coops are up and running already. Some are incipient. Among the up and running where a wood products group and several county-level home health care groups. In various stages of development were other coops for home cleaning services, retreat centers, and hospitality. I also gave a ride share to a person at the symposium representing a team of four working on a coop-based model for scientific research publication. The “theory” we discussed was mostly straight-up business school content; how to manage HR, accounting, and marketing. To one of @rufuspollock’s points above, the financial analytic examples we looked at involved “patient capital”, in which there was no urgency to repay start-up seed money nor was there any interest expense attached. Obviously, those numbers would look very different if normal commercial finance were used to fund the venture. For this reason, part of larger regional coop effort is to promote public-sector development banks with lending rules that are more coop-friendly.
If financial capital under neo-liberal models were taking good care of both consumers and workers, all this coop effort would be wasted. The growing neglect of financial capital for ground level concerns of the public at large is what is creating both the need and necessity for the expansion of coops in our region.
Great to hear, thanks Bob!
I’d really want to see some thought-through analysis of how coops solve the incentives and property rights type problems. I don’t get (yet) why the end of the carbon pulse would help producer cooperatives per se.
In particular, i’d love to see specific responses to the issues in the 3 major areas i mentioned in my piece on producer coops:
- Investment: secure resources both human and capital to carry out the enterprise
- Production: work together to produce outputs and sell them
- Decision-making: make decisions about the above
PS: i don’t tend to click through to gdocs write-ups - if there were any way to summarize the key points from the gdocs (and have gdocs more like an extended backup) that would be better for me. (it also makes the forum more long-term viable as gdocs etc can disappear).
PPS: there is a decent-ish literature on producer coops iirc (and their difficulties) and it would be worth an AI session researching that literature and any empirics on producer coops to get some initial theory and evidence. (IMO whilst i love coops and wish there were more of them it is important to be rigorous in our thinking and a bunch of the pro-coop movements tends not to be …)
" Cooperative movements develop best during periods of severe economic crisis, social upheaval, or industrial transition when traditional markets fail to meet basic human needs.
Key Historical Circumstances
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The Industrial Revolution: The shift from agrarian life to factory work destroyed traditional trades. Workers faced low wages, unsafe conditions, and high food prices, which led them to pool their resources for survival.
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Economic Crises and Depressions: Severe downturns, such as the Great Depression or local market collapses, stripped people of purchasing power. Cooperatives emerged as a way to cut out middlemen and lower costs for food, credit, and housing.
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Agricultural Distress: Farmers often faced exploitation by monopolistic grain elevators, railroads, and banks. Agricultural co-ops allowed farmers to collectively process, transport, and sell crops to secure fair prices.
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Social and Political Reform Movements: Eras of reform—such as utopian socialism in the 19th century, Populism in the United States, or the labor movement—provided the ideological framework and solidarity needed to build collective enterprises.
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Legal and Institutional Support: The creation of enabling laws (like the Rochdale Equitable Pioneers Society rules in 1844 or modern cooperative acts) gave these groups legal recognition, tax clarity, and stability.
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Post-War Reconstruction: After major conflicts, devastated communities used cooperatives to rebuild housing, re-establish food distribution, and restart local economies without relying on scarce capital."
From one of the home health care coops yesterday:
non-member wage - $21 per hour
member wage - $23.50 per hour
member bonus based on coop performance - $5-$8 per hour worked, calculated each 6 months.
Washington State Average: Around $22.28 to $24.20 per hour
Rigorous enough? In this vertical, the seed capital is minimal. Property is not a factor. The model is expanding across the state due to proven success.
For something property-intensive, like a farm, coop management structure would clearly not be enough. Something like a land trust would also be needed. Every vertical industry would have its such own calculations to make. There is no point in proving in the abstract that coop structure is better or worst than selling one’s labor on the open market. Workers vote with their feet. Right now, corporate life is not looking especially attractive to many people.
On the question of incentive modeling, it really makes a lot of difference what type of person is involved in the organization. Consider, for example, Loveinger’s personal development model. An organization built on 8s and 9s will work much differently than an organization built for 3s and 4s. Incentives are clearly quite different for different types of people.
To take this to the level of cultural dialectic, or course it would be helpful if cultural messaging and systems supported personal development to higher levels. The current late-capitalist culture of material self-aggrandizement is surely unhelpful in this regard. (Watching recent TV commercials in which stylish couples are modeling material bliss through luxury spending on credit cards at high end hotels and airports is an example of a negative influence of current culture). I would argue that coop development includes a “bildung” component encouraging people to rethink their goals and values.
To sum up, we can model coop incentives around Games A, B … on static assumptions around economic motivations. There is another “game” however, which is to work toward transforming the motivations. For this “game”, then ask - which economic structures are most conducive to personal and social development goals?