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Many people equate socialism with big government, but it is actually something you can do locally, with other like minded individuals. Credit unions, cooperatives, communes and co-housing groups practice what I think of as small scale socialism. What these types of groups have in common, and what defines them as socialist, is that they let more stakeholders participate in governance than a traditional capitalist business. They exist in a larger socioeconomic context that may or may not practice much socialism. Most if not all compete with other businesses in a capitalist, fee-market economy, at least in some sense. But at their core they are socialist in nature.

First, I suppose I should define what a "stakeholder" is. A stakeholder is just a person who has some investment or interest in what a group is doing. It means anyone who is affected by the group's activities. A worker, a customer, the owners of course, even a
neighbor, these people are all affected by what a business does and can therefore be considered stakeholders of that business. They have a stake in it. Letting more stakeholders participate in the governance of a business or group ensures that more people's legitimate concerns get addressed.

Many people are familiar with credit unions. I bank exclusively at a local credit union. Credit unions are non-profit institutions. They are not run to generate a profit for the owners. In fact, the owners are the customers. All profit that is generated gets distributed back to the customer/owners who created it. The customer/owners also get to vote on who runs the place. If they do not like their credit union's current management and their policies, they can change them.

Because of this, there is no motivation for a credit union to screw you over. If they did, they would just have to give the money back to you at the end of the year, with interest. Because of this, credit unions can put your money to work serving you better. I got a call a year or so ago, I'd accidentally overdrawn my account. Instead of re-ordering my withdrawals to cover only the largest first, which generates a bunch of extra fees for a traditional bank as dozens of little checks bounce instead of a few big ones, they just called me, I made a deposit, and that was that.

They also invest my money in the local community. In fact, I'm also a borrower, I have my mortgage there, at a very nice fixed rate. They loan money to local businesses as well, helping drive the local economy. I got my car loan through a credit union. They were very lenient, one month when I had to pay late and went in shame faced to explain, they almost laughed at me, "Oh, that's just a suggested date! We won't actually do anything until you are several months behind, and then its just a sternly worded letter." Seriously, why are you not banking with a credit union?

Once you understand credit unions, you understand most of what cooperatives are. Credit unions are just cooperative banks. There are many other types of cooperatives, in fact, even big businesses recognize the value of "socialist" cooperation and like to use cooperatives! Cooperatives are a type of non-profit enterprise. But they exist to help their owners in some way. A large nut grower's cooperative (like Diamond Foods used to be) is a very different thing from a small cooperative grocer.

It is how the cooperative defines ownership that defines what the co-op (for short) really is. Broadly speaking, there are consumer cooperatives and worker's cooperatives. In each, the owners have a right to participate in the governance of the co-op in a fashion usually defined in the bylaws (but sometimes in the articles of incorporation). In larger customer owned cooperatives, you may simply get to vote for candidates for the various governing positions. In smaller worker owned cooperatives, important decisions might require consensus of all owners.

Unfortunately, the laws for incorporating and running a cooperative vary significantly from state to state. But a group does not have to be incorporated as an official cooperative to act as one. In many cases, the Limited Liability Company can be a good choice for a small worker's cooperative. But I'm not a lawyer, so don't listen to me, consult a professional if you are interested. Or at least look in your local library for a copy of your state's laws on the matter, that's what I did when I helped found a programmer's cooperative in California.

The first consumer cooperative may have been the Fenwick Weaver's Society, formed in Scotland in 1761, while The Shore Porters Society claims to be the first worker's cooperative, also from Scotland, formed back in 1498. Utilities of various kinds are often run as cooperatives, and this can eliminate the dangers of monopoly without government regulation, as the utility customers themselves ensure things are fair. Housing cooperatives form another large sector of the cooperative movement.

Communes and co-housing are two examples of intentional communities using cooperative housing. Both feature shared lands and facilities. Co-housing refers specifically to private homes with shared lands and central facilities such as cooking, dining, laundry, and recreation areas. They have a cooperative style of governance, being owned and managed by the residents. A commune is a looser term, it might have all the features of co-housing or it might be a single building. Often, the residents of a commune run a business as well as living together.

Communes and co-housing foster community and good relationships. They can be very green by nature, sharing resources reduces waste and inefficiency. The style of governance is up to the members, in some communes they practice total communism, with no personal possessions at all. These types of communes are more frequently religious than Marxist in nature, in my experience. Other communes allow private ownership of personal property, and only share real property like land. It's all up to the members.

The cooperative movement has a long and interesting history, and it is intimately intertwined with the history of labor, oppressed people and the lower class. Small scale democratic or consensus run cooperatives and communes of today are not primarily hippie dippy psychedelic crash pads for flower children (though such places still exist), they are pragmatic and level headed non-profit mutual benefit corporations. Perhaps the largest and most successful of these, the Mondragon Cooperative, helped a poor Basque region in Spain go from farming to being a modern industrial power in less than fifty years. They are something that you can take part in today, heck you and your friends could probably found one of your own.

Originally posted to SethRightmer on Fri Aug 19, 2011 at 07:12 PM PDT.

Also republished by Community Spotlight.

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