Member Cooperatives and Economic Activism

Economic inequality is a growing concern in our society, and is spurred by corporate consolidation. Large corporations use their market influence and vast resources to crush or acquire competitors, and manipulate politics and culture to fit their ends. A large amount of consumer surplus is hoarded by these corporations, as they increasingly discover and leverage weaknesses in human psychology to trick their customers into paying higher prices or buying harmful or unnecessary products. Our society must address these imbalances, but it is difficult and often impractical to do so with government.

Description

Member cooperatives are a powerful model of economic organization that combines all the best aspects of for-profit companies, non-profit charities, and democratic institutions. In a member cooperative, members democratically own and control a private organization that exists solely to meet the common goals of the group. They grant groups the ability to organize to solve their own economic problems, without relying on the inherently adversarial profit motive. And in the form of Credit Unions, the viability of the model has already been proven.

However, since member cooperatives have traditionally relied on the same slow and inefficient methods of democratic control used by governments, they haven't reached anything close to their full potential. By using Persistent Democracy, member cooperatives can be controlled in an extremely nimble and fair manner, allowing them to inspire confidence and compete with profit-seeking companies.

Member cooperatives need some way to distinguish voting members from everyone else, and must require that members contribute in some way to the cooperative. This means they work best when the customer relationship is ongoing and predictable. Any business model based on subscriptions or membership fees can be trivially made into a cooperative, and as the recent direct-to-consumer subscription service trend demonstrates, many more products and services can be delivered as subscriptions or memberships than was previously appreciated.

The industries we should most prefer to start cooperatives in are those where risk is well quantified and market value is obvious, as is the case in any commodity industry. Almost all industries that currently form the bedrock of our economy could be operated as member cooperatives:

  • Banking, finance, and real estate services.
  • Insurance.
  • Healthcare.
  • Food production.
  • News media.
  • General retail.
  • Utilities and energy.
  • Internet and telecommunications.
  • Commodity goods manufacturing.
  • Cloud computing services.
  • Online marketplaces.

Activists seeking to address economic inequality, poor public health, environmental degradation, or cultural manipulation have been frequently frustrated in trying to institute legal solutions to these problems. Many will of course still require legal changes, and we shouldn't tolerate our political systems being so inefficient and unresponsive. But even if the structural reforms discussed in this book were implemented and used to agitate for other reforms, democracy still requires something resembling consensus. An efficient and fair democracy won't be enough to solve all these issues, and we'll still meet resistance and frustration when pursuing goals that seem obvious to us. To deal with this reality, I propose a new kind of activism, Economic Activism.

Member cooperatives can be started by anyone at anytime, with no need for special permission or legal reforms. They simply must follow the law and remain solvent. Anyone with passion for some change that would require businesses to act differently can immediately begin working to make that change by creating a cooperative. Cooperatives don't in any way extract profits to an owner class and can instead reinvest profits to lower prices or improve service, and they can quickly hold managers accountable through democratic control. These qualities mean cooperatives always have the potential to maximize consumer surplus and increase members' prosperity more than a for-profit company. If a cooperative can create more prosperity for members, then it will inevitably overtake and destroy any abusive for-profit competitors, taking away the economic capability that forms the foundation of plutocratic power.

It has been relatively easy for the wealthy to prevent social change by hampering politics. But in order to stop cooperatives from overtaking their companies they would have to hamper the very markets they themselves operate in, a more delicate task.

We don't have to wait for the goverment's permission to attack economic inequality and consumerism. Through cooperative Economic Activism, we can attack the source of those problems directly and immediately. We can seize the economic power that has for so long been used against us.

Benefits

  • Member cooperatives aren't controlled by profit-seeking shareholders and are only constrained by the need to remain fiscally solvent. This means they can prioritize members' non-monetary values and pursue any initiative regardless of whether it fully maximizes profits.
  • Cooperatives have no need to leverage artificial scarcity, monopoly, planned obsolescence, or psychological weaknesses to manipulate markets and their customers. As long as they remain solvent, they can adopt whatever business model their members feel provides them greatest prosperity.
  • Consumerism and environmental degradation have been spurred largely by the one-sided incentive to maximize profits, since more consumption always leads to more profits regardless of market oversaturation. Member cooperatives have no incentive to oversaturate markets.
  • Member cooperatives are still constrained by market dynamics and fiscal solvency, meaning they are allowed to evolve or die or merge just as companies are. This stands in contrast with government agencies which sometimes are allowed to become inefficient or stagnant without sufficient accountability.
  • Member cooperatives give control over the means of production to citizens and can prevent the rise of "techo-feudalism", as automation and artificial intelligence decrease the value of human labor.

Potential Objections

  • Member cooperatives don't automatically grant any special rights to employees, and still allow for the same adversarial relationship between member-owners and labor. This worry is mitigated by these considerations:
    • Automation will make this less and less acute over time, and gradually cooperatives will mostly control land and machinery with very little human labor.
    • Cooperatives can choose to automatically grant their employees equal or special voting rights.
    • Cooperatives are still subject to labor regulations.
  • Member cooperatives are controlled democratically and are therefore steered by their members' values, which might still be selfish or biased or irrational. However those same negative values would still otherwise have been expressed in the market as buying decisions, so a democratic arrangement is likely to be a strict improvement.
  • Cooperatives aren't a panacea, and can't solve all our societal problems. Poltical activism and reform are still absolutely necessary.

Open Questions

  • Would it make sense to propose reforms that alter the tax obligations or anti-trust limitations of cooperatives if they met some criteria of democratic control? Monopoly could be a non-issue with cooperatives since they by definition allow membership to anyone who can contribute, but the requirements for contribution could potentially be abused. However especially with the inherently anti-monopoly effects of common resource taxes, it might be reasonable to simply remove anti-trust regulations entirely and be confident that abusive companies will always be overtaken by cooperatives.
  • What precise governance structure should our ideal cooperative have? I intend at some point in the future to draft a constitution and start a cooperative myself. I'm very excited about this idea, and have many specific ideas about governance and business models.

Table of Contents

Introduction
In Defense of Pure Logic
Persistent Voting
Quadratic Range Voting
Persistent Documents
Persistent Prioritization
Persistent Endorsement
Persistent Commitments
Persistent Funding
A Theory of Minimum Necessary Rights
Markets and Rights
Common Resource Taxes
The Crowdsell Mechanism and Intellectual Property
Democratic Districts
Free Borders
Persistent Logistics
Democratic Adjudication
Misinformation Trials
Member Cooperatives and Economic Activism
Coda
Make a contribution