The United Nations (UN) and the International Labour Organisation (ILO) recognized the potential of cooperative enterprises for economic development and poverty reduction at the beginning of the twenty-first century (ILO 2002; Birchall 2003). During the UN’s 2005 Year of Micro-Credit, the ICA highlighted the role that cooperative enterprises have played for more than a century in providing microfinance and supporting microenterprise throughout the world. The ICA claimed that “cooperatives are amongst the most successful micro-finance institutions” (ICA 2005, 1) at the International Day of Co-operatives on July 2, 2005, when it launched the campaign “Micro-finance is our business: Co-operating out of poverty.” The UN explains that its designation of 2012 as “the International Year of Cooperatives is intended to raise public awareness of the invaluable contributions of cooperative enterprises to poverty reduction, employment generation and social integration. The Year will also highlight the strengths of the cooperative business model as an alternative means of doing business and furthering socioeconomic development” (UN 2011).
People in every country and throughout history have used cooperative economics as a development strategy. Cooperatives—particularly worker-owned cooperative businesses—are examples of democratic economic institutions that provide a mechanism for pooling resources, increasing benefits, and sharing profits. In addition, those of us who study cooperative business development find that it solves many problems created by market failure, economic discrimination, and underdevelopment. Haynes and Nembhard suggest that “many who worry about the survival of our cities recognize that collaboration and cooperation are and will continue to be critical elements in any strategy of community revitalization” (1999, 65). Fairbairn et al. elaborate: “For decades, co-operatives in market economies have arisen where there are market deficiencies—imperfect competition, excessive concentrations of power, and unmet needs. They have arisen, too, where the costs of adjustment to economic change have threatened to destroy communities, where local people needed power to control the pace and direction of change in order to preserve what they valued. Look for the market deficiencies, look for the costs of change—look for the need—and find the niche where a co-op may thrive” (1991, 1).
Cooperative businesses are group-centered, need-based, and asset-building local development models based on the pooling of resources, democratic economic participation, and profit sharing. They are locally controlled, internally driven democratic institutions that promote group learning, economic interdependence, consolidation of resources, development of assets, and protection of people and the environment. Cooperatives stabilize their communities—increasing economic activity, creating good jobs, increasing benefits and wages, and encouraging civic participation. Community-based cooperatively owned enterprises are characterized by greater community input and participation in the planning, development, and governance of commercially viable, socially responsible businesses. Cooperatives provide a mechanism for low-resource people with few traditional opportunities to create new economic opportunities for themselves and their co-workers and neighbors.
Evidence suggests that cooperatives increase productivity and create value, particularly those owned and controlled by employees. Levine and Tyson, for example, surveyed the research and found that “both participation and ownership have positive effects on productivity” (1990, 202). Vanek (1971) similarly emphasizes the importance of and efficiencies gained from active participation (in ownership, which leads to participation in control and management) and equitable income sharing. Levine and Tyson summarize the research and conclude that cooperatives create superior working conditions. Spear finds that worker co-ops are more flexible than traditional companies, and have “less inflation and less unemployment in downturns which produces a positive macroeconomic effect” (2000, 522). Logue and Yates have found more recently that worker cooperatives and employee-owned firms have survival rates that equal or surpass those of conventional firms, and produce a combination of conventional and nontraditional economic returns. They “place more emphasis on job security for employee-members and employees’ family members, pay competitive wages (or slightly better than their sector), provide additional variable income through profit-sharing, dividends or bonuses, and offer better fringe benefits” (2005, ix). In addition, cooperatives often support community programs and facilities such as schools and health clinics. Cooperatives tend to promote increased civic engagement (see, for example, Gordon Nembhard 2000, 2002, 2004b; Gordon Nembhard and Blasingame 2002, 2006), helping to empower communities to create new economic structures and infrastructure that meet their myriad needs, based on their particularities and experiences. Small, democratically governed cooperatives in particular, whose members are often low-income, work to broaden and democratize business and home ownership, and allow members to pool resources and skills to enable them to be owners and to achieve economies of scale and higher efficiencies.
Birchall and Ketilson (2009) document both the resilience of the cooperative business model and the ways that cooperatives and credit unions have weathered financial and economic crises over the past hundred years or more. Cooperative business ownership, cooperative financial institutions, and co-op housing have been solutions to past economic challenges, such as debt peonage under Jim Crow, and lack of food, affordable housing, and financial services during the Great Depression; and they can solve current and continuing economic challenges such as the redevelopment of the Gulf Coast after Hurricane Katrina and recovery after the housing crisis of 2007–9 and the current “Great Recession.”5
In the twentieth century there was a growing recognition of the benefits of cooperatives, even for African Americans. In 1918, writing in the Crisis for an African American audience, Warbasse observed, “The fact that he [the Negro] is the most exploited of all people, that the government discriminates against him, and that he pays more for what he buys than does the white citizen should open his eyes to the possibility of co-operation” (1918, 224). Du Bois argued that cooperatives would provide the economic opportunities denied to African Americans, and would allow Blacks to serve the common good rather than be slaves to market forces (Du Bois 1933b).6 Similarly, George S. Schuyler contended early in his career that cooperative economics would “save the race” (Schuyler 1930b, n.d.). A. Philip Randolph connected the consumers’ cooperative movement to the labor movement (Randolph 1918; Wilson and Randolph 1938). Halena Wilson (1952) urged her fellow members of the Ladies’ Auxiliary to the Brotherhood of Sleeping Car Porters to seriously consider the “mutual profit and common benefit” of cooperative ownership. By 1992 Jeremiah Cotton was rationalizing that since Blacks suffer common material conditions (“if each black person’s material well-being is dependent on that of all other blacks”), they should exercise “community cooperation” (1992, 24). This book explores the cooperative thought of these and other Black leaders, chronicles their cooperative practices, and provides context for their cooperative economic ideas and strategies.
Is There an African American Cooperative Tradition?
When I began this project fifteen years ago, my colleague Curtis Haynes Jr. and I had been exploring how theories of cooperative economic development and Black self-help could address late twentieth- and early twenty-first-century urban redevelopment or revitalization. We made the case that what we called Du Bois’s theory of racial cooperative economic development,7 combined with Hogan’s theory of Black self-help and the model of Mondragon Cooperative Corporation among the Basque people in northern Spain,8 made a compelling case for public policy that fostered and supported cooperative economic development in Black urban communities (Haynes and Gordon Nembhard 1999; Gordon Nembhard and Haynes, 2002, 2003). It seemed reasonable to us that combining the thought of two important African American activist scholars with successful practice among another subaltern group would provide a straightforward prescription for economic revival