I don’t think anyone has yet announced the death of coops. I’ll do that right now. Coops are dead. Consumer coops, producer coops, employee coops and supplier coops. All dead or dying.
The issue that prompts this has been my reading of Lawrence Goodwyn’s Democratic Promise: The Populist Moment in America from Oxford University Press in 1976.
I suffer for my blog readers. The book was unmerciful. Nearly 900 pages, poorly written, filled with trivial details and the author’s ideology about the long-term demise of democracy and poor farmers. The ideology was distracting.
The movement that I know of as the Peoples Party first convened in 1892. It was later called the Republican Progressive Party in Teddy Roosevelt’s run for president and gained power in many states in the 1910’s. In California the Progressive Party elected Hiram Johnson and introduced the initiative, recall, referendum, civil service, the open ballot and much more. I’ll write about that subject later as I’m researching the origins of the grass roots Schwarznegger phenomenon.
Goodwyn attributes the entire creation of the Peoples Party to its main constituency, the Farmers Alliance. The Alliance gained members by advocating the use of supplier coops to sell farm crops at higher prices and buyer coops to get essentials, food, clothes etc. for the farmers at lower prices. Hundreds of thousands of farmers joined the movement from 1886 to 1894. The Alliance was separate and competitive with the Grange and much bigger.
The Alliance coops all failed, rather quickly. The prices of cotton, corn and wheat have dropped steadily from the Civil War until today. Nothing could have stopped that. Sears & Roebuck stepped in to sell farm families goods at lower prices in the 1890’s via a catalog and industrial style shipping techniques. Goodwyn doesn’t mention that.
What is relevant, as I read the book, is the realization that I have dealt with over 100 coops out of the several thousand businesses I’ve worked with. I’ve worked with coop auto repair shops, bookstores, insurance companies, savings banks, farms, food wholesalers, restaurants, truckers, farmers markets, ice creameries, some carpentry shops, many grocery stores ... etc. A few have survived, very few. Survival at all has always depended on the ideological commitment of the core workers and plenty of free labor. In Sweden, and other parts of Europe, the coops, I’ve worked with, are subsidized by the government.
What’s wrong with coops? Nothing.
They just happen to be a lesser form of management than the traditional stock, partnership or sole proprietor form. Good people can make coops work. But not for long and not in a volatile market. Group decision making can be excellent, but a single focal point leader is ultimately the source of long term survival.
That is my point. Coops do much better in stable markets like grocery retailers or food suppliers. Simple products, little credit and stable sales. They don’t do well anywhere else.
In addition, as coops get large, they enter the new commercial market that has become important since 1980: the market of businesses that get bought and sold. A coop is hard to buy or sell, it is hard to use as collateral for a loan. Of course many coop insurance companies, food supplier coops, and savings banks have changed their structure so they can be sold as standard equity corporations. That is still the end of the coop.
I have always loved the positive-sum romantic idea of cooperation and coops. It just turns out that the reality of commerce trumps romantic notions.