Restakis Interview on Humanizing the Economy


Aurora Online with
John Restakis


Humanizing the Economy: Cooperatives in an Age of Capital

Interview by Mike Gismondi

For the last 14 years, John Restakis has been Executive Director for the B.C. Cooperative Association in Vancouver. The BCCA is the umbrella association for the co-op and credit union movement in B.C. Its parent association has sister organizations right across the country for the other provinces. I worked with John over the last 5 years as part of the BC-Alberta Social Economy Research node (BALTA). We sat down to discuss his new book,Humanizing the Economy: Cooperatives in an Age of Capital.

Aurora: Tell us about the title of the book and how you came to write it?

Restakis: Sure. The title is Humanizing the Economy, Cooperatives in the Age of Capital. And it’s interesting about the title. It took me a long while to figure out how to encapsulate what I wanted, what was kind of the kernel of the story, so to speak. And, I landed on this title and the more I’ve thought about it since writing the book, the better it seems. It captures the heart of the book. Actually I owe a debt of gratitude to Stefano Zamagni at the University of Bologna for the title because he used to talk about civilizing the economy, humanizing the economy and so on and that kind of stuck, you know, in my mind and then I thought, that’s perfect.

So, it does deal with the nature of cooperatives, as democratically structured organizations, and their impact. What is the power of co-ops and what do they actually do in the context of a capitalist era? And, what they do is help to humanize the economy, and that’s the role of co-ops in the capital stage. That’s how I perceive it.

Aurora: Some of our listeners will want to know about cooperatives, can you tell us a bit of what a cooperative is before we move to the more sophisticated analysis….

Restakis: Well, in its basic definition a co-op is any enterprise that is collectively owned and democratically controlled by its members for their mutual benefit. Those are the three elements of any co-op. The collective ownership is key, because as a member of a co-op you are a part owner. The democratic structure is fundamental because it’s based on the concept of economic democracy, so any co-op has to be a democratic organization with its board of directors directly elected by the members. And third, the purpose of any co-op is to act in the mutual interest of members.

There’s a mutuality built into the structure, it’s not just about what do I get out of it as an individual, it’s more than that. Any good co-op will be an organization that strives to generate mutual benefit among all the members, right? So it’s a collective ownership democratic structure.

Aurora: Canadians may have seen a few around. Some consumer co-ops, like Mountain Equipment Cooperative, or United Farmers of Alberta (UFA) in my home province. But, we’re talking about much more than that. Tell us a bit about yourself, and what brought you to this topic of cooperatives in a neoliberal age?

Restakis: I’ve been involved in community work and sort of social change work since I was a teenager. I started when I was 18 as a community organizer working with young people in Toronto and then I continued doing work and training as a community organizer. I trained in Chicago, Industrial Areas Foundation, for a time. Then I came back to Canada and I got involved in education. So I did parent organizing, schools, communities around education issues for many years and then that led to popular education work and adult education.

I worked as a trainer and as an organizer for adult literacy programs for a number of years in Ontario and then I gradually got interested in community economic development and then through that I found myself working for the Ontario Co-op Association as a manager for their CED Program. It was through that sort of interest in community economic development that I became familiar with co-ops, but that was quite late.

I was in my 40’s and I was just, how should I put it, just captivated by co-ops because in so many ways they drew together so many threads of my work, my professional work, my professional history and my ideas and my interest. They kind of encapsulated a lot of those things in one form. And, I was just so struck by the fact that I hadn’t been exposed to them earlier. As someone who had been involved in community organizing work and community work and political work and so on, as an activist, how is it possible to be an activist from the age of 18 and end up being 40 before you come across co-ops in any serious way?

Aurora: Well, you answer that question in the book. You talk about the fact that we live in this delusional economy of individualism, as you say. Let’s talk a bit about that ‘delusion’ because it will help set up the contrast with what you mean by humanizing the economy.

Restakis: Well, it’s a complicated thing because I start off the book, as you remember, with some reflections on the battle in Seattle. And this overwhelming, this huge display of anger and frustration with the economic order, the status quo, with the WTO and the IMF and so on. And I start by looking at that anger and the populist content around that and reflecting also on how very little was forthcoming around responses to the problem. So this is a problem, how little there was in terms of an alternative viewpoint in terms of how our economies might be organized.

Aurora: Right.

Restakis: And, that kind of absence of an alternative vision is a product of, you know, of 200 years of sustained misdirection, shall we say, of students, in the academy of people understanding what’s the purpose of economy, what’s the purpose of markets and I think a very clear and willful burying of alternative view points that have been around for a very, very long time, but have disappeared from view.  And so, growing up in our current environment and even being exposed to and being actually bombarded with news about how our current economic system is not working, how it is benefiting a very small number of privileged people to the expense of everybody else, even though people are completely saturated with that news and that problem, they have no background or training or exposure to alternative ideas.

So that’s part of what I talk about in the book as the grand illusion and the grand illusion has to do with a particular view of the market and a particular view of economics which is, you know, the classical sort of free market view. But what is so striking is how even with those marchers in Seattle, or the Occupy Wall Street people today, even though they are very astute about what is broken, they are very ignorant about what are the solutions to fix it.

Restakis: That’s one of the primary motivations for me to write the book. In a sense to say look, here’s a history here and a story here that you as an activist have to know. You have to know this stuff.

Aurora: Let’s start with your audience, and then move into the discussion of the types of cooperatives out there.

Restakis: The audience that I had in mind was kind of two or three distinct audiences, actually. The trick was trying to bridge those audiences with a single work. And they are quite distinct audiences, connected but distinct. The foremost audience that I wanted to engage was people like me. People that had been involved in or currently involved in social change work. Whether people are working around political work or social justice work or people involved in fair trade or people involved in community economic development, its people that are practically involved in social change work. That was the key audience, foremost in my mind, the people that I was speaking to.

Aurora: Right.

Restakis: But then there was also another audience, a broader audience of people that are not professionally involved or practitioners involved in social change work, but who care about social issues. So those are folks that are watching television or watching the Occupy Movement, for example, on Wall Street and they are saying, yeah, I’m interested in those questions, I’m interested in those issues. People that, you know, aren’t directly involved in economic reform, but are consciously interested in buying fair trade coffee because it’s the right thing to do. And it’s people that follow these kinds of issues on TV or read the papers and care about them. So that was the broader secondary audience that I was interested in.

Aurora: You have a wonderful historical section and I wasn’t going to go there too much because I thought, well, the readers can go there, but what I got excited about were the contemporary cooperative experiments that you describe in the book. More than experiments, but well established cooperatives that have been quite successful.

Restakis: I want to spend just a moment talking a little bit about the history because there are two, I think, really profound weaknesses of the progressive movements or the activist dynamic going on today. One has to do with theory and vision and the second has to do with history.  And I want to tell this story because one of the things that really struck me repeatedly, because I used to take groups of people over to Bologna to study and to be exposed to the cooperative economy of Emilia Romagna, which I talk about in depth in the book. One of the things that struck me, when I bring over a group of Americans or Canadians, usually a mix, was when they would pose a question to an Italian professor or practitioner or an activist, the response was very often embedded in history.

Aurora: Ah, okay.

Restakis: That to answer the question, so it is comprehensible to the questioner, the Italian would often say in order for you to understand this you have to understand where this comes from.

Aurora: Right, so I violated your whole principle by jumping ahead in the book (smiles).

Restakis: That’s okay. So, often answers would be imbedded in the historical context which made it real and comprehensible. And that was striking to me because it is part of their attitude, part of their make-up, right? And it was important because it was so clearly not the make-up of the people that came with me, and were asking those questions.

So there is a profound disconnection between people involved in these social change movements and the history of these issues that they are so concerned about, and the history of their own movements themselves. When I say there is a profound weakness in the social change sort of movements going on around us, I’m talking about theory. On the one hand, we lack the kind of conceptual framework that people can fit their work into that gives it meaning. That explains why they do what they do, and why what they do is important.

When you ask them the question “why are you doing what you are doing?”  “why should we listen to what you have to say?” few people can answer that question other than on the basis of their values, because they care about this or this is important on a values basis.

Conceptually, theoretically, few people are able to answer the question why should co-ops be more interesting to us than capitalist forms. So that’s a profound weakness.

The second one is simply a lack of awareness of the history of resistance to our current economic system of corporate capitalism. There is a long, long history and the direction of liberalism and of capitalism was contested viciously by working class people, by intellectuals, by writers 200 years ago.

And there is a profound gap in peoples understanding of that prelude to what they are doing now. When I said earlier that the book is directed to people like myself, it’s people who care but have very little anchoring in a theoretical understanding of why these issues are the way they are, and why we are saying that we need to look to history for something different.

Aurora: Well, the book does a good job introducing those historical continuities, setting the context for each of the contemporary stories that you tell in this book. Was it Italy and that experience which showed you a new depth to the issues?

Courtesy: Economics, Cooperation, and Employee Ownership:
The Emilia Romagna Model. John Logue

Restakis: Absolutely it was Italy. I’ve always been interested in Italy for other reasons, personal and aesthetic reasons, but I was first introduced to Italy, not even about co-ops per se, but rather around the evolution of these industrial districts. The flexible manufacturing (sector) that works with the small-scale businesses that were banding together to co-produce and co-market their products for a global market place. Robin Murray the economist in the U.K., at London School of Economics (Author ofCooperation in the Age of Googleand Vimeo discussant at Fair Trade and Cooperation) introduced me and my colleagues in Ontario to the flexible manufacturing networks in the industrial districts of Emilia-Romagna, primarily. So at that point of time I was involved with the co-op movement in Ontario, but I became intrigued by these industrial districts because what they did was, in a sense, relate one small business to another in clusters around specific industries. And cooperation among these small firms that were individually owned, usually family owned or capitalist firms, but nevertheless, cooperation among them allowed them to excel in the products that they produced and to really operate at a scale because of the cooperation, in ways that were simply impossible for them to do on their own.

So, I came to the Italian co-op movement through the gateway of the manufacturing districts and then when I was in Italy, it was only then that I became aware that these flexible manufacturing networks in the industrial districts were themselves built on a foundation of cooperation that extended back, many, many decades. I became aware of the cooperative movement in Italy and its history and not just its success, but its pervasiveness.

In Emilia-Romagna something like 40% of the GDP of that region is generated by co-ops. They are the backbone of the economy in Emilia-Romagna and they have a political and economic history that is intimately connected to the growth and sophistication and formulation of the co-op form and at a much higher, more complex degree than almost any other region in the world.

Now you mentioned Mondragon in the Basque region of Spain as another, that’s the best known example of a cooperative economic system, but it’s very different than the one in Italy. People sometimes have criticized me for not having spent time on Mondragon in the book and the answer is because it is already a known example, and you can get lots of material on Mondragon but you can’t get a lot of English material on the cooperative movement in Italy in Emilia-Romagna.

Aurora: Well Mondragon is not without its critics these days too, especially in its globalization. You talk about some unique shifts that have taken place within the Emilia-Romagna model, from a more collaborative but still semi-competitive model, to a much more articulated model that has made it more effective in today’s global economy? You talk about how they compete co-operatively in a neo-liberal age.

Restakis: Yes, the co-op way of organizing enterprise has gone through a really interesting evolution in Emilia-Romagna. And you’re right, in the last say, fifteen or so years there has been a real acceleration of change in that form in Italy, not just in Emilia-Romagna. On the one hand these manufacturing districts that I talked about that had these small firms clustering around specific towns with the focus on a very specific industry. Those districts have undergone a change in terms of how they are articulated and how they are organized. Cooperation still remains a feature of them, but what has also emerged is the domination of a particular firm for particular expertise and those other firms that were previously on sort of more equal footing among themselves have now become satellite firms around leaders in particular businesses or industries. So, a kind of a specialization and a kind of a stratification of these industrial districts has happened. That is one change that has been driven by changes in the market place.

Artist at Work at Cooperative Imola
Courtesy: Economics, Cooperation, and Employee Ownership: The Emilia Romagna Model. John Logue

Another change that’s evolved in the co-op movement itself is how cooperatives now become international. And you mentioned, for example, some of the critiques that were leveled against Mondragon and its form and many of those critiques come from its activities globally, internationally. Well, the cooperatives in Italy have evolved in two ways, too.

One is that they have gotten much bigger so the scale of their operations has increased dramatically. Second they have grown to the extent now that they are operating in many countries outside of Italy, so they have become multi-national co-ops. And the third thing that has happened is that cooperatives have now sort of emerged as primary players in Italy’s economy. In other words, if you look at engineering, construction, in social services, in certain kinds of design work, cooperatives have now appeared at the very top tier of preeminent firms in Italy. That was never the case before. Co-ops were much more local and they were very successful, but on a regional/local level. But what has happened now is the cooperatives have now broken through and are now preeminent enterprises in Italy and that’s a change because they occupy so many of those positions now.

The reason that they have been able to do this is by building on their cooperative traditions. In other words they have been able to scale up and concentrate their economic success and power by utilizing their cooperative relationships with other firms, with other co-ops within the co-op system. So what’s happened in the movement in Italy is that cooperation has evolved to a whole other level. Not just in the individual firm at a regional level among the members of that particular firm, it’s become regional and cross-sectoral. So you have financial co-ops teaming up with worker co-ops, labor co-ops teaming up with retail co-ops, to create new kinds of cooperative networks that together have allowed a number of co-ops to appear as major, major players in the Italian economy. And, that kind of increase in networking and of utilizing the co-op model to strengthen the position of co-ops in the market place has developed a sophistication and an integration that was never seen before. Those were major changes.

Aurora: And have they been able to do that without sacrificing the humanizing or the reciprocity aspects? That’s the big question….

Restakis: Well that is the challenge and that is an open question, I think. Let’s take a look at one of the largest of these co-op systems is a retailing system. It is called the Co-op, right? And the Co-op is the largest distributor of food in Italy. It’s a consumer co-op and one of the major challenges is how do we operate and survive as a large-scale co-op with millions of members and still make membership mean something? And how do you do that if you are a co-op system that spans not just Italy, but is now reaching out into other parts of Europe, right, and maintain a connection to community? So what they have done is, they have had to innovate decision-making. To de-centralize where decisions are made, to de-centralize how money that is generated by the co-op is actually allocated at a local level, at a community level and how to mobilize local members in a particular town or region so that their connection to the co-op has significance to them and the place where they live, right?

And they have been able to do that by radically de-centralizing a number of functions of the co-op. So they have these regional committees that elect their own representatives from among local membership, and those committees are responsible for allocating and identifying where the profits from that region of the co-op, how they are going to be used. And that’s helped the co-op branch out into other kinds of activities that are important to people locally: things like health care, home care services, recreational services, organizing trips to go to the seaside, developing relationships with local food producers, local restaurants, or becoming part of the slow food movement and so on. So they’ve relocalized the activities and the effects of the co-op to a regional or community level.

Restakis:  What that has done is, in a sense; leverage the profits and the model of the co-op system, the consumer co-op system, so that it places the power in the hands of local members. So they then can actually see the benefits of the co-op system – as huge as it is – in ways that are particular and tailored to their local community interests.

Aurora: Let’s discuss the idea of the social care co-op movement then. In Italy, this is a large and emerging area and one that would be quite exciting for Canadians to think about, given our aging society.

Restakis: The social care question is something that I’ve been thinking about and researching for quite a while and again the Italian experience has helped inform me about what the possibilities are for co-ops in this area of public services and caring for people that need, you know, help of one kind or another.

Forming parmagiano reggiano at LatteriaCourtesy: Economics, Cooperation, and Employee Ownership: The Emilia Romagna Model. John Logue

In Italy probably the most important development of the co-op form has been around the development of social co-ops and that took place at sort of the beginning of the 80’s. In summary what happened was people, families that were using public services, primarily for taking care of people that were in trouble, incapable of taking care of themselves, people with intellectual or physical handicaps, decided that they could do a better job than the public system, than the government system, by organizing co-ops where they had control. So the earliest social co-ops in Italy typically were a combination of families whose loved ones were in care and the families were also the caregivers or finding the physiotherapists, the professionals providing care to these people. And so what happened was they adopted the co-op mode. So that the design and delivery of social care was directly in the hands of caregivers and the families and the individuals that use those services, okay?

But what happened was that model quickly flourished to the point now, where some twenty years later, it has emerged as probably the most important innovation in the co-op model and the co-op form that we have seen maybe in a century. The traditional forms of producer co-ops, consumer co-ops, you know credit unions, financial co-ops have been, in a sense, we have added a whole new category of co-op, which is social co-ops: Co-ops with provisions of social care or human services. Today and I don’t even have the exact numbers, but for example, just to give you one instance, in the city of Bologna over 87% of the social services that are provided to the people in that city (of approximately 4 million people) are provided through social co-ops under contract to the municipality.

So the municipality and the public sector still has a key role in the provision of social care. And they provide a fair degree of funding for social care, but the actual design and delivery system for that care is in the hands of the care-givers and the families and the people that actually use those services.

So that is a profound shift in how we understand the role of the state and the role of government with the provision of care. What has also emerged is a fair bit of research on how well is this working. Questions like: what’s the quality of care that is provided under these cooperative systems? What is the cost of the care compared to, you know, care systems run by the government? And what’s the perception of workers that were formerly, or normally would have been seen as public sector workers, that are now working with co-ops? And so Carlo Borzaga (European Institute on Co-operative and Social enterprises), I quote him in this section, has done research on all of this and the results are really quite striking.

The emergence of social co-ops has greatly expanded the variety and the range of home care services or a particular kind of support for a family member, than there were before.

Secondly, the cost of those services has been substantially lower than the cost provided either by the private sector or by government. Part of that is because social co-ops rely not only on professionals but also on volunteers, so they engage that kind of civil dimension of community where people contribute the time to care for their neighbors. The use of volunteers has lowered the cost, but it’s also improved the quality of service because social co-ops have been able to capture this element in care that is underdeveloped or ignored both by government systems on the one hand, or for profit systems on the other.

And this is the element that social co-ops capture and is built on, the element of relationships. The personal connections that need to be present in social care systems and this has to do with the nature of care itself. In other words, social care is essentially a provision of human services, of what are called relational goods. And relational goods are those kinds of goods that are an actual exchange of relations among people.  Face to face relations, right? And it is the absence of relationships among actual individuals in both commercial systems, for profit systems, and bureaucracies that have made social care so appalling.

On the one hand, in government provided systems the individual that receives for example a welfare check or a health service is often simply dealing with a system. They are not dealing with an individual that they have a personal relationship with. And in a private system, those services are commercial services. They are based on the premise that the point of the system is to generate a profit for the company.

Both of those models undermine the quality of personal relationship that is at the heart of any social care. And so the most important contribution of social co-ops is the mechanism through the co-op structure that allows the provision, the provider of care, the care-giver and the user of that care to actually enter into personal relationship through the co-op. And that has had a profound difference in the actual content of the care, how care is designed and the quality of the care itself.

Aurora: To describe this relationship you use the word sociability, a concept that Georg Simmel developed many years ago, to explain why some people continue to always shop at the same grocery store. They don’t shop for price, they shop for that relationship. He used the word trust but in a different way than an economist would use trust. It is a trust in the people, the ambience, and the owners. I’ve built this relationship with them, you know, and it makes even more sense in social care. I’m just thinking of my own experience. There are variations obviously within Canadian social care. Some of the religious ones, for example, maintain some of that emphasis on reciprocity between care giver and receiver, and the reliance on a mix of employees and volunteerism, and it is faith based.

Because we are living in a country where there is a lot of pressure to privatize social care and health care in Canada, maybe we can just talk a bit more about the challenge transferring such a system to our context.

Restakis: Yeah, that challenge is replicated right across the west, you know, it’s this tension between public and private and what I consider, anyway, to be a product of one ideology, which is a free market model and the grand delusion which I talk about in the book. The notion that market models or that the free market can be applied to any exchange or any kind of relationship and produce a better result, if you base it on a commercial market, sort of classical principals of the free market. I consider this to be simply an economic logic of the private sector colonizing the public. I mean it’s not an accident that over the last twenty – twenty-five years or so that opportunities for the private sector to expand, to make money, in some cases have become limited. So what’s happened is an expansion of commercial activities into third world countries, the typical colonial sort of expansion of markets. But that colonial logic of expanding markets into new terrain is now driving toward the area of public services: colonizing public services through private sector models. So there’s an economic imperative at work there.

Aurora: That’s interesting….

Restakis: So in Canada, just as in the U.K. and the U.S. there are these two imperatives going on. One is around ideology, around the expansion of the free market idea into areas that were not considered previously as market areas, like health care or something like it that were public domains that governments should be responsible for, and the other is this kind of colonizing profit imperative.

In Canada that debate has been going on for a long time and what’s interesting is that there is still an enormous reservoir for public support for publically organized services, especially around health care. People have, in a sense, identified health care as a kind of a bridgehead for protecting the notion of public services as being a different kind of relationship among Canadians,  than market or commercial exchanges.

Aurora: Sounds about right.

Restakis: What I have been trying to point out is there is also a third alternative which is that civil society itself has a role to play in the provision of care and always has had a role to play. What we need is a model that is capable of embodying the civic and social values of civil society. In other words, that people have an inherent responsibility to care for each other on the basis of community, on the basis of human relationships, on the basis of reciprocity, really. And at the same time, an alternative that can provide an economic logic for organized care in a way that doesn’t break the bank. You know, you need to develop systems that are actually sustainable economically, not just socially.

And so what I have been exploring then is how do social co-ops address those two fundamental questions. One, how do they provide care for people that is humane? And second, how do they provide care for people that are actually economically sustainable? And the research is showing and experience is showing that cooperatives are very good at doing both. And the reason they are good at doing both is because they provide a mechanism whereby the care recipient, the people that actually use the services, have control rights. Have a high degree of control rights in how those services are designed for them.

Aurora: These are the recipients themselves?

Restakis: These are the recipients themselves. So people that use the services are not simply passive objects of care systems. They are active protagonists in designing the kind of care systems that actually work for them and that is absolutely fundamental if we are going to talk about reforming care systems. So, I’ve done a lot of talks and presentations on the social care system: a) what’s wrong with it, that it is broken, and b) what is crucial in fixing it?

And the main thing that I kind of land on is that care systems, in order to do what they should do, have to not only engage the users, but actually link the providers of services with the users of services in not only a personal relationship, but a relationship of equality.

That unless you democratize the care systems where people that depend on services actually have power in the system, you’re always going to end up with abuses, you’re always going to end up with bureaucratization of care and you’re always going to end up with systems that serve other than the people that really need those services to survive and that are dependent on them.

Aurora: You discuss some of the practical tools and mechanisms used in this social care market including social vouchers. That was very interesting too. Maybe we could go there?

Restakis: So one of the problems or one of the real challenges for looking at social care systems using co-op models, or looking at social care systems that actually prioritize reciprocity as the mechanism that actually makes humane care possible, is how?  Relational goods depend on this principle of reciprocity. Which is what co-ops are; co-ops are based on this principle. In other words, if I help you, you will help me in return, unless you have that reciprocity principle operating you can’t cooperate and you can’t organize a cooperative without it.

But it’s not just cooperatives. It is all this myriad of organizations that make up the social economy. So, nonprofit organizations, volunteer organizations, recreational groups, charitable organizations, all these kinds of groups that make up what we call the third sector, in some way or another rely on this principle of reciprocity. And it’s an economic principle as well as social principle. And the principle simply states that for the provision of a particular service or an exchange of some kind, if I provide you with a favor then you will reciprocate, if not to me then to somebody else. So that is an economic driver for all of these organizations. That’s the logic of these organizations and it’s the logic of co-ops. Not the only logic, but a key factor. The problem is, as I see it, that when you put all these organizations together in a kind of a, as a sector, like the social economy, where is the market? What is the market reflection of reciprocity?

So if you have a social co-op that is providing services to people with disabilities and their families and it’s based on this notion that people are sort of going to help each other through co-operation, to provide these services for each other. That’s the reciprocity principle. But what is the economic reflection of that principle in terms of the market? You have a social economy, but do you really have a social market? Do you have a marketplace that is based on this reciprocal exchange that is so basic to all of these organizations? What I was trying to sort of get at in the book is that for a social economy to flourish and take its place as an equal partner alongside the public sector on one hand and the private sector on the other, you also need a corresponding marketplace for those kinds of reciprocity services and relational goods. We really don’t have one.

We have an informal arrangement that uses a co-op model or a charitable model, whatever, to provide these kind of reciprocity based services, but we have very poor ways of valuating those services or allowing people and organizations to actually exchange services on a reciprocity model in a way that provides them with revenue, and that valuates them economically. And so you have a system where nonprofit organizations, social service organizations, almost all of them are based either on private donations on the charity model or government subsidies.

Now we are looking at a whole evolution of what are called social enterprises, where the focus is on how to mobilize capital from the private sector to provide social benefits. So capital mobilized not just for the generation of profit, but capital mobilized for the provision of social goods. All the attention now is going around, how do we do this? How do we get social venture capitalists for example, to put money into swimming pools and health centers. The problem with this is that what you are really doing is using one economic logic of capitalism in the commercial market, and fitting it into a reciprocity framework, which is the provision of social goods. And what I’m saying is that’s not good enough, because what you still end up with is social co-ops, nonprofit groups and all of these social economy organizations and the social economy as a whole being a dependent system on either the public sector or on private capital, and that dependence is perpetuated.

So I think the theoretical and practical challenge is how do we develop market mechanisms that actually correspond to the operating logic of social economy organizations, which is reciprocity? That’s the problem around social markets. We need to develop market models that allow social enterprises and social economy organizations to generate the revenue and the resources they need based on something other than private sector capitalism or tax money. Does that make sense?

Aurora: In your book you talk about focusing on the demand side rather than the supply side. And the use of social vouchers and things like that?

Restakis: Exactly. One example of this point has been sort of illustrated in Bologna. There is a foundation in Bologna that was seen as a charitable foundation; that gave out money primarily for the provision of services to the elderly, eldercare. The official model is you give money to the organizations that provide the service, but what was tried in Bologna was to reverse this and put it on its head. Basically the charity provided vouchers that were given directly to the consumers; directly to the families in need of the senior care. And what that did was all of a sudden it put the market power, the economic power of choice in the hands of the families that actually were depending on these services.

The vouchers were designed in such a way that the value of the vouchers corresponded to the particular set of services, that a particular family needed. Each voucher had a different sort of economic value, a purchasing value. Secondly those vouchers were neutral in the sense that if you came to an organization with the voucher, and provided that organization with the voucher, there was no way of telling from that organization’s point of view the degree of subsidy.

Aurora: Right, there was this anonymity to it.

Restakis: There was anonymity involved in it. So if you had a high degree of subsidy that was needed, the people wouldn’t know. They simply got a voucher and they provided the service. So that protected the dignity of the people holding the vouchers. They weren’t discriminated against on a basis of, you know, they needed more charity money than others. And secondly, it gave them a choice in the marketplace of social care. They were able to go to one provider with a voucher and receive a service. If they weren’t happy with that service, they could go to any other provider that provided that service.

What ended up happening was over time a number of these organizations flourished that provided these services on this voucher system, and a number of them did very poorly. And the result was that there was kind of a revolt on the part of some of these organizations coming back to the foundation and saying, you know, we’re in trouble here, we’re not getting the kind of revenue we need to continue operating. And the response from the foundation was, well what are you doing wrong that these other organizations are doing right? It’s incumbent on you as an organization, as a service provider to respond, and to innovate on the basis of what these people actually want from you.

Aurora: To learn.

Restakis: To learn. So there was a kind of screening, a selection process that went on that was simply not possible before, because these organizations previously had been guaranteed a grant to provide this service no matter how shitty the service was. So funding the demand side of the social care equation as opposed to the supply side of the equation builds in a certain dynamic of reform. And that has to do with the empowerment of the people that actually depend on these services.

Aurora: Ok. The linkages are clear and very intriguing. There is much rich material in the book John. I’m looking down my list and we’re only part way. Let’s talk about the case studies and stories from Japan, India, Sri Lanka, and Argentina. What were you trying to illuminate in each one?

Restakis: I sort of try and take a picture, a snapshot of different places in order to illuminate different dimensions of the co-op reality. The book begins, as we said, with a kind of an historical and theoretical background and through the cases studies, the examples from different countries, use them to illuminate one or another aspect of the theory and of the history.

Huesitos de Wilde Cooperative, ArgentinaCourtesy: The

So in Argentina I talk about the recovered factory movement and that is in the context of the economic bankruptcy of Argentina in 2001. And that illuminated the role of the IMF and international global regulatory organizations in propelling Argentina toward bankruptcy. Which I might add is a very similar situation taking place today in Europe. And so the telling of the recovered factories simply highlights the ways in which the co-op model has empowered the workers to take control over their workplaces, at a point where the previous owners had basically bankrupted and looted the enterprises and then left them shuttered and thrown all the workers out of work.

And so that story is intended, in a sense, to highlight what the co-op form can do at a very local level to save enterprises and to challenge this domination of an international sort of economic model, that always favors owners. Always favors capital over the interests of community and workers. So that’s a kind of focus on worker co-ops, not just worker co-ops, but a focus on the intimate connection between companies and communities.

Aurora: Yes. That connection jumps right out at you, because local people came and helped the workers.

Restakis: People came and helped the communities in which these factories were located and suddenly understood that companies have a community logic to them. That the people work in those factories, but live in those communities in which those factories are located, that there is a symbiotic relationship. And normally what you have is a kind of a firewall between a company and the community in which it is located. And the experience in Argentina with recovered factories broke down that barrier and made evident to people that there was a community of interest between the company and the economic role it provided, and the health of that community. So that community company connection was made transparent in that process. I thought that was important.

Aurora: You offer a really fulsome example of the tile company, where the indigenous people, who extracted the actual clay used in the tiles, created a feeder system into the factory, they started contributing designs.

Restakis: Yes, Previously this factory, Zanon, basically, when it was under private ownership, would simply see the clay and the resources and the indigenous people that provided this clay supply to the tile company as simply an economic resource. They had no personality; they had nothing more to contribute than simply the clay and their work. What happened in Zanon when the workers took control of it and organized a co-op was a different logic began to operate. They began to include the indigenous peoples as individuals. As people with a history and a culture and a contribution that was beyond simply, you know, digging out the clay and handing it over to the company.

And so they entered into a relationship with them that was creative and that made visible and valued their culture as people in the production process. That was unheard of before. The only reason it was made possible was because there was something other than an efficiency and commercial logic that was at play in the co-op, in that workers identified and realized and valued their community connections over and above simply mining the land and mining the labor of people for a profit. And there are thousands of these kinds of stories, but that’s just indicative of what a different ownership structure at a factory can mean for a local community.


Note: The Zanon company’s name changed to FaSinPat (Factory Without a Boss) since workers took control)

Aurora: Take me somewhere else.

Restakis: I wanted to look at some unusual examples of how co-ops build community and so the other example that I highlight is Calcutta. Sonagachi District in Calcutta is one of the world’s largest red light districts. And so I looked at sex trade workers in Calcutta and how the co-op model has helped them to build community in a very different way than the Zanon example of factory workers in a tile factory. In this case what we are looking at are women who have been forced or coerced or sold into prostitution, most of them, almost all of them – how their previous state of isolation, subjection, invisibility, powerlessness was transformed by their organizing a credit union.

And it was a profound transformation, and I think it is one of the most striking examples that I present in the book because it deals with so many variables at the heart not only of the creation of community, but individual self-worth. Prostitutes in India are at the very bottom of the social ladder and not only because they are women, but because of what they do for a living.

This entire development was initiated as a result of a World Health Organization project to try and document and prevent the spread of HIV virus in the sex trade in India and in Calcutta. In Sonagachi there was an epidemiologist that was recruited to organize this kind of sex education and HIV prevention program.

What became apparent very early on in the project was that it was very difficult to get prostitutes in Sonagachi to take seriously HIV prevention measures like, you know, demanding the use of condoms for example. I think they said less than 3% of prostitutes in Sonagachi used condoms in their work. The reason it was so difficult to motivate them to actually take measures to prevent the spread of HIV was because of their extraordinarily low self-esteem. They did not value their lives enough to care. And so the project then became how do we raise the self-esteem and the self-worth of these women so that they care enough to take the measures they need to take to save themselves? And so they started organizing, they trained a set of women who were actively involved in the sex trade to act as organizers for this program. And they started organizing among their peers. When they started asking women, well what is it that would make the most difference for you and your life if we were to organize a project together? They didn’t say, you know, we want to have more access to condoms or whatever, the first thing they came up with as a concrete assistance to them would be a credit union, because that would then allow them to save money and the ability for them to save money means that they could send their kids to school, the could purchase property, the could come out from under the thumb of the local loan sharks. Unless they were able to save money, they would never free themselves from the kind of subjection they were mired in, in the area.

Co-op Social Enterprise: Women of SonagachiaPhoto: Courtesy of John Restakis

So the credit union then became the mechanism whereby not only did they find a resource to actually get credit, and to save money and didn’t have to rely on a loan shark so that all of their money just sort of disappeared. But secondly, that the creation of the credit union put these women in relationship to each other in a completely different way then they had been involved in before. In other words, it developed a bond of community among these women and it was this community, sense of community that then gave them the organizational power to start articulating, you know, their reality. So it gave them an identity. It gave them a voice, and it gave them a visibility they never had before.

The impact of the co-op was not only to give them access to money so that they could actually liberate themselves personally or individually, but even more importantly it gave them a sense of common identity. The building up of community that co-ops can do is absolutely fundamental, when we are talking about something like the disempowerment of women or the subjection of women. Or, in another instance, the subjection of indigenous people, farmers, aboriginal farmers in other parts of the world that use co-ops to give them cultural power, and not just economic power but cultural identity; cultural power so they can reaffirm who they are as people. That’s part of the whole dynamic of what community brings to people.

There is a major chapter in the book where I talk about communities in crisis and how our consumer society and the reigning ideology of corporate capitalism, the free market, inherently undermines community and destroys community and isolates people. And so in addition to co-ops being a response to the economic challenge of how do you actually redistribute wealth and economic power more justly, it also responds to the profound problem of repairing the dissolution of community that is a consequence of a consumer society. There are all kinds of aspects to this in that chapter, but I’m bridging from what community brought to those prostitutes in Calcutta. I mean the co-op now operates something like seven health clinics. It has driven the incidence of HIV/AIDS in Calcutta to the lowest among any of the red-light districts in India. The use of condoms has gone up what, 600%, something like that, 65/70% of them now use condoms. And it’s enabled these women to actually purchase property and to leave behind something for their kids, education being one of the most important consequences of a credit union.

That notion of community building then bridges over to lessons that we can glean from how the co-op model, based on reciprocity and the exchange of personal relations and the bonds that come socially through the operation of co-ops, how it repairs and builds community. That community aspect is a big part of the role of co-ops in what I called in the title humanizing the economy; humanizing the economy also means rediscovering and rebuilding the social connections among people that are absolutely foundation to healthy communities.

Aurora: Well, thank you for that. You also have a great chapter on Japan that our reader will enjoy. I want to change gears a bit here. I was struck by a discussion of fair trade in the book where you are trying to correct, I think, some of the weaknesses in fair trade. Can you encapsulate it for us? I want readers to be aware of commodity chains and your idea for the role of co-ops at the local end of fair trade exchanges.

Restakis: Right, I looked at fair trade because I wanted to examine how the co-op model can relate to international trade issues. And it’s a big challenge because co-ops are; the logic of co-ops is so often, local. It’s face-to-face relationships and people working together in community. So how does that relate to the global trade system? And fair trade is, in part, the answer to that. I mean the fair trade system is a global network of trade relationships based on the premise that you can choose to purchase products that are ethically sound because they return a fair return to the producer, okay? But what most people don’t understand, don’t realize is that the entire fair trade system, the whole apparatus is based on producer co-ops. That it’s the co-op system at the foundation of the fair trade system that ensures that those farmers are going to get a fair return for their product, for their group. If it didn’t have a co-op at the bottom of it or a democratic structure at the bottom of it, there is no way you could guarantee that middle men aren’t going to cream off some of the profits and that the small farmer is still going to end up being ripped off.

So the co-op model at the bottom of the fair trade system is really what keeps it honest. And what I point out is that this is being challenged, this is being threatened because the fair trade organization, the fair trade systems are more and more seeking scale access to store shelves and distribution systems in the industrialized west and the north, teaming up with retailers, large corporations that are then able to stock fair trade products in their supermarkets or in their distribution systems. But what that is doing is basically adding a credence or a valuation to these large distribution systems like Starbucks or Tesco or whatever in Britain that may purchase, say 2% or 3% of their coffee beans from fair trade suppliers, and brand themselves as fair trade ethically traded corporations, when 95 or 97% of their product comes from non fair trade sources.

So these large private corporations, for a relatively small premium, purchase a fair trade seal of approval which basically undermines the very logic of fair trade. The whole international logic of fair trade as being a way of selling third world commodities in first world markets ethically, by providing a premium to producers so they can make a living and so on, is inherently limited. What needs to happen in these underdeveloped regions is exactly what happened to underdeveloped regions in the north, which is they have to find a way to diversify what they do. They can’t only be providing coffee beans and hope to develop a local economy that is actually going to generate the kind of revenue and wealth and so on like that is actually going to create a healthy, vibrant local economy.

Aurora: Most fair trade commodities are primary products.

Restakis: Exactly, mostly agriculture, mostly, primary commodities and the commodities markets, as we all know, are unreliable, they go up and down coffee or tea or whatever. So what I point to is coming back full circle in this instance to Emilia-Romagna in Italy. If these fair trade co-ops at the foundation of the fair trade system really want to empower farmers, but also build wealth in those communities, they have to diversify. They have to find ways of adding value to their products. Diversifying from monoculture to a variety of local produce that they can then start building a local economy around, using their co-op connections with other co-ops that replicates the success of the small scale clusters of financial districts in Italy. ‘Cause it was cooperation that allowed those small individual firms in Italy to band together and then to create wealth locally, but also sell globally.

And it’s the same logic and the same mechanism that can be made to work in underdeveloped regions. They need capital, they need credit, they need processing technology, marketing expertise, all of this kind of knowledge needs to be imported and applied locally and the co-op form can help them do that. And do it so that they do not then become dependent on selling their coffee beans to Starbucks, but leverage their co-op to develop relationships with other producers, other economic interests, other kinds of skill sets in that region to develop a local economy, not just to develop a distribution network for coffee beans.

Aurora: That’s great. Okay, last bit. I did meet Elinor Ostrom last year, at a conference on climate change, where she was talking about the institutional mechanisms we need to respond socially and economically to climate change.
But your work on co-operatives wove many of similar institutional and value elements back into the equation of humanizing the economy.

Restakis: Well the last issue I try to come to terms with and grapple with in the book is the question of scale and the degree to which the co-op form can be globalized to address global issues, like climate change. I guess the main point I was making is that first of all, the crisis around climate change, global warming and so on and the crisis around environmental degradation is driven by an economic model, a particular kind of economic model that we are dependant on which is an expansion model of corporate consumerism. And all the negative externalities, side effects of that system are ending up not only destroying communities because of what consumerism does to people and communities, but destroying the foundations of economies too, depleting natural resources, environmental degradation, global warming and so on.

So, the main point is that unless we develop an institutional structure that democratizes political decision-making at a global level, and then we’re not going to change the climate change problem. We’re not going to solve the environmental degradation problem. We’re not going to solve the problem of the destruction of environments through the resource industries. All of that reform, I think, depends on fundamentally altering the control and ownership structure of global corporations. Or at least altering the decision making and control structures of those institutions that are set up to regulate those organizations.

So, whether we’re talking about the IMF or the WTO, unless there is a cooperative logic that is applied to those institutions, they will always support the corporate elite that sustain them. That pays for them. That pays their wages and chooses their boards of directors and their CEOs and so on. And in order to make that point actually credible what I had to do was show that cooperation among stakeholders at that global scale can actually work. Elinor Ostrom talks about the management of the commons as being possible at local and regional levels when people and communities have control, if they follow some simple basic rules. She identifies around five or six, right? All of those rules work and operate on the premise that there is democratic control and community engagement and power around the operation of those systems. Whether we are talking about the management of fish stocks or the management of water for irrigation purposes or the management of pasturelands we’re always talking about ways in which people form cooperative systems to manage collective interests.

And what Ostrom shows is that it is possible regionally and locally and what I showed through the effort, for example, to deal with the depletion of the ozone layer or the management of acid rain around the Great Lakes and other examples, is that this is possible. But that democratically controlled systems are actually essential to addressing issues. People normally isolate global warming or environmental degradation from questions of democratic structure and I’m saying you can’t reform the one without the other. That’s the basic premise of that closing section. And the challenge is for people to figure out how to do that. That it’s a lot simpler to organize cooperative systems when you know your neighbors. When you’re living in the same region or community where you’ve grown up, with the people around you and so cooperation becomes a lot easier because you have face to face relations with these people.

How do you build cooperative systems on an interregional and sort of international level to deal with something like climate change, with strangers? With people that are not only not living near you, but who are not even like you. Right? So how do you develop the levels of trust and interaction and reciprocity that allow this global cooperative system to operate? Now I think it’s possible, but I think it’s a learning process. And I think I mentioned in the book that one way of articulating or describing the advance of what I would call civilization is the degree to which people learn to establish larger and larger orders of inclusion through cooperation.

So the increase in cooperation from family to community to regional to national levels eventually to international levels, the creation of those cooperative systems also entail an expansion of connection between people. Greater and greater orders and complexity of community described as something beyond simply your neighborhood, but a community of interest that could be regional, or national or even international.

The learning curve is how do people and communities develop institutions that enable people to imagine themselves as connected to larger and larger orders of activity and inclusion with people that they have nothing obviously in common with, except a human interest. That is the challenge, I think, for the co-op model. It needs to operate at the level of efficacy where the problems operate. So if you are operating around the issue of global warming how do you develop the institutional structures that entail that democratic control element reaching right down to the local level that is capable of addressing global warming on a global scale?

Aurora: You’re not giving me the answer to that question, right?

Restakis: No, in the next book.

Related Links

John Restakis

The Cooperative City, John Restakis 2011


University of Victoria – Centre for Cooperative and Community-Based Economy

1 Comment

  • jodi monnier says:

    I really like what you guys tend to be up too. This type of clever work and exposure!
    Keep up the awesome works guys I’ve incorporated you guys to our blogroll.

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