Cooperatives are the answer for layoffs

By Stefan Ivanovski

Contributing Writer

In today’s world of interconnectedness, interdependence and globalization it is important to think of sustainable economic development. The recent crisis that started on Wall Street has shown that the globalized economy is vulnerable to shocks. These shocks can produce ripple effects across the whole world that affects millions globally. We see and feel these impacts in the U.S. through the difficult job market and the stubbornly high unemployment rate.

I believe that the way to avoid future massive layoffs in times of economic and financial crisis it is important to start democratizing workplaces. Generally, cooperatives as democratic workplaces provide members with life-long employment that furthers the intellectual, spiritual and social development of each individual. In order to ensure that viability of cooperatives, it is important that each member of the cooperative internalizes principles of democracy, equality and solidarity.

For those of you who are not familiar with cooperatives, they are basically democratic workplaces where each worker of the cooperative has the right to a voice and a vote, regardless of the number of shares that a member possesses. In a cooperative, all workers are the “owners” of the means of production, which means that each individual member has an equal say in the company decision-making.

The fact that each individual is dignified with a voice and a vote in a cooperative promotes a sense of equality among the members. In traditional enterprises, the individual or a group of individuals that controls more than 51 percent of the stocks controls the company. It does not matter whether the owner(s) is/are competent, or whether they hire several employees or several thousand; effectively all decision-making rests with an exclusive board of directors.

Sometimes it is not economically efficient that cooperative members who don’t have experience in management, sales and marketing actually make decisions related to these areas. This is something that can be resolved with investing in education or hiring new members who are competent in these areas. The fact that members ultimately make all decisions allows cooperatives to meet the needs of the members instead of solely pursue profits for a few shareholders.

In a cooperative, each member is the “owner” of the enterprise, which gives the members a sense of empowerment and dedication to work hard and ensure the success of the cooperative. Members share all the income and losses that are generated by the cooperative, so each member has a vested interest in the financial success and solvency of the enterprise. Even though the members have to make money in order to meet their basic needs, the fact that all the workers in the enterprise have an equal say and a vote in the decision-making process leaves the members with more control over how the income is going to be distributed. The principle of democracy ensures that there is a more egalitarian distribution of income, which allows for more resources to be distributed for the further development of each individual rather than the pursuit of profit and accumulation of wealth.

I think that cooperatives can help bring about democracy in the workplaces, which in turn can contribute to moderating the negative effects of financial and economic crises. Since cooperative members see themselves as more than just “co-workers,” the subjectivity among the members in democratic workplaces changes to account for broader collective needs and interests as opposed to individual ones. In cooperatives, the members do not see each other as “commodities” that are “hired” and “fired”; rather, cooperatives contribute dignifying work and sustainable life-long employment. The different sets of values that govern cooperatives such as democracy, equality and solidarity prevent massive layoffs from being the norm in coping with financial insolvency. So, if we would like to avoid chronic high unemployment rates that burden individuals and families, I believe that we have to promote democracy in the workplaces as well, not just the “right to vote” during elections. 

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