The co operative alternative

Can a business work without the profit motive? As Adam Smith famously pointed out, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.

Can a business work without the profit motive? As Adam Smith famously pointed out, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.”

Despite this powerful truth, which is at the heart of our economic system, there is an alternative: the co-operative movement.

Formal co-operatives have been around as long as the joint-stock company, perhaps even longer. But the financial crisis has led to widespread disillusionment with 21st century capitalism, and many are bullish on co-operatives. The movement just had its first International Summit of Cooperatives, a high-profile event complete with a flashy website and PowerPoint presentations by the uber-corporate consultants of McKinsey & Company.

A co-operative is an autonomous organization of people voluntarily working together for mutual benefit. There is Mountain Equipment Co-op, which is essentially an outdoors equipment company owned by its own customers. The Alaska Village Electric Cooperative is another example, allowing 54 communities to escape the grip of Alaska’s big utilities. Or there are producer co-operatives, like United Farmers of Alberta, where farmers own the company that buys and markets their produce.

Whitehorse’s Potluck Food Co-op is a hybrid, owned by both producers and customers.

Then there are workers’ co-operatives, where the workers own the business, such as the Yellowknife Glass Recyclers Co-operative. At workers’ co-operatives, the employees actually own and run the business. This is fundamentally different from corporations where workers own just a few percent of the shares or merely have egalitarian-sounding job titles like “partner” or “associate.”

Some of the most successful co-operatives have been financial, either credit unions like Vancity or insurance companies (you can tell since they often have “Mutual” in their name).

While the Yellowknife Glass Recyclers Co-operative is small, many co-operatives rival big corporations. Co-operators, an insurance co-operative which has a Whitehorse office, has been in business over 60 years and has 5,000 staff and almost $40 billion in assets under administration.

Co-operatives have faced opposition over the years. The most extreme was from Stalin, who thought co-operatives represented rival power centres to the Communist Party. He denounced their leaders in classic show-trial style as “anarcho-syndicalist deviationists” (a moniker I’ve not previously been able to use in a column) and had them shot. In North America, there has been opposition from corporate competitors who resent co-operatives for having a lower cost of capital and more flexibility on pricing since they don’t need to make a profit.

There have been reams of paper wasted on theoretical arguments about which form of organization is better. Ultimately, co-operatives live in the same competitive jungle as corporations, partnerships, sole proprietors and other forms of business organization. If they can maintain some kind of competitive advantage that attracts more customers, whether that’s low prices, friendlier customer service or socially responsible business practices, then they will survive.

Many of our home grown Western Canadian co-operatives, such as MEC, Vancity and the Co-operators, are doing more than surviving. These are strong, successful enterprises that put many of their corporate competitors to shame with their products and services. And they do it somehow without stock options for the boss or investors shouting for quarterly earnings.

So what are the possibilities for more co-operatives in the Yukon? The most common idea is a credit union. There used to be one in Whitehorse but it failed during the nasty 1979 recession. That left the Yukon government to cover a big chunk of its debt with public money, since territorial credit unions aren’t covered by federal deposit insurance (unlike banks).

A credit union today would have to not only compete with some well-established players, but would have to talk one of the provincial deposit insurance schemes for credit unions into covering a Yukon institution in order to limit the risk for Yukon taxpayers.

The power and telephone businesses are already occupied by private or government utilities. Co-operatives for artists and farmers either already exist or are under discussion.

Some communities even have babysitting co-operatives. The most famous is the Capitol Hill Babysitting Cooperative in Washington, DC, which is 60 years old. It has also spawned a mutual assistance society for elderly Washingtonians, helping them stay living in their homes.

Getting a bit wilder, one idea would be a wireless internet co-operative. The downtrodden websurfers of Whitehorse could band together, put some kind of miracle box on Grey Mountain, and offer high-speed wireless service in competition with our local internet monopoly. A great idea, but unfortunately they would probably also have to form a co-operative to build a new fibre-optic cable link to Juneau since the monopoly also owns the cable going down the Alaska Highway.

Another idea would be a geothermal co-operative. Similar to the plan for the new F.H. Collins, Riverdalians would drill a hole into the Selkirk aquifer and use a central heat exchanger to extract energy from the warm water, then pipe that water in insulated pipes to houses in the neighbourhood. Heat pumps in each basement would extract the heat and your oil furnace would only be needed when it was -40C.

It’s probably too late for Riverdale, because the streets are paved and everyone already has a furnace installed. But doing this for a few streets in Whistle Bend might be a great idea. I recently heard about a housing development in Chilliwack doing something similar.

I’m sure there are lots of other good ideas. But we’ll have to see who gets to them first: a newly formed Yukon co-operative or a rapacious capitalist entrepreneur.

Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels.

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