THE COOPERATIVE MOVEMENT Corporate Social Responsibility Series Series Editor: Professor David Crowther, De Montfort University, UK This series aims to provide high quality research books on all aspects of corporate social responsibility including: business ethics, corporate governance and accountability, globalization, civil protests, regulation, responsible marketing and social reporting. The series is interdisciplinary in scope and global in application and is an essential forum for everyone with an interest in this area. Also in the series The Employment Contract and the Changed World of Work Stella Vettori ISBN 978-0-7546-4754-6 Capitalist Networks and Social Power in Australia and New Zealand Georgina Murray ISBN 978-0-7546-4708-9 Stories, Visions and Values in Voluntary Organisations Christina Schwabenland ISBN 978-0-7546-4462-0 Whistleblowing and Organizational Social Responsibility: A Global Assessment Wim Vandekerckhove ISBN 978-0-7546-4750-8 Repoliticizing Management: A Theory of Corporate Legitimacy Conor Cradden ISBN 978-0-7546-4497-2 Making Ecopreneurs: Developing Sustainable Entrepreneurship Edited by Michael Schaper ISBN 978-0-7546-4491-0 Corporate Social Responsibility in the Mining Industries Natalia Yakovleva ISBN 978-0-7546-4268-8 The Cooperative Movement Globalization from Below RICHARD C. WILLIAMS Regis University, USA with Preface by George Cheney © Richard C. Williams 2007 All rights reserved. No part of this publication may be reproduced, stored in a re- trieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher. Richard C. Williams has asserted his right under the Copyright, Designs and Patents Act, 1988, to be identified as the author of this work. Published by Ashgate Publishing Limited Ashgate Publishing Company Gower House Suite 420 Croft Road 101 Cherry Street Aldershot Burlington, VT 05401-4405 Hampshire GU11 3HR USA England Ashgate website: http://www.ashgate.com British Library Cataloguing in Publication Data Williams, Richard C. The cooperative movement : globalization from below. - (Corporate social responsibility series) 1. Cooperative societies 2. Cooperative societies - History I. Title 334 Library of Congress Cataloging-in-Publication Data Williams, Richard C. The cooperative movement : globalization from below / by Richard C. Williams. p. cm. -- (Corporate social responsibility series) Includes Index. ISBN: 978-0-7546-7038-4 1. Cooperation--History. 2. Cooperation-- Case studies. I. Title. HD2956 .W55 2007 334--dc22 2006034024 ISBN: 978-0-7546-7038-4 Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham, Wiltshire. Globalization From Below A Haiku Ode to Cooperatives with apologies to the Sphinx and Basque Sheep Trade might shrink the world No room at the inn But who dares to extract the The Hilton and the five-stars Essence of the thing? Have naught to offer Let justice roll down Ideas so grand The Spirit can ignite Like a river; righteousness Poets strain to compress The potential in us all Like a mighty stream! Life into sound bytes To create justice The world traveler We catch early break: Development! not Finds myriad miracles Five syllables found in Just a dam, nuclear plant, Of cooperation “Globalization” And more Mickey D’s But only if she Gross domination: A supply-focused Moves behind the veil of glitz Mega-multinationals Economy means basic To the birth of hope Quash competition Needs cannot be met Coffee growers sell Rich getting richer But demand focus To local co-op, avoid And the poor getting poorer Allows room for creative Coyotes’ rip-off Can it ever change? Response to felt need “Untouchables” tap Powerless people We need a new view Source of self-empowerment Feel hunger, violence of A view from the other side Microfinancing The widening chasm Where there is enough Vision of Agus Powerless masses Cooperation Indonesian People’s Bank Return the violence, pressed Not hyper-competition Open up new doors Past human limits Can it work today? Jakartan Mennos The little guy is Individuals Sing and echo prophet’s song: Not the enemy, and the Can work together to be Justice for the poor West isn’t the Best Truly creative If we don’t sing out, We shrivel and die Not a collective Then who? the Sphinx? the When competition alone Controlled by a corrupt state Shaggy Arrasate sheep? Is our way of life But something better O God, when shall all We must bridge the chasm How will the co-op The weary earth cease sighing The prophets remind us that Endure as alternative And ring out its mirth? We’re in the same boat To exploitation? – Brian Ladd – Bruce Fast We make lots of bread Some folks cry “commies!” Off the sweat of the poorest But people of faith and hope Then toss crumbs their way Hear the prophet call: This book is dedicated to the members of the Boulder Mennonite Community, Boulder, Colorado, USA, for their diligence in living and walking a simple and cooperative life-style modeled so ably by their sixteenth century Anabaptist progenitors. Contents List of Figures ix List of Tables x Foreword xi Preface by George Cheney xiii Acknowledgments xxi Introduction 1 PART I HISTORY AND THEORY OF COOPERATION Chapter 1 History and Theory of the Cooperative Movement 9 Chapter 2 Comparing Cooperation, Competition, and Individual Effort 37 Chapter 3 The Standard Economic Model and Globalization 57 PART II COOPERATIVE CASE STUDIES Chapter 4 Cooperation and Microfinance in Southeast Asia and Oceania 83 Chapter 5 The Cooperative Movement in India 95 Chapter 6 Mondragón: The Basque Cooperative Experience 113 Chapter 7 Cooperatives in Latin America 125 Chapter 8 Puerto Rico’s Cooperative Effort 139 PART III ANALYSIS AND IMPLICATIONS FOR THE FUTURE Chapter 9 What Makes a Cooperative Work? 151 Chapter 10 The Blueprint: Globalization from Below 165 viii The Cooperative Movement APPENDICES Appendix A Credit Union Statistics 185 Appendix B Measuring Effect Size 207 Appendix C The IMF “Merged Model” 213 Appendix D Interviews: Protocol and Summary Data 215 Index 223 List of Figures Figure 1.1 Number of Credit Unions 26 Figure 1.2 Number of Credit Union Members (in millions) 27 Figure 1.3 Total Assets of Credit Unions (in $millions) 28 Figure 3.1 World Poverty and Income Inequality After Free Trade 65 Figure 5.1 ASP Organizational Chart 102 Figure 6.1 Basic Mondragón Cooperative Organizational Chart 117 Figure 6.2 Four Legs of the Inter-cooperative Structure 118 Figure A.1 Number of US Credit Unions, 1939-2004 194 Figure A.2 Number of Members at US Credit Unions, 1939-2004 195 Figure A.3 Membership Growth at US Credit Unions, 1940-2004 196 Figure A.4 Assets at US Credit Unions (in $millions), 1939-2004 197 Figure A.5 Asset Growth at US Credit Unions, 1940-2004 198 Figure A.6 Savings Growth at US Credit Unions, 1940-2004 199 Figure A.7 Loan Growth at US Credit Unions, 1940-2004 200 Figure A.8 Loans to Savings Ratio at US Credit Unions, 1939-2004 201 Figure A.9 Savings to Assets at US Credit Unions, 1939-2004 202 Figure A.10 Reserves to Assets at US Credit Unions, 1939-2004 203 Figure A.11 Loans to Assets at US Credit Unions, 1939-2004 204 Figure A.12 Dollar Asset Growth at US Credit Unions (in $millions), 1940-2004 205 Figure B.1 The Standard Normal Distribution 209 List of Tables Table 1.1 Agricultural Cooperatives’ Shares of US Farm Market— Selected Commodity Groups 25 Table 1.2 Energy Cooperatives in the United States Selected Utility Data by Ownership, US, 2000 30 Table 2.1 Impact of Cooperative, Competitive, and Individualistic Efforts on Productivity/Achievement 43 Table 2.2 Cognitive or Moral Reasoning 46 Table 2.3 Mean Effect Sizes for Types of Tasks 48 Table 2.4 Mean Effect Sizes for Quality of Study 50 Table 3.1 World’s Real Per Capita Income Distribution, 1988-1993 62 Table 3.2 World Population and Total World Poor (in billions) 63 Table 3.3 Countries Ranked By Percent of Population in Poverty (OECD Nations Only) 76 Table 4.1 Sixteen Decisions 86 Table A.1 United States State Credit Union Statistics 185 Table A.2 United States Federal Credit Union Statistics 188 Table A.3 United States Credit Union Statistics 191 Foreword When I was working on a project with the Mayan people in the highlands of the state of Chiapas, Mexico, I learned of the severely negative effects of the North American Free Trade Agreement (NAFTA) on the native peoples and especially on the coffee growers of that area. Their traditional economic mode for generations had been cooperative, but the provisions of NAFTA that require producing/trading units to be privately owned were forcing their cooperative coffee growers out of business. Before NAFTA, they were able to realize 25 pesos per kilo for their coffee; after NAFTA they could scarcely get 6 pesos for the same partially processed kilos. Competition from the US-subsidized coffee corporations in Vietnam simply nailed the lid on the cooperative coffin in Chiapas. Direct trade lines with similar cooperatives in the US and Europe, created in the late 1990s, promise salvation for the coffee cooperatives in Chiapas. The current practice of “free market capitalism” is based on a curious set of assumptions. The first of those assumptions has always puzzled me in the light of my experience in administering non-profit groups and in my teaching career: The idea that unfettered competition is necessary to provide balance and equity within the society and within the economy. Something about that assumption drove me to a rational analysis of the research comparing cooperation with competition. To me the results of that research is as clear as the observation that the earth is not flat but spherical and as definitive as the more recent conclusion that smoking is not a healthy activity.