The Growth of Citizen Co-Ops Is a Positive Development As Corporations Fail Us in Every Way

During Andrew McLeod's 10-day visit to the Basque Country of northern Spain, he met a 34-year-old man named Aitor Garro, who makes aluminum car components. For the last 13 years, this man has worked at Fagor Ederlan, a division of the Mondragon Cooperative Corporation, which is the world's largest system of worker-owned businesses. Mondragon's 100 global businesses employ 120,000 people and produce sales exceeding $20 billion annually. Garro grew up knowing only this system, as both his parents also worked in co-ops. "It was interesting to watch his perception of co-ops," McLeod said. "He took them for granted. It was like water to a fish."

McLeod, a California-based cooperative development specialist, spent the past year and a half traveling around the world and throughout the United States to learn about the valuable role cooperative systems can play during economic hard times. His travels took him to the Trentino region of northern Italy, the Pacific Northwest, the U.S. Rust Belt and Spain.

Worldwide, roughly 750,000 cooperatives serve 730 million members, according to the National Cooperative Business Association. Here in this country, some 72,000 co-op establishments operate, providing more than 2 million jobs and serving 120 million members--that's four in 10 Americans. These establishments exist in energy, childcare, food distribution, health care, insurance, agriculture, telecommunications and other industries. But co-op advocates want growth, and they say the time is now, as wealth concentration has reached dangerous levels, large investment banks have crumbled and unemployment affects 10 percent of the American population.

"A lot of cities are seeing that traditional economic- and job-development strategies have hit a dead end," said Ted Howard, executive director of the Democracy Collaborative. 

Cooperatives offer a potential solution: Through shared ownership and democratic control, co-ops distribute wealth, create jobs and keep control in the local community by allowing people to make the decisions that impact them, instead of leaving those choices to parasite investors who can sell a stock and walk away. Co-ops--whether they be of the worker, consumer, producer or purchasing variety--create a more equitable formation for society that brings decision-making and resource-sharing down to everyone, and investment earnings are not limited to a small group of people.

"Our firm belief is that cooperatives are the best business model for economic and social progress," said Adam Schwartz, vice president of NCBA. "Because of the structure--owned by workers--it's a fair model and treats people in a way that allows them to thrive while balancing the needs of their community."

In the fall of 2008, McLeod visited Trentino, Italy, which has at least 545 co-ops serving the region. Here, McLeod learned that 90 percent of the towns in the province have a food co-op as their only grocery store, and credit unions comprise the majority of the financial industry. This system--started by a Catholic priest in 1890--impressed him. 

But his visit to Basque Country left a deeper impact. This mountainous region runs between Spain and France along the Atlantic coast, and houses a couple of large cities and many small towns tucked within the valleys. Mondragon formed in 1956 and has since become a transnational-cooperative system that includes Spain's second-largest retail chain, with 2,400 stores, one of the country's largest banks, and medical and educational institutions.

"In contrast to this country, where small rural communities face the loss of industrial jobs, they're seeing growth," McLeod said. "It's night and day."  Workers earn an average income nearly 40 percent higher than the rest of Europe, McLeod said, and the system survived Spain's economic recession in the 1980s without laying off members. Profits are pulled together in this integrated system and made available to help support new, or struggling, cooperatives. Top executives can only earn six times the starting base wage of workers, and the chief-executive officer can only earn nine times the wage.