The Power of Cooperation

In the bustling borough of Brooklyn, New York, a remarkable grocery store thrives, standing out among its competitors. Aptly named the Park Slope Food Co-op, this unique establishment boasts sales per square foot that are four times higher than any other grocery store in the area. What's even more intriguing is that this co-op, which employs a staggering 10,000 people, operates without the presence of a traditional CEO. Park Slope Food Co-op is just one of three million cooperatives, or co-ops, spread across the globe, making a significant impact on the global economy.

Co-ops serve as a vital component of the world economy, providing employment to approximately 280 million individuals, accounting for 10% of the global workforce. With over $2 trillion flowing through their doors annually, co-ops have established themselves as major players in various sectors. But how can a business of such magnitude function efficiently without a CEO at the helm?

To comprehend this organizational structure, it is essential to delve into the nature and founding principles of co-ops. Let us rewind to 1844 when a group of 28 weavers from Rochdale, England, united to create a cooperative store, collectively owning the enterprise. By purchasing goods in bulk directly from suppliers, these weavers could negotiate favorable prices, enabling them to afford products that would otherwise be beyond their means. They operated the store democratically, pioneering a remarkable approach for the time. Although not the first co-op in the world, the Rochdale Society of Equitable Pioneers was the first to publicize its principles, which continue to guide co-ops to this day.

Presently, co-ops come in various forms, ranging from consumer co-ops like REI in the US and S-Group in Finland to financial sector co-ops such as credit unions and mutual insurance companies. Producer co-ops unite farmers and other producers, while worker co-ops like Mondragon in Spain or The Cheeseboard in Berkeley, California, aim to provide employment opportunities within communities. Certain consumer co-ops, including Park Slope, require their members to work shifts in the store. In exchange for their labor, members enjoy reduced grocery prices of 15 to 50% and possess the power to influence the store's product offerings.

Three fundamental aspects define co-ops. Firstly, all co-ops are collectively owned by their members, regardless of whether they are consumers, producers, or workers. Unlike conventional companies, which can have external shareholders, all co-op owners are also members. Secondly, co-ops are not primarily driven by profit maximization. While many co-ops generate substantial profits, their core mission lies in serving their members' needs. Thus, evaluating co-ops solely based on traditional business metrics overlooks their primary purpose. Lastly, co-ops are democratically controlled by their members. However, decision-making processes may vary. Small worker co-ops like The Cheeseboard allow day-to-day operational decisions to be made collectively by the workers. As co-ops grow larger, they often institute some form of leadership or management. Park Slope, for instance, has a general manager who oversees around 80 employees. Meanwhile, Mondragon, the largest network of worker and consumer co-ops globally, employs a president and managers to lead the approximately 30,000 worker-owners and 50,000 contract workers. Notably, leadership roles in co-ops differ significantly from those in traditional companies. Co-op leaders implement policies that have been agreed upon by their members or worker-owners through democratic voting systems. At Mondragon, workers even possess the authority to vote for the dismissal of the president. Consequently, in a co-op, there is no single individual wielding top-down power over others, akin to a CEO in a traditional company.

While both co-ops and traditional companies employ voting systems for major company-wide decisions, the voting process differs considerably. In traditional companies, voting rights are usually associated with share ownership. The more shares one owns, the greater their voting power. For example, at Alphabet, the parent company of Google, the two founders control 51% of the votes, effectively steering the company's direction. In contrast, every member of a co-op holds the right to vote, typically with each member having one vote. This stark contrast in voting systems leads to fundamentally different policies compared to those of traditional companies. For instance, Mondragon imposes salary limits for its management, capping their earnings at approximately six times the income of the lowest-paid worker. In Spain, CEOs of traditional companies earn an average of 143 times more than a typical worker. At Park Slope, monthly general meetings allow any member to attend and vote, requiring a simple majority to pass a motion. Subsequently, these motions are then taken up by the Board of Directors, comprised of co-op members, for official approval. At The Cheeseboard, worker-owners strive to reach consensus on major decisions, resulting in a more time-consuming process. In fact, the workers engaged in debates for a year and a half during the late 1970s, deliberating whether to display a sign declaring The Cheeseboard as a collective. However, the thorough discussions and disagreements surrounding this decision solidified its significance, and nearly 50 years later, The Cheeseboard proudly displays its collective identity.

Co-ops demonstrate several remarkable qualities that contribute to their success. Studies conducted in the UK reveal that co-op startups are nearly half as likely to close within five years compared to traditional businesses. Additionally, in a study involving 600 workers from two in-home healthcare businesses, one being a worker co-op and the other a traditional company, workers engaged in similar tasks with comparable salaries. The key distinction lied in the level of job satisfaction, with co-op workers expressing approximately 40% higher levels of contentment with their employment.

In a world dominated by traditional corporate structures, the cooperative model presents a refreshing and effective alternative. Co-ops embody the spirit of collective ownership, democratic decision-making, and a focus on serving the needs of their members. The success of Park Slope Food Co-op and countless other co-ops worldwide serves as a testament to the enduring power of cooperation and the remarkable outcomes it can achieve.

Henrik Leandro