Disaster Cooperativism

Posted on by Nathan Schneider

Capitalism loves a good crisis. It produces crises plentifully; it takes advantage of them gleefully. A crisis is an opportunity to throw pesky rules out the window—like workers’ rights or environmental responsibility—and carry out some brutal structural adjustment for the sake of capital.

Can the co-op movement take advantage of crisis, too? Often, it has. The Great Depression, for instance, was a time when the U.S. government actively pursued cooperative development, establishing rural electric companies and farmer co-ops, in order to provide services where the capital markets had failed. After Argentina’s economy collapsed in 2001, workers occupied their factories and kept them running (which Naomi Klein reported on before her landmark book on disaster capitalism). And we don’t have to wait for disasters of that scale; capital fails at all sorts of things all the time—especially Internet startups, of which about 90 percent fail. This, I think, presents an opportunity for platform cooperativism.

There are two basic strategies for cooperative development, which seem to me to be also the two basic strategies for platform cooperativism:

  1. Startups: Companies that are born as cooperatives, with cooperative principles deep in their DNA, growing and evolving through democratic processes
  2. Conversions: Companies that begin in non-cooperative forms, and that transition to cooperative ownership, governance, and culture by desire or necessity

We tend to put a lot of our attention on startups, because startups are kind of glamorous, and they can seem more pure in their cooperative commitments. But conversions may actually turn out to be a more promising path for platform cooperativism. Some conversions happen because the company’s owners think it’s a noble idea, and others because it fits well with the company’s business model. For platforms that have already had some success, conversion means that a broad stakeholder community doesn’t have to share the high risk of the startup stage; once the platform takes off a bit, it can switch to a more appropriate stakeholder structure. And this approach can be aided by keeping an eye out for crisis.

I’ve sometimes advocated that we should try cooperativizing the huge platforms like Facebook and Uber and Google, which have become public utilities and have no business being investor-owned. But doing so without simply confiscating a lot of capitalist property would be hugely expensive, possibly impossible. Much more plausible would be to attempt a conversion of a platform that capitalism has failed—that is rapidly losing value, or that hasn’t yet taken off. In some cases, co-op conversion might be precisely what a supposedly failing platform needs in order to solidify its user community, attract patient investment, and thrive.

In the past, declining tech companies—like Netscape-turned-Mozilla—have opted for an afterlife as foundation-directed, open-source projects; can we instead resurrect them as co-ops?

In order to do so, we need infrastructure—anti-private equity for platform cooperativism. Organizations like the National Center for Employee Ownership already specialize in converting existing businesses to more democratic ownership structures, and turning capitalist failures into democratic successes. This process involves financing, technical assistance, consulting, and culture. We need organizations with the special skills needed to do this work in tech, that have the tools to create successful turnarounds and the know-how to look for opportunity in the tech industry’s plentiful emergency rooms.

What’s already out there that we can draw from, and what needs to be created? Where do we begin?

13 thoughts on “Disaster Cooperativism”

  2. Nathan Slater Reply

    Thanks for posting this article. I’ve felt for quite a while that marginalization from an existing system is opening people’s minds to alternatives. The various mutualized and cooperative housing organizations take property off the real estate market. Members own rather than speculators. With such a high percentage of young adults living with their parents again, I would think this “crisis” presents an opportunity to transform the cultural understanding of living space and of “property” itself.

  3. Josef Davies-Coates Reply

    Disaster Capitalism isn’t about taking over failing companies. Not sure Disaster Cooperativsm should be either, but yes the co-op movement could and should take better advantage of the opportunities crises present.

    In the UK a load of big failing companies were once turned into co-ops to try and save them, but it didn’t work and so ended up give co-ops a bad name. The companies failed because their industries had been massively disrupted by changing economic realities but even though they were already failing lots of people just remember that the co-op experiment to save them failed and therefore unfairly associate co-ops with failure (despite the fact that pretty much all evidence suggests that co-ops are indeed more durable and resilient structures).

    At the same time, conversions are I think already where the bulk of global co-op growth is coming from, especially in countries like France, as highlighted in Co-ops UKs excellent recent report “What do we really know about worker co-operatives” (.pdf) (nicely summarised by Shareable here. The fact that many co-ops in countries like France emerge as buyouts of existing businesses rather than start-ups in part explains (as noted in the report) why on average worker co-ops are actually bigger than other companies (because many of them are born large).

  4. Nathan Schneider Reply

    Thanks for the great points, both here and on the discussion list. These certainly make the point that I should have considered more carefully the downsides of targeting troubled companies in this way—perhaps my concluding questions should have focused more on the if and whether than the how.

    While co-ops have been found to have a lower failure rate than other businesses, they may perhaps also have a higher cost of failure, in terms of the widespread impact on more vulnerable stakeholders. We can’t afford to have the same relish and thrill around “disruption” as others do, because the people who get disrupted are our members. That’s all the more reason to be careful and responsible about the process of conversion.

    A couple of suggestions have emphasized the need to look at the question, one way or another, in terms of systems and sectors rather than just individual businesses. In any case, this is a really important and interesting discussion and I’m grateful for the responses! Keep it going.

  5. Rafael Reply

    This is an amazing article and it something the resonates with me throughout my interactions and involvement with society. I think going after the lowest hanging fruit could work, meaning co-operative entrepreneurs just coming together, rolling up their sleeves and identifying existing extractive business models and focusing on how to disrupt and create alternative platforms that have cooperative principles and community consciousness embedded within them. This gives people a clear alternative to choose from and allow for more organized involvement through strategic outreach and training. Story telling is huge.

    This is why incubation teams need to be formed to outline all existing extractive platforms and collectively create alternatives, launch test, etc. What would be helpful is the coming together of similar alternative platforms.

    The other method is creating collobarative financial models that will allow communities or workers to purchase businesses that will most likely go up for sale and converting them into a more equitable business model. The workers already understand how the business functions.

    Unfortunately for the majority of people they are barely making ends meet, working long hours and the learning curve to understand these new models is daunting. Not to mention the absolute garbage that they are bring fed each day.

    The other point based on my experience in talking to people is that not everyone wants to become an owner, but wants to know that they are being considered and not being marginalized. The emphasis on a triple bottom line should be the only way to do business even if it’s not a cooperative. Just something to think about…

  6. Lisha Sterling Reply

    At Geeks Without Bounds we are working on the startup phase of this. We help teams develop civic and humanitarian technology and we focus on helping those teams to become sustainable. In the beginning we saw that as either for or not for profit companies and only briefly discussed the potential for cooperativism. These days we emphasize the potential in building these organizations as cooperatives. I personally have a strong sense that these routes of technology are best supported by organizations that have community as a core value, from the community of workers to the community served by the technology. Our genesis was in disaster response, and the lessons of corrective action in the midst of those disasters influenced us as the organization developed into an accelerator for humanitarian projects. I’m currently writing a series of essays about this and will also be speaking about it at the upcoming P2P Foundation conference in September.

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