I’ve always had a vague idea about what a cooperative was, but I didn’t fully understand this business model until I attended Kevin Edberg’s cooperative training with Cooperative Development Services.
Blown away by this viable economic alternative that fits within a capitalist system, I felt a glimmer of hope for a more just financial future. Whether you’re jaded from the 40+ hour work week or from watching gas and grocery prices go up or from seeing every business in town put up a "Now Hiring" sign, a closer look at what a co-op is and how it benefits communities is worth a look.
I was first introduced to housing co-ops in college. During the Great Depression, university students in Ann Arbor, Mich. banded together to live in larger houses where rent, chores and groceries were divided up fairly between tenants. The Inter-Cooperative Council eventually came to own the properties themselves, meaning the tenants were not paying a landlord whose goal would likely be to make tenants pay as much as possible.
On the contrary, the entire board of the Inter-Cooperative Council was live-in students, giving them instead all the reason to make payments more accessible and the housing even better. The Inter-Cooperative Council is active to this day, and students are able to save money and live more comfortably by becoming members of the co-ops.
That’s the beauty of the co-op model. The people who have co-ownership of the co-op are also the same people who frequent or use the co-operative’s services.
Unlike Apple, a company that profited off low-quality phone batteries from a public who they knew would replace them at high costs, co-op owners would only be hurting themselves if they were to offer low-quality products or jack up prices.
It’s like laissez-faire economics, except the invisible hand that might guide us to exploit clients instead protects clients through the equally natural idea of self-defense. We don’t want to pay more than we have to, so we don’t. And everybody benefits.
What I’m saying is, the people who own and profit off of Wal-Mart don’t shop at Wal-Mart. So they have no real stake in the quality of the products or services they provide except to make money.
Alternatively, those who own and profit off of Bemidji’s Harmony Foods Co-operative do shop there, do believe in organic and local produce, and financially benefit when Harmony has a good year of sales. This breeds customer loyalty. It’s the same with the Beltrami Electric Co-op. That company is never going to be as profitable as a sole proprietorship, but at the same time, they will never abuse their customers -- because their member-owners are the customers.
One of the main defenses of our capitalist economy that I have heard is that capitalism drives innovation. That may very well be true. Someone like Jeff Bezos may not have started Amazon if he hadn’t dreamed about making large profits; even the COVID vaccines may not have been developed, or nearly as quickly, had companies like Pfizer and Moderna not been externally motivated by sums of money.
If we remove the prospect of profits, some inventions may go uninvented. This is why some people fear a socialist model or even Universal Basic Income.
This is why I love the idea of the cooperative. It fits into an existing system without requiring major economic upheaval. Co-operatives are still motivated to make profits. Because those profits get proportionately redistributed to the members at the end of the fiscal quarter or year.
When Beltrami Electric has a good year, one old man doesn’t rake in all the cash. Instead, each and every member-owner gets a piece of the pie. Therefore, the motivation to profit and innovate is retained, but those successes are felt more widely and communally than one person getting rich behind the scenes.
It’s no secret that the United States faces extreme income inequality, and that gap has only gotten wider in recent years. I myself have three separate contracting positions and still qualify for state-assisted financial aid for health care services. I know that a lot of people can relate; there are folks on food stamps while others have live-in chefs or maids. Two people can both work 40 hours a week and one makes six figures with benefits while the other works at two different fast food joints; same hours, very different opportunities.
The idea that America is a functioning meritocracy, where those with strong work ethics are rewarded proportionately, has been thrown into question. There are many who work hard and still struggle to make ends meet.
My hope is that more people will be inspired to open cooperatives. A friend of mine’s parents just opened a brewery cooperative in southern Minnesota with a few other couples. Panamanian coffee farmers I used to work with have discussed the cooperative model for running a coffee-threshing machine. The foods initiative I work with in Red Lake is hoping to open a farmers co-op to help small farmers sell their produce together.
Co-ops keep bubbling up, and it seems there are creative ways to turn most businesses into co-ops. Hair salons, coffee shops, movie theaters and hospitals. Perhaps the cooperative model could be a real solution to reforming our economy in the 21st century. Definitely, something to think about after Labor Day.
Originally from Phoenix, Ariz., Rachel Beglin now resides in Bemidji. She is a former Peace Corps Volunteer, sustainability advocate, gardener, writer and coffee enthusiast.