Category: cooperativism (page 1 of 2)

Grad Student News: Horohito Norhatan

Horohito Norhatan is a graduate student at the Center for Basque Studies, University of Nevada, Reno. Throughout his research, he has had the opportunity to investigate the impact of the cooperative business model on poverty eradication and job creation in the Basque region.

During the 2016-2017 academic year, he taught PSC 211, “Introduction to Comparative Politics.” He plans to teach courses including International Relations, Basque Political Systems, and Basque Cooperativism during the upcoming academic year.

During his tenure as a graduate student at the University of Nevada, Reno, Horohito has taken deliberate action to perfect his research by submitting academic papers and participating in academic conferences pertaining to his research topic. He has participated in several CLAGS (College of Liberal Arts Graduate Symposium) on economic development and cooperation. As a concrete accumulation of his research experience, he has also submitted several manuscripts to major scholarly journals including Economic and Industrial Democracy, the Community Development Journal, Economy Society, the Journal of Co-operative Organization and Management, and the Journal of Comparative Economics.

How the Basque Country provides intriguing solutions to some of the world’s thorniest challenges

 

The Democratic Party’s Presidential hopeful Bernie Sanders took inspiration from Denmark when he proposed a 60 percent income tax increase in exchange for public services. However, American voters apparently did not welcome a candidate who wanted to increase taxes. Had Mr. Sanders taken inspiration from the Basque Autonomous Government instead of northern Europe, he may have had a better chance of gaining support from American voters.

The Basque Country, with a total population of 2.2 million, is the richest and most advanced economic region in Spain. According to an article by Sami Mahroum in the National, “it is among Europe’s top 20 percent of regions in wealth.”It also has the highest percentage of employment for medium to high-tech manufacturers in Europe. Many regard the Basque Country as a robust competitor to the advanced manufacturing regions in Germany. However, the greatest achievement of the Basque Country is how it has overcome local terrorism, globalization, and leadership challenges rather smoothly compared to both the Spanish state and the European Union.

Mr. Sanders could have also learned from the Basque Cooperative economic model. 60 years ago, Jose Maria Arizmendiarrieta formed the Mondragon federation of cooperatives. Today, Mondragon is Spain’s largest cooperative group, providing employment for more than 75,000 people and contributing 12 percent of the region’s GDP. Mondragon owns subsidiaries in 125 countries around the world. The Mondragon cooperative model is unique, as it has a cap on the CEO’s salary, limiting it to six times the lowest salary offered at the cooperative. Employees put aside 6.5 percent of their earnings toward a foresighted fund as a part of their pensions and contingencies.

The Basque Country’s unique cooperative model provides an inspiration in innovation for the world’s poverty and inequality issues. This model echoes the sentiments of American voters well, who are dissatisfied with globalization, rambling capitalism, big government, and high taxes. The Mondragon model serves as a mutual-capitalism or democratic capitalism model rather than the “invisible hand.”

For further reading: https://www.thenational.ae/opinion/how-the-basque-country-provides-intriguing-solutions-to-some-of-the-world-s-thorniest-challenges-1.623572

The Basque Economy: Present Reality and Future Prospects

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The Euro symbol. By Svilen.milev, at Wikimedia Commons

Two interesting articles on the Basque economy have recently been published by BasqueTribune:

In “How is the Basque Economy Doing?” economist Joseba Barandiaran offers a general overview of the present situation, describing a predominantly service-based economy but with an important manufacturing sector. While noting the healthy state of this “relatively rich economy,” Barandiaran also points out certain major challenges that need to be addressed: improving the technological dimension of Basque manufacturing, increasing RDI investment, and, perhaps most difficult of all, addressing the continuing demographic decline in the Basque Country. Read the full article here.

In “The Basque Country: We Lived in the Future (We Just Were Not Aware of It)” economist Asier Alea criticizes the assumption that advanced economies are merely service-based, arguing for a critical reflection on the place of manufacturing in contemporary societies. In his view, the recent crisis has demonstrated that those economies that maintained a robust manufacturing sector were better able to cope with the ensuing problems. We are, he argues, now on the verge of a new industrial revolution that will also herald new social and cultural changes involving a global vision rooted in strong local identities; changes that, he contends, the Basque Country is well placed to capitalize on, having embraced this vision already. Read the full article here.

If you’re interested in these topics, check out some of the Center publications on the Basque economy and related issues such as globalization and innovation.

Basque Economy: From Industrialization to Globalization, by Mikel Uranga, available free to download here. A general survey of the historical evolution of the modern Basque economy from its roots in heavy industry to the more diverse contemporary situation.

Implications of Current Research on Social innovation in the Basque Country, edited by Ander Gurrutxaga Abad and Antonio Rivera. An examination of social innovation in the Basque Country, focusing on knowledge transfer, learning, and innovation.

Innovation: Economic, Social, and Cultural Aspects, edited by Mikel Gómez Uranga and Juan Carlos Miguel de Bustos.  A study of the different ways in which innovation is understood in the Basque Country.

Basque Cooperativism, edited by Baleren Bakaikoa and Eneka Albizu. A comprehensive exploration of why the cooperative movement has flourished in the Basque Country and its response to the challenge of globalization.

Behavior and Organizational Change, edited by Sabino Ayestarán and Jon Barrutia Goenaga. Leadership, management, and cooperation in the workplace are all examined here from the perspective of the Basque Country.

See also a couple of more recent publications that examine the general issues raised in the abovementioned books in more detail:

Innovation and Values: A European Perspective, by Javier Echeverria. Charts the historical development of innovation policies and offers a new line of research that takes into account the history and philosophy of science and technology, but which underscores the profound specificities of the concept of innovation.

Building the Basque City. The Political Economy of Nation-Building, by Nagore Calvo Mendizabal. A critical examination of different perspectives on nation and state formation in Spain and the Basque Country within a European context, taking economic issues such as the controversial High Speed Train project and European integration as its focus.

 

 

 

Can worker cooperatives alleviate income inequality? A1.2 million dollar investment from the New York City government is the latest boost to Cooperatives

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Cooperative models as a post-crisis development have gained popularity, as seen in the aftermath of Hurricane Sandy in 2008 as well as during the 2008 financial crash.  The resilience of the cooperative business model in such times of crisis has attracted the New York City government to invest as much as $1.2 million in developing worker cooperatives in the city. Indeed, it is the largest investment ever made by a city government in the cooperative movement.  Yet doubt still exists regarding the real impacts of cooperatives within the context of the larger national economy.

Cooperatives have been one of the most successful solutions to tackle popularly publicized inequality issue in many urban areas. The pay ratio between the highest and lowest workers in cooperatives is between 3 to 1; in contrast, in traditional corporations the ratio can go as much as 600 to 1. Without the middlemen or placement fee, cooperatives can also provide decent incomes for their members. In many mega metropolitan regions like New York, where many of the low income citizens are freelance, self-employed, or temporary, a workers cooperative is a feasible solution. La Mies Bakery in New York, for example, where workers own and manage the company, has created decent stable jobs for 18 workers.  In the United States there are 233 worker cooperatives, yet this is a low number in comparison to non-cooperative businesses in the country. As the United States continuously deindustrializes its economy, cooperatives should expand their impact on the larger national economy, thereby creating more jobs for those impacted by industrialization.

In order to expand their impact, cooperatives should go beyond their traditional boundaries in the area of anti-poverty and income inequality programs. Instead, cooperatives should evolve and embrace modernization and transform into an alternative management practice model in the production of goods and services. That way, the democratic ethos and spirit in their organization can catch on and change the broader national economy.

For further reading please visit

http://america.aljazeera.com/articles/2015/1/13/worker-run-cooperatives.html

Cooperatives Roles in Local Economic Development (LED)

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The concept of economic development originated in the early twentieth century when Western countries began to modernize and industrialize their economies. Since then, the evolution of the developmental concept has been influenced by the emergence of capitalism and demise of feudalism (Contreras, 1999). However, development as it is understood in the Social Sciences today emerged during the period of reconstruction initiated in the Unite State in 1949, when President Harry Truman declared, at his inaugural address, that economic development was a priority for the West (Truman Library, 2015). The developmental theories that emerged during the 1940s and 1950s, known as classical developmental theories, emphasize the central role that the state must play in major phases of economic development.  Nevertheless, a newer emerging contemporary developmental theory, known as local economic development, suggests the participation of indigenous populations during developmental planning.

A report by the International Labor Organization (ILO) (2006) specifies the role of a local economic development strategy in bringing prosperity to a local civil society. The ILO report specifically notes how local economic development has become a significant deterrent to globalization challenges in many part of the world. Further, the ILO stipulates that cooperative movements have become the foundation for capital accumulation, socioeconomic development, and the democratization of political and social life in many parts of the world. History has recorded how cooperative movements became the source of mobilization for local economy activities in South Africa (Khumalo, 2014), in Nigeria (Mande, at al., 2014), and in the United States (Bartik, 2003). Some of the notable achievements of cooperatives in developing countries include enhancing the employability of more vulnerable parts of the population, establishing a balance between community-centered versus self-interest policies, and  improving community-business relations (Fulton & Keltinson, 1992). Indeed, the collective nature of cooperatives can be beneficial in the local economic development approach.

 

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For Further readings in cooperatives and local economic development topic please refer to the following literature:

Bartik, T. J. (2003). “Local economic development policies”, Upjohn Institute Working Paper No. 03-91. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.

Contreras, R. (1999). How the concept of development got started. Transnat’l L. & Contemp, 47.

Fulton, M. E., & Ketilson, L. H. (1992). The role of cooperatives in communities: examples from Saskatchewan. Journal of Agricultural Cooperation, 7, 15-42.

International Labour Organisation (ILO). (2006). A local economic development manual for China. Geneva: International Labor Organization.

Mande, S., & Lawal, K. A. (2014). Cooperative marketing societies and its challenges for sustainable economic development in Lagos, Nigeria. Journal of Research & Method in Education, 4(6), 24-31.

Truman Library. (2015, April). Harry S. Truman Library and Museum. Retrieved from http://www.trumanlibrary.org/

Mondragon Model: Independent and Community Based Development

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The cooperative business model has been implemented across the globe to improve the living of lower income populations in many parts of the world. Birchall (2004) notes the cooperative movement contribution in reaching the United Nations Millennium Development Goals (MDG) in poverty eradication. In South Africa, cooperatives have become an alternative source of income in the face of growing unemployment and under employment among the low-income population (Khumalo, 2014). Nevertheless, not all cooperatives in the world perform well. Prior study on the cooperative movement shows that self-determination, grassroots participation, and nongovernmental intervention are the basis of a successful cooperative (OCDC, 2007). On the other hand, the government mobilization model tends to obstruct the competitiveness of cooperatives, as evidence shows how cooperatives in the less developed countries have a low survival rate due to governmental intervention, which has created a group of opportunists among members of the cooperatives who take advantages of governmental subsidies and assistance (Nyambe, 2010; Dyi, 2011). One cooperative that seems to be successfully withering the internal issues related to self-determination and internal conflict is the Mondragon Cooperative in the Basque Country, Spain.

The Mondragon Cooperative represents the prime example of how cooperative entrepreneurship based on community participation and democratic structure eradicates poverty and creates sustainable living for the members. The social entrepreneurship of Mondragon is rooted in the cohesiveness and collective tradition of Basque culture. As a result, Basque traditions have cemented the members and community dedication and efforts to establish an autonomous cooperative movement. In contrast to outdated stories of failed cooperatives, the Mondragon Cooperative has grown extraordinarily since its infancy, and it still progresses in terms of real-growth of revenues and workforce (MCC, 2015). During the early years of this cooperative’s development, the Mondragon founders successfully mobilized the local community to establish their grassroots efforts to fight against their economic constraints by establishing cooperatives. The founders focused on maintaining their independence and kept the cooperatives out of the governmental influence. Admiring the success of Mondragon model, Clamp and Alhamis (2010) stipulate that the independence  of Mondragon contributes to its maturity and growth into a complex of cooperative networks, a concept that should be replicated elsewhere, and the spirit for self-determination and community efforts should be the basis for building a successful cooperative in developing countries. One example of such implementation is how the Mondragon cooperative has served as a model inspiration for CODC (Cooperative Ownership Development Corporation) in New Mexico, which aims at developing businesses that serve the local economy (Clamp & Alhamis).

If managed well, cooperatives can be a critical instrument in the poverty eradication effort across the globe. Prior study in the developing world shows how cooperatives have stimulated economic activities in smaller communities in which large enterprises cannot operate due to small profit margins. However, in order to function properly as a grassroots based institution, cooperatives must remain independent and free from political intervention. Instead, the government should facilitate policies that enable cooperatives to function as autonomous entities, and to provide managerial and administrative training.

 

References for Further Readings

Birchall, J. (2004). Cooperatives and the millennium development goals. Geneva: International Labour Office.

Clamp, C. A., & Alhamis, I. (2010). Social entrepreneurship in the Mondragon Cooperative Corporation and the challenges of successful replication. Journal of Entrepreneurship, 19(149), 149-177.

Dyi, L. (2011). Status of co-operatives in South Africa. East London, South Africa: The South African Department of Trade and Industry.

Khumalo, P. (2014). Improving the contribution of cooperatives as vehicles for local economic development in South Africa. African Studies Quarterly, 14(4), 61-79.

Mondragon Cooperative Cooperation (MCC). (2015). History | MONDRAGON Corporation. Retrieved from http://www.mondragon-corporation.com/eng/co-operative-experience/history/

Muthuma, E. (2012). Do co-operative development policies really lead to the development of co-operatives?: Lessons from Kenya. Africa Insight, 41(4), 176-191.

Nyambe, J. (2010). Workers’ cooperatives in South Africa, an assessment and analysiso of conditions of cuccess and failure. In DGRV-South Africa-working paper no. 6. Berlin: Deutscher Genossenschafts und Raiffeisenverband.

Overseas Cooperative Development Council. (2007). Pathways to economic, democratic and social development in the global economy. Washington, DC: US Overseas Cooperative Development Council.

Cooperatives over Corporations

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Relatively unknown among ordinary people, cooperatives have a substantial presence in America. A 2009 survey by the University of Wisconsin’s Center for Cooperatives found that cooperatives have generated $653 billion in sales and provided jobs for more than 2 million people in the United States. The survey also reveals that there are as many as 30,000 cooperative organizations in America. Cooperative enterprises conduct normal business activities similar to their corporation counterparts, except that cooperatives have a democratic structure, an equitable sharing of income, and vivid commitment to the common good of the surrounding community. Surprisingly, many well-known American businesses are actually cooperatives. The list of widely recognized American cooperatives includes ACE Hardware, Best Western Hotels, Organic Valley, REI, True Value, and WinCo.  All of these companies emphasize their business philosophy on democratic values, humanism, and a community focus. Hence, this fact has challenged the conventional wisdom of many ordinary Americans that the foundation of American economic success lays only in the hands of corporations.

Cooperatives involve large-scale structural reform that ordinary Americans can implement right where they live; giving small groups a pragmatic and effective way to push back against the arrogance and avarice of the centralized, hierarchical corporate model. Not only do co-ops work economically, they also privilege ordinary people, offering real democratic participation and putting some “unity” back in “community.”

For further reading please visit the following websites:

http://www.truth-out.org/opinion/item/6862-cooperatives-over-corporations

http://www.uwcc.wisc.edu/whatisacoop/BusinessStructureComparison/

http://www.forbes.com/2010/05/13/cooperatives-co-op-leadership-citizenship-ethisphere.html

** Horohito Norhatan is a graduate student at the Center who is interested in cooperatives and is sharing with us a series of articles on his favorite research topic, cooperatives, Horohito received his M.L.S. in political leadership and public services from Fort Hays State University. His research focuses on cooperative movement, economic democracy, political economics, and development policy. In his graduate thesis, “Cooperative Impacts on Poverty Eradication in Indonesia,” he investigated the impact that Indonesian cooperative organizations had in reducing the poverty rate, generating community wealth, and increasing the regional gross domestic product. Under the guidance of Dr. Xabier Irujo, Horohito is conducting research related to Basque cooperative organizations and their impact on the development of the Basque economy.

Auzolan: A Form of Social Innovation Rooted in Traditional Basque Culture?

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Basque women engaged in traditional communal work. Photo via Wikimedia Commons

In Basque Culture: Anthropological Perspectives, William Douglass and Joseba Zulaika discuss the importance of the auzoa, the neighborhood or local district, in traditional Basque culture:

Within the householdcentric auzoa, neighborhood ties and obligations constitute primary networks of social and economic relations, including the special relationship that a household maintains with its closest or “first” neighbor(geographically defined), the relationship that the household maintains with three or four of the physically most proximate households, and the relationship that the household maintains with all other households within the auzoa. . . . Traditionally, every household depended on another for first-neighbor obligations. The first neighbor was the initial outsider to be informed whenever there was a crisis . . . The importance of the first-neighbor relationship is eulogized in refrains and reflected in the common statement that it was more important to be on good terms with one’s closest neighbor than with a brother.

The same authors then go on to cite an example of these first-neighbor relations as described in Sandra Ott’s The Circle of Mountains: A Basque Shepherding Community, whereby a loaf of “blessed” bread was circulated around the village of Santa Grazi (Zuberoa) in a clockwise direction as a means of social solidarity and binding ties in the community.

When extended to the second level of relations, auzolan (neighborly or communal work) became especially important at key times of the year: close neighbors assisted one another at harvest time, for example, or during the traditional ritualized slaughtering of household pigs, with perishable meat rationed out to those assisting (and of course the favor returned when it came time for these neighbors to kill their own pigs).

Many of you out there from a rural background, as I am, will probably be familiar with friends and neighbors helping out during harvest time, and returning the favor when called on to do so. And I wouldn’t suggest that such communal ties are specific to traditional Basque culture alone. Indeed, I’m sure they exist all over the world. Nor, indeed, would I say that such traditional bonds need necessarily be just evident in rural life. Indeed, even if we haven’t experienced them first-hand, I’m sure we’ve read books or seen movies set against a backdrop of tight-knit urban communities, whether in small towns or big city neighborhoods.

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New World Basques enjoy a break from communal work. Photo from Basque Library archive

What does fascinate me, though, is the idea that these kinds of local community relations and communal ties, so ritualized in the Basque context and rooted in traditional, rural society, may serve as the basis for more contemporary forms of social innovation. Douglass and Zulaika, for example, go on to mention the claim that the strength of urban industrial cooperativism in the Basque Country, as exemplified by the Mondragon Corporation, is down to traditional forms of economic cooperation in Basque agricultural and fishing practices.  They also qualify the idea, however, by pointing out some of the flaws in this argument.

But whatever the case of this particular argument, I think modern studies of social innovation could benefit from studying these traditional practices in Basque society, practices that predate the strong cooperative movement in  the Basque Country. In 2009, the White House Office of Social Innovation and Civic Participation (SICP) was created to engage the social sector (individuals, communities, non-profit organizations, foundations, social enterprises, faith-based organizations, and so on), as well as business and government, in finding new solutions to the challenges facing American society today. This office recognizes the importance of new, bottom-up, grassroots, solutions to such challenges as well as the communal, shared responsibility in finding these solutions. We speak and hear a lot today about the importance of “community” and its associated values. Do we have something to learn from traditional Basque culture? Or is that society too outdated, too rigid? Does it offer little to a contemporary urban society that privileges global movement, flexibility, and change and sees little to learn from traditional rural society? Surely the root of human innovation lies in the very practice of agriculture itself, the techniques and implements developed by humans to work the land. What do you think?

If you’re interested in the subject of innovation, social or otherwise, see Innovation and Values: A European Perspective, by Javier Echeverria, an ambitious attempt to combine different perspectives on innovation in one single work that argues for a “philosophy of innovation.” that addresses different types of values (economic, technological, social, legal, political, and so on), assessing these values in terms of the effects and consequences of innovation processes on their advocates and other agents concerned with them.

See, also, two books in the Center’s Current Research series in partnership with the University of the Basque Country: Implications of Current Research on Social Innovation in the Basque Country, edited by Ander Gurrutxaga Abad and Antonio Rivera; and Innovation: Economic, Social, and Cultural Aspects, edited by Mikel Gómez Uranga and Juan Carlos Miguel de Bustos.

 

 

Cooperative Movement and Community Efforts are a part of the American DNA

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One part of American history has been corrupted, concealed, and mythologized. John Curl, the author of a book titled For All the People argues that communalism and the cooperative movement have been systematically buried from U.S. history.  In his book Curl demonstrates how the democratic community based economic model had been a part of U.S. political and economic policy and how it was interwoven with many of the historical transformational events of the country, including cessation from the British Empire, the abolition of slavery, the attainment of women’s suffrage, the workers’ and union rights crusade, and the civil rights movement. Curl also elaborates on how the principle of economic democracy has been in constant opposition to the wealth concentrated capitalism that has created massive disparities in the national distribution of income. Therefore, Curl encourages ordinary citizens to reclaim this lost history by embracing the true character of the American nation that is based on the people, democratic value, and community participation.

For further reading:

http://www.amazon.com/All-People-Cooperation-Cooperative-Communalism/dp/1604865822/ref=sr_1_1?ie=UTF8&qid=1433413249&sr=8-1&keywords=9781604865820

http://www.pmpress.org/content/article.php?story=johncurl

http://www.truth-out.org/opinion/item/14076-cooperatives-and-community-work-are-part-of-american-dna

Taking Cooperative Solutions to the Next Level

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Cooperatives at the grassroots level have played a significant role in providing solutions to many of the social problems in society, from supplying the growing population of the world with foodstuffs to supporting local business in the competitive and globalized market. However, the crucial challenge that most cooperatives must face today is how to cooperate with each other to address the major common challenges related to sustainability and global competition. Therefore, the next revolutionary vision in the cooperative movement should bring cooperatives together at a global level to solve global challenges.  Cooperation among cooperatives is crucial to the continuity of the cooperative movement in the globalized era. Globalized consumers are pampered with more product and service choices from around the world. Hence, cooperatives can no longer expect members and communities to support them simply because they are a cooperative. Cooperatives can only survive if they can provide better quality products and services than their competitors.

Some discussion regarding cooperative solutions can be found in the following readings:

http://www.thenews.coop/90883/news/general/taking-co-operative-solutions-to-the-next-level/

** Horohito Norhatan is a graduate student at the Center who is interested in cooperatives and is sharing with us a series of articles on his favorite research topic, cooperatives, Horohito received his M.L.S. in political leadership and public services from Fort Hays State University. His research focuses on cooperative movement, economic democracy, political economics, and development policy. In his graduate thesis, “Cooperative Impacts on Poverty Eradication in Indonesia,” he investigated the impact that Indonesian cooperative organizations had in reducing the poverty rate, generating community wealth, and increasing the regional gross domestic product. Under the guidance of Dr. Xabier Irujo, Horohito is conducting research related to Basque cooperative organizations and their impact on the development of the Basque economy.

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