The cooperative enterprise model is seeing a renaissance around the world. The turnover of the largest 300 cooperatives in the world over the last 3 years has grown by 11.6 per cent to reach 2.2 trillion USD in 2012. Preliminary data from 76 countries points to more than 250 million people working in co-operatives. The International Co-operative Alliance recently postulated that cooperatives would be the fastest growing form of enterprise by 2020.

This is an ambitious goal, even taking into account the momentum of the cooperative movement in the aftermath of the crisis and following the 2012 UN International Year of Cooperatives. Their continued appeal in follow up to the global ‘great recession’ suggests it might not be off target.

During the recent and persisting economic crisis, the cooperative model proved its value time and again as a resilient business model. For workers of conventional businesses which were failing, cooperatives offered a socially, as well as economically viable alternative.  Empresas recuperadas (reconverted enterprises) in Argentina are just one example of firms where workers were able to save their jobs by taking ownership of the companies they worked for.

Looking ahead and considering some of the pervasive drivers of change which will shape the future world of work, the cooperative model looks well placed. It’s clear, for example, that the cooperative principles are well in tune with the spirit of peer-to-peer networking which has become such a core feature of the knowledge economy. In fact, LSE economist Robin Murray has argued that this is precisely where cooperatives flourish best.

The Danobat Group in Spain, which makes
chip-removing machine tools, has thrived by
putting ownership in the hands of workers.
Photo by Lydie Nesvabda.

“Front line workers and plant managers have been given greater autonomy … work is being organized in teams and around projects. Projects draw in other firms in webs of collaboration. The capacity to co-operate, within firms and between them, is becoming more important than the principle of obedience,” Murray says.

Avanto Helsinki, a cooperative founded by university students in Finland, is an example of young people establishing cooperatives following such principles. Avanto is a “think-and-do-tank” offering participatory research, PR and communication services to companies, organizations and the public sector.  The cooperative model was seen by the young entrepreneurs as a low-risk start sharing both risk and responsibility.  It also offered a democratic (one member one vote) way to organize the day-to-day running of business, in addition to having fun with a group of likeminded peers.

Cooperatives have made some of their greatest strides in the green economy. In the renewable energy industry, for example, a recent ILO report found that they have a number of competitive advantages, including democratic local control over energy production and use, the capacity to create local employment, and reasonable pricing. Cooperatives could play a major role in achieving the goal of ‘energy for all’ – the drive to bring clean, modern energy to the 1.3 billion people in developing countries without access to electricity

Cooperatives have shown innovative flair in sectors such as social care, where there are widening  gaps between what communities need and what governments can provide.

Another recent ILO publication on tackling informality in e-waste management shows how organizing into cooperatives can help to improve the living and working conditions of e-waste workers. India and Brazil have had experiences where solid waste management cooperatives have extended their membership and services to include those working in e-waste management. During the official launch of the publication in January, discussants stressed the importance of an enabling legal and policy environment for cooperative enterprises at the national level, as well as more participatory development of regulations and guidelines around e-waste management at the local level.

Cooperatives have shown equally innovative flair in traditional sectors such as social care, where the  gaps between what communities need and what the government can provide are widening. Driven by global demographic changes, jobs in provision of care services are projected to be some of the fastest growing segments of the labour market. Cooperatives in Italy, for example, have expanded to the point of providing a wide range of services, from day-care for children to home-care for the elderly.

It’s said that need is the mother of invention. Cooperatives have historically emerged out of the need to provide goods and services not available from the public sector and conventional businesses. As such needs expand and become increasingly complex, cooperatives will find more and more space to meet them, advancing social conclusion and creating jobs for the future in the process.

Originally published by the ILO Blog on February 18, 2015

Simel Esim is a political economist, working in social and economic development for the past 20 years. She is the Head of the Cooperatives Unit at the International Labour Organization in Geneva. From 2004 to 2012, she was a Senior Regional Technical Specialist in the ILO Regional Office for Arab States, based in Beirut, Lebanon. Prior to the ILO, she worked in the International Center for Research on Women, Development Alternatives, Inc. and the World Bank.

Waltteri Katajamaki is Junior Professional Officer with the ILO Cooperatives Unit.

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In your view, what are three (or key) elements of “new economies”?

1. At the core, new economies have to be focused around people and protecting public interests, not falling prey to short-term, profit-driven private interests. They are designed with the real experiences of people in mind and both accessible and accountable to those people – not just the relative minority that most of the market caters to.
2. We are often told that the current mainstream economic system is theoretically focused on the most efficient allocation of resources, which is pitched as the equivalent of maximizing returns to the greatest number of people. But we also know that structural failures, varying political interests and simple lapses and incompetence lead to massive inequity. So the second element is that new economies understand and take into account questions of power and privilege. They are grounded in an understanding that the economy and power are intimately linked and changes in one have powerful implications for the other.
3. New Economies are normative, based on a set of values that center around questions of fairness, such as preventing oppression. Too often we hide behind shaky claims of objectivity and shake our heads sadly at the outcomes that follow. An approach that claims to be objective often fails to protect the basic values and rights that should be at the foundation of our society.

How does this relate to cities?

As sites of concentrating both people and ideas, cities are ideal grounds for piloting new economies that are connected and accountable to communities. Those who are supporting the development or adoption of these new economies can garner feedback from communities even in the process of trying out new ideas. It can be easier to track and measure the progress of a system in a dense area – and easier for people to hold others accountable.

And of course, cities are where most people already live and where power relations are most clearly visible – this supports the development of the new economies I began to describe above.

How have your personal experiences shaped the way you view economies?

Living in the big, convoluted city of Karachi, Pakistan is what drove me to think about and understand political economy. It’s where I first understood how alternative models could flourish, when I learned about social enterprises and when I first began to poke holes in the mainstream economic system we live within. Since then my work has focused around helping great non-profits and social enterprises flourish, and in this I have been reminded over and over again of how pervasive economic and political structures are.

Even when initiatives think they are somehow free of these external influences, even when entrepreneurs resolve to stick to their values and never compromise on their beliefs, they eventually succumb and either submit or fail. The most stable, well-funded and well-respected organizations are the ones that go with the flow and don’t ruffle too many feathers. Large multinational non-profits know that it is risky to be too outspoken, to be too honest. This is deeply frustrating to me because it means that markers have been laid down about what constitutes acceptable speech or not, and clearly shows how economic dependence stifles freedom.

What does real wealth mean to you?

Real wealth is knowing that you and your loved ones are safe and comfortable. That’s a peace of mind that I think really gives people the freedom to pursue their dreams and passions (beyond having the means necessary, of course – but safety and comfort are based on material well-being). Most people in this world struggle for basic security (broadly defined) and a minimum level of comfort, so can never be the best versions of themselves because they may never have the opportunity to explore what that means, let alone meaningfully pursue it. That’s a huge loss and I think a feeling of safety, broadly defined, is something that all truly wealthy people enjoy.

Real wealth leads to real freedom.

Nabeel Ahmed helps non-profit social enterprises launch target-based sustainability programs in Ontario as Member Experience Manager at Sustainability CoLab. Nabeel worked at the MaRS Centre for Impact Investing as the Managing Editor of SocialFinance.ca before a fellowship with Aga Khan Foundation Canada in Kyrgyzstan. He is currently a Guest Editor on the New Economies theme with Cities for People and volunteers for a number of local and international non-profits. Nabeel studied public policy and administration at the University of Toronto after business school in Karachi. He enjoys cricket, culture (especially from the subcontinent) and good arguments.

This blog is part of the ‘Voices of New Economies‘ series within Cities for People – an experiment in advancing the movement toward urban resilience and livability through connecting innovation networks.

The Voices of New Economies series is collectively curated by One Earth and The Canadian CED Network.

This series is an exploration of what it takes to build the economies we need – ones that work for people, places, and the planet. We are connecting key actors, finding patterns, noting interesting differences, and highlighting key concepts and initiatives. Together, this series offers insights into the new economies movement as it develops.

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In your view, what are some key elements of “new economies”?

1. Holistic measures of progress: There are many new measures bubbling up (eg. Gross National Happiness), but they need to take a more central place in decision-making, and they need to be refined and expanded in what they measure and how well they measure.
2. Respect natural limits: I see this as one of the central flaws of our current economic system. Environmental goods and their externalized costs are a major blind spot; we need to internalize those costs and respect natural limits, especially in the context of climate change. We have to work with nature, not against it.
3. (Eco)systems thinking: the recognition of the influence of relationships, and that human beings are not only part of the world, but connected to the world. This includes relationships between people and nature, but also between people, including the new connections that technology is facilitating. Taking a systems lens to thinking about economy and society is a foundation for understanding the impacts of decisions and actions.
4. Democratizing the economy & localizing control: New technologies can facilitate crowdsourced investment, connections and participation, but in-person communities, human and social capital are crucial.  We are experimenting with the new ways technology allows us to connect, and re-discovering some older wisdom about organizing.  The bottom line is that there’s an essential role for human connections in democratizing the economy.

Why is neighbourhood-level development important?

I think “communities” is the term most often used in CCEDNet, in part because it’s widely applicable, from geographic neighborhoods to communities of identity or interest. A community is a venue for people to get organized, connect and learn about each other, identify shared interests, challenges, opportunities to cooperate, and to change. For example, an immigrant community has specific needs – developing language skills, getting help to reach out to employers or starting businesses – and the foundation is that a community acts as an organizing vehicle to address those needs and create change.

How do these relate to cities?

Since cities have the highest concentrations of people, they are among the most dynamic places for connections, opportunities, and possibilities to be created. But the way they’ve been built has disconnected us from nature and each other. Cities need to be understood as part of broader regions. We need to recognize urban-rural relationships and the flows of goods and services, including ecological services, that a broader region provides. On the human side, there are many ways that cities can be better designed to deliberately create opportunities for relationships and cooperation, and connect the different spheres of our lives. Much of today’s built environment was created when zoning and building practices reflected an older mentality of separation. Integrating systems thinking into the design of cities can create opportunities for people to relate and care for each other better.

What are some major challenges to enhancing sustainable local economies?

In the New Economies world, there is a significant focus on business & finance, with valuable attention paid on growing more blended business models (social enterprises, BCorps, co-ops) and new finance models (impact investing, new types of investment capital, crowdfunding). These are creating lots of local opportunities for transition, which is exciting. However, I’d say there is less attention on places and people, from our angle of community economic development.  Ideally, we should be connecting the dots between all four pillars: business, finance, places and people.

Another one of our biggest challenges is communicating these opportunities to a wider audience, both professionals in various sectors and the general public, in a way that is meaningful and engaging.

A good example of a places- and people-centered project is the Quint Development Corporation in Saskatoon, which has a mandate for the city’s core neighborhoods. Among the local residents, there is a large Aboriginal population that has particular needs, so the employment and housing opportunities are combined with outreach that is tailored to their needs.

What does real wealth mean to you?

Real wealth means freedom, well-being, and happiness, for current and future generations, and fairly distributed for as many people as possible.

Based on an interview conducted by Jane Zhang

Michael Toye became Executive Director of CCEDNet in August of 2008, bringing a deep background in community economic development (CED) to the Director’s chair. Upon earning his Master of Social Work at McGill, Michael helped set up two worker co-operatives that provide research, consulting and training services related to CED and the social economy. Michael’s involvement with CCEDNet dates back to 2000 when he helped organize CCEDNet’s National Policy Forum while serving as a coordinator with the Coopérative de consultation en développement La Clé.

More recently Michael has deepened his knowledge of Canadian social policy and parliamentary process serving as a policy analyst at the Library of Parliament in Ottawa, while teaching courses on CED and social enterprise at Concordia University. Michael has written a number of articles and other publications on CED and the social economy, including co-editing the book, Community Economic Development: Building for Social Change.

This blog is part of the ‘Voices of New Economies‘ series within Cities for People – an experiment in advancing the movement toward urban resilience and livability through connecting innovation networks.

The Voices of New Economies series is collectively curated by One Earth and The Canadian CED Network.

This series is an exploration of what it takes to build the economies we need – ones that work for people, places, and the planet. We are connecting key actors, finding patterns, noting interesting differences, and highlighting key concepts and initiatives. Together, this series offers insights into the new economies movement as it develops.

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