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Where Profit is Subordinate to Labour

Voices from US worker co-op movement

by Dru Oja Jay

Jessica Gordon Nembhard giving a talk on African American Cooperatives in 2011. Photo: Arizona Social Economy
Jessica Gordon Nembhard giving a talk on African American Cooperatives in 2011. Photo: Arizona Social Economy
Melissa Hoover speaking to documentary filmmakers. Photo: Shift Change
Melissa Hoover speaking to documentary filmmakers. Photo: Shift Change
Ed Whitfield speaking in New York. Photo: New Economy Coalition
Ed Whitfield speaking in New York. Photo: New Economy Coalition
Esteban Kelly addresses the crowd at ECWD. Photo: Philadelphia Area Cooperative Alliance
Esteban Kelly addresses the crowd at ECWD. Photo: Philadelphia Area Cooperative Alliance
"If I want time off, I just write to my co-workers and tell them," the woman told me with what seemed to be a mix of bemusement and pride. We were chatting in the hallway as the Philadelphia edition of the Eastern Conference for Workplace Democracy (ECWD) wound down. She lacked the harried gleam of the more activist conference-goers. It turned out she had just been hired by a worker co-op after working for years in another business, and had come to learn more about working in a democratically run, worker-owned business. Up to now, she had only worked in traditional, hierarchical firms; this was her first experience in the co-op world, and her attitude struck me as one of cautious optimism.
 
This woman was in some ways the opposite of most of the people I had been interviewing for the past 48 hours. The folks I had been talking to probably have over a century of co-op organizing experience between them. Many of them have a sense of the their movements that reaches over a century back and a decade forward. Because she didn't have any of that, the new worker-owner in the hallway came to represent, for me, the main hope and the principal challenge that the worker co-op movement faces.
 
Will ordinary workers see the benefits of owning and running their corner of the economy, and will these workers embrace the entirely different way of relating with their peers, colleagues and investors that the co-operative economy implies? Our passing interaction provided no answers, but it brought the attendant hopes and fears into focus. The stakes are high.
 
Taking time off when you want to is at best a really small part of what co-ops are about. Companies like Netflix have embraced similar “talent management” policies, allowing workers to take whatever vacation time they feel is appropriate within a hierarchical investor-controlled framework. Anyone who has been part of a worker co-op startup might well scoff at the notion of taking time off at all. The implications of worker ownership and democratic management go much deeper. Attempting to explain those implications requires reaching beyond familiar concepts and vocabulary.
 
The freedom to govern one's own labour is what puts worker co-ops and workplace democracy at the core of the struggle for social justice and ecological sustainability. Just about any major problem that we can imagine fixing was created by the ingenuity and dexterity of workers, harnessed and controlled by structures beyond their control. What, besides human labour, created the financial mess we’re now in, widened the gap between rich and poor even further, and built the fossil fuel infrastructure that is stoking the climate crisis? What, besides human labour, can build an alternative system?
 
Solutions to our very large problems would look a lot more possible if everyone exercised as much control over their labour as, say, my hallway interlocutor does. Could democratic workplace decisions about allocation of resources replace the eternal spectacle of politicians anxiously eviscerating environmental regulations and labour laws, while tending to the care and feeding of "job creators"?
 
With the freedom to choose how their labour is used, human beings could decide to pull back from the brink of planetary ecological collapse. Neoliberal economists could be a shrill but irrelevant minority opinion. Wealth could be distributed more equally, and people would feel secure enough in their employment to treat each other fairly. 
 
I can make bold claims like these because there's considerable evidence that member-owned co-ops are, on the whole, much faster to adopt eco-friendly practices and more likely to treat their workers well. They also last longer, and preserve jobs in economic tough times. If cooperation and the space it makes for values other than profit seeking were widespread, other ways of thinking could unfurl rapidly.
 
The cooperative movement and worker co-ops have been around for over 150 years in the US. In that time, thousands of experiments in cooperation have yielded a vast trove of lessons in how to transform our relationship to work and the economy. If and when we reclaim the power of our labour, this body of knowledge will make or break what comes next. However, the lessons contained in this history seem to be as obscure as they are potent.
 
I went to the ECWD, a bi-annual conference organized by the United States Worker Co-op Federation, to find out where this movement stands today, and how it’s relating to the challenges.
 
From democratic workplaces to movement building: Gordon Nembhard
 
Jessica Gordon Nembhard is a professor Department of Africana Studies at the City University of New York, and is active in the workplace democracy movement as a convenor, educator, editor, moral compass, and historian, among other roles. 
 
In a 10 minute break between conference tasks, she explains that the movement that brought a few hundred people to Philadelphia last summer has been taking form for about a decade.
 
While a lot of political radicals find hope in dreaming about a cooperative restructuring of society, people who work in co-ops long-term are more likely to be motivated by practical, and personal, exigencies. By facilitating and participating in decade-long conversations, people like Gordon Nembhard have moved the big picture- and the detail-oriented people closer together.
 
"When we had the first ECWD in 2002, one of the last conversations we had before was people saying they didn't feel like they were in a movement, that they were just happy to be in a democratic workplace," Gordon Nembhard explains. 
 
"We don't seem to have those conversations so much anymore," she says. "Even some of the people who were in those conversations are now actually becoming co-op developers… Some of them have become even more involved in movement building."
 
The building process has consisted of establishing and "shoring up" the US Federation of Worker Co-ops (USFWC) and growing what more than one person called the movement's "connective tissue". Gordon Nembhard also sees education, specifically economic education, as a major need.  "We're more likely to teach young people to think flexibly about leadership and social things but not about economics... conservative ideology has really been winning the day." 
 
But the path to more education lies through more worker co-ops. "An increase in the number of worker co-ops does as much for education and changing the public dialogue as actual education programs [do]... the more flesh and blood worker co-ops we have, the more people end up doing business with them."
 
"A lot of peoples' resistance is that they don't see how it can work." 
 
Game-changing strategy: Hoover
 
Melissa Hoover tends to be described by her colleagues as a multi-talented super-organizer. Where some organizations entrust the roles of strategic thinker, charismatic motivator, and tireless organizer to more than one person, the co-op movement appears to have found something approaching the whole package to fill one of the handful of paid positions it can afford at the level of "connective tissue." Hoover is the Executive Director of the USFWC, and has played a key role in the last ten years of institution-building.
 
Hoover says the worker co-op movement is in a phase of growing a "glue layer" of secondary institutions. "Regional organizing groups, sectoral organizing groups, federations, all of the stuff that helps knit things together and direct resources."
 
But what needs to be developed now, she says, is a "game-changing strategy." 
 
Worker co-ops tend to be in low-profit sectors that aren't capital intensive, perhaps because those are precisely the areas where workers tend to be overworked or exploited. When lower startup costs coincide with a pressing need for workplace democracy, co-ops can be an attractive option for workers.
 
"That kind of co-op really meets people’s needs, which is the heart of the form, but on the other hand it's not going to create the kind of surplus that you really need to build a movement," Hoover says.
 
The "stabilizing role" of co-ops -- their ability to allocate scarce resources with maximum efficiency and fairness over a long period of time -- is a big part of their appeal. Somewhat paradoxically, it means that co-ops tend to crop up in industries with thin margins. If there's money to be made, bosses can pay their workers a little better, but investors want structures that will return profits to shareholders, rather than to workers and community projects.
 
Capital-intensive, high-margin ventures like software development and manufacturing haven't seen a lot of co-ops forming. "Capital is the main barrier," Hoover explains. "We just don't have capital access." 
 
In the other room, and not by accident, cooperators are participating in a day-long discussion about alternative financing; it turns out that lots of co-ops rely on loans from other co-ops, and a huge amount of financing happens outside of financial institutions.
 
Subordinating capital to labour: Martin
 
Brendan Martin is the President and founder of Working World, a non-profit that provides financing to Worker Co-ops. He is at the centre of efforts to bring some financial clout to the co-op sector. Working World got started in Argentina in 2005. In the aftermath of the 2001 collapse caused by neoliberal policies foisted on the country by the IMF, workers occupied shuttered factories and started up production again as self-managing worker-owners. These overnight transformations of factories into worker co-ops were not without complications. "They had products and workers and machines, but they didn't have ways to grow," Martin explains. Even just buying raw material posed a major challenge. 
 
Under the traditional capitalist investment model, the loan recipient is responsible for success, and has a lot to lose. Martin describes the model as “put up everything you own as collateral, and before you know it the bank owns your factory."
 
Working World aimed to create a "friendly" capital source to finance worker takeovers. Occupying workers often had no business plan, and no management experience. "There was really just a desire, a strong desire... an investor would look for red flags, but these things were painted red."
 
So how did Working World fare with these factories that no bank would bother with, granting loans with no collateral? "It turns out it works very well," says Martin. "We got 98% of our loans paid back in full."
 
They accomplished this by closely supporting and supervising the nascent worker-run businesses. Working World's watchwords were, and are: "work intensively, plan very carefully."
 
More recently, Working World partnered with the workers of Republic Windows and Doors, who occupied their factory after its owners ceased operations during the 2008 financial crisis. Today, they are worker-owners of New Era Windows.
 
Their approach stems from a philosophy that is alien to the current financial sector. "The Mondragon dictum is that capital needs to be subordinate and instrumental to labour, and it's hard to imagine that if you're a for-profit bank," Martin explains. Instead, Working World sees itself as a "community controlled organization," where the mandate of the staff "is not to maximize profits, but to maximize whatever that community tells them to -- that might be cooperative jobs in this case."
 
"We weren't there to maximize profits, we were there to be instrumental to the workers, and to serve their community." This approach is in stark contrast to the mainstream understanding of finance, where "in the investor-invested relationship, sometimes it doesn't go well, and it's always the invested that has to make up for that somehow."
 
"What's the force to knock out of the way so that workers can have more control?" Martin, who worked as a financial consultant in New York before starting Working World, says it's finance. The financial sector "owns more of the country now that anyone, and we are paying so much tithing and patronage in the form of interest... the rents that are extracted now from the economy are extraordinary."
 
Could the idealistic young people of the future aspire to a career in finance? Organizations like Working World are changing the paradigm of banking and investing, and if they’re successful, the idealistic banker might become more than a trope of absurdist humour. But before that’s possible on a large scale, there will be significant resistance from the existing system.
 
Democratizing human productivity: Whitfield
 
Just before our interview, Ed Whitfield delivered a succinct reminder to conference participants about the collective consciousness in communities who have had to confront environmental racism and structural inequality. "People think of themselves as a community since they had to fight a landfill; the co-op movement would be well served by realizing that not all communities are working in a hyper-individualist frame, or with those assumptions."
 
Whitfield works with the Southern Grassroots Economies Project and co-directs the Fund for Democratic Communities from Greensboro, North Carolina. He starts out with the big picture, but constantly references how non-activists perceive and evaluate ideas. 
 
People are aware the economic system is dysfunctional, he says, but they see the old paradigms like the Soviet Union as frightening "failed experiments." The shortcomings of those experiments, Whitfield suggests, has a lot to do with "how we implement democracy." Despite lingering suspicion of collectively-owned economies, phrases like "economic democracy" or "the democratization of wealth" continue to carry tremendous power and potential.
 
Whitfield’s combination of economic theory and community organizing experience gives his explanations a hard-won clarity that may sound unfamiliar to students of economics. He cuts through deeply ingrained assumptions, but delivers his message in plain language. 
 
"The human capacity to be productive," Whitfield explains, "is the opportunity to produce more than we can utilize. We can use that to take care of families, to take care of the elderly, but actually it's used by people as the focus of control." But if we could place productive capacity "at the disposal of people broadly," that "could be applied to solving social contradictions, ecological contradictions, and the elevation of the quality of life."
 
Why doesn't this happen? Because we have forms of ownership that restrict people by cutting off their access to real opportunities to be productive – to build, help and care beyond their own survival or subsistence. "If that's the problem, the process of democratizing wealth has to do with different kinds of ownership, and cooperative ownership is among those forms."
 
The question, for Whitfield, comes down to how we shift from the logic of the market to the logic of a commons. His explanation on how to do that is worth quoting at length:
There's an amount that I'm not going to be willing to pay for what you have to sell, there's an amount that you're not going to be willing to sell it for. Anytime you have different interests, you're going to have those kinds of negotiations. In the context of a democratic system, when you multiply the number of people involved in that transaction by a few million, you get this really complex thing. It's so complex that I don't think that the answer to [how to manage that complexity] it can be found by just multiplying the number of transactions and types of things, because that gets to be completely outlandish. It has to do with the capacity of people to think together, to engage with each other.
 
While a lot of the thinking about democracy has to do with how do we register all of the opinions and viewpoints of folk, what I think we need to move to is understanding how we create opportunities for people to think together, to try to jointly come up to solutions to problems in the give and take. [The solutions won’t be found in] the preexisting ideas of what should take place, but instead in the transaction of "hey, let's talk about this, see if we can come up with something together." When I've seen people try that, I've seen them get really excited about what they could come up with.
 
That kind of thinking together produces what I call an emergence where what comes out of it is more than the sum of all the pieces that went into it. It's bigger, more powerful, and more elegant. You don't have all the pieces that are competing with each other.
How do we promote that kind of thinking? By creating space to discuss our economies and how they might be changed. A first step, Whitfield says, is to use facilitation tools like World Cafe and to "construct some really good questions that call upon people to question their own assumptions, to think about the implications of what it is they're talking about." This gives people the -- surprisingly scarce -- opportunity to "think about the obvious and less obvious consequences and then try to come up with a solution." 
 
The obstacles to a shift toward considering productive labour as a commons are massive. "Keeping people from exercising deliberation above the level of self-interested calculations, is a necessary part of capitalism," Whitfield explains. "Deliberation at the level of the commons is a strictly guarded privilege, accessible only to those with a career motive and class interest so thoroughly cultivated that it looks and feels natural."
 
"The existing structures put all of that stuff at the disposal of a handful of folks who often end up to be mean-spirited, narrow minded, and justify their own position by insulting everybody else." 
 
"'We're risk takers, we're innovators, we're job creators, we deserve to make a thousand times more than the people who work for us' -- but larger and larger amounts of people aren't buying that anymore."
 
Perhaps the place to start is in communities. "If people want to seize some power, it's certainly a lot easier to do it at the local level, and if people are successful at that, other communities will be excited about it and try to emulate it as well." When people hear about the solidarity economy, Whitfield says, "that's literally their response: 'Oh, we can do that? Yeah, that's a better idea.'"
 
For Whitfield, the key is to "create some models in peoples' minds" and, side by side with communities, "look very closely at some new possibilities and creative use of resources that currently exist." 
 
"A key to a big part of this is grassroots organizing; if you're not there everyday, you're not going to be one of the main people doing it, but certainly you can help seed that process with good ideas about new possibilities."
 
From dignified labour to transformative process: Baena
 
Undocumented immigrants are among the most marginalized populations in the US, and the worker co-op movement has been making small but concerted efforts to make resources available to migrant worker co-ops. English-Spanish translation was available for every session at the Eastern Conference for Workplace Democracy.
 
Nikki Marín Baena works with migrant co-ops in her work as co-director of Cooperation Texas. The current climate, she says, is "perhaps the most repressive for immigrants ever." Undocumented workers are "detained every year in unprecedented numbers by the Obama administration," there is increasing militarization on the border (including the use of drones) while racial profiling is normalized in the Southwest.
 
Baena, who is also on the board of the USFWC, explains that because they live in constant fear and insecurity, "immigrants are easy to exploit." And that's what makes co-ops appealing. "People need dignified work."
 
Women's Action to Gain Economic Security (WAGES), is a San Francisco Bay Area organization that develops co-ops in the eco-friendly cleaning sector, primarily for members who are low-income women of colour. They have launched a handful of worker-owned co-ops in the Bay Area, the oldest of which is paying its members $15/hour with dental, health and vacation benefits. As WAGES's web site points out, people who work as cleaners in traditional firms have little job security, while wages and benefits at that level are unheard of. WAGES estimates that the pay in one of its co-ops is 150 to 200 per cent more than the prevailing wages in the part of the housecleaning industry where workers aren't owners.
 
The model WAGES pioneered is now being implemented in New York and Texas, among other areas.
 
Baena also sees coops as a way to build capacity and skills among workers. "In a cleaning job where you're exploited, you're not building another skillset." But if you're part of a co-op, "you're learning facilitation, language skills, and keeping the books as part of running your own business -- those are job skills, even if someone doesn't want to be in a cleaning co-op forever."
 
"Another way to look at it is that these people can be the co-op developers of the future."
 
But linking these efforts to a larger transformative process is also important, Baena says. "We need to start taking economic ownership of our communities, because that's tied in with our liberation." What's exciting is "talking about neighbourhood based approaches in cooperative development -- what resources does this neighbourhood need? How many of them can we cooperativize now, how many in five years?"
 
While most cooperators seem to agree that the most tangible impact can be made at the local level and through communities, strategizing at a national and international level -- and across cultural and linguistic boundaries -- has also contributed to the worker co-op movement's current achievements. For many activists, outreach efforts and big picture thinking are a priority going forward.
 
As comprehensive as we ought to be: Kelly
 
Esteban Kelly has been involved in coops and the co-op movement for over a decade. Among many other hats, he is a worker member of the Anti-Oppression Resources and Training Alliance (AORTA), which plays a key facilitation and training role in the US worker co-op movement. He has watched the current wave evolve, but he sees it as part of a longer history. "Co-ops have played an important role in intervening at important moments to build broader movements -- economic resiliency, saving small farms, local food, sustainability -- that's what we've been doing in this country for 150 years."
 
But the current movement was fueled by a proliferation of clusters of co-ops in urban centres in the Bay Area and Twin Cities, Kelly explains. "You have a friend who is in a cafe co-op, you organize a bike co-op, you see the visibility of a bike co-op *and* a cafe co-op and you decide to organize a compost co-op or whatever -- that's word of mouth, that's how people start growing these things, and that's why we see worker co-ops growing in clusters."
 
Early conferences organized by the USFWC, Kelly recalls, were "a sea of plaid." Most of the practitioners "were people who were into pedal powered blenders who were running around in their plaid shirts." This presented challenges to making the movement culturally and linguistically accessible, and ensuring it had connections in places where interest in co-ops could grow. "If our leadership took off and was just these quirky, ah, bike enthusiasts from the Pacific Northwest, then we weren't going to have the connections to build bases and be tapped into supporting local groups, offering technical assistance."
 
In the early 2000s, organizers put a lot of effort into ensuring that there was regionally and demographically diverse representation on the first USFWC boards of directors, though not without difficulty. "It's no big deal for someone from Equal Exchange to have someone on the board of a national organization," says Kelly, "but for someone who is just trying to get their own worker co-op off the ground in the South Bronx, that's a very different ask."
 
Kelly praises USFWC leaders for accepting criticism while not being immobilized by the early cultural lopsidedness. The first USFWC boards were "really careful not to get panicked about the lack of representation the way that maybe some younger organizations will get freaked out and paralyzed by those dynamics." Hoover and others were "brave about it.. they were like 'yup, we're not beyond reproach, but also we're going to do what we can to be ready so that when Latino worker co-ops start approaching us for help, that we're prepared to be big tent, and we're not going to culturally alienate people by having this only be a conference of bike messengers'."
 
For Kelly and others, one of the exciting prospects of building an economic base for a movement is the ability to think beyond the categories imposed by foundation funding. Previous conferences have featured well-attended discussions about the challenges and limitations of operating within the "Non-profit Industrial Complex." The ability to choose the movement's direction and scope is, for many, an exciting side-effect of economic self-determination.
 
"Categories," Kelly says, chiding me for asking about the difference between the solidarity economy and worker co-op movements, "are imposed on movements by foundation dollars, and our movement can be decoupled from that foundation based world, because we can take our economic dollars through dues, through surpluses, profit-sharing, through equity, through decommodifying things... using those to fuel what we're doing and set those directions." 
 
Being outside of the "non-profit prism" affords the opportunity to look at economic democracy "as comprehensively as we ought to." The economy is an incredibly complex entity, and it includes "all the things that economists are looking at, informal markets and informal economies, feminized labour, the domestic sphere."
 
"Marxist-feminists have been telling us this for 100 years, robustly for 50 years," says Kelly. When we talk about the economy, "we need to be talking to childcare providers and parents and youth... we need to be talking about all the things." And if co-ops form the economic basis for a larger transformative movement, we can walk the talk too.
 
How does the movement attain that level? Kelly, Hoover and others are cautiously suggesting something that is likely to raise eyebrows in certain corners: engaging with the state.
 
Kelly says it's only recently that he's warmed up to the idea, and that he remains committed to bottom-up grassroots approaches. But hear him out:
 
"The three largest sectors of co-ops -- agriculture, housing and credit unions -- are all backed by the state." Credit unions received charters to give tiny loans to people whose credit rating was destroyed, "something banks don't see it in their capitalist interest to be doing." Housing co-ops "were built up using public funds, but are being privatized and run by shitty management companies." Agricultural co-ops make farming economically viable "by smoothing out some of the risk and allowing farmers to set prices collectively instead of competing with each other."
 
The worker co-op movement, Kelly suggests, could align with organizers who are working to stem privatization and develop the democratic potential of government-backed co-ops. Many housing co-ops were built in response to the struggles of previous generations of social movements through Housing and Urban Development (HUD), but are now being run by management companies, effectively privatizing cooperatively-owned resources.
 
Kelly points to groups like the Urban Homesteading Assistance Board (UHAB) in NYC, "who are organizing tenants to fire their management companies and giving them training to do it themselves," or hire the help they need.
 
"Why not hold HUD accountable what they ought to be doing? Governance and everyday democracy [shouldn't be] the privilege of elite food co-ops and elite housing co-ops and gated communities."
 
USFWC Executive Director Melissa Hoover thinks that legislative changes "could tip the policy scales" in favour of widespread conversions of existing businesses into worker co-ops, and make starting new worker co-ops much easier by freeing up access to different sources of capital. In Spain, for example, workers can invest unemployment insurance into a co-op. Other potential initiatives include preferential treatment for worker co-ops in government contracting, leveraging of retirement funds, or tax incentives.
 
Hoover says that some work is being done informally in cities, but she believes the movement is years away -- or at least a few major partnerships away -- from having the capacity to push significant legislative changes at the state or federal levels.
 
A big part of the challenge of expanding cooperation is that what's involved is a comprehensive change in how people interact with each other, which takes a lot of time and experimentation. 
 
Kelly thinks that the movement has a lot of work to do in terms of building capacity for training and practice. "We were caught off guard when the 99% movement popped up... we would lose our minds if tomorrow 30% of americans said tomorrow we're going to start [working in a cooperative mode]." 
 
With a proportionally tiny number of worker co-op owners, Kelly believes we're still far away from having the capacity to lead a social transformation. "We need many many more people who have these movement skills."
 
Despite being over 10 years into its latest wave, the US worker co-op movement is thinking in terms of decades, not years. 
 
A quickening: Kemble
 
Rebecca Kemble is a former anthropology PhD student, political activist, owner-member of Union Cab in Madison, Wisconsin and the current president of the USFWC.
 
Kemble recounts the humbling early encounters with the international co-op movement. "In Uruguay and Brazil, cooperatives are a major economic and political force... it's interesting to be in a situation where the US is on the bottom." At one international conference in Colombia, Kemble delivered an apology for the devastation of US foreign policy in the region, a legacy of coup d'états, funding for anti-democratic groups, and paramilitary killings. "It was amazing to be able to speak on behalf of worker co-ops and say that."
 
For Kemble, "more robust" connections to other social justice networks are essential to the worker co-op movement's success. "We have a hell of a job in front of us in terms of education... a lot of radicals don't know what a worker co-op is, as well as a lot of liberals who would probably support them."
 
She seems to share the cautious optimism of other movement veterans.
 
"There's a quickening," Kemble tells during a brief break from working on a story for her local media cooperative. "We're getting more comfortable saying that we're a movement." More people are realizing “we're not just running a discrete business, but we could be part of a process of social transformation."

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dru (Dru Oja Jay)
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Writer, organizer, Media Co-op co-founder. Co-author of Paved with Good Intentions and Offsetting Resistance.

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