Cooperatives: The key to climate action?

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BY GAYA SRISKANTHAN | JANUARY 16, 2016

After prolonged resistance, a tentative victory has been achieved against the Dakota Access Pipeline. Native Americans and their allies spent months in a standoff against oil infrastructure that threatened water supplies and sacred sites. The struggle represents a conflict between different visions of the world. One a vision of short-term wealth creation that benefits a few while threatening natural resources and the climate. The other a vision of human well-being based on protecting water, soil and air for future generations.

Indigenous peoples' ways of life represent alternatives to current patterns of economic development. Opportunities also exist for the rest of us to build alternatives in line with shared values and ecological boundaries.

Our current economic growth model assumes we have an inexhaustible planet. This approach will not ensure our long-term physical survival. There are some glaring signals that it won’t ensure our economic survival either. Examples include the financial crisis of 2008, findings that wealth inequality stunts economic growth, and admissions from the International Monetary Fund that economic trickle-down theory doesn’t work. Critics from the Nobel laureate Joseph Stiglitz to the Pope have raised the alarm on “unbridled capitalism.”

To solve the greatest challenges of our time, climate change and inequality, we need an economic system that serves us better. However, beyond identifying and agreeing upon the problem we often stop short at imagining solutions.

There are signs that the seeds of a stronger and more responsible economy may be taking root. Businesses that put social and environmental principles before profit already exist. These enterprises emphasize greater equality and collective ownership. Financial decisions are not left to the power of a few, whether government bureaucrats or corporate CEOs. They are made democratically by the generators and beneficiaries of economic activity: workers and customers.

This diverse economic sector has many names: social economy, solidarity economy, local economy, new economy, the next system. The UN has even formed a task force to examine the benefits of these approaches.

Sounds like a nice idea, but is this economically realistic? It is not just realistic but could bring more benefits to society as a whole. These businesses are often more resilient than "mainstream" companies that regularly suffer job losses and bankruptcies. A recent UN report concluded that worker- and customer-owned banks made less risky decisions. These banks actually outperformed investor-owned banks during the recent global financial crisis. Similarly, worker-owned cooperatives show better results, even in the face of adversity.

One well-known example is Mondragon Cooperative Corporation. This successful worker-owned company of over 70,000 employees is the tenth-largest company in Spain in terms of asset turnover. The company operates internationally with a diverse portfolio, including the manufacture of industrial machinery. Mondragon experienced lower levels of unemployment during the 2008 recession and still remained globally competitive. Instead of firing staff during the economic downturn, employees voted to take pay cuts and top managers took their share of the burden. The Spanish cooperative is not alone. Over 2008, in the midst of the financial crisis, the combined turnover of the world’s 300 largest cooperatives was an impressive $1.6 trillion. Comparable to the GDP of the ninth-largest economy in the world.

Action to fight climate change could gain from new economic approaches. Take the two sectors that contribute the most to global carbon emissions: energy and agriculture.

In Germany, community-owned energy cooperatives are booming. The impressive success of wind power in Denmark has been driven by community-owned wind turbines. In the US, the move away from utility-scale power plants is also happening. Solar power generation in the US may be underestimated by as much as 50 percent. This is due to the exponential growth in rooftop solar, which is not systematically recorded. The opportunity to magnify the potential of small-scale energy producers could be immense.

Ecologically friendly, small-scale farming benefits both food systems and the climateAgricultural cooperatives are indispensable to this kind of farming. They help small-scale farmers remain competitive through collective purchasing and distribution networks. Farming built on cooperatives and ecological farming could be better for the climate and food security.

Action on climate change could both support and profit from a more stable and democratic economy. Climate finance and subsidies currently being swallowed by the fossil fuel industry could be redirected to locally owned energy and farming. Socially responsible financial institutions could manage and distribute these funds. The result could be a stronger economy that works better for both people and the climate.

In a letter to Obama last year, Chief Arvol Looking Horse of the Dakota, Lakota and Nakota implored him to "move us toward sustainable development as fast as possible".  A framework for a more democratically managed and collectively owned economy could be part of this. The re-imagination of the economy is already in motion. It’s time for the climate movement to get on board.

[This article is based on a version originally published in In These Times]


Gaya Sriskanthan has more than 15 years of experience working on climate change, environmental protection and sustainable development with a range of organizations, including the United Nations, the World Wildlife Fund and the U.K. Department for International Development. She currently focuses on indigenous peoples’ rights and civil society inclusion in climate change action. Follow her on Twitter: @gayasktn

 


Showing 8 comments

  • commented 2017-01-23 19:44:26 -0500
    Will Cooper, Yes, we must beware social democrats, for they as well as neoliberals leave us stuck in the capitalist system.

    You are mostly right about the improbability of nonviolent revolution. In fact, counterrevolutionary violence from the state is a guarantee. However, Marx made the following point in a speech after a First International convention in Holland in 1872: “You know that the institutions, mores, and traditions of various countries must be taken into consideration, and we do not deny that there are countries—such as America, England … where the workers can attain their goal by peaceful means.”

    I’ll bet you, too, would like to see more discussion about actually forming workers’ cooperatives and a grassrooted revolutionary movement of producers.
  • commented 2017-01-22 14:29:42 -0500
    I’ve felt for some time that there should be a strong alignment with “Indigenous peoples’ ways of life”, especially in Canada with the First Nations and Reserve system, a strong alignment with both consumer and worker co-operative economic models. These models should naturally be built on “ alternatives in line with shared values and ecological boundaries.” Having said that my indigenous (often referred to as First Nations in Canada) suggest that the very strong individual tendencies might make adopting the co-operative model in First Nations communities more difficult than one would think at first glance. Nonetheless, I remain hopeful.

    Having spent much of the last 40 years actively participating in consumer co-operatives, a fundamental aspect of the success of a co-operative, at least in the formative years, while it establishes a competitive foot-hold in the surrounding capitalist environment, is community of shared values. Of course it helps if there is a price advantage that will lure people in and keep people engaged to offset the challenges of running the co-operative.

    There is a natural alignment of distributed renewable (sustainable) energy production/distribution/use systems and community based co-operatives. Even more important, as your article highlights, co-operatives tend to make fewer and less environmental and financial risky decisions. Co-operatives still must have a strong value proposition, as does any business, but the co-operative value proposition now explicitly includes community values.

    As much as some would like to drag future nuclear power development into the climate change mitigation/adaptation, it is much harder to understand how a co-operative model would or could be adapted to what would be by necessity large scale centralized nuclear power stations. This issue, as well as the more sober but still optimistic recent analyses of nuclear power development with respect to the current climate change crises (What role could nuclear power play in limiting climate change? http://thebulletin.org/2017/january/what-role-could-nuclear-power-play-limiting-climate-change10374), suggest that we need to focus on distributed community based, including co-operatives, solutions. These community based solutions are especially appropriate in rural areas of the world, as well as North America.
  • commented 2017-01-22 13:45:36 -0500
    The article makes some good points, but I was perplexed why Sriskanthan linked to an article by Joseph Stiglitz, who at best advocates social-democratic reforms of capitalism. He and Robert Reich echo each other’s call for saving capitalism, making it more human, fairer, more equitable and focused on human needs. We know from history that that doesn’t work. It’s ephemeral at best; I compare it to weight loss: dieters lose a bunch of weight (capitalist ills) but then they gain it all back again and even more (reaching the their set point or exceeding it (the restoration of capitalist power). What’s needed is the replacement of capitalism with an economic-political system based on economic democracy. Stiglitz never mentions class once in his article. Any analysis of the failures of our present economic system that doesn’t cite Marx is liberal garbage. Cooperative enterprises such as Dr. Wolff promotes focus on instituting socialism at the micro-economic level; the cooperative model engages workers in ownership and self-management, eliminating the exploitation of capitalists. Cooperatives are necessary, but not sufficient. The working class must also seize political power. Whether this can be done peacefully is the serious questions that needs to be answered. Trotsky and Lenin—and Marx, too—thought not.
  • commented 2017-01-18 16:35:55 -0500
    I hadn’t planned on a second comment, but have changed my mind.
    Joe makes an excellent point about Cooperatives within our current capitalistic society. We need to create a couple dozen more Mondragons, including taking a few fortune 500 companies off Wall Street and into private coops. That would include eliminating those golden parachutes for CEOs. It could work but would likely require assistance from a few billionaires…

    Also glad to hear from the author, Gaya, who commented; “It would be interesting to look more deeply at the findings you shared and compare them with others that seem to reach slightly different conclusions.” This is actually what I have done the past few years – though I only consider myself an interested layperson, not an expert. I consider the first link to CleanTechnica as a poor example, not because of the site but the author, Lazard. Many who work and advise in the energy sector feel that when Larzard gets something right, it can be compared to monkeys on typewriters! The EnergyTransition site, and that author Morris, are well known as RE/Energiewende apologists. Most of the facts cited there are true, but a few key facts are often withheld or twisted. Which makes that site as much propaganda as news/commentary. Sorry if I sound harsh, but IMHO these issues are important as I believe that both energy & infrastructure are building blocks to society. http://www.environmentalprogress.org/big-news/2017/1/13/breaking-german-emissions-increase-in-2016-for-second-year-in-a-row-due-to-nuclear-closure

    I’ve come to understand that many of the apprehensions about nuclear energy center around two things: weapons and radiation effects. Any country aligned with IAEA rules separated nuclear energy from weapons decades ago. In fact, nuclear energy is the best way to get rid of warheads! Look up the Megatons to Megawatts program. As for radiation, people fear what they don’t understand. Though radiation can kill or injure, so can a large bottle of aspirin or nearly any medication. The dose makes the poison – and it’s really, really hard to get exposed to THAT much radiation. If you fly often, you are exposed to more radiation than most nuclear workers! Learn about the LNT/ALARA fallacy through the writings of Ed Calabrese, Bernard Cohen, or TD Luckey, & Rod Adams.

    Thanks for the informative article, Gaya. That had several good links embedded.
  • commented 2017-01-18 14:14:07 -0500
    Capitalism must go. There is no way a global system of production for profit can be ecologically sustainable,

    That said, what is the alternative? Simply put, the alternative is for people to own and control their means of making a living, and workers’ cooperatives are one of the many workplace means of accomplishing this.

    Marx was initially enthusiastic about workers’ cooperatives, but soon saw that their need to operate in the capitalist economy degraded them. This is a problem Democracy at Work will need to address.
  • commented 2017-01-17 14:31:49 -0500
    Thanks for sharing these thoughts Christopher. It would be interesting to look more deeply at the findings you shared and compare them with others that seem to reach slightly different conclusions. Analyses taking into consideration monetary subsidies have found community solar to be comparatively cost effective (utility scale solar even more so). https://cleantechnica.com/2016/12/25/cost-of-solar-power-vs-cost-of-wind-power-coal-nuclear-natural-gas/
    These figures do not consider the considerable externalised “subsidies” non-renewable energies enjoy with regards to impacts on the climate and health.

    Additionally, the local co-benefits that cooperatively-owned energy provide (e.g., local employment generation, circulation of profits through the local economy and local wealth generation, community skill development etc.) are generally lost in macro-economic analyses. This is an question of how we measure economic success and benefits to society. https://energytransition.org/2015/10/the-co-benefits-of-community-energy/

    The article you shared has a focus on nuclear energy as a more cost effective alternative. This is an energy source that sits in a grey area: it is a low emissions energy source but presents the potential externality of environmental contamination. This is a contentious issue and a conversation in its own right. Countries such as Germany have made the decision to phase out nuclear. On the opposing side there are many who advocate for nuclear’s place in the energy mix, citing climate needs – it is a topic this small box cannot do justice to.

    Complex, multi-variate relationships between society and energy systems need to be examined in a holistic manner and the debate not only continues but also shifts every year with advances in technology. There is a need to understand which solutions may suit widely varying local contexts, needs and even local priorities and aspirations. Energy cooperatives are one such potential solution. Your reflections certainly contribute a piece of the puzzle to this crucial issue, so thanks again for the thoughtful feedback.
  • followed this page 2017-01-17 12:46:43 -0500
  • commented 2017-01-17 01:56:02 -0500
    I completely agree that cooperatives are the best way forward for many businesses. However they need the right product to produce/sell. Intermittent renewable energy seems to be dependent on subsidies regardless of the nation it’s produced in. Whether it is called a FIT, or RE Porfolio Standard, or a tax break, or something else – it’s just a poor business model for society to pay twice for energy, IMHO. www.theenergycollective.com/roberthargraves/2396252/rooftop-solar-too-expensive-to-meter http://energyrealityproject.com/lets-run-the-numbers-nuclear-energy-vs-wind-and-solar/
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