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The contribution of co-operatives to community economic development : A case study of CRS Workers’ Co-operative Newell, Teresa Margaret 1994

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THE CONTRIBUTION OF CO-OPERATIVES TO COMMUNITY ECONOMIC DEVELOPMENT: A CASE STUDY OF CRS WORKERS' CO-OPERATIVE by  TERESA MARGARET NEWELL B.A., Simon F r a s e r U n i v e r s i t y ,  1989  A THESIS SUBMITTED I N PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in THE FACULTY OF GRADUATE STUDIES ( S c h o o l o f Community a n d R e g i o n a l  Planning)  We a c c e p t t h i s t h e s i s a s c o n f o r m i n g to the required standard  THE UNIVERSITY OF B R I T I S H COLUMBIA A u g u s t 1994 ( c ) T e r e s a M a r g a r e t N e w e l l , 1994  In presenting this thesis in partial fulfilment  of the  requirements for an advanced  degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department  or  by  his or  her  representatives.  It  is  understood that  copying or  publication of this thesis for financial gain shall not be allowed without my written permission.  Department of  IPMMQIQITW *  ^efripWAu  The University of British Columbia Vancouver, Canada Date  DE-6 (2/88)  -  P  e  c  .  W4-  Pu^/^l^G-  ABSTRACT Compared peaceful,  t o many  safe,  other  economically  places  i n the world,  well-developed  Canada  is a  haven of democracy.  D e s p i t e t h i s d e s i g n a t i o n , many Canadians s t r u g g l e d a i l y t o a c q u i r e the s i m p l e s t of n e c e s s i t i e s .  T h i s t h e s i s i s about e x p l o r i n g the  p o t e n t i a l of a l t e r n a t i v e economic s t r u c t u r e s t o a m e l i o r a t e some of Canada's economic and s o c i a l problems. to examine the concept the  role  of Community Economic Development  o f the c o - o p e r a t i v e  illustrate institution,  The purpose o f t h i s work i s  the p o t e n t i a l  model  as a CED  of the worker  (CED) and  institution.  co-operative  as a  To CED  the case of CRS Workers' Co-op i s s t u d i e d .  A review of the l i t e r a t u r e p r o v i d e s background i n f o r m a t i o n on the  development  of the CED movement  i n Canada.  Academic and  community-based p u b l i c a t i o n s are examined t o p r o v i d e i n s i g h t v a r i o u s CED t h e o r i e s and approaches.  Basic co-operative  into  concepts  are i n t r o d u c e d i n a h i s t o r i c a l review of c o - o p e r a t i v e development in  Canada.  The r o l e  of c o - o p e r a t i v e s  as CED  institutions i s  examined and a case study of CRS Workers' Co-op i s used t o e x p l o r e the p o t e n t i a l c o n t r i b u t i o n s of an a l t e r n a t i v e b u s i n e s s s t r u c t u r e . Recommendations contained i n r e p o r t s from a f e d e r a l t a s k f o r c e and a p r o v i n c i a l a d v i s o r y group on c o - o p e r a t i v e s and CED form the b a s i s f o r c o n c l u s i o n s about the r o l e s of government and e s t a b l i s h e d c o - o p e r a t i v e s i n f o s t e r i n g and s u p p o r t i n g the development o f worker c o - o p e r a t i v e s and CED p r o j e c t s . ii  TABLE OF COMENTS Abstract  i i  Table of Contents  i i i  Acknowledgement  v  Preface  vi  1.0 INTRODUCTION  1  1.1 Purpose  1  1.2 Scope  1  1.3 R a t i o n a l e  2  1.4 O r g a n i z a t i o n and Methodology  3  2.0 COMMUNITY ECONOMIC DEVELOPMENT 2 .1 CED as a Movement  4 6  2.1.1 Reactions t o an Economy i n C r i s i s 2.1.2 I n f l u e n c e s  7 10  2 . 2 CED D e f i n e d  13  2.2.1 Approaches  14  2.2.2 P r i n c i p l e s  23  3.0 CO-OPERATIVES IN CANADA  31  3.1 Co-operative Development  31  3.1.1 H i s t o r y  32  3.1.2 P r i n c i p l e s  46  3.2 Co-operatives i n P r a c t i c e 3.2.1 Types of Co-operatives 3.3 Co-operatives and CED  50 50 56  3.3.1 Co-operative C o n t r i b u t i o n s t o CED iii  56  4.0 CRS WORKERS' CO-OPERATIVE  63  4.1 H i s t o r y o f CRS  63  4.1.1 4.1.2 4.1.3 4.1.4 4.1.5  E a r l y Days 64 I n c o r p o r a t i o n i n 1976 67 A New Decision-Making S t r u c t u r e i n 1982 ... 71 A New S a l a r y S t r u c t u r e i n 1991 74 Lessons f o r CED 76  4.2 Nature o f Ownership  77  4.2.1 Role o f P r o f i t s 4.2.2 Democratic C o n t r o l 4.2.3 The D i s t r i b u t i o n o f Surplus 4.3 CRS's C o n t r i b u t i o n s t o CED 4.3.1 4.3.2 4.3.3 4.3.4 5.0  Economic B e n e f i t s Educational Benefits Co-operative Community Needs of People  SUMMARY AND CONCLUSIONS  78 81 82 83 83 85 86 87 89  Appendix  105  Endnotes  110  Bibliography  112  iv  ACKNOWLEIXJEMENT I would l i k e t o thank C r a i g Davis, my a d v i s o r , f o r h i s p o s i t i v e support and guidance thoughout the process of d e v e l o p i n g and w r i t i n g this thesis.  v  PREFACE In May 1991, f o l l o w i n g the completion of my course work i n p l a n n i n g , I took a p o s i t i o n i n the A d m i n i s t r a t i v e C o l l e c t i v e at CRS Workers' Co-operative. My two years of experience as a member of the CRS Board of D i r e c t o r s has p r o v i d e d me with insight into the o r g a n i z a t i o n that proved u s e f u l f o r the case study s e c t i o n of t h i s thesis.  vi  1.0 INTRODUCTION 1.1 PURPOSE The general purpose of t h i s thesis i s to create awareness f o r the p o t e n t i a l of alternative economic structures to economic and s o c i a l problems i n Canada.  ameliorate  More s p e c i f i c a l l y ,  the  purpose i s to examine the concept of Community Economic Development (CED)  and  the  institution. workers  1  potential  of  the  co-operative  model  as  a  CED  Toward t h i s l a t t e r objective, the contributions of  co-operatives to CED are explored i n a case study of a  well-established, f i n a n c i a l l y successful co-operative: CRS Workers' Co-operative.  1.2 SCOPE The  main focus of t h i s thesis i s narrowly  contribution of co-operatives to CED,  with p a r t i c u l a r  placed on the r o l e of workers' co-operatives. purpose  of  "creating awareness"  about  "Awareness"  i n this  reader's knowledge of the concepts  the  economic  at times, becomes  thesis means enhancing of CED  the  emphasis  To accomplish  "alternative  structures" ,the o v e r a l l scope of the thesis, quite broad.  defined as  and  co-operation  the by  exploring the p r i n c i p l e s and the development of the two movements i n Canada.  1  1.3 RATIONALE Part  of the rationale  observation  that  i t does  for this  not make  thesis  sense  comes  that  a  from the  country as  economically well-developed as Canada should have so many people struggling t o make i t through l i f e every day. It i s not necessarily that current approaches t o economic and community development are not working but that they do not seem t o be doing enough. We are l i v i n g i n d i f f i c u l t times with complicated economic  and s o c i a l  problems;  a wide  range  of approaches t o  development must be explored and supported. Another part of the rationale f o r t h i s thesis comes from the b e l i e f that change must happen at the community l e v e l and that i n d i v i d u a l actions can make a difference i n how the world works. Co-operatives o f f e r opportunities f o r small changes t o occur and f o r people t o have a larger impact on t h e i r own economic d e s t i n i e s . This  thesis  i s also prompted by a desire t o broaden my  knowledge and perspective as a (future) planner.  By blending the  t h e o r e t i c a l aspects of CED with a h i s t o r i c a l review of co-operative development and the p r a c t i c a l observations of a case study,  this  t h e s i s provides me with a base f o r approaching future development work.  2  1.4 ORGANIZATION & METHOLX)LOGY The thesis consists of f i v e chapters.  Chapter two contains a  l i t e r a t u r e review of CED development and theory.  I t s purpose i s t o  create a greater understanding of the CED approach by exploring the ideas, b e l i e f s , strategies, and aims of the movement. Chapter three introduces co-operative concepts and provides a historical  review  of  co-operative  development  in  Canada.  Comparisons between the co-operative and the CED movements are drawn and the p o t e n t i a l of the co-operative model to contribute as a CED i n s t i t u t i o n i s examined. Chapter four i s a case study of CRS Workers' Co-operative.  A  h i s t o r i c a l review of the organization and my insights as a member of CRS provide the background f o r the study. chapter i s to breathe  life  The purpose of t h i s  into the t h e o r e t i c a l and h i s t o r i c a l  material of chapters two and three by studying the contributions of a  well-established, successful workers'  co-operative c u r r e n t l y  operating i n B r i t i s h Columbia. Chapter brought  five  forward  contains  a summary of the p r i n c i p a l  i n the preceding  chapters  and  offers  points some  conclusions about the future development of the CED and the cooperative movements. Implications f o r the r o l e of established cooperatives, the role of government, and the r o l e of planners i n f o s t e r i n g further development are o u t l i n e d and p o s s i b i l i t i e s f o r future research are considered.  3  2.0 COMMUNITY ECONOMIC DEVELOPMENT Compared to many other places i n the world, peaceful,  Canada i s a  safe, economically well-developed haven of democracy.  Cur problems pale i n comparison to those of the war-torn  former  Yugoslavia o r the economically c r i p p l e d Russia, but we do have problems. There are people l i v i n g on the streets i n every major Canadian city.  We have food banks and prisons strained to capacity.  We  have shelters to care f o r neglected children and t o protect women against violence. We have a culture that i s driven by mass media generated consumerism and a f i x a t i o n on material wealth.  We have  racism, addiction, alienation, i s o l a t i o n , and despair. We have too many Canadians who are w i l l i n g and able to work who cannot  find  jobs and too many others who are employed i n work that i s f a r below t h e i r a b i l i t i e s or aspirations. communities  threatened  We have the l i v e l i h o o d of e n t i r e  by decisions made half-way  across the  country, half-way around the world or just across the border. These are complicated problems.  There are no simple answers  i n these d i f f i c u l t times but i t i s puzzling that a country with so much wealth should have so many people struggling t o get through l i f e every day. One place we could s t a r t  looking f o r answers  business and economic structures, report,  as J.T. Webb puts  Workers' Co-operatives; A People  Regional Development:  4  i s i n our  Centered  i t i n his  Approach t o  Our economic i n s t i t u t i o n s which supposedly e x i s t to serve us and provide us with the goods and services to l i v e s o c i a l , c u l t u r a l , p o l i t i c a l and r e l i g i o u s l i v e s --to l i v e whole l i v e s -- have taken on a l i f e of t h e i r own which i n many aspects seems t o be at war with the rest of our lives. These structures encourage confrontation, competition, aggressive behaviour, self-seeking and at worst encourage s o c i a l i r r e s p o n s i b i l i t y . ...Business i s structured i n such a way that there i s only one bottom l i n e -- p r o f i t s . (Webb 1987, 11) At present, we have evolved an economy that often does not meet  basic  human  environmental  needs  impacts  There are people  and  does  not  always  consider the  of i t s "economically v i a b l e " decisions.  i n communities across Canada who have become  f r u s t r a t e d with the lack of control  they have over  their  own  economic destinies and have begun to look at new ways t o organize economic l i f e . The purpose of t h i s chapter i s to introduce a movement that has been gaining ground i n Canada, p a r t i c u l a r l y over the past ten years.  I t i s a movement that o f f e r s an a l t e r n a t i v e approach t o  some of the problems our communities  are facing,  a  holistic  approach that attempts to integrate economic, s o c i a l , c u l t u r a l and environmental issues.  This approach i s c a l l e d community economic  development (CED) . CED i s not a panacea; i t cannot address a l l the complicated problems facing our country, but i t i s a place t o s t a r t .  I t i s an  organizational concept i n which individuals can come together i n small ways to begin to make a difference i n t h e i r communities. This chapter i s divided into two sections.  The f i r s t section,  CED as a Movement,is concerned with the o r i g i n of the movement and how i t has developed i n Canada.  The second section, CED Defined, 5  provides an introduction to the broad f i e l d of CED o u t l i n i n g three d i s t i n c t  activity  conceptual approaches to t h i s  by  form of  development and by presenting a b r i e f overview of the p r i n c i p l e s of CED.  2.1 CED AS A MOVEMENT The Canadian experience with CED i s captured i n the l i t e r a t u r e i n two waves.  The  f i r s t wave marks the beginning of CED  as a  movement that developed i n reaction to the " c r i s i s of the welfare state" during the l a t e 1970s and e a r l y 1980s.  The second wave has  1  been evolving since the l a t e 1980s and e a r l y 1990s as regarding the natural  impacts  environment  literature.  of  "globalization"  began  to  become  and  more  concerns  the state of prominent  in  the the  2  CED as a movement has been influenced by a number of forces. The ideas put f o r t h by E.F. Schumacher i n Small i s B e a u t i f u l : A Study of Economics as i f People Mattered published i n 1974 b u i l t upon further i n George McRobie's 1981  follow up,  Small i s  Possible, form a chord of theory that reverberates throughout literature.  Roots of CED  experiences  of  the  and  the  are also found f i r m l y planted i n the  Canadian  Co-operative  Movement.  These  influences combined with grassroots a c t i v i t i e s i n a number of other realms continue to shape the development of CED as a movement.  6  2.1.1 Reactions to an Economy in Crisis A. The Decline of the Welfare State In the post World War  II era of sustained growth, the welfare  state, l e d by private sector enterprise and a s s i s t e d by s e l e c t i v e government increases 1986,  programs and i n material  policies,  provided  prosperity and  for  social  "unprecedented  security"  (Hunsley  ix). In the e a r l y 1970s large scale economic growth began to slow  down, unemployment increased and optimism about continued affluence deteriorated.  In  1973,  the  o i l crisis  marked not  only  beginning of a serious downturn i n the world economy but brought  home to many Canadians the  Canadian  economy was  influenced  by  full  extent  outside  to  i t also  which  sources  the  the  (Campfens  1983,4). This Canada.  i s when the  "crisis  of  the  welfare  state" began i n  The foundation f o r the proper functioning of the welfare  state i s f u l l employment. The surplus wealth generated by the post war  growth economy f u e l l e d Canada s p u b l i c l y a s s i s t e d s o c i a l 1  economic programs.  and  As unemployment rose, however, surplus wealth  i n the economy declined and demands on s o c i a l and economic programs increased.  Governments at a l l l e v e l s were squeezed f o r funds and  began the process of l i m i t i n g t h e i r involvement i n the p r o v i s i o n of a number of services. By the e a r l y 1980s the welfare state was difficulty.  i n serious f i n a n c i a l  Unemployment remained a problem and economic recovery  was hampered by r i s i n g i n f l a t i o n and high i n t e r e s t rates. 7  More and  more  communities  "elsewhere,"  were  feeling  decisions  the  made  by  e f f e c t s of national  decisions  or  made  multinational  corporations to close a plant or l a y people o f f , decisions made by government  to  reduce funding  f o r services or  to  cut  programs  altogether. In the e a r l y 1980s there was a f l u r r y of CED a c t i v i t y across Canada as communities  3  began to look f o r ways to increase  local  control and decrease dependency on outside forces, whether those forces  be  "big  business"  i n i t i a t i v e s began as  or  "big  government."  reactions against  the  Most  local  f a i l u r e of top-down  regional development p o l i c i e s , as reactions against the f a i l u r e of the  traditional  market  system  to  provide  sufficient  quality  employment opportunities i n the community or as reactions against the neglect of s o c i a l and community services. CED 1980s  took on the a t t r i b u t e s of a movement during the  when  activists  and  academics  began  to  early  document  local  i n i t i a t i v e s and to f o s t e r i t s development through a multitude conferences, papers, a r t i c l e s , and books.  4  of  Many of the proceedings  and publications that came out at t h i s time focused on creating a more homogeneous body of  CED  standard  outline  principles  and  theory  development.  8  by  attempting  consistent  to  define  strategies  for  B. G l o b a l i z a t i o n and the State of the Natural Environment Concerns regarding unemployment, economic s t a b i l i t y , community control and the provision of s o c i a l services provided the impetus f o r the CED movement to continue growing throughout the 1980s. The movement picked up further momentum i n the e a r l y 1990s as problems associated with the impacts of "globalization" and degradation of the natural environment began to surface more r e g u l a r l y i n the  CED  literature.  in  1992,  5  the B.C.  In a report of a p r o v i n c i a l consultation on CED Working Group on  Community Economic Development  states that: CED has emerged as an a l t e r n a t i v e to conventional approaches to economic development. I t i s founded on the b e l i e f that problems facing communities - unemployment, poverty, job loss, economic i n s t a b i l i t y , environmental degradation and loss of community control - need to be addressed i n a h o l i s t i c and p a r t i c i p a t o r y way. (BC Working Group 1993, 2) The  authors  of  Co-operatives  Economics i n S o c i a l Perspective  and  believe  Community that the  Development: challenge  communities i n the 1990s comes from " g l o b a l i z a t i o n and restructuring: corporations;  free  trade  and  trading  international competition;  regional autonomy and f l e x i b i l i t y "  blocs; and  loss  for  economic  transnational of  local  (Fairbairn et a l . 1993,  or  8) .  In a paper written f o r the Journal of Planning Education and Research i n 1993,  Boothroyd and Davis suggest that:  Through the 1980s and into the 1990s awareness has grown that both l o c a l and national economies are increasingly threatened ( i f not already impacted) by the depletion and degrading of natural resource bases, telecommunication innovations that allow investment decisions to be handled more remotely and c a p i t a l moved more quickly, unmanaged trade, and f i s c a l c r i s e s caused by the systemic incapacity to make do with l e s s . (Boothroyd & Davis 1993, 234) 9  Similar points are emphasized by Marcia Nozick i n a 1990 C i t y Magazine a r t i c l e : The Western world's over-consumption and over-production have resulted i n global environmental destruction [and that] through a process of corporate take-overs, the international free flow of c a p i t a l , and concentration of production into the hands of an ever shrinking almighty few, there has been a noticeable and systematic elimination of d i v e r s i t y from the face of the earth. (Nozick 1990, 17) The "crisis  CED movement  i n Canada developed  of the welfare  state",  i n response  as an a l t e r n a t i v e  t o the  t o the  "big  business" or "big government" responses of t r a d i t i o n a l approaches to economic development. movement  today  as  I t continues to evolve as a legitimate  the q u a l i t y  and  quantity  of employment  opportunities i n Canada become more desperate, as concerns over the adequate p r o v i s i o n of s o c i a l  services become more serious, as  natural resource problems become more complicated and as the impacts of a changing global economy become more devastating f o r communities.  2.1.2 Influences The appropriate technology movement, the co-operative movement and grassroots activism have a l l had a major influence on the development of CED i n Canada.  A. Appropriate Technology In 1973, E.F. Schumacher, an economic advisor on t h i r d world development,  was  concerned  that 10  Western  technologies  were  aggravating the problems of c i t y growth and r u r a l decay i n poor countries. it  He believed that " i f you want to be a good shoemaker,  i s not good enough t o make good shoes and to know a l l about  making good shoes, you also have to know a l o t about feet. the aim of the shoe i s t o f i t the foot" other  words,  Schumacher believed that  Because  (Schumacher 1977) . the technology  In  used i n  development must be appropriate to the s i t u a t i o n . Schumacher believed that we should  question  not only the  e c o l o g i c a l implications of technology but a l s o the impact of that technology from a human point of view, from the perspective of the worker. that  He believed that "you could make e f f i c i e n t technologies  were small  and simple,  saving  minimum damage t o the environment,  capital  and energy,  and using  people's  doing skills  instead of bypassing them" (McRobie 1986, 57). Schumacher was not the only person at t h i s time who questioned how development should be approached.  As he says, there was a  "great ground-swell of people" who were a l s o asking themselves: Well r e a l l y , the purpose of our existence on t h i s earth cannot be to destroy i t . The purpose of our existence can't be to work ourselves s i l l y and t o end up i n a lunatic asylum. Let's reconsider i t . (Schumacher 1977, 7) . These are the people f o r whom Schumacher's perspective made perfect sense.  They began the CED movement i n Canada by echoing  h i s ideas throughout the l i t e r a t u r e .  11  6  B. Canadian Co-operative Movement The Canadian experience with CED concepts i s rooted i n the development of the co-operative movement.  Just  7  practitioners  l i k e the CED  of today, the  e a r l y co-operators found t h e i r communities being threatened by increasing corporate concentration, and by the export of l o c a l resources to remote metropolitan centres. They were convinced that the key to withstanding the onslaught of the 20th century l a y i n strengthening the c u l t u r a l , p o l i t i c a l and economic f a b r i c of l o c a l communities. (Wismer & P e l l 1981, 1) Canada's e a r l i e s t economic  institutions.  co-operatives were They  gave  c u l t u r a l and economic i n i t i a t i v e s .  equal  f a r more emphasis  than  just  to social,  I t i s t h i s s o c i a l philosophy  and the integration of economic and community development that permeates conceptions of CED i n Canada today (Newman 1986,  56) .  C. Grassroots Activism In 1984, the Social  Planning and Review Council of B r i t i s h  Columbia published a report on Community Economic Development i n B.C.  In t h i s report they found that CED projects i n B.C. share  some commonalities i n the process of t h e i r development: A number of people f i n d they have a common concern, frequently about the severe unemployment problem i n t h e i r comrnunity. A group meets and agrees t o expand i t s membership across the entire community of those who share t h i s s p e c i a l i n t e r e s t . Ideas f o r l o c a l action are generated. A society i s formed. . . . (Clague 1985, 5) The process outlined above by Clague and r e i t e r a t e d Perry  by Stewart  (1984, 9) i s basic grassroots activism, a group of people  organizing themselves around a common concern.  12  The h i s t o r y of  the  CED movement i s bursting with grassroots a c t i v i t y of one sort  or another. There have been many experiments i n c o l l e c t i v e enterprise and s e l f - s u f f i c i e n t community development, communities.  8  also known as i n t e n t i o n a l  There have also been groups within Canadian society  - including Quebecois, native and metis people, members of the environmental  movement,  and residents  of communities  i n the  hinterlands of the North, the West, and the A t l a n t i c region - that have  taken a grassroots  approach  to solving  issues  i n their  communities and gaining more control over t h e i r own l i v e s (Wismer & P e l l 1983, 68). Grassroots i n i t i a t i v e s are products of the people but without the  support of Canadian job creation programs such as LIP (Local  I n i t i a t i v e s Program), LEAP (Local Employment Assistance Program), and OFY (Opportunities f o r Youths) many Canadian experiments with CED  could  not have  been  maintained long  enough  to  initiate  s i g n i f i c a n t change (Wismer & P e l l 1983, 68).  2.2 CED DEFINED The f i e l d of CED i s broad, both i n theory and i n p r a c t i c e . There are many d e f i n i t i o n s of CED i n the l i t e r a t u r e i n v o l v i n g an assortment of approaches and p r i n c i p l e s .  Boothroyd and Davis  devised a typology of approaches to CED that provides an excellent perspective on the wide range of a c t i v i t y i n t h i s f i e l d .  9  Using  t h i s typology, the f i r s t part of the following section o u t l i n e s three common approaches to CED: growth promotion, s t r u c t u r a l change 13  and conmrnalization.  The second part of t h i s section provides an  overview of the p r i n c i p l e s that are common t o current  working  d e f i n i t i o n s of CED.  2.2.1 Approaches The general objective of any CED a c t i v i t y i s t o take some measure of control of the l o c a l economy back from the market and the state.  The approach used t o reach t h i s objective w i l l  fall  under one of three categories depending on what concepts of economy and community are used t o guide the i n i t i a t i v e and according t o what the primary goals of the i n i t i a t i v e are and what strategies are used t o achieve these goals (Boothroyd & Davis 1993, 230) . For the purposes of the typology, Boothroyd and Davis define community,  economy, and development  i n terms  enough t o encompass a l l three approaches. community  focuses  on  member  10  involvement  that  are general  Their d e f i n i t i o n of as  the  essential  c h a r a c t e r i s t i c of community and includes geographically defined communities  as well  as communities  based on common  Economy i s defined t o include concepts of both market market  interests. and non-  a c t i v i t i e s by describing economy as: "a system of human  a c t i v i t y directed t o meeting human wants that i s determined by deliberate a l l o c a t i o n s of scare resources, including human time" (Boothroyd & Davis 1993, 230). Their d e f i n i t i o n of development emphasizes planned change, "deliberate quantitative o r q u a l i t a t i v e change of a system" as opposed t o "change r e s u l t i n g from good luck  14  or  aggregated i n d i v i d u a l  efforts  to maximize  personal  gain"  (Boothroyd & Davis 1993, 230).  A.  Growth Promotion Approach (cEd) Under the cEd approach to economic development the concept of  economy i s narrowly defined i n terms of monetary transactions. Community i s recognized i n terms of i t s l o c a t i o n on a map.  The  primary purpose of any i n i t i a t i v e i s to promote growth i n jobs, income and business a c t i v i t y .  The primary strategy used to achieve  t h i s growth i s to increase monetary inflows (Boothroyd and Davis 1993, 7). In t h i s type of approach there i s generally not enough thought put into questioning what kinds of jobs are created, how the income growth i s distributed, what type of business a c t i v i t y i s generated or whether money a c t u a l l y stays i n the community.  Smokestack Chasing In the t r a d i t i o n a l form of growth promotion, also r e f e r r e d to as "smokestack chasing", the source of growth i s assumed to l i e i n attracting  major  employers  to  the  locality.  The  type  of  development to be attracted i s t y p i c a l l y a factory but could just as well be a mine, a railway, a t o u r i s t a t t r a c t i o n , a prison, a college or a government agency (Boothroyd & Davis 1993, 231) . The competitive nature of t h i s approach forces communities to b a t t l e against one another i n an attempt to "lure the economic equivalent of a knight i n shining armour" only to f i n d that the 15  benefits they expected might never be r e a l i z e d (Boothroyd & Davis 1993,  231).  A number of communities have found a f t e r s u c c e s s f u l l y  a t t r a c t i n g a large corporate branch plant, a megaproject, or a government infrastructure expansion that the e f f e c t s on e x i s t i n g businesses can sometimes be quite negative.  Other communities have  found that t h e i r natural resource base has been s e r i o u s l y depleted with no r e a l long term economic benefits to show f o r i t .  Still  other communities f i n d themselves held ransom f o r b e t t e r subsidies or larger tax breaks when demands are made through v e i l e d threats to  shut down or move an operation. Although  t h i s type of  "smokestack chasing" may  not be  as  common today as i t was i n the l a t e 1970s and e a r l y 1980s, elements of  it still  exist.  In fact there i s a modern variant of  this  approach c a l l e d "growth planning" which i s s t i l l followed by many communities today.  I t i s a more sophisticated v e r s i o n of growth  promotion where the same narrow concepts of economy and community are applied to the same goals of increasing jobs and income but where the  strategies employed to achieve  these goals are more  complicated.  Growth Planning The  emphasis  with  comprehensive  planning  private  public  and  opportunities addition  and  this that  actors  developing  approach  attempts in  to  setting  is  on  type  of  involve a l l relevant targets,  a wide range of  surveying  strategies.  to chasing outside investors/employers, 16  the  this  In  approach  includes other strategies such as increasing the p r o d u c t i v i t y of e x i s t i n g firms and promoting the establishment of new firms by l o c a l entrepreneurs. E f f o r t s are focused on a s s i s t i n g increasing  firms i n  community exports, making better use of resources,  developing new products and supporting import s u b s t i t u t i o n e f f o r t s (Boothroyd & Davis 1993, 232). There promotion  are many situations  i n which these types of growth  e f f o r t s may be absolutely necessary, f o r instance i n  emergencies  such as the closure of a single-industry town's main  employer or i n the cases of c h r o n i c a l l y impoverished but none i n which i t i s s u f f i c i e n t According approach  t o Boothroyd  communities,  (Boothroyd & Davis 1993, 232) .  and Davis,  i s i n i t s single-mindedness.  the weakness Issues  of  i n this long-term  s t a b i l i t y , s u s t a i n a b i l i t y , interdependence, equity and q u a l i t y of working  life  are not addressed.  Goods and services  produced  outside of the marketplace (e.g., by volunteers) are not counted as contributing  t o community  environmental  growth.  The c u l t u r a l ,  social  costs of increased growth are u s u a l l y  considerations  and the shaky  increased growth w i l l  assumption  that  automatically " t r i c k l e  or  secondary  the b e n e f i t s of down" through the  community underlies many poor decisions.  B.  Structural Change Approach (ceD) The s t r u c t u r a l change approach to CED i s what was described i n  the opening activity.  section of t h i s chapter as the f i r s t  wave of CED  I t emerged simultaneously t o the smokestack chasing 17  approach as some communities began looking f o r ways t o "improve s t a b i l i t y i n the short and long terms by broadly reducing  their  dependencies rather than simply looking f o r ways t o promote growth" (Boothroyd & Davis 1993, 234) . I t evolved as an a l t e r n a t i v e t o the type of planned growth approach that r e l i e s heavily on government support and the " i n v i s i b l e hand" of the market system t o guide the destiny of a community. Under the ceD approach to economic development, s t a b i l i t y and s u s t a i n a b i l i t y are the primary goals; i t i s the q u a l i t y of the economy, the types of jobs and the l e v e l of d i v e r s i t y ,  that i s  emphasized, rather than the quantity of growth i n one v a r i a b l e o r another. not  I t i s advocated by those who believe communities should  buy growth at any p r i c e  instability, capital)  (e.g.,  absentee ownership,  at the p r i c e of c y c l i c a l  or the exhaustion  of natural  (Boothroyd & Davis 1993, 233).  The concept of the economy i n t h i s approach includes a wide spectrum of monetary and nonmonetary transactions ranging from b i g businesses  and the public sector to c o l l e c t i v e s ,  community  enterprises,  exchange,  mutual  voluntary  activity,  a i d and household  community extends beyond l o c a l i t y  cooperatives,  barter  activity.  to incorporate  and  skills  The notion of a meaning of  place: a sense of one's home. The  primary  s t r u c t u r a l strategies used t o increase  local  control i n the i n t e r e s t of s t a b i l i t y and s u s t a i n a b i l i t y are grouped into s i x categories by Boothroyd and Davis:  18  1. D i v e r s i f y external investment sources. The reasoning behind d i v e r s i f y i n g i s that several small operations are generally more stable than one large employer.  2. Reduce dependence on external investment by increasing l o c a l ownership. This strategy includes ideas such as supporting employee buy-outs, encouraging  local  entrepreneurs,  identifying  appropriate  small  scale technologies or u n f i l l e d market niches that can be u t i l i z e d by l o c a l entrepreneurs.  As well as developing c r e d i t unions and  community loan funds to help ensure a larger portion of community funds  stay  in  the  community  this  strategy  also  involves  e s t a b l i s h i n g community-rooted firms such as producer and consumer cooperatives and community development corporations.  3. Reduce dependence on outside decision-makers by increasing l o c a l control over resource management. This strategy includes encouraging the development of comanagement initiatives,  nature  cooperative housing.  conservancies,  community  land  trusts  and  11  4. Reduce dependence on t r a d i t i o n a l exports by d i v e r s i f y i n g products or markets f o r e x i s t i n g products. The  strategy here i s to f i n d ways to avoid r e l y i n g on a s i n g l e  commodity to form the community's economic base.  19  5. Reduce the need f o r exports i n general, by s u b s t i t u t i n g l o c a l production of imports paid f o r by exports. For example, encourage buy-local programs where possible.  6. Reduce dependence on money as the basis f o r l o c a l exchange by strengthening the l o c a l noncash economy. The strategy here i s to reduce the impacts on the community of macro-economic business cycles by establishing community gardens o r forming babysitting cooperatives, f o r instance.  The strategies offered by the ceD approach t o development would  be suitable  f o r a wide  range  community  socio-economic  s i t u a t i o n s . Many c i t i z e n s would welcome the economic attained  by the development  stability  of a mix of l o c a l l y - c o n t r o l led,  environmentally-sustainable a c t i v i t i e s .  The drawback with t h i s  approach, however, i s that not everyone would be w i l l i n g t o make the trade-offs and compromises necessary t o achieve t h i s type of development (Boothroyd & Davis 1993, 233).  There i s a mainstream  attachment t o unlimited growth that tends t o lead people t o a strong notion of q u a l i t y of l i f e (i.e. m a t e r i a l l y driven) which i s not compatible with many of the strategies outlined i n the ceD approach.  The f a r reaching s o c i a l and environmental implications  of t h i s perception of unlimited growth and material luxury are what motivates many of today's CED a c t i v i s t s t o continue working towards developing better communities.  20  C.  Communalization Approach  (Ced)  The communal i z a t ion approach to CED goes beyond concerns with economic growth and s t a b i l i t y to considerations of how wealth i s used and d i s t r i b u t e d . extensive.  Boothroyd  The concept of economy i n t h i s approach i s and  Davis  describe  i t as  "market  and  production d i s t r i b u t i o n based on market and nonmarket p r i n c i p l e s " (Boothroyd & Davis 1993, 237).  For advocates of Ced,  structural  change i s necessary but i n s u f f i c i e n t as a goal. The emphasis i s on developing an economy i n such a way that people f e e l connected on a  social/emotional  level,  where they are concerned  with  other's well-being and gain s a t i s f a c t i o n from co-operating. i s a q u a l i t y many aboriginal people i n Canada c a l l sharing"  (Boothroyd and Davis 1993,  development  235).  each This  "caring and  I t i s the process of  and the concept of equity that matter most with t h i s  approach: Ced t r i e s to create within the community f a i r access to the means of household l i v e l i h o o d by creating f a i r access to the community's c o l l e c t i v e decision-making processes. It i s p a r t i c i p a t o r y i n i t s means and ends, communalistic without negating the i n d i v i d u a l . I t s concern i s to e s t a b l i s h free cooperation. (Boothroyd & Davis 1993, 236) Ced strategies can be grouped into 3 categories: 1. Working through l o c a l and senior governments to eliminate marginalization or e x p l o i t a t i o n of p a r t i c u l a r people within the community. Strategies here would be to urge governments to encourage  work  sharing,  work  prevent discriminatory  lending-policies,  conditions or f a c i l i t a t e unionization. 21  monitor  Ced p r a c t i t i o n e r s could  help to e s t a b l i s h f a i r e r d i s t r i b u t i o n s of corrmunity services and development  impacts  and  to  make  planning  p a r t i c i p a t o r y (Boothroyd & Davis 1993,  processes  more  236).  2. Structuring ceD i n s t i t u t i o n s (such as co-ops, land t r u s t s , and community development corporations) to favour those most i n need. Co-ops, f o r instance, can be organized to meet ceD objectives such as buffering individuals from the market, increasing c o l l e c t i v e bargaining power, and retaining earnings i n the community while s t i l l promoting s o c i a l j u s t i c e that i s a Ced objective & Davis 1993,  (Boothroyd  236).  3. Strengthening noncash mutual a i d norms and p r a c t i c e s . These are the types of a c t i v i t i e s that have t r a d i t i o n a l l y enabled weaker  members  distributions  of  of  a  food  community  to  or  for  caring  survive children  (e.g., at  through  risk)  and  households to accomplish tasks beyond t h e i r i n d i v i d u a l power (e.g., through  barn-raising  bees) .  The  ethic  of mutual  a i d , while  weakened by modernization, survives as "voluteerism" . The strategy here i s to point out the importance of mutual a i d to the community economy and promote i t s expansion. The  Ced  approach  (Boothroyd & Davis 1993,  assumes that  the purpose  of  CED  236) . i s to  increase community s o l i d a r i t y , d i s t r i b u t i v e j u s t i c e , and broadly defined q u a l i t y of l i f e .  There i s also an assumption that economic  i n s t i t u t i o n s should be organized to promote cooperation rather than 22  competition  (i.e.,  they  should  economic development) and  combine s o c i a l development  that  with  a l l community members must  empowered to p a r t i c i p a t e i n planning and decision-making that shape the community's economy (Boothroyd  be  processes  & Davis 1993,  236) .  Unfortunately, Ced faces the same basic l i m i t a t i o n as ceD i n that i t i s out of step with the mainstream.  Privacy, f o r instance,  has a high value i n today's society and i t i s argued that f o r many individuals  this  emphasis  on  privacy  r e s p o n s i b i l i t y f o r the p u b l i c good. "out  i n the world" that s o c i a l  individual  control that  the  replaces  sense  of  There i s also a perception  forces now  best  a  anyone  seem so can  manageable personal goals (Boothroyd & Davis 1993,  do  f a r beyond  i s focus  237) .  on  The same  elements: a l i e n a t i o n , i s o l a t i o n , p o l i t i c a l cynicism and apathy that create  the need f o r Ced  also l i m i t  i t s p o t e n t i a l as  a viable  a l t e r n a t i v e to t r a d i t i o n a l economic development approaches.  2.2.2 Principles The three approaches outlined i n the previous section provide a broad perspective on the range of a c t i v i t y i n t h i s f i e l d . idea of separating CED  The  approaches into the categories of growth  promotion, s t r u c t u r a l change or communalization i l l u s t r a t e s  how  d i f f e r e n t strategies can be used f o r d i f f e r e n t s i t u a t i o n s depending on what the goals are and how the concepts of community and economy are perceived.  23  The following section provides a narrower perspective on CED by focusing on some of the p r i n c i p l e s currently used to guide CED i n i t i a t i v e s i n B r i t i s h Columbia.  A.  Definition For the purposes of t h e i r 1986 Directory of CED i n B.C., the  S o c i a l Planning and Review Council (SPARC) presented the following statement: CED i s concerned with fostering the s o c i a l , economic and environmental well-being of communities and regions through i n i t i a t i v e s taken by c i t i z e n s i n c o l l a b o r a t i o n with t h e i r governments, public i n s t i t u t i o n s , community agencies or other organizations, that strengthen l o c a l decision-making and self-reliance, co-operative endeavour and broad p a r t i c i p a t i o n i n community a f f a i r s . (SPARC 1986, v i i ) In a recent report on CED the B.C. Working Group on CED stated that: CED i s a community-based and cornmunity-directed process that e x p l i c i t l y combines s o c i a l and economic development and i s directed towards fostering the economic, s o c i a l , ecological and c u l t u r a l well-being of communities and regions. As such i t recognizes, affirms and supports a l l the paid and unpaid a c t i v i t y that contributes to the r e a l i z a t i o n of t h i s well-being. (B.C. Working Group on CED 1993, 2) In both statements, community control i s emphasized as the dominant  feature,  and  references  to  integration  p a r t i c i p a t i o n are included as central elements.  and  citizen  The BC Working  Group d e f i n i t i o n , the more recent of the two, shows how the f i e l d has moved towards an even more h o l i s t i c  approach to CED as i t  includes a broad reference t o " a l l the p a i d and unpaid a c t i v i t y " and emphasizes a more general sense of "well-being". 24  The p r i n c i p l e s t h a t CED  activity  structural  B.  in  B.C.  d i r e c t these d e f i n i t i o n s today  change and the  tends  follow  a  blend  that  of  the  communalization approaches.  Principles The B . C . Working Group l i s t s  W o r k i n g G r o u p o n CED 1993,  1.  to  illustrate  the  following principles  (B.C.  2):  Equity  Belief  that  community members  should  community d e c i s i o n - m a k i n g p r o c e s s e s ,  have  equitable  access  resources and b e n e f i t s  to  o f CED  proj ects.  2.  Participation  E n c o u r a g e a c t i v e p a r t i c i p a t i o n o f a l l members o f t h e c o m m u n i t y a n d work  to  remove  marginalized  3.  barriers  that  limit  the  participation  of  citizens.  Community-Building  Work  towards  relationships  4.  the  building of  a  acceptance,  sense  of  community  by  understanding and mutual  fostering respect.  C o o p e r a t i o n and C o l l a b o r a t i o n  Encourage  relationships  both  within  communities  communities based on c o o p e r a t i o n and c o l l a b o r a t i o n .  25  and  between  5. Integration H o l i s t i c approach that addresses s o c i a l , economic, c u l t u r a l  and  e c o l o g i c a l dimensions of community well-being.  6. Interdependence Recognize that the l o c a l community exists within a l a r g e r context and  that  i t s decisions  can  have an  impact  f a r beyond i t s  own  boundaries.  7. L i v i n g within Ecological Limits Encourage  processes,  structures  and  i n i t i a t i v e s that  respect  ecological l i m i t s and support work that i s sustaining, regenerating and nurturing of both the community and the earth.  8. Self-Reliance and Community Control B u i l d on l o c a l strengths, decrease dependency on, interests.  c r e a t i v i t y and resources, and  and  v u l n e r a b i l i t y to, outside  seek to economic  Support decentralized, non-hierarchial decision-making  processes that  strengthen  the  autonomy of  the  individual,  the  community and the region.  9.  Capacity-Building  Encourage the a c q u i s i t i o n of relevant s k i l l s and the development of supportive structures and i n s t i t u t i o n s .  26  10. D i v e r s i t y Encourage economic activates that are diverse and appropriate t o the expressed needs within the community and region.  11. Appropriate Indicators Monitor  and evaluate  progress  through  community-derived and  appropriate economic, s o c i a l , c u l t u r a l and e c o l o g i c a l indicators, rather than through conventional economic measures and standards.  These  same points  are r e i t e r a t e d  throughout the CED l i t e r a t u r e .  i n one form o r another  For instance, Nozick's f i v e basic  12  p r i n c i p l e s of CED, s e l f - r e l i a n c e , s u s t a i n a b i l i t y , d i v e r s i t y , human needs  and democratic processes  umbrella of " h o l i s t i c  are a l l emphasized  under the  thinking inspired by Schumacher"  (Nozick  1990, 15) :  1. Economic s e l f - r e l i a n c e of communities as opposed to dependence on outside economic forces.  2. E c o l o g i c a l and economic s u s t a i n a b i l i t y : development that emphasizes d i v e r s i t y and q u a l i t y over quantity.  3. Development geared to human needs both material and nonmaterial as opposed to the sole accumulation of material wealth.  27  4. Empowerment of communities through self-management and  local  control, using democratic processes that maximize community and grassroots p a r t i c i p a t i o n .  5. Endogenous development stemming from the unique h i s t o r y and culture of a community as opposed to uniform development based on a set of corporate standards or s o c i a l l y defined "norms".  In p r a c t i c e , there are few CED  i n i t i a t i v e s that are able to  adhere to a l l of these p r i n c i p l e s but many groups working i n the f i e l d of CED  i n B.C.  do attempt to model t h e i r organizations on  these types of p r i n c i p l e s .  There are research organizations l i k e  the S o c i a l Planning and Research Council of BC and the WomenFutures CED  Society,  that  are  devoted  networking i n support of CED. such as  The  School  to  researching,  planning  and  There are educational i n s t i t u t i o n s  of Community and  Regional  Planning  at  the  U n i v e r s i t y of B r i t i s h Columbia and the CED centre at Simon Fraser U n i v e r s i t y that o f f e r CED and community planning courses.  At the  community l e v e l , there are numerous non-profit organizations  and  voluntary groups devoted to creating l o c a l employment and providing community s o c i a l services and t r a i n i n g (Clague, 1985, are  workers'  co-operatives  and  even  a  few  4).  There  barter/exchange  organizations that round out the l i s t of the types of groups i n B.C.  that are  attempting  to o f f e r a l t e r n a t i v e s to  mainstream economic development approaches.  28  traditional  The CED approach has emerged as an a l t e r n a t i v e to t r a d i t i o n a l approaches to economic development because i t o f f e r s a d i f f e r e n t perspective on the role of business and economic structures i n f o s t e r i n g community development. Our t r a d i t i o n a l economic i n s t i t u t i o n s are not structured to meet basic human needs.  Promoting economic growth i s the main goal  of conventional approaches to economic development where increases i n employment and p r o f i t success.  With the CED  are used as the standards to measure approach, the perspective  on  i n s t i t u t i o n s i s skewed towards the interests of people.  economic Fostering  community well-being i s the main goal of the CED approach where issues  of  equity,  sustainability  and  quality community  of  working  self-reliance  life,  stability,  are used  to guide  decisions. As noted e a r l i e r ,  people i n communities across Canada are  concerned about unemployment and the impacts of g l o b a l i z a t i o n , about the degradation and depletion of natural resources, and about having access interested  to adequate s o c i a l  i n experimenting  with  services. CED  They have become  approaches because  they  r e a l i z e that they cannot r e l y on the " i n v i s i b l e hand" of the market or the "long arm" of government to solve a l l of t h e i r problems. One  type of economic structure that  i s particularly  well-  s u i t e d t o meeting the wide ranging demands of the CED approach i s the co-operative.  Co-operatives, with t h e i r equitable p r i n c i p l e s  and democratic nature, make i d e a l CED i n s t i t u t i o n s .  Co-operative  structures reinforce many CED p r i n c i p l e s and ensure that the needs 29  of people process.  are The  always an  integral  following chapter  part of  the  i s dedicated  to  decision-making exploring the  p o t e n t i a l of co-operatives to contribute to the CED approach.  30  3.0 COOPERATIVES IN CANADA During  the review  on CED approaches,  co-operatives  were  i d e n t i f i e d as one of many d i f f e r e n t types of i n s t i t u t i o n s that can be used to achieve CED goals.  This chapter, which i s d i v i d e d into  three sections, w i l l take a d e t a i l e d look at co-operatives and what they have t o o f f e r the CED movement.  3.1 COOPERATIVE DEVELOPMENT There development  is a  long  i n Canada.  and  diverse  history  of  In order to understand  co-operative  the nature of  today's co-operative movement and what i t has to o f f e r CED, i t i s important to understand the motivations of the e a r l y co-operators and  how  their  ideas have been  incorporated into  co-operative  development over time. Co-operatives of one type or another have been operating i n Canada since the e a r l y 1900s. The o r i g i n s of the Canadian movement date back t o the 1850s i n England  and the Rochdale Society of  Equitable Pioneers that launched the f i r s t successful consumer cooperative.  There  were  a  variety  of  Utopian  co-operative  experiments i n the e a r l y 1800s but i t was Rochdale that marked the beginning of successful co-operative structures.  31  3.1.1 History A. The Rochdale Movement The h i s t o r y of the co-operative movement i s d i v i s i b l e  into  three phases. The Utopian or pre-Rochdale phase from 1800 to 1850, the Rochdale movement phase from 1850  to 1950,  Rochdale or systems phase which began about 1950  and  the  post-  (Melnyk 1985,  6) .  Pre-Rochdale Utopian Phase (1800-1850) According  to  many historians,  the  origin  of  modern  co-  operative i n s t i t u t i o n s can be found i n the ideas of the European thinkers  of  the  late  eighteenth  and  early  nineteenth  century  (McGillivary and Ish 1992, 8) . French Utopian s o c i a l i s t s St. Simon (1760-1825)  and  Charles  Fourier  (1772-1837)  and  the  English  i n d u s t r i a l i s t Robert Owen (1771-1858) believed that a "return to the small agrarian-style v i l l a g e community" might stave o f f the e f f e c t s of the new c a p i t a l i s t i n d u s t r i a l i z a t i o n (Melnyk 1985,  6) .  Their ideas l e d to various experiments with Utopian co-operative communities  in  France  and  England,  successful (Fairbairn et a l 1991, The  first  most  which  were  not  20).  modern co-operatives arose  s o c i a l turmoil of the nineteenth century. Europe was  of  i n the midst 13  Nineteenth  of  the  century  a time of rapid urbanization, i n d u s t r i a l growth and  technological change.  Those with access to c a p i t a l , the owners of  business, c o n t r o l l e d the means of production.  With control over  the means of production and no shortage of labour, owners were able to control labour and dictate d i f f i c u l t working conditions. 32  The Rochdale Movement (1850-1950) The  formation of the Rochdale  p r i m a r i l y by  the working/middle  Co-operative was  class  a  response  to the adverse  economic  e f f e c t s they were experiencing: Since the members of t h i s group d i d not have access to enough c a p i t a l on an i n d i v i d u a l basis to be able to p a r t i c i p a t e as owners of firms, they decided to j o i n together, pool t h e i r c a p i t a l , and attempt to accumulate wealth by acting together. (Fulton 1991, 101) This i s where the influence of the e a r l y Utopian s o c i a l i s t s comes i n because although the Rochdale pioneers were interested i n economic advancement and c o n t r o l l i n g sources of c a p i t a l they were adverse to the excesses of capitalism.  The pioneers followed "a  communitarian ethos which prefers the d i s t r i b u t i o n of wealth on the basis of e f f o r t rather than c a p i t a l and the meeting of member needs rather than the vagaries of a s o l e l y prof i t - o r i e n t e d marketplace" (McGillivary and Ish 1992, 5) . The goal of the Rochdale pioneers was Utopian.  They wanted to  create a self-supporting "home colony" (Melnyk 1985, 6) i n which to reassert  community  production  and  human needs  (Fairbairn et a l 1991,  as  6) .  the  guiding force  of  They wanted to have a  p o l i t i c a l voice i n t h e i r group a f f a i r s , and they wanted to develop education and s o c i a l services, which at the time were inadequate (Fulton 1991, 101).  The society's a r t i c l e s included matters such  as construction of homes, manufacturing, farming, education, and self-government  (Melnyk 1985,  6) .  Consumer co-operative stores  were viewed as the f i r s t step i n t h i s multi-functional approach and i n 1844 the f i r s t successful consumer co-operative store was opened 33  by the Rochdale Society of Equitable Pioneers i n England (Melnyk 1985,  6) . The operation of the store and of the society was  guided by  the following set of p r i n c i p l e s : These p r i n c i p l e s were that membership i n the Society would be open to a l l - - i t would be c o n t r o l l e d democratically. A l i m i t e d amount of interest was to be paid on c a p i t a l , and, i n the event of a surplus i n any trading period, t h i s was to be d i s t r i b u t e d to the members i n r e l a t i o n to t h e i r purchases. Goods were to be sold on a cash basis s o l e l y , because of the d i f f i c u l t i e s caused by c r e d i t , and were to be s o l d at the current r e t a i l p r i c e . . . . The goods s o l d were to be of good q u a l i t y . . . . There was to be a reserve fund set aside f o r education of members and non-members i n the ways of the Society, and p o l i t i c a l and r e l i g i o u s n e u t r a l i t y was to be observed. (McGillivary and Ish 1992, 10) Unfortunately  f o r the  pioneers,  operating  the  stores, which developed when the idea of consumer became successful  and  copied,  became an  end  network  co-operatives  in itself.  o r i g i n a l dream of a multi-functional co-operative  of  community  The was  abandoned as the Society turned i t s attention mainly to managing t h e i r network of stores (Melnyk 1985, community i d e a l was operatives  never achieved,  helped b u i l d a  community within the new,  6). the  Even though the Utopian Rochdale s t y l e of  sense of working-class  co-  i d e n t i t y and  market-driven society (Fairbairn 1991,  51) . The following figures provide insight i n t o the success of the Rochdale approach.  Twenty years a f t e r the founding of Rochdale,  the Manchester Wholesale Society, the wholesale arm of the Rochdale Society, was  started to service r e t a i l co-op stores which by that  time had b u i l t up 18,337 members.  By 1877  the Wholesale Society  was serving 588 s o c i e t i e s with 273,351 members (Melnyk 1985,7) . 34  By  the l a t e 1800s i t was serving 1,133 r e t a i l  stores representing  1,445,099 members (Melnyk 1985, 7). Over time the Rochdale aims and rules gained the status of "co-operative  principles"  Interpretation, widely  application,  but i t was  (McGillivary  and  Ish  1992,  11) .  and emphasis of the r u l e s v a r i e d  the Rochdale  Society's  "principles"  that  u l t i m a t e l y guided the development of co-operative i n s t i t u t i o n s and enterprises throughout Europe, North America and parts of the rest of the world during the l a t e 1800s and e a r l y 1900s (McGillivary and Ish 1992, 11). The 1895  International Co-operative A l l i a n c e  (ICA) was formed i n  f o r the worldwide promotion of co-operation and by 1930 the  success of the movement made the need f o r more formalized standard p r i n c i p l e s evident (Melnyk 1985,  8) .  In 1937 the ICA undertook the  task of reformulating and restating the "co-operative p r i n c i p l e s " . These same reformulated Rochdale aims and rules continue t o inform co-operative d e f i n i t i o n and l e g i s l a t i o n i n several countries today including Canada, B r i t a i n , and the United States (McGillivary and Ish 1992, 11) .  These "principles" w i l l be r e v i s i t e d i n greater  d e t a i l i n the l a t t e r part of t h i s chapter.  Post-Rochdale Phase (after 1950) The period between 1850 and 1950 was a time of i d e o l o g i c a l fervor i n the co-operative movement. win the world  (Melnyk 1985, 6) .  Co-operatives were t r y i n g to  By the e a r l y 1950s the dream of  replacing the p r i v a t e sector had disappeared and had been replaced 35  by the theory of co-operatives as a " t h i r d sector" i n a c a p i t a l i s t economy behind the private and public sectors (Melnyk 1985, 18) . In  the post-Rochdale  or systems  presently l i v i n g co-operatives  phase  i n which  p r a c t i c e co-existence  we are  rather than  conversion and according to George Melnyk, author of The Search For Community: From Utopia to a Co-operative Society, are "primarily concerned with systems and managing t h e i r success"  (Melnyk 1985,  6) . Melnyk  (1985)  divides  co-operatives  into  four  distinct  p o l i t i c a l categories: l i b e r a l democratic, Marxist, s o c i a l i s t , and communalist. and  He characterizes the Canadian co-operative movement,  the Rochdale movement i n general,  as " l i b e r a l  democratic,"  defined i n terms of i t s r e l a t i o n s h i p to capitalism: The essence of l i b e r a l democratic co-ops i s successful competition with capitalism through short-term and immediate benefits t o i t s members. This pragmatic approach appealed t o the person's s e l f - i n t e r e s t rather than to h i s idealism and i t demanded a r e c o n c i l i a t i o n between the co-op and the private sector. (Melnyk 1985, 17) There are three basic c h a r a c t e r i s t i c s that d i s t i n g u i s h l i b e r a l democratic operative  co-ops from Marxist, ventures:  socialist,  or communalist co-  an emphasis on private property,  tolerance of capitalism, and a pragmatic uni functional ism 1985,  a basic (Melnyk  15). These are the c h a r a c t e r i s t i c s that evolved out of the  Rochdale  model  and have  come  to define  most  of the co-op  i n s t i t u t i o n s prevalent today i n Western Europe and North America (Melnyk 1985, 15).  36  Melnyk believes that the current post-Rochdale phase i s i n " i d e o l o g i c a l c r i s i s " and that a renewed model f o r co-ops i s needed. He believes that  there  i s a "crisis  of conscience"  presently  a f f e c t i n g the movement which stems from the continued s u r v i v a l of the types of ideals which were present during the Utopian phase of co-operative development, 150 years ago (Melnyk 1985, 8) . Canadian s o c i o l o g i s t Jack Craig tends to view the s i t u a t i o n l e s s desperately when  he  characterizes  the  "current  phase  of  co-operative  development as one embracing a v a r i e t y of ideologies which stem from the d i f f e r e n t s o c i a l movements and from the s p e c i f i c  nature  and goals of the i n d i v i d u a l co-op" (McGillivary and Ish 1992, 15) . Melnyk's concern f o r ideology reveals a general tension within the current  co-operative  movement  which  exists  between  those  who  embrace the status quo managerial approach and those who push f o r a return to a more i d e o l o g i c a l l y based approach.  B.  Co-operative Movement i n Canada Historically,  co-operative  institutions  have developed  in  Canada on a regional basis. According to Melnyk they have done so "because of the c u l t u r a l  differences i n a b i l i n g u a l  country,  because of the d i f f e r e n t regional economies that have developed i n Canada, and because of the varying h i s t o r i c a l periods during which the country was s e t t l e d and developed"  (Melnyk 1985, 20) .  study Patterns and Trends of Canadian Co-operative that came out of the Co-operative 1982,  In the  Development,  Future Directions Project i n  Canadian co-operatives are described as "emerging out of 37  l o c a l i n i t i a t i v e s , immigration patterns, and group i n t e r e s t s " operative Future Directions Project 1982, The  following section reviews  the  (Co-  12). development of  the  co-  operative movement i n Canada and i n p a r t i c u l a r , how the motives f o r development have v a r i e d over time and from region to region.  E a r l y Years In Western Canada the f i r s t co-operative ideas were introduced with the immigration 1870s.  As  of American farmers to the P r a i r i e s i n the  the West became s e t t l e d and  the  economy began i t s  transformation from one based on the fur trade to one based on wheat, co-operative ideas began to take root The  (Melnyk 1985,  21) .  impetus f o r co-operative development i n Western Canada came  from four main sources. One  source  f o r co-operative development involved "the  long  h i s t o r y of e x p l o i t a t i o n by prof it-motivated i n s t i t u t i o n s with head o f f i c e s located outside the region" (Melnyk 1985, farmers  who  had  suffered  the  hardship  of  22) .  Pioneering  homesteading  were  f r u s t r a t e d by the monopoly held by the g r a i n elevator companies. To f i g h t u n f a i r p r a c t i c e s and express t h e i r discontent at c e n t r a l Canadian domination, farmers organized t h e i r own co-operative wheat pools (Melnyk 1985,  20) .  The f i r s t r e a l gains f o r co-operation i n  Canada were the establishment of the p r a i r i e wheat pools. success  encouraged the  Their  formation of a g r i c u l t u r a l marketing  operatives throughout the country  38  (McGillivary and Ish 1992,  co13) .  A second source f o r co-operative development during the earlyyears i n Western Canada came from the need f o r " c a p i t a l f o r better equipment so workers could compete i n a t e c h n o l o g i c a l l y expanding economy" (McGillivary and Ish 1992,  12) .  Just as the workers i n a  r a p i d l y i n d u s t r i a l i z i n g Europe turned to co-operative methods to gain access to c a p i t a l f o r improved technology and communications, the farmers  i n Western Canada organized successful co-operative  i n s t i t u t i o n s to be able to modernize equipment and continue  to  adapt to the changing r u r a l economy. A  third  element  providing  the  impetus  for  co-operative  development was the desire f o r mutual economic gain while operating within the security of group a c t i v i t i e s (McGillivary and Ish 1992, 12) . Although "discontent at central Canadian domination" and the "need  for  capital  p o s s i b i l i t y of a  for  equipment"  financial  played  return went a  parts,  the  long way  simple  i n leading  farmers and labourers throughout the country to organize successful co-operative  institutions  a g r i c u l t u r a l marketing Project 1982,  such  as  agencies  the g r a i n elevators and  the  (Co-operative Future Directions  9).  The cause of agrarianism was the fourth important element to influence  the  development of  co-operatives  i n Western Canada.  Agrarianism encompasses "a r e j e c t i o n of urban e v i l s , a b e l i e f that farm l i f e was at i t s base co-operative, and a preference f o r the small  community  i n control  (McGillivary and Ish 1992, who  of  i t s economic  12).  and  social  life"  There were farmers at t h i s time  regardless of differences of geography, s p e c i a l i z a t i o n , 39  or  wealth,  "increasingly saw themselves as a d i s t i n c t class, ignored  by government and exploited by interest groups, " and who "protested the s p e c i a l p o s i t i o n of manufacturers,  resented the influence of  corporations, and objected to the p r i v i l e g e s of c i t y dwellers" (Cooperative Future Directions Project 1982, 10). These farmers were attracted t o co-operative methods because "they provided ways t o bypass  the exploiters  capitalism"  of  rural  society  and  they  denounced  (Co-operative Future Directions Project 1982, 10) .  There was a spontaneous array of co-operative experiments occurring a l l across Canada i n the l a t e 1800s and e a r l y 1900s and although many of these early, somewhat Utopian experiments met with f a i l u r e , they s t i l l played an important  r o l e i n introducing co-  operative methods and ideology to a wide v a r i e t y of people large number of places.  As a result,  in a  the issues of urbanism,  industrialism, and morality remained basic to the Canadian movement f o r many years (McGillivary and Ish 1992, 13) . At the same time as the a g r i c u l t u r a l l y based Western Canadian co-operative movement was developing, the influence of immigration patterns was being f e l t  i n the consumer co-operative movement.  Consumer co-operatives made s i g n i f i c a n t inroads i n Canadian c i t i e s during the e a r l y 1900s as many European immigrants brought t h e i r experience with co-operative stores t o Canada (Co-operative Future Directions Project 1982, 15).  40  Co-operative banking also made substantial progress during the e a r l y years of the century. By 1900, the needs were intense. Banks d i d not lend t o middle and lower income earners. . . farmers who needed cash to purchase equipment, buildings and l i v e s t o c k and urban dwellers who needed money f o r furniture and housing, were forced to pay usurious rates or go without" (Co-operative Future Directions Project 1982, 16). The f i r s t c r e d i t union or "caisse populaire", was established in  Quebec  i n 1901 by a  Desjardins,  legislative  reporter  who had become concerned  about  named  Alphonse  the severe  problems i n Canada during the 1890s (Melnyk 1985, 20) .  credit This i s  where the c u l t u r a l differences of a b i l i n g u a l country a f f e c t e d an aspect of co-operative development.  The caisse populaire movement  grew r a p i d l y because the powerful Catholic Church promoted the c r e d i t unions i n every parish as "expressions of Quebecois l o y a l t y and p i e t y " (Melnyk 1985, 20). In Quebec "caisse populaires" were expressions of francophone nationalism. In the r e s t of the country, "caisses populaires" provided a model f o r the development of much needed co-operative f i n a n c i a l services. In A t l a n t i c Canada during the 1920s and 1930s, two p r i e s t s recognized started  the need f o r adult  a local  improved  adult  Antigonish  initiative education  Movement,  throughout the region  that  education  that  i n the region.  They  began as a way t o encourage  and ended fostered  up with  a movement, the  co-operative  (Melnyk 1985, 20) .  development  Through small  group  discussions, the p r i e s t s were "able to mobilize large segments of the  population  improvement"  to launch  economic organizations  f o r community  (Melnyk 1985, 20). The movement touched 41  fishermen,  farmers, and miners through c r e d i t unions, co-operative canneries, and marketing  co-operatives.  By 1934, 952 study clubs had been  formed i n Nova Scotia and 150 co-operative enterprises had been set up  (Melnyk 1985, 20) . With co-operative success i n the countryside and the A t l a n t i c  region, the r i s e of consumer co-operatives i n the c i t i e s and the emergence of co-operative c r e d i t  i n Quebec,  some co-operative  leaders began to nurture the idea of a "co-operative commonwealth" (Co-operative Future Directions Project 1982, 19). This "win the world" approach characterized the i d e o l o g i c a l fervor that pervaded the co-operative movement during i t s e a r l y development i n Canada.  The Depression Years The  Depression  operative  principle  of the T h i r t i e s of democratizing  was a time  when the co-  the economic  system and  defending the l i v e l i h o o d of ordinary people found i t s widest appeal (Melnyk 1985, 23) .  According to the study produced by the Co-  operative Future Directions Project: The economic problems and s o c i a l ferment of the 1930s generated debate i n co-operative c i r c l e s about the purpose of the movement. The strongest v i s i o n was the d e s i r e t o eliminate "poverty i n the midst of plenty"... .On an i n d i v i d u a l level, [the co-operative movement] taught t h r i f t and encouraged group action; on a community l e v e l , i t could provide services and amass resources; on the n a t i o n a l l e v e l i t promised greater democracy and an a l t e r n a t i v e economic order. (Co-operative Future Directions Project 1982, 35) The Depression years consolidated the co-operative movement' s s p e c i a l r e l a t i o n s h i p with Western Canada as the hardships faced by farmers  encouraged a l l sorts of new ventures. 42  Co-operatives  organized education and s o c i a l programs i n every part of the region (Melnyk 1985,  23).  During the Depression years the influence of co-operatives was also confirmed i n A t l a n t i c Canada as the Antigonish Movement became an  important  (Melnyk 1985,  regional v e h i c l e of  survival  f o r ordinary  people  20).  Co-operative stores and t h e i r associated wholesale operations were the hardest h i t during the depression as many stores were forced to close due to the worsening c r e d i t circumstances of t h e i r cash-poor members (Co-operative Future D i r e c t i o n s Project  1982,  30) . The marketing  co-operatives fared much b e t t e r during these  times, p a r t i c u l a r l y once the war broke out and they were provided with shelter i n the form of orderly wartime marketing arrangements (Co-operative Future Directions Project 1982,  35).  The Movement /After 1950 A f t e r World War  II the desire to "democratize  the economic  system and defend the l i v e l i h o o d of ordinary people" died down and the  movement  began  i t s shift  towards  interested pragmatism" (Melnyk 1985,  24).  an  emphasis  on  The changing  "selfCanadian  economic environment discouraged co-operative utopianism: The Canadian co-operative movement l o s t much of i t s i d e o l o g i c a l edge i n the l a t e 1940s and 1950s. The agrarians and Marxists were out, Utopians and s o c i a l democrats were declining, the r e l i g i o u s a c t i v i s t s l o s t t h e i r momentum, and the 'co-operative sector' provided d i r e c t i o n without passion. As Canadian society became less i d e o l o g i c a l and more m a t e r i a l i s t i c , the Canadian co-operative movement became more cautious and less controversial. (McGillivary and Ish 1992, 14) 43  The Co-operative Future Directions Project study points to the l a t e 1940s and e a r l y 1950s as "the beginning of a great transformation throughout automobile  and  Canada.  suburban l i v i n g ,  social  The modern c i t y based on the became the  focus  f o r national  growth; a h i g h l y i n d i v i d u a l i s t i c ethos i n which community and cooperative  activism weakened"  Project 1982, The  Future  Directions  36).  impulse  disappeared  (Co-operative  f o r s o c i a l reform q u i e t l y d i s s i p a t e d and  as the co-operative movement entered i t s "systems"  phase of expanding and augmenting i t s corporate structures. large  then  Canadian  co-operatives  that  survived  the  The  Depression  concentrated on developing a pragmatic r e l a t i o n s h i p with c a p i t a l i s m (Melnyk 1985,  24).  Current Phase - 1980s and 1990s It  would seem from  the  literature  operative movement i s currently s t i l l expanding 24) .  that the  Canadian  i n the "systems" phase of  and augmenting i t s corporate structures (Melnyk  The  theme of the June 1994  co-  T r i e n n i a l Congress of  1985, Credit  Unions and Co-operatives c e r t a i n l y seems to provide support f o r t h i s view with i t s t i t l e : "Interdependence:  Co-operative Linkages"  and with issues l i k e "youth, strategic a l l i a n c e s , organizational renewal and d i v e r s i t y " to guide discussions. The co-operative movement may not be enjoying the same sort of ideological  fervor that was  present during the e a r l y years of  development, but given the d i f f i c u l t economic times co-operatives 44  and  other businesses have been facing i n recent years  understandable.  this i s  Many of the country's co-operative leaders are  f i n d i n g i t necessary to focus t h e i r energies on ensuring that t h e i r organizations remain healthy and maintain t h e i r place alongside the more t r a d i t i o n a l business i n s t i t u t i o n s . The Canadian co-operative movement has a cumulative membership of more than 12 m i l l i o n  14  (Co-op Working Party Report 1993, 3) .  Co-  operatives are not dominant i n the Canadian economy as a whole but they do  represent a powerful,  diversified  sector that plays a  c r i t i c a l r o l e i n smaller communities and i n p a r t i c u l a r regions and industries (Fairbairn et a l 1991, Co-operatives life,  1).  continue as a v i t a l  force i n Canadian r u r a l  where about 70% of the grains that are marketed from the  P r a i r i e s flow through co-ops and about h a l f of a l l d a i r y products produced i n Canada come from co-operatives Report 1993,  (Co-op Working Party  3).  The consumer co-operatives that started i n the e a r l y years of the century as important movements i n Western Canada, Quebec and Atlantic  Canada, today are joined together i n supporting large  wholesale endeavors, p a r t i c u l a r l y Federated Co-ops, Co-op Federee, and Co-op A t l a n t i c The  caisse  (Co-op Working Party Report 1993, populaire  system  of  3) .  co-operative  financial  i n s t i t u t i o n s that began i n Quebec i n the e a r l y 1900s now forms the heart of the Quebec economy (Co-op Working Party Report 1993,  4) .  The c r e d i t unions that started i n the rest of the country i n the 1930s  have  grown  to  become  extremely 45  important  in  several  provinces, most notably Saskatchewan and B r i t i s h Columbia Working Party Report 1993,  (Co-op  4) .  3.1.2 Principles The  Rochdale pioneers provided the o r i g i n a l r u l e s but the  p r i n c i p l e s of co-operation have never been s t a t i c . reinterpreted and reformulated over the years.  They have been  The organizational  f l e x i b i l i t y of these p r i n c i p l e s i s the cornerstone of co-operative development.  I t i s the very broad d e f i n i t i o n of co-operation "as  people working together i n a s p i r i t of s e l f - h e l p and mutual a i d f o r t h e i r common good" that allows co-operatives t o be adapted t o meet a wide v a r i e t y of needs (Melnyk 1985, 4). The  Rochdale  pioneers  were  interested i n pooling  their  resources f o r economic advancement but with an e g a l i t a r i a n twist. They believed i n "the d i s t r i b u t i o n of wealth on the basis of e f f o r t rather than c a p i t a l and the meeting of member needs rather than the vagaries of a s o l e l y prof i t - o r i e n t e d marketplace"  (McGillivary and  Ish 1992, 5) . Their b e l i e f s are r e f l e c t e d i n the o r i g i n a l Rochdale p r i n c i p l e s that included the following ideas: 1. Membership i n the Society would be open t o a l l . 2. Membership would be controlled democratically. 3. Limited interest was t o be paid on c a p i t a l . 4. Surplus was t o be d i s t r i b u t e d t o members i n r e l a t i o n t o t h e i r purchases. 5. A reserve fund was t o be set aside f o r the education of members and non-members i n the ways of the Society.  46  6. P o l i t i c a l and r e l i g i o u s n e u t r a l i t y was t o be observed (McGillivary and Ish 1992, 10). As mentioned e a r l i e r , the p r i n c i p l e s of co-operation have not remained s t a t i c , reformulated  over  they have been interpreted, r e i n t e r p r e t e d and the years.  The International Co-operative  A l l i a n c e (ICA) has reformulated the Rochdale p r i n c i p l e s twice, i n 1937 and 1966.  A t h i r d reformulation project was announced at  the ICA Stockholm Conference i n 1988 and i s t o be completed by 1995 (McGillivray and Ish 1992, 5). The 1966 ICA Congress gave us the p r i n c i p l e s that c u r r e n t l y define  co-operative  activity  throughout  the world.  Those  p r i n c i p l e s , that s t i l l r e f l e c t many of the o r i g i n a l Rochdale aims and rules, are as follows: INTERNATIONAL CO-OPERATIVE PRINCIPLES  15  1. Membership of a co-operative society should be voluntary and available without a r t i f i c i a l r e s t r i c t i o n o r any s o c i a l , p o l i t i c a l or r e l i g i o u s discrimination, t o a l l persons who can make use of i t s services and are w i l l i n g t o accept the r e s p o n s i b i l i t i e s or membership. 2. Co-operative s o c i e t i e s are democratic organizations. Their a f f a i r s should be administered by persons elected o r appointed i n a manner agreed by the members and accountable t o them. Members of primary s o c i e t i e s should enjoy equal r i g h t s of voting (one member, one vote) and p a r t i c i p a t i o n i n decisions a f f e c t i n g t h e i r s o c i e t i e s . In other than primary s o c i e t i e s the administration should be conducted on a democratic basis i n a suitable form. 3. Share c a p i t a l should only receive a s t r i c t l y l i m i t e d rate of i n t e r e s t i f any.  47  4. Surplus or savings, i f any, a r i s i n g out of the operations of a society belong t o the members of that s o c i e t y and should be d i s t r i b u t e d i n such manner as would avoid one member gaining, at the expense of others. This may be done by decision of the members as follows (a) by p r o v i s i o n f o r development of the business of the co-operative; (b) by p r o v i s i o n of common services; or (c) by d i s t r i b u t i o n among the members i n proportion t o t h e i r transactions with the society. 5. A l l co-operative s o c i e t i e s should make p r o v i s i o n f o r the education of t h e i r members, o f f i c e r s , and employees and of the general public, i n the p r i n c i p l e s and techniques of Co-operation, both economic and democratic. 6. A l l co-operative organization, i n order t o best serve the i n t e r e s t s of t h e i r members and t h e i r communities, should a c t i v e l y co-operate i n every p r a c t i c a l way with other co-operatives at l o c a l , national and international l e v e l s . In t h e i r paper, Co-operatives i n P r i n c i p l e and Practice, Anne McGillivary  and  Daniel  Ish summarize  these  principles  as  representing o r r e f l e c t i n g three things: "the actual p r a c t i c e of co-operatives; the minimal requirements d e f i n i n g a co-operative f o r the purposes of the ICA; and the attempt of the movement t o set and maintain a p a r t i c u l a r standard of operation" (McGillivary and Ish 1992, 20). If  the p r i n c i p l e s are meant to r e f l e c t  movement then  i t makes sense  that they  the state of the  would continue  reinterpreted and reformulated as the movement changes.  to be  In fact,  the 1995 review i s a good example of how co-operative p r i n c i p l e s can be changed t o r e f l e c t the concerns of the times.  The e s s e n t i a l  s p i r i t w i l l remain the same but i n 1995 the ICA w i l l be looking at ways  t o incorporate  issues  such  as the environment,  gender,  c a p i t a l i z a t i o n , democratic control i n large organizations and  48  government r e l a t i o n s into i t s standard p r i n c i p l e s Party Report 1993,  (Co-op Working  6) .  The ICA i s made up of 70 countries representing 700 m i l l i o n i n d i v i d u a l memberships (Co-op Working Party Report 1993,  5) .  Co-  operatives exist under regimes spanning c a p i t a l i s m to communism and socio-economic Ish  1992, 7)  conditions of almost every kind. The organizational f l e x i b i l i t y  (McGillivary and of co-operative  p r i n c i p l e s i s the cornerstone of co-operative development. operation meets a wide v a r i e t y institutional communities  expression  Co-  of human needs and has found  i n everything from banking t o Utopian  (Melnyk 1985, 3) .  The important  dimension i n t h i s  a d a p t a b i l i t y i s that the co-operative form of business i s not so much driven by p r o f i t as by the desire t o b r i n g fairness, equity and j u s t i c e t o the marketplace (CCA Pamphlet n.d.). To understand  the co-operative concept  and i t s development,  one must take a broad view because i n i t s simplest form a co-op i s : ... an association of people who have combined t h e i r resources of c a p i t a l and labour to capture greater or d i f f e r e n t b e n e f i t s from an enterprise than i f the business were undertaken individually. (Fairbairn et a l , 21) B a s i c a l l y , the co-operative model o f f e r s economic s e l f - h e l p through the pooling of resources.  Through t h e i r t r a d i t i o n of s e l f -  help and mutual aid, co-operatives have made a major c o n t r i b u t i o n to the development and s t a b i l i t y of communities across Canada and throughout the world.  49  3.2 CO-OPERATIVES IN PRACTICE Although co-operatives are organized around common p r i n c i p l e s , they  vary  in  size,  area  served,  affiliation,  legal  f i n a n c i a l structure, membership group and goals.  status,  They run many  d i f f e r e n t types of businesses and provide a v a r i e t y of services to t h e i r members.  3.2.1 Types of Co-operatives A. Credit Unions Credit unions are f i n a n c i a l co-operatives that provide a f u l l range of banking services to t h e i r members. community-based, or very large.  They can be small and  Over 9 m i l l i o n Canadians are  members of c r e d i t unions or caisses populaires with assets over $64 billion.  In 1989 the Quebec Desjardins caisse populaire system had  more than 1600  outlets involving 4.4  b i l l i o n of assets (Quarter 1992,  24).  m i l l i o n members and $34.7 The 1,301  c r e d i t unions i n  the rest of Canada accounted f o r a further 4.3 m i l l i o n members and $29.8 b i l l i o n of assets (Quarter 1992, Credit unions play an important  24). r o l e i n many communities.  Because they are l o c a l l y - c o n t r o l l e d , c r e d i t unions have the a b i l i t y to  reduce  dependence  on  externally-control led  banks  and  can,  depending on management p o l i c i e s , prevent leakages of savings and encourage  local  entrepreneurship  communities (Boothroyd 1991,  5) .  50  by  reinvesting i n their  own  As consumer-owned f i n a n c i a l i n s t i t u t i o n s , they have pioneered innovative technology,  like daily-interest  automated t e l l e r machines and,  savings accounts  and  at the same time, have provided  community-based services to t h e i r members (CCA Pamphlet 1992). The co-operative f i n a n c i a l sector also includes insurance and t r u s t companies. Insurance co-operatives across Canada employ over 7,500 individuals, provide service to 9 m i l l i o n p o l i c y holders and are among the largest insurance companies i n Canada (CCA pamphlet 1992).  B. Marketing Co-operatives (aka Producer Co-operatives) Marketing co-operatives are j o i n t marketing organizations f o r primary producers such as farmers and f i s h e r s .  The common feature  of marketing co-operatives i s that the members are independently employed, provide  most often self-employed, themselves  (Quarter 1992,  19) .  with  a  common  and  establish  service,  a  usually  co-op  to  marketing  In t h i s case, a member's use of the co-  operative i s measured by what he or she s e l l s to i t rather than what i s bought from i t . Broken down by sector, farm-marketing co-operatives have a 68% market share f o r grain and oilseeds, 56% f o r d a i r y products, 28% f o r p o u l t r y and eggs, 26% f o r honey and maple products, 18% f o r l i v e s t o c k and 15% f o r f r u i t s and vegetables.  In t o t a l , Canada's  farm marketing co-operatives have 188,914 members, more than 23,000 employees, and transacted $8.7 b i l l i o n of business i n 1989 1992,  18) . 51  (Quarter  Fishing seafood  co-operatives  process  and s e l l  much of Canada's  to markets i n Canada and around the world  (CCA 1992) .  There were 61 these i n 1989, situated i n the A t l a n t i c provinces and the West Coast.  There sales were $184.9 m i l l i o n .  (Quarter  1992, 19). A  variation  producers Inuit  of the marketing  co-operative  f o r primary  i s the a r t i s a n co-operative, l i k e those set up by the  i n the Northwest T e r r i t o r i e s  northern Quebec.  and the Cree and Inuit of  There are now 34 artisans' co-operatives i n the  Northwest T e r r i t o r i e s , and 11 such co-operatives i n northern Quebec (Quarter 1992, 19).  C. Consumer Co-operatives Although greatest  farm  business  marketing success  co-operatives  among  Canadian  have  achieved the  co-operatives, the  Canadian movement i s based p r i m a r i l y upon consumers or users of a service. There are many types of user-based co-operatives providing a wide range of products and services, from farm supplies, food retailing  and wholesaling,  to daycare,  healthcare,  utilities  operations, communications, recreational equipment, and even b u r i a l services.  16  Although  each of these services d i f f e r ,  the common  denominator i s that the people who use the co-operative f o r i t s services are a l s o i t s members (Quarter 1992, 19) . In Canada today, r e t a i l co-operatives are concentrated i n the West  and i n the A t l a n t i c  region.  Co-op A t l a n t i c  acts  as a  wholesaler and organizer of 176 outlets i n communities throughout 52  the A t l a n t i c Region (Quarter 1992, $480  million,  making  it  the  19).  In 1989,  i t had sales of  largest  Canadian-owned  seventh  corporation i n the A t l a n t i c provinces (Quarter 1992,  19) .  In the  West, the Saskatchewan-based wholesaler, Federated Co-ops, services 360  retail  co-operatives  (Quarter 1992,  19) .  with  $2.2  billion  of  sales i n  Co-operative a c t i v i t y i n the consumer sector  ranges from these large scale wholesalers and  t h e i r network of  stores to the small neighbourhood-based food stores and clubs  in  local  communities  where  each  store  democratically c o n t r o l l e d by the people who 1992,  1989  is  buying  owned  and  shop i n i t (Quarter  21). There are  nine  healthcare co-ops i n Canada with  a  total  membership of 227,823 b e n e f i t i n g from insurance programs, community c l i n i c s and dental services (Simpson 1991,  136).  Childcare co-ops are growing r a p i d l y i n Canada.  In  there were estimated to be about 800 operating both daycares nursery f a c i l i t i e s  (Simpson 1991,  1989, and  136).  D. Worker Co-operatives While consumer co-operatives are owned by t h e i r customers, worker co-operatives are  owned by  their  employees.  From  the  outside, a workers' co-operative may look l i k e any other business, but i t s i n t e r n a l structure i s very d i f f e r e n t . c a p i t a l rather than the other way  around.  Here labour "hires"  A worker co-operative  e x i s t s to provide members with stable employment i n a workplace they control (CCA Pamphlet 1992). 53  Worker co-operatives operate i n a wide range of f i e l d s from the p r i n t i n g  industry, to r e t a i l  facilities,  plywood and  pulp  m i l l s , communications and advertising, natural food wholesaling, r e t a i l i n g , and publishing but i n s t a t i s t i c a l terms, the worker cooperative i s much less prominent than any o f the other models, both i n business scale and membership  (Quarter 1992,  27 and Simpson,  135) . In Canada, i n 1989, there were about 300 worker co-operatives with 6,140 members and $223 m i l l i o n of revenues (Quarter 1992, 27) . About 60% of Canada's worker co-operatives are located i n Quebec, where i n 1984 the P a r t i Quebecois government put i n place a system of development groups and a government corporation to a s s i s t with financing (Quarter 1992,  27).  Quebec's 41 f o r e s t r y co-operatives  account f o r 60% of the business and about 50% of the membership of a l l worker co-operatives i n Canada.  The only other s i g n i f i c a n t  c l u s t e r i s i n the natural foods business, where such worker cooperatives as CRS, Wild West and PSC dominate the wholesale trade on the West Coast  (Quarter 1992,  27).  E. Housing Co-operatives In a housing  co-operative, the residents (or users of the  service) are also members, each having one vote i n e l e c t i n g the board and i n p o l i c y committees. owns the housing members.  These  In most cases, the co-operative  c o l l e c t i v e l y and co-ops  ownership and renting.  offer  leases i t back to  middle  ground  individual  between p r i v a t e  In t h i s s i t u a t i o n members have much more 54  control than tenants, over both costs and occupancy, because they are,  i n e f f e c t , t h e i r own landlords (CCA Pamphlet, 1992). Since the mid-1970s, co-operatives have taken hold as a form  of  s o c i a l housing.  The co-op housing sector has b u i l t more than  60,000 u n i t s creating 60,000 person-years of construction r e l a t e d employment and 500 1990,  full  time jobs  there were about 1,400  (CCA Pamphlet, 1992) .  housing co-operatives with more than  200,000 residents, and with a book value of more than $2.2 (Quarter 1992, By  the  As of  billion  21). end  of  the  1980s  there  were  6,916  co-operative  corporations i n Canada with a t o t a l membership exceeding 21 m i l l i o n people.  Twelve m i l l i o n Canadians belonged  to at least one  co-  operative corporation, and the assets of the movement were $105.9 billion  (Quarter 1992,  15)  As t h i s review has shown some of these co-operatives are small and community-based, such as the grocery-buying clubs found i n many communities or the f i s h processing and marketing co-ops on the East Coast.  Other co-ops have become very b i g businesses. The Federated  Co-op chain of r e t a i l department stores, the province wide wheat pools i n each of the P r a i r i e provinces, and  the Inuit a r t and  consumer co-ops have a l l become s i g n i f i c a n t economic forces. In e i t h e r case, small or large, as relevant contributors to the Canadian economy co-operatives have a v i t a l r o l e to p l a y i n the economic and s o c i a l l i f e of our country.  The current strength and  d i v e r s i t y of the co-operative sector encompass many of the c r i t i c a l areas necessary f o r l o c a l economic development. 55  3.3 CaOPERATIVES AND CED As discussed i n chapter two,  there i s a v a r i e t y of opinion  about what constitutes CED a c t i v i t y .  The d e f i n i t i o n of CED  includes ideas of s e l f - r e l i a n c e and improving  the s t a b i l i t y  that and  s u s t a i n a b i l i t y of a community economy by reducing dependencies on the market and the state i s the d e f i n i t i o n that w i l l be used as a reference point f o r the following section. With t h i s view of  CED,  i t i s the process of development, the q u a l i t y of an economy, and the concept of equity that matter most.  D i v e r s i t y i s encouraged  and human needs are brought into the economic p i c t u r e through the p a r t i c i p a t i o n of community members i n planning and  decision-making  processes. The co-operative model, with i t s long h i s t o r y of development, wide v a r i e t y of structures, and durable p r i n c i p l e s , i s very w e l l suited to the goals of CED.  The  following section explores the  p o t e n t i a l of co-operatives to contribute to the CED approach.  3.3.1 Co-op Development and its Contributions to CED A. S i m i l a r i t i e s i n Development The  e a r l y days of co-operative development i n Canada echo  throughout today's CED 1900s  were  movement.  discontented  with  Just as farmers central  Canadian  i n the e a r l y domination,  communities interested i n CED today, are f r u s t r a t e d by decisions being made i n the head o f f i c e s of transnational companies. cause  of  agrarianism,  an  impetus 56  for  early  The  co-operative  development, with i t s r e j e c t i o n of "urban e v i l s " , disapproval of capitalism and preference f o r the small community i n c o n t r o l of i t s economic and s o c i a l l i f e ,  holds s i m i l a r i t i e s t o the "caring and  sharing" approach of some CED a c t i v i s t s today. With t h i s approach, q u a l i t y of l i f e takes precedence over material wealth as a guiding force  i n decision-making.  alienating  effects  of  Emphasis i s placed on l i m i t i n g the our  t e c h n o l o g i c a l l y driven  world  by  developing an economy where people enjoy co-operating and are t r u l y concerned with each other's well-being. Ideas central to the e a r l y days of the co-operative movement such as: b e n e f i t i n g from the pooling of resources,  democratizing  the economic system, defending the l i v e l i h o o d of ordinary people and eliminating poverty i n the midst of plenty, are a l l shared by today's CED movement. The motives and ideals of today's CED movement are reminiscent of  the e a r l y days of the Canadian co-operative movement.  The co-  operative movement i s now a well-established force i n the Canadian economy.  Today's CED movement, s t i l l i n i t s "early days", could  benefit a great deal from experience gathered by the co-operative movement during i t s development. For example, the capacity to manage the r e l a t i o n s h i p s and tradeoffs between economic and s o c i a l goals i s well developed i n many co-operatives (Newman e t a l 1986, 27). Many CED i n i t i a t i v e s could benefit from insights into t h i s balancing process as well as from the technical assistance, t r a i n i n g or advice that could be provided by many co-operators. 57  Over the years, co-operators have also become p r o f i c i e n t i n interacting  with  government  support and involvement  programs  and mobilizing  (Newman et a l 1986, 27) .  community  They have been  able to use common goals as a basis f o r creating strong support organizations at p r o v i n c i a l , regional and national l e v e l s (Newman et a l 1986, 27).  I f the CED movement i s to take root i t w i l l need  to interact with government programs and to develop a broad network of support i n s t i t u t i o n s .  The Canadian co-operative sector should  be able to o f f e r useful guidance i n both of these areas.  B. Economic Aspects of Co-operation The  Co-operative  sector represents an  Canada. As the 1984 Report  economic  force i n  of the National Task Force on Co-  operative Development stated: Co-operative organizations play s i g n i f i c a n t roles i n a l l regions of the country and i n many industries that are c r i t i c a l l y important to Canada. Co-operatives are also helping Canada to meet the challenge of creating longterm meaningful employment. (National Task Force 1984, 14) Co-operatives, with t h e i r strong community roots, attempt to o f f e r permanent development. the opportunity f o r l o c a l  They also provide communities with  control  and with a response  to the  impacts of g l o b a l i z a t i o n and market d e f i c i e n c i e s .  Local Control The key to CED i s l o c a l control. meet the needs of individuals.  Co-operatives are formed to  They are l o c a l l y owned and the  people i n control of the co-operative understand the problems and 58  needs of the l o c a l population.  The democratic nature of the co-  operative structure means that everyone who  has a stake i n the  outcome of a decision has the power to contribute to making that decision. than  This a b i l i t y to respond to the needs of people, rather  strictly  important  the  needs  of  capital,  by  involving  people  economic decisions means that co-operatives can  in help  decrease dependency on outside economic i n t e r e s t s .  Response to Market Deficiencies Many  CED  traditional  initiatives  market  system  began  as  to provide  reactions  against  enough employment  the  or  as  reactions against the neglect of s o c i a l and community services by the state.  By serving these unmet needs and responding to market  d e f i c i e n c i e s co-operatives are fundamentally a form of community development. For decades, co-operatives have arisen where other i n s t i t u t i o n s - investor-owned businesses, government - l e f t a deficiency. The process of developing and sustaining a cooperative involves, i n miniature, the process of developing and promoting community s p i r i t , identity, and social organization. This grassroots o r i e n t a t i o n i s a r e f l e c t i o n of l o c a l people taking the i n i t i a t i v e to understand the problems they face and to develop solutions. (Ketilson et a l 1992, i)  Permanent Development The  grassroots o r i e n t a t i o n  means that  co-operatives  have  t r a d i t i o n a l l y been organized by people associated i n one kind of community or another.  For instance the community may be geographic  or i t may be by kind of work (e.g., fishers) or i t may be by need (e.g., housing).  Regardless of t h e i r base, however, co-operatives 59  survive and prosper because they meet the needs of i n d i v i d u a l s . Co-operatives have strong community roots and are committed to t h e i r communities. Generally, co-operatives are interested i n long term benefits.  They do not close t h e i r doors to move to another  province or country because of government assistance or a cheaper work force (Co-operative Working Party Report 1993,  7) .  Retain Earnings i n the Community An  important  element  i n CED  strategies  outflow of income from the community. from  government payments,  kept  i n the  community  the  throughout the l o c a l economy.  the  Earnings enter a community  external sources  exports of goods and services.  i s to reduce  of  investment,  and  The more of t h i s income that i s  more  there  will  be  to  circulate  The p r i n c i p a l d i f f i c u l t y i n keeping  income i n a community comes when people i n the community use these earnings to purchase goods and services outside of the community. The implication i n t h i s equation i s that there needs to be a balance between t r y i n g to bring income into the community through external investment, government, and export-oriented a c t i v i t i e s and t r y i n g to develop l o c a l l y oriented a c t i v i t i e s that l o c a l people can control and where they can purchase  the commodities they need.  Investor-owned businesses tend to focus on the r e l a t i v e l y more p r o f i t a b l e export-oriented a c t i v i t i e s  (Ketilson et a l 1992,  37) .  This means that to provide the l o c a l l y oriented industries that are required to sustain economic a c t i v i t y i n the community, other forms of ownership may need to be developed 60  (Ketilson et a l 1992,  37) .  Co-operatives, given t h e i r concern about elements other than just p r o f i t s , are excellent v e h i c l e s f o r developing these types of l o c a l l y oriented a c t i v i t i e s .  Response to G l o b a l i z a t i o n Many CED a c t i v i s t s are concerned with managing the pervasive impacts markets.  of g l o b a l i z a t i o n and  the ever changing  whims of  world  Co-operatives have c h a r a c t e r i s t i c s that, according to  Fairbairn, make them i d e a l i n s t i t u t i o n s f o r the community response to g l o b a l i z a t i o n . Co-operatives mobilize community resources, t r a i n and develop community members and leaders, and l i n k the community and i t s i n t e r e s t s into the market economy. Co-operatives and cooperation also serve as a model f o r change and adaptation. Communities challenged by g l o b a l i z a t i o n require an a l t e r n a t i v e kind of development, and co-operatives have structures, ideas, and t r a d i t i o n s ready to be applied. (Fairbairn 1991, 10) C. S o c i a l Aspects of Co-operation Co-operatives have an important Canadian economy.  s o c i a l r o l e to p l a y i n the  Co-operatives, with t h e i r dedication to serving  member needs, provide many s o c i a l l y needed but marginally economic services  (e.g., day care co-operatives and health services co-  operatives) . With t h e i r commitment to the democratic  involvement  of  foster  members,  co-operatives  encourage  self-help  and  the  development of l o c a l leadership. CED  involves issues of adult education, s o c i a l organization  and empowerment. CED  The co-operative model i s a means to an end f o r  because even though a co-operative i s b a s i c a l l y an economic  enterprise that follows c e r t a i n p r i n c i p l e s , a co-operative i s a l s o 61  a process of adult education structures,  depending  (Fairbairn 1991, 45) .  on how  the concept  Co-operative  of co-operation i s  characterized and defined, provide people with the opportunity t o take charge and help themselves.  By involving people i n the s o c i a l  and economic decisions a f f e c t i n g t h e i r l i v e s , co-operatives enhance their  understanding  of democratic  development of leadership s k i l l s .  principles  and promote the  This democratic involvement may  be the greatest contribution that co-operatives have t o make t o Canada (National Task Force 1984, x i i ) . As t h i s section has shown, the co-operative model, i n general, has s i g n i f i c a n t contributions t o o f f e r the CED approach.  The CED  movement could learn many lessons from the experiences  of the  established co-operative sector. As important economic and s o c i a l forces i n the Canadian economy, co-operatives encompass many areas critical  t o the success  of community development. By i t s very  nature,  the co-operative  model,  with  i t s wide  variety  of  structures, and durable p r i n c i p l e s i s w e l l - s u i t e d t o meeting the diverse needs of the CED approach. While the co-operative model, i n general, has s i g n i f i c a n t contributions t o o f f e r the CED approach, i t i s the worker cooperative structure, i n p a r t i c u l a r , that holds the most promise as a t o o l f o r achieving the aims of CED. study  of CRS Workers'  Co-operative  In chapter four a case  provides  hope that  possible t o achieve e g a l i t a r i a n goals i n the midst hungry economy.  62  it  is  of a p r o f i t  4.0 CRS WORKERS' CO-OPERATIVE The purpose of t h i s chapter i s to explore the p o t e n t i a l r o l e of worker co-operatives i n CED by focusing on the contributions of a well-established, successful organization c u r r e n t l y operating i n British  Columbia.  CRS Workers'  Horizon D i s t r i b u t o r s , a natural  Co-operative,  which  foods wholesaler,  operates  and Uprising  Breads Bakery, a retail/wholesale bakery, w i l l be the organization that provides the foundation f o r t h i s study. The  f i r s t part of the chapter reviews the h i s t o r y of CRS to  see what lessons might be learned from the nearly twenty years the co-operative has been i n existence. way  i n which  the basic  The nature of ownership, the  p r i n c i p l e s of co-operation  have been  incorporated i n t o the o v e r a l l structure at CRS, i s considered i n the second part of the chapter.  The f i n a l part of t h i s chapter  contains a summary of s p e c i f i c contributions CRS has t o o f f e r the CED approach.  4.1 HISTORY OF CRS The  key to the co-operative  model  f l e x i b i l i t y of co-operative p r i n c i p l e s .  i s the organizational  1  CRS has seen a substantial  amount of growth and s t r u c t u r a l change since the e a r l y days when i t s roots were i n the s o c i a l movement of the l a t e 1960s.  The  socio-economic climate i n which CRS operates has changed over time and the needs and ideals of the membership have changed along with it.  The co-operative  has grown from s i x members supported by 63  government  grants  in  the  early  1970s,  to  an  economically  independent organization of 54 members and over $13 m i l l i o n per year i n sales i n the early 1990s. CRS  i s a dynamic organization, constantly adapting to the  needs of i t s members and the needs of i t s businesses, c o n t i n u a l l y balancing the desire f o r democratic control with the e f f i c i e n t and e f f e c t i v e decision-making needed to run successful businesses.  In  order to adapt to changing needs and a tremendous amount of growth, the  democratic  decision-making  structures  transformed a number of times over the years. different  structures, however,  the  of  CRS  have  been  Regardless of the  co-operative  principle  of  democratic control has always ensured that the needs of the members have remained i n the forefront.  4.1.1 Early Days The roots of CRS order" food co-op  date back to V i c t o r i a i n 1971  and a "pre-  (buying club) c a l l e d Amor de Cosmos that  based on p r i n c i p l e s of consumer control and volunteer labour History 1989, ideals.  3) .  was (CRS  People i n t h i s group were dedicated to co-op  They believed that fundamental changes to s o c i e t y were  possible and they were w i l l i n g to take r i s k s and to volunteer time and energy to achieve t h e i r p o l i t i c a l ideals. From 1971 to 1973 the group received grants from Opportunities f o r Youth (OFY) and the Local I n i t i a t i v e s Program (LIP) which they used to help s t a r t consumer co-ops throughout  the province  (CRS  History 1989, 3) . In 1972 Fed-up Co-operative Wholesale was formed 64  because there were so many new  pre-order co-ops that a c e n t r a l  depot was needed (CRS History 1989, 3) . By the end of 1973,  almost  f i f t y c o l l e c t i v e s , from a l l corners of the province, were ordering from and p a r t i c i p a t i n g i n running the warehouse (CRS H i s t o r y 1989, 3) . Member warehouse. and  co-ops  supplied volunteer  workers  to  the  Fed-Up  The federal grants provided money to pay the s a l a r i e s  expenses .of s t a f f who  acted as consultants f o r the Fed-Up  system and the member food co-ops.  One of the grants was  submitted  under the t i t l e "Consumer Resource Service" and the i n i t i a l s  "CRS"  came to be used to describe the consultant group. The  grant money, according to the federal government,  was  supposed to be used only f o r the temporary funding of s a l a r i e s and expenses (CRS History 1989, 4).  The CRS workers viewed the salary  monies as common property of the "movement" and an important source of c a p i t a l to seed new projects and make c a p i t a l expenditures History 1989, 4) .  (CRS  Their answer to the government r e s t r i c t i o n s and  t h e i r c a p i t a l i z a t i o n needs was to keep only as much of the s a l a r i e s as they needed to l i v e on and then return the rest to a common pool i n the form of a "kickback"  (CRS History 1989,  4).  The CRS group was becoming more interested i n long-term goals for the movement: federation businesses.  that  "They wanted Fed-Up to be a strong co-operative could  handle  the  ownership  and  operation  of  They wanted a movement that could combine the economic  power of member-run co-ops from around the province i n t o a base f o r change" (CRS History 1989, 5) . CRS received a grant from the Local 65  Employment Assistance Program i n 1973 provision  of  permanent  jobs  to  and f o r the f i r s t time the  members  objective f o r the group (CRS History 1989,  became  an  important  5).  Members of the Fed-Up Council were not interested i n creating permanent  employment,  they  were d i s t r u s t f u l  stressed the primacy of volunteerism, service which Fed-Up provided" Council directed CRS  of  major  growth,  and f e l t s a t i s f i e d with the  (CRS History 1989,  5) .  to e s t a b l i s h i t s businesses,  In 1974  the  including i t s  wholesale warehouse, independent of the Fed-Up system (CRS History 1989,  5) . Despite t h e i r differences and the fact that they were running  separate warehouses, the loosely a f f i l i a t e d .  two  groups,  A political  CRS  and  separation  Fed-Up, remained of  the  two  groups  occurred when the CRS members became interested i n the p r i n c i p l e of worker control, something quite d i f f e r e n t from the Fed-Up system where consumer control was paramount (CRS History 1989,  6) .  The CRS group began to develop other industries on t h e i r In 1974  they had two projects i n operation.  a beekeeping operation,  own.  One project involved  the other involved some food  processing  equipment which had been purchased with money from the common pool set  aside from worker's s a l a r i e s (CRS History 1989,  beginning of 1975  CRS  Tunnel Canary Cannery.  had  By  the  established Queenright Beekeepers  and  (CRS History 1989,  6) .  6).  None of these industries was established without a great deal of struggle, both i n t e r n a l and external. Although at t h i s stage workers were beginning to educate themselves i n the technical aspects of t h e i r work, trades were learned mostly through hard experience. Government funding afforded the luxury of being able to make mistakes. . . . (CRS History 1989, 7) 66  Aside from operating as a commercial beekeeper, Queenright also  involved  in  the  construction of  beekeeping  was  equipment.  Beekeeping parts were produced out of pine m i l l ends f o r wholesale and  retail  markets.  Production was  very labour intensive  and  control over.the source of supply f o r pine m i l l ends was  extremely  difficult.  dwindling  High  costs  of  production  coupled  with  government funding and a lack of experience i n running a business of t h i s nature l e d the group to decide to dissolve Queenright i n 1975 and put t h e i r energies into making use of a commercial oven and other bakery equipment which had been donated e a r l i e r i n the group s existence. 1  the beginning of  Uprising Breads Bakery was up and running by  1976.  With LEAP money running out, CRS began to prepare i t s e l f to enter the world of independent business (CRS H i s t o r y 1989, 1976,  8) .  C o l l e c t i v e Resource & Services Workers' Co-operative  formally  incorporated under  Columbia (CRS History 1989,  the  co-operatives  act  of  In was  British  8) .  4.1.2 Incorporation in 1976 At  the  end  of  1976  CRS  was  one  co-operative with  three  d i v i s i o n s or enterprises: Tunnel Canary Cannery, U p r i s i n g Breads Bakery, and the CRS wholesale warehouse (CRS History 1989, 8) .  The  focus f o r the workers at t h i s  job  time was  to maintain t h e i r  s e c u r i t y by ensuring that the businesses continued to be v i a b l e and by concentrating on improving t h e i r s k i l l s as workers and managers of t h e i r own enterprises (CRS History 1989, 67  8).  The wholesale business improved enough i n 1977 f o r CRS to move from a 1,000  sq. f t . basement to a proper 4,500 sq. f t . warehouse.  There were approximately 14 member-workers at t h i s time including bakery,  wholesaler,  bookkeepers.  and  cannery  workers,  as  well  as  two  Management of the businesses was done by the whole  group during general meetings which were held every Friday afternoon.  Issues  such  as  salary  scheduling of work, purchasing,  levels,  major  general p o l i c y  acquisitions,  and  goals were  discussed by the e n t i r e membership at these general meetings History 1989,  (CRS  10).  Co-operative sales doubled i n 1978 and i t became evident that CRS needed a more formal meeting structure that allowed f o r b e t t e r preparation, more democratic making.  input and more informed  Toward the end of 1978  decision-  a restructuring committee  was  established to recommend changes i n the management and decisionmaking systems. process was planning,  changed to a structure of sub-committees where of personnel,  decisions. By  As a r e s u l t of t h i s committee the decision-making  and  co-ordination  groups  made  General meetings were l i m i t e d to once a month.  1979  warehouse.  finance  the The  wholesaler bakery  struggling to break even.  was  had  outgrown  doing  well  i t s 4,500  but  the  sq. f t .  cannery  was  The workers were beginning to see the  co-op as an ongoing vehicle f o r s o c i a l change which they wanted to perpetuate.  They started long range planning and out of that  planning came the decisions to move to a larger warehouse and to close the economically i n e f f i c i e n t 68  cannery.  The cannery was  closed because i t d i d not f i t the long range  plans of the organization.  At the time of the move to a l a r g e r  warehouse the cannery was having d i f f i c u l t y breaking even on what was quickly becoming a highly s p e c i a l i z e d and expensive product to produce.  The  cannery's production  was  highly labour  intensive.  The f r u i t was canned i n honey syrup rather than sugar, and i n glass rather than t i n s  (CRS  History 1989,  9) .  The  canning business  required large cash outlays at the beginning of every season so that enough j a r s and f r u i t could be purchased to create products that would be available throughout the year. of  the  canning equipment and  processes was  Technical knowledge required  of  a  few  workers but the majority of those working at the cannery c a r r i e d out assembly-line When the  type jobs.  co-op  was  faced  with  the  choice  of  investing  considerable money i n a much larger, more e f f i c i e n t and mechanized operation,  subsidizing  the  present  one  with  prof it-making  enterprises or withdrawing from the canning business altogether, they chose to withdraw altogether.  Balance sheets aside,  the  bottom l i n e i n the decision to close the cannery came from the workers themselves when the question "Who  wants to work there?"  asked at a general meeting and no one r a i s e d h i s or her hand History 1989,  was (CRS  9).  When the move was made to the new 12,000 sq. f t . warehouse CRS took i t s present form: two enterprises, a retail/wholesale bakery and  a natural  foods wholesaler,  serves both (CRS History 1989,  9). 69  plus  an  accounting  team which  The  sub-committee structure improved  planning capacity and  f i n a n c i a l controls, which i n turn allowed the co-op t o begin to anticipate business needs, rather than merely respond t o problems. With  the  environment  new  structure  control  over  the  co-op's  business  increased and the co-op prospered.  The move also marked the beginning of CRS' r e l a t i o n s h i p with CCEC Credit Union as the new, larger, l o c a t i o n necessitated CRS' f i r s t borrowing from the c r e d i t union system (CRS History 1989, 9) . CCEC Credit Union was founded i n 1976 by a group of people active i n daycare, consumer and housing cooperatives who decided t o pool t h e i r organization's money and form a f i n a n c i a l i n s t i t u t i o n because they were frustrated by the unwillingness of t r a d i t i o n a l f i n a n c i a l i n s t i t u t i o n s t o provide needed c a p i t a l and other f i n a n c i a l services (CCEC Pamphlet 1991) .  The founding of the c r e d i t union was based  on a strong commitment to cooperative and democratic p r i n c i p l e s . The s i g n i f i c a n c e of being able t o do business with a l i k e minded  17  financial  development of CRS.  i n s t i t u t i o n was very important  to the e a r l y  Although CCEC was not always able t o supply  a l l of CRS's f i n a n c i a l requirements  (due t o stringent regulatory  controls) they understood the structure of CRS and often acted as a guide t o the f i n a n c i a l world f o r the co-op.  In fact, CCEC was  instrumental i n f a c i l i t a t i n g the development of the f i r s t major financing package CRS had with B.C. Central Credit Union.  CCEC  remains a dominant lending i n s t i t u t i o n f o r CRS and i s the c r e d i t union of choice f o r the personal business of many of today's CRS workers. 70  4.1.3 A New Decision-Making Structure in 1982 In 1982 the r e a l i t i e s of economic recession caught up with CRS (CRS  History 1989, 13) .  The s u r v i v a l of CRS was threatened  as  sales declined rapidly, and the need t o curb costs, p a r t i c u l a r l y i n the  administrative  Consequently,  area,  became urgent  a Structure  develop a proposal  Evaluation  (CRS History 1989, 13) . Comrrtittee  was  struck to  f o r a new, more e f f e c t i v e and l e s s c o s t l y  administrative structure (CRS History 1989, 13). The r e s u l t of t h i s committee was the creation of a governance structure that included: an elected Board of Directors (consisting of  f i v e members accountable to the General Membership) t o co-  ordinate  co-op l e v e l  activities;  a Personnel Committee and an  Administrative C o l l e c t i v e to do the bookkeeping and accounting f o r the  c o l l e c t i v e s and t o provide  the Board with information and  analyses regarding c o l l e c t i v e plans, budgets and performance (CRS History 1989, 13). The food wholesaler and the bakery, although d i r e c t l y accountable t o the Board, became more autonomous as a result  of  collectives,  the  restructuring.  each responsible  They  operated  f o r developing  as  distinct  y e a r l y plans  and  coordinating a c t i v i t i e s within the context of the approved plans (CRS History 1989, 13) . "In addition to saving money, t h i s major r e s t r u c t u r i n g of CRS was intended  to provide  an administrative  structure that  react quickly t o i n t e r n a l and external pressures.  could  Information flow  and a c c e s s i b i l i t y t o information was improved" (CRS H i s t o r y 1989, 14) . 71  In 1984 further  the work of the restructuring committee went a step  when  the  membership  management structure  (CRS  instructed  History 1989,  it  to  14) .  design  a  This issue was  new a  turning point f o r CRS because some members were concerned that a new  management team would create  a hierarchy  that would be  in  contrast to co-operative p r i n c i p l e s of worker self-management and responsibility  (CRS  History 1989,  14) .  Despite  these concerns,  however, a proposal to create a general manager, and a manager f o r each of the two businesses, was adopted i n 1984  and f o r the administrative c o l l e c t i v e  (CRS History 1989,  14) .  Three people l e f t the  co-operative over t h i s issue. The l a t e 1980s were a time of tremendous growth f o r both businesses.  CRS  The Bakery completed an expansion study i n 1985,  and  the following year increased i t s r e t a i l space to include 1,500  sq.  ft.  the  (CRS  bakery,  History 1989, eight  at  the  9) .  There were eleven  warehouse,  four  in  the  members at  administrative  c o l l e c t i v e and the combined sales f o r the co-op were $3.0  million.  Growth i n the  1988  wholesale warehouse was  phenomenal. In  the  wholesaler chose a new name, Horizon D i s t r i b u t o r s , and moved to a new  36,000 sq.  f t . warehouse.  In the  f i r s t year at  the  new  warehouse the number of workers almost doubled and sales exceeded $5.5  million. The management structure, o r i g i n a l l y set out i n 1982,  throughout preserved  this as  the  period  of  growth.  The  e s s e n t i a l nature  structure proved to have the  flexibility  f a c i l i t a t e growth to over 50 members (CRS History 1989, 72  evolved  14) .  was to  The question of how s a l a r i e s were d i s t r i b u t e d to the members became more of a focal point  during  t h i s period  of  growth, as business needs and member needs continued  continued  t o change.  The s a l a r y structure that was defined i n the l a t e 1970s r e f l e c t e d the society to which the members aspired  (CRS History 1989, 15) .  Every member received the same "base rate", regardless of the job they  were doing,  and people  with  children  received  "dependent supplement" on top of t h i s base rate.  an added  When the new  management structure came i n t o e f f e c t i n 1984 there was pressure t o change the salary structure to r e f l e c t the fact that there were now people who had r e s p o n s i b i l i t i e s defined as d i f f e r e n t from the r e s t of the membership (CRS History 1989,  15) .  In 1986,  the membership  adopted a "managers' d i f f e r e n t i a l " to r e f l e c t t h i s difference i n responsibility differential  (CRS History  1989, 15) .  f o r s e n i o r i t y was  importance the co-operative  also  At the same time a  adopted  to r e f l e c t  the  wanted to place on experience (CRS  History 1989, 15). The issue of managers' d i f f e r e n t i a l s was l i n k e d c l o s e l y to the concerns about hierarchy and control which had come out of the e a r l i e r restructuring debates.  Emotionally  charged  occurred at the personal and the philosophical l e v e l . of  the controversy  were the people who believed  discussions On one side i n the f l a t  structure, i n the idea that paying one person more than another diminishes the value of lower-paid jobs.  On the other side, there  were those who f e l t that i t was necessary f o r CRS to pay c l o s e r to the market rate i n order  to a t t r a c t and r e t a i n the c a l i b e r of 73  people  needed  to  operate  an  organization  of  CRS'  size  and  1988  and  complexity.  4.1.4 A New Salary Structure in 1991 An  increase  continued pressure  increases on  the  Committee was The  to  the  managers'  salary system and  i n 1990  a  alleviate  Salary  Structure  struck.  great turmoil, was  Salary Structure  the adoption,  structure based on job types. and  in  i n s e n i o r i t y increments d i d not  r e s u l t of the  evaluated  differential  assigned  i n 1991,  Committee work, amidst of a four l e v e l salary  With the new  structure jobs were  to a salary l e v e l according  to a set of  c r i t e r i a adopted by the board of d i r e c t o r s (CRS History 1989,  16) .  Managers' s a l a r i e s were determined separately  (CRS History  1989,  base rate  (with  16) .  The  salary structure went from a  flat  d i f f e r e n t i a l s added f o r workers with dependents, f o r managers, and f o r seniority) to a m u l t i - l e v e l system based on a set of related c r i t e r i a . co-op's h i s t o r y . By 1991,  job-  This issue marked another turning point i n the Again, some members resigned over t h i s decision.  the wholesale operation, Horizon D i s t r i b u t o r s , had  once again outgrown i t s warehouse space. Sales jumped considerably and space almost doubled when the business moved to a new sq. f t . f a c i l i t y .  In 1989  million.  the  By  1993  CRS  had 37 members and  co-op had  grown to 54  sales of  $6.3  members with  combined sales of Uprising and Horizon reaching $13.2  74  55,000  million.  the  In 1994 growth continues to pressure the salary and decisionmaking structures of the co-op.  CRS i s constantly evolving,  c o n t i n u a l l y t r y i n g t o balance the needs of the businesses with the needs  of the members.  competitive  i n their  In order  f o r the businesses  respective markets,  they  need  t o be quality  personnel and e f f i c i e n t , e f f e c t i v e , dec i s ion-making processes. In order f o r members to be "served" they need an acceptable s a l a r y and a meaningful l e v e l of democratic control. In the past CRS has looked to developing goals and statements of  purpose  to guide  their  decisions.  In the mid 1980s the  following "Statement of Purpose" was adopted and remains i n place today: To provide i t s members with secure, well-paying jobs, within a personally empowering structure; t o operate i n accordance with the p r i n c i p l e s of worker ownership and self-management ; to be a model of a democratic a l t e r n a t i v e to the c a p i t a l i s t system; to operate businesses i n an environmentally and s o c i a l l y responsible manner, producing goods and services that make a p o s i t i v e contribution to society; t o have a work environment that supports the development of non-oppressive attitudes and behaviour; and t o support groups who, l i k e CRS, are contributing to the creation of a society where personal, economic and s o c i a l relationships are based on co-operation and equality. I f CRS i s to continue balancing the needs of the members, the needs of the businesses and the needs of the co-operative i t w i l l have t o review i t s statement of purpose,  and begin the long term  planning process of developing new goals f o r new d i r e c t i o n s .  75  4.1.5 Lessons for CED There i s an enormous amount of information and wrapped up  i n the h i s t o r y of CRS.  The  experience  organization has many  lessons to o f f e r other workers' co-operatives and p o t e n t i a l  CED  initiatives. The high degree of commitment from the founders was  critical  to the e a r l y success of the organization (CRS History 1989, Without c l e a r goals and the p a y r o l l would  have  had  difficulty  experimentation.  A  "kickbacks"  surviving  strong  ideological  the  as a base, early  base  16) .  days  with  a  CRS of  clear  fundamental goal of providing employment i n an empowering structure has been an important guiding feature throughout CRS' development. The e a r l y f i n a n c i a l support from the various government grants allowed  members to learn by  changes and then to move on. changing process  doing,  to make mistakes,  to make  Development at CRS has been an ever-  showing that  i n order  to  be  successful  the  structures of an organization must r e f l e c t the needs and the goals of the members. An organization must be w i l l i n g to reassess goals and make changes as business changes, as people change and as the world changes. The  importance  of  good management  and  technical  skills,  although not stated d i r e c t l y i n the e a r l i e r h i s t o r y d e s c r i p t i o n , has been a c r i t i c a l element i n the development of CRS. CRS d i d not just occur.  Growth at  The natural food market d i d not magically  open up overnight and the bakery was not simply " i n the r i g h t place at  the  right  time."  People, 76  with  skills  and  imagination,  developed at  the  the  n a t u r a l foods  bakery.  forecasting,  People  with  CRS.  brought  them  with as  the  These a r e not but  rather  organization  P e r h a p s t h e most u s e f u l offer,  is  simply  businesses  abilities  in  accounting,  budgeting, marketing, customer r e l a t i o n s ,  systems b u i l t  cultivate  market and c r e a t e d e x c e l l e n t  where  that:  necessarily  abilities  they  planning,  and computer  skills  that  products  that  were  people able  to  developed. l e s s o n the  it  is  individuals  development  possible  have  w o r k p l a c e a n d t h e i r own e c o n o m i c  to  of  CRS h a s  create  democratic  to  successful  control  over  their  as  small  fate.  4.2 NATURE OF OWNERSHIP CRS h a s  come a l o n g way i n 20 y e a r s .  group of people w i t h g e n e r a l i z e d s k i l l s a flat  It  started  and j o b s ,  operating within  s a l a r y s t r u c t u r e where l i n e s o f a u t h o r i t y were q u i t e  and d e c i s i o n - m a k i n g tended t o f o l l o w a consensus s t y l e . a l a r g e group o f people four  a  levels  i n the  with specific  salary structure,  skills lines  CRS i s  and j o b s . of  general now  There are  authority are  more  h i e r a r c h i c a l and the d e c i s i o n - m a k i n g s t y l e tends towards  "majority  rules".  like  Despite  difference  between  these  changes  night  and  always been embodied i n the been point  interpreted differently is  that  the  which,  day,  to  some,  co-operative  s t r u c t u r e o f CRS. at  different  organization  is  members.  77  still  seem  principles  the have  P r i n c i p l e s may h a v e  times but the owned  and  important  run  by  its  At CRS every member i s an owner because upon being f o r membership a worker must purchase $4000 i n shares. all  approved CRS,  like  co-operatives, operates on the p r i n c i p l e of one member/one-  vote, which i s d i f f e r e n t from investor-owned  firms that operate  under the p r i n c i p l e of number of shares/number of votes.  This  difference i n p r i n c i p l e has s i g n i f i c a n t implications f o r decisionmaking and control. From a business perspective, Horizon D i s t r i b u t o r s and U p r i s i n g Breads Bakery are no d i f f e r e n t from any other business i n t h e i r respective industries.  Income from operations must exceed expenses  i n order f o r them to p r o f i t and they must p r o f i t to ensure the long term  viability  of  the  businesses.  In t r a d i t i o n a l  businesses  surplus i s d i s t r i b u t e d to investors or owners. The same i s true i n the case of CRS  where surplus earnings are d i s t r i b u t e d to the  worker-owners i n the form of bonuses. The  significant  organizations businesses  are  come  contrasts  from  the  controlled,  between  role and  profits  the  way  the  two  play,  the  i n which  types  of  way  the  surplus i s  distributed.  4.2.1 Role of Profits The purpose of CRS i s to "provide good q u a l i t y jobs to as many people as possible i n an empowering way"  (Worker Co-op 1994,  3).  I f the businesses are not successful, jobs cannot be provided and the purpose of the co-op i s not  met.  K e t i l s o n suggests that the r o l e of p r o f i t i n the d i f f e r e n t  78  organizations may  lead to d i f f e r e n t types of decisions and i n the  case of co-ops those decisions w i l l tend to favour the needs of the members rather than the needs of c a p i t a l : The nature of the ownership of economic a c t i v i t y within a community matters. Investor-owned businesses, f o r instance, w i l l be much more l i k e l y to l e t f i n a n c i a l considerations take p r i o r i t y when making decisions about investment or whether to remain i n the community. Community-based organizations such as co-ops are l i k e l y to place l e s s weight on the p r o f i t a b i l i t y of the organization, and more on the economic well-being of the members comprising the organization. (Ketilson et a l 1992, 35) There are many examples at CRS of decisions where the economic well-being of members has overshadowed the s t r i c t consideration of profitability.  One such example occurred i n the e a r l y 1990s, when  CRS had a period of substantial losses which s e r i o u s l y threatened the v i a b i l i t y of the co-op.  There were a number of contributing  factors to the losses but the two main concerns at the time were, one,  to stop the losses and, two, The  approach  directors, collectives situation.  the  the  general  co-op  to s t a b i l i z e the  took  manager and  s i t down and  work out  was the  to  have  businesses. the  managers of  a plan  board the  of  three  for controlling  the  With p a y r o l l as the co-operative's largest expense, the  quickest and simplest answer, from a business perspective, would have been to l i m i t losses by laying people o f f and c u t t i n g p a y r o l l . When the group met,  however, they were able to come up with a  two-part package of recommendations which d i d not involve any job losses.  A c e r t a i n l e v e l of f i n a n c i a l losses was  accepted at the  outset and then with employment as a p r i o r i t y , the group was  able  to put together a creative "emergency measures" package which would 79  allow  the  co-op  to  continue  t o meet  its  financial obligations  to  c r e d i t unions and s u p p l i e r s . The emergency measures i n v o l v e d budget c u t s required  members  increased capital  to  make  work h o u r s ,  requirements.  lengthy set  The i n t e r e s t s  of  focal point of  2.  Workers,  reduced v a c a t i o n  The second p a r t o f  i n the  future.  increased  package  the  were  role  elected  i n c r e a t i n g the  share  course  the  b o a r d members,  had a  recommendations and p r o v i d i n g  managers.  t o a l l members.  Written  were p r o v i d e d f o r e a c h p e r s o n a n d a v e r b a l a g e n e r a l m e e t i n g where members h a d  opportunity to discuss  further  of  included a  t h e membership, namely employment,  p r e s e n t a t i o n was made a t  problems,  ask questions  a n d make  recommendations.  Workers, on the  the  way  are:  I n f o r m a t i o n was o p e n a n d a c c e s s i b l e packages  4.  and  the  The k e y f e a t u r e s  form o f  d i r e c t i o n to the  the  pay  in  and  discussions.  i n the  significant  3.  sacrifices  o f recommendations and g o a l s which would s e t  f o r b e t t e r management  1.  collective  i n operations  at  the general meeting  recommendations and as  economic  level,  had the  final  approval  s u c h h a d c o n t r o l o v e r t h e i r own  futures.  80  5. The whole process was an invaluable learning experience f o r a l l those who were involved.  In a t r a d i t i o n a l l y structured business the workers would not have been as intimately involved i n the decision-making process, they would not have had access t o as much information, and they would not have had as much control over t h e i r own economic futures. Also, i n a t r a d i t i o n a l l y structured business, the tradeoffs between financial  losses  and  jobs  would  probably  have  worked out  d i f f e r e n t l y as the l e v e l of losses tolerated by the co-op might not have been acceptable i n a conventional business, p a r t i c u l a r l y an inve stor-owned business. The  one  member/one  vote  principle  not  only  enhances  organizational responsiveness to member needs and concerns, principle  also  decision-making  allows  broad  process.  participation  I t provides  of members  people  with  this  i n the  both the  r e s p o n s i b i l i t y and the authority t o p a r t i c i p a t e i n the decisions that a f f e c t t h e i r l i v e s , decisions involving employment and income (Simpson 1991, 136).  4.2.2 Democratic Control In t r a d i t i o n a l structures control of the business i s based on the amount of money invested, usually one vote per share purchased. The more shares owned, the greater the control.  In a workers co-  operative, l i k e CRS, control i s d i s t r i b u t e d democratically among members through the one member/one vote p r i n c i p l e . 81  At  CRS,  environments  members  have  control  over  through workgroup meetings.  planning through c o l l e c t i v e l e v e l meetings.  their  everyday  work  They have input  into  Members p a r t i c i p a t e  i n evaluation and h i r i n g committees as well as other important ad hoc committees such as the Restructuring Committees of the 1980s. They have the opportunity to be involved i n p o l i c y formation and the o v e r a l l guidance of the co-op through the elected board of directors.  Members also have control over the organization through  General Meetings where the general membership has f i n a l approval on large c a p i t a l expenditures and important p o l i c i e s including salary structure and bonus d i s t r i b u t i o n . The structures f o r democratic control c e r t a i n l y e x i s t at CRS but i t must be remembered that co-operative p r i n c i p l e s are very f l e x i b l e and i t takes more than just the statement "one member/one vote" to ensure that "meaningful p a r t i c i p a t i o n i n the economic and s o c i a l p o l i c y of the co-op" i s a c t u a l l y achieved (Task Force 1984, 39) .  In fact,  as the previous CRS  h i s t o r y section revealed,  f i n d i n g the appropriate vehicle f o r democratic p a r t i c i p a t i o n i n a workers' co-operative i s often an ongoing struggle.  4.2.3 The Distribution of Surplus The e g a l i t a r i a n appeal of the co-operative model i s revealed not only i n the p r i n c i p l e of democratic control, but a l s o i n the principle  that  surplus  earnings  belong  to  members,  to  be  d i s t r i b u t e d i n such a way as to ensure that one member can not gain at the expense of another. 82  Surplus earnings i n t r a d i t i o n a l businesses are d i s t r i b u t e d on the basis of c a p i t a l investment, according to the number of shares owned.  At  CRS,  as  i n other  workers'  co-operatives,  surplus  earnings belong to the members and are d i s t r i b u t e d i n proportion to the number of hours worked (not including overtime) . The important feature of t h i s p r i n c i p l e i s that, according to supporters of the co-op model, the d i s t r i b u t i o n of surplus based on work i s a much more equitable way  to d i s t r i b u t e the f r u i t s  labour than one which i s based on c a p i t a l  of  investment.  4.3 CRS' CONTRTOUTIONS TO CED 4.3.1 Economic Benefits CRS  i s a source of stable and  economy which, at times,  can be  l a s t i n g employment.  very unstable,  the  In an  employment  s e c u r i t y o f f e r e d by CRS i s of paramount importance to members.  If  the co-operative were located i n a smaller center t h i s degree of s e c u r i t y would also be an important  source of s t a b i l i t y f o r the  community i n general: When the workers control the enterprise, they are able to implement p o l i c i e s which place employment s e c u r i t y before other considerations (i.e., short term p r o f i t s ) . Job protection helps maintain stable communities while contributing to the broader economic benefits associated with retaining buying power i n the community (CWCF Pamphlet 1993). CRS i s no d i f f e r e n t from other businesses i n that i t generates wages to be spent i n the economy, purchases supplies and services from l o c a l businesses, and pays i t s share of taxes. The 83  figures  associated with these a c t i v i t i e s are a drop i n the bucket compared to the 800,000 job economy of Metro Vancouver but CRS contributes nonetheless; Again, the impact of CRS on such a large economy may not be s i g n i f i c a n t but worker ownership does mean l o c a l ownership and t o a  certain  extent  this  ensures  that  earnings  remain  i n the  p r o v i n c i a l economy rather than being siphoned o f f t o another part of the country or the world. The structure at CRS, and i n most worker co-operatives, i s conducive  t o better  productivity. together.  labour/management  Workers,  relations  and  higher  co-ordinators and managers make plans  The tension and d i s t r u s t inherent i n t r a d i t i o n a l l y run  businesses i s minimized  by a structure which ensures  that the  views/needs of the membership are included i n the decision-making process. CRS workers gather knowledge of the businesses through t h e i r p a r t i c i p a t i o n i n workgroup, c o l l e c t i v e and general meetings.  By  understanding how the businesses operate members are better able t o look f o r ways t o improve productivity.  The benefits of increased  p r o d u c t i v i t y are not guaranteed but being an owner and working alongside your fellow owners tends t o provide enough incentive t o ensure that improvements do get made and that c e r t a i n standards are met. The economic benefits of CRS occasionally extend d i r e c t l y t o community-oriented  groups and organizations.  CRS has a p o l i c y  which c a l l s f o r a c e r t a i n percentage of earnings t o be a l l o c a t e d t o 84  a  "Corrirtunities Fund".  financial  support  Over the years  this  fund has provided  to wide v a r i e t y of groups and organizations  ranging from the Strathcona Gardens Composting Project, Kiwassa Neighbourhood House, and the Lil'Wat Peoples Defense Fund t o MATCH International, the P h i l i p i n e Womens' Centre, and an a g r i c u l t u r a l co-operative i n Nicaragua.  Many other organizations have been the  r e c i p i e n t s of smaller food donations d i s t r i b u t e d throughout the years.  4.3.2 Educational Benefits CRS endorses the co-op p r i n c i p l e of education.  The importance  of member development and the co-op's commitment t o the ongoing education of members i s r e f l e c t e d contains l i b e r a l allowances  i n CRS' y e a r l y budget which  f o r t r a i n i n g and education.  Members  can take job-related courses i n areas such as baking,  computer  t r a i n i n g , marketing,  accounting,  and f i r s t  courses on subjects such as c o n f l i c t  a i d o r more general  r e s o l u t i o n and unlearning  racism. The structure of CRS allows f o r informal education t o happen on a much larger scale than the formal education. valuable economic experience planning  through  and dec i s ion-making.  participation  Members gain i n business  They become f a m i l i a r  with the  f i n a n c i a l aspects of business through reports and presentations at c o l l e c t i v e and general meetings.  Members have the opportunity f o r  development through p a r t i c i p a t i o n i n committees ranging from h i r i n g and evaluations t o safety and new products. 85  The Board of D i r e c t o r s  which  i s open  exceptional  opportunity to gather  creating p o l i c y , financial  t o a l l , except  managers,  offers  members  an  experience  and knowledge i n  debating d i f f i c u l t p o l i t i c a l  issues, analyzing  information,  and planning  f o r a l l aspects  of the  businesses and the co-op. Despite the formal t r a i n i n g courses and the informal learning opportunities inherent i n the structure of CRS one of the most i n t e r e s t i n g sources of education comes from the workers themselves. A r i c h d i v e r s i t y of individuals has been drawn to the organization over the years.  The exchange of ideas and perspectives among the  workers, whether i t occurs i n the boardroom or i n the lunchroom, can often be the source of some of the most meaningful learning experiences available at CRS.  4.3.3 Co-operative Cbirmunity CRS takes i t s role i n the co-operative community s e r i o u s l y . Since 1972 the members have worked to increase the p r o f i l e and l i k e l i h o o d of co-operatives i n the community. In e a r l i e r years, members were d i r e c t l y involved i n c r e a t i n g consumer  co-operatives  and publishing  information  pamphlets.  Today, CRS members provide information, advice, board seminars and f i n a n c i a l management workshops to other co-operative organizations. CRS contributes f i n a n c i a l l y , i n the form of membership fees, to organizations dedicated to promoting the development of cooperatives and CED i n i t i a t i v e s , such as: the S o c i a l Planning and Review Council of B r i t i s h  Columbia 86  (SCARP) , the Canadian Co-  operative Association (CCA), and the Canadian Worker Co-operative Federation  (OWCF).  Representatives the  CCA  from CRS have been very active p a r t i c i p a n t s i n  over the years and  have taken leadership r o l e s i n the  founding the CWCF and i n developing a number of CCA Members continue to represent co-op meetings and  CRS  conferences.  involved i n a network of CED  initiatives.  p r o v i n c i a l l y and n a t i o n a l l y at Recently,  a member of CRS  a c t i v i s t s which was  was  responsible f o r  organizing a consultation with ministers from the p r o v i n c i a l NDP government.  4.3.4 Needs of People The most s i g n i f i c a n t contributions CRS  has to o f f e r the  CED  approach comes from i t s a b i l i t y to meet the needs of the people who work there. working  Members have control over the  conditions.  They  control  their  own  workplace and economic  the  lives.  Members have access to the highest l e v e l of decision-making and are involved i n the equitable d i s t r i b u t i o n of  earnings.  In h i s paper, "Worker Cooperatives and Community Development", Charles Turner o f f e r s a wonderful statement on what worker control means to people: Only when workers are able to control the workplace on a democratic basis and share equitably i n the f r u i t s of t h e i r labour are they able to perceive t h e i r power as creative beings and act with strength and d i g n i t y . Without the opportunity to exercise creative power i n the workplace, material incentives become an opiate of the working class, subtly destroying i t s character (Turner 1987, 65). 87  As an owner, work becomes more meaningful. as  productive  as  possible  while ensuring  The desire to be  that  the  needs  of  i n d i v i d u a l workers are taken care of provides f o r an e f f i c i e n t and enjoyable work environment.  The a l i e n a t i n g e f f e c t s of "punching a  clock" or meeting a s p e c i f i c dress code do not e x i s t at CRS. There i s a portion of the CRS  statement of purpose  which  r e f l e c t s the organization's commitment to meeting the needs of a l l members: . . .to have a work environment that supports the development of non-oppressive attitudes and behaviour; and to support groups who, l i k e CRS, are contributing to the creation of a society where personal, economic and s o c i a l relationships are based on co-operation and equality. These are not just words on a page.  There i s a culture born out of  mutual respect f o r d i v e r s i t y i n l i f e s t y l e and opinion that makes CRS a unique workplace. CRS approach. the  has  proven  to be  an  excellent  vehicle  f o r the  CED  The h i s t o r y of the organization holds many lessons f o r  development  initiatives.  of future workers' co-operatives and other CED  The democratic nature of ownership at CRS and the  e g a l i t a r i a n appeal of the co-operative model,  means that human  needs and CED concerns f o r equity, p a r t i c i p a t i o n , and control are recognized and b u i l t  into the system of decision-making.  The  a b i l i t y of the CRS to provide s i g n i f i c a n t economic and educational benefits  to i t s community and  i t s workers  proves that  i t is  possible to create successful organizations where workers have meaningful control over t h e i r own economic fate.  88  5.0 SUMMARY AND CONCLUSIONS Chapter two introduced the concept of CED as an a l t e r n a t i v e to conventional approaches to economic development.  The CED movement  i n Canada was shown to have emerged i n the l a t e 1970s i n reaction to  the  "crisis  traditional  of the welfare state"  market  system  to  provide  and  the  failure  adequate  of  the  employment.  A  resurgence i n the movement occurred i n the e a r l y 1990s as concerns regarding  unemployment,  globalization,  and  poverty,  economic  environmental  instability  degradation,  continued  to  plague  communities. The  belief  that  problems  facing  communities  need  to  be  addressed i n a h o l i s t i c and p a r t i c i p a t o r y way was emphasized as a key  feature of  conventional social,  the  CED  approaches,  approach. CED  This means  attempts  c u l t u r a l and environmental  to  that,  integrate  unlike  economic,  issues i n a decision-making  process that i s accessible to members of a community. Chapter approach.  two  also  explored the  broad  nature  of  the  CED  The general objective of any CED a c t i v i t y was defined  as: "to take some measure of control of the l o c a l economy back from the market and the state." examined.  Different  Three common approaches  strategies  were  found  to be  to CED were useful  for  d i f f e r e n t situations depending on what the goals of the i n i t i a t i v e were and how the concepts of community and economy were perceived. I believe that the p o t e n t i a l f o r CED e x i s t s i n the s t r u c t u r a l change  and  communalization  approaches  89  outlined  i n the  second  section of chapter two.  These approaches involve a wide array of  strategies that would be suitable i n any number of communities. They are concerned with the q u a l i t y of the economy, with issues of long-term  stability,  sustainability,  equitable d i s t r i b u t i o n  of  wealth, f a i r access to decision-making processes, and q u a l i t y of life.  The communalization  approach,  i n p a r t i c u l a r , i s concerned  with developing an economy i n such a way that people f e e l connected on a social/emotional l e v e l and are concerned with each other's well-being. These approaches do not have a l l the answers. are formidable b a r r i e r s to the evolution of CED, which i s the fact that CED  In fact, there  not the least of  approaches are out of step with the  mainstream and tend to be i n need of organizational and f i n a n c i a l resources. The strength of CED, however, i s that i t asks questions such as: how can a country as wealthy as Canada f a i l to meet the basic human needs of so many individuals?  The purpose of CED i s not to  solve a l l the problems of the welfare state or to overthrow the c a p i t a l i s t economy i n Canada. CED i s about making small changes i n important places. With the right support, education, and research, CED may be able to provide a better way of meeting people's needs and  a l l e v i a t i n g problems of unemployment, poverty and  economic  instability. The co-operative model was  introduced i n chapter three as a  strategy that could be used to achieve CED goals.  The long and  diverse h i s t o r y of co-operative development i n Canada was traced 90  back to the 1850s i n England and the Rochdale Society of Equitable Pioneers who  launched the f i r s t successful consumer co-operative.  A h i s t o r i c a l review of the co-operative movement revealed that the  original  reinterpreted  Rochdale over  aims  time u n t i l  and  rules  they  were  gained  the  reformulated status of  and "co-  operative p r i n c i p l e s " . These p r i n c i p l e s were shown to have guided the  development  of  co-operative  institutions  and  enterprises  throughout the world. In Canada, the co-operative movement was  characterized as  following the " l i b e r a l democratic" t r a d i t i o n , a pragmatic approach that i s able to compete s u c c e s s f u l l y with c a p i t a l i s m by appealing to a person's s e l f - i n t e r e s t rather than s t r i c t l y to her idealism. H i s t o r i c a l l y , idealism has always played a part i n Canada's co-operative movement but the strength of t h i s p r a c t i c a l approach was  r e f l e c t e d i n the regional patterns of development where co-  operative i n s t i t u t i o n s were established mainly to meet the needs of people, regardless of t h e i r philosophical opinions of c a p i t a l i s m . There were marketing co-operatives and wheat pools on the P r a i r i e , consumer co-operatives i n the c i t i e s , caisses populaires i n Quebec, and community development co-operatives i n A t l a n t i c Canada. The organizational f l e x i b i l i t y of co-operative p r i n c i p l e s was emphasized i n chapter three as the cornerstone development.  Co-operation was  of  shown to have found  co-operative institutional  expression i n everything from banking to Utopian communities. The fact that the co-operative form of business has  achieved  success not so much driven by p r o f i t as by the desire to b r i n g 91  fairness, equity and j u s t i c e t o the marketplace was h i g h l i g h t e d as a s i g n i f i c a n t feature of the co-operative model. An  overview of the types  of co-operatives  Canada was provided i n chapter three.  functioning i n  The amount of community and  economic a c t i v i t y being conducted through co-operative i n s t i t u t i o n s was used t o i l l u s t r a t e operative  the strength and d i v e r s i t y  sector and the r o l e  co-operatives  play  of the coi n Canadian  economic and s o c i a l l i f e . The f i n a l part of chapter three explored the p o t e n t i a l of the co-operative model t o contribute t o CED goals.  The h i s t o r i c a l  development of the two movements revealed s i m i l a r i t i e s  i n the  motives and ideals that indicated that co-operatives would be w e l l suited t o CED.  Emphasis was placed on the benefits CED i n i t i a t i v e s  could r e a l i z e from the technical and p o l i t i c a l experiences of the co-operative movement. The r o l e of the co-operative sector as an economic force i n the  Canadian  potential  economy  of  the  co-operative  contributions t o CED. could  provided  be a l l e v i a t e d  strong  reinforcement  model  to  make  f o r the  significant  I t was emphasized that many CED concerns by co-operative  structures  that  provide  communities with the a b i l i t y f o r l o c a l control, the opportunity t o create stable development, and with p r a c t i c a l responses t o market d e f i c i e n c i e s and the impacts of g l o b a l i z a t i o n . The r o l e of co-operatives as a s o c i a l force i n the Canadian economy  was  revealed  i n chapter  three.  The nature  of co-  operatives, with t h e i r dedication to serving member needs and t h e i r 9 2  commitment to the democratic involvement of members, was recognized as an  important  feature f o r achieving CED  equitable d i s t r i b u t i o n of wealth  and  fair  goals regarding access  the  to d e c i s i o n -  making . Chapter three showed that co-operatives,  i n general,  have  great p o t e n t i a l as vehicles f o r f u l f i l l i n g the a s p i r a t i o n s of initiatives.  CED  I t was noted that not a l l co-operatives have the same  a t t r i b u t e s to o f f e r CED.  Worker co-operatives, i n p a r t i c u l a r , were  i d e n t i f i e d as having the type of structure that holds the most promise f o r meeting people's  needs and  a l l e v i a t i n g problems of  unemployment, poverty and economic i n s t a b i l i t y . Chapter  four brought  theory  and  reality  together  as  the  contributions of the worker co-operative structure were explored using a well-established organization as a model. A lessons  review to  of the h i s t o r y of CRS  reveal  f o r the  CED  Workers' Co-operative  movement.  A  high  degree  had of  commitment by founding members, c l e a r goals, good management and technical s k i l l s , e a r l y f i n a n c i a l support from the government, and an atmosphere which encouraged "learning by doing" were a l l c i t e d as important  factors i n the success, e s p e c i a l l y during the e a r l y  years, of the organization. Chapter four demonstrated that the nature of ownership at CRS, guided  by  principles  of  democratic  control  and  equitable  d i s t r i b u t i o n of surplus, provides the foundation f o r members to control t h e i r own economic l i v e s .  CRS showed that i t i s p o s s i b l e  to recognize concerns f o r fairness and equity, and emphasize human 93  needs, within an  economic decision-making  structure and  still  compete s u c c e s s f u l l y i n a p r o f i t - d r i v e n c a p i t a l i s t economy. The  potential  of  the  worker  co-operative  structure  was  exhibited i n the economic and educational benefits produced by  CRS.  CRS was shown to be a place of stable and l a s t i n g employment where people have the opportunity to have meaningful c o n t r o l over t h e i r workplace and  working conditions.  a v a i l a b l e to members of CRS  was  The  educational  experience  shown to extend past the  technical t r a i n i n g of courses.  The  formal  opportunity f o r members to  gather knowledge was also shown to be a v a i l a b l e through democratic structures that r e l y on the exchange of ideas and perspectives from a r i c h d i v e r s i t y of p a r t i c i p a n t s . Throughout the co-op s h i s t o r y CRS has struggled to maintain 1  a balance between making e f f i c i e n t and e f f e c t i v e business decisions while at the same time maintaining a l e v e l of democratic c o n t r o l which i s empowering to each member on a personal l e v e l .  Juggling  the needs of the businesses with the needs of the members and the needs of the co-op i s a constant b a t t l e at CRS and one which any CED organization must be prepared to face. The socio-economic  climate i n B r i t i s h Columbia has changed a  great deal since CRS f i r s t started. Many of the experiences i n the e a r l y development of CRS could not be duplicated today. members of CRS  The e a r l y  had strong i d e o l o g i c a l b e l i e f s with roots i n the  s o c i a l movement of the l a t e 1960s.  Their l i f e s t y l e s  reflected  t h e i r b e l i e f s and they made s i g n i f i c a n t s a c r i f i c e s to support the development  of  the  co-operative. 94  This  i s not  to  say  that  dedication to b e l i e f s i s not possible i n the 1990s, i t i s j u s t that times are d i f f e r e n t .  Government  much more scare and what funds  funding, UIC i n p a r t i c u l a r , i s are available  tend to be more  t i g h t l y administered than when CRS was applying f o r grants.  The  experiences of CRS may not be e a s i l y duplicated i n today's socioeconomic climate but the lessons remain v a l i d . In  order  developed  f o r new  co-operatives  with a reasonable  and  CED  p r o j e c t s to  success rate they w i l l need a high  degree of commitment over a long period of time. skilled  management, c l e a r  be  goals  and steady  They w i l l need  financial  support,  p a r t i c u l a r l y during the e a r l y stages of development. The challenge i s i n securing f i n a n c i a l support and f i n d i n g or developing people who  are  interested  i n alternative  economic  structures.  Co-  operatives and community development w i l l not spontaneously emerge. In order f o r worker co-operatives and other CED i n i t i a t i v e s to be developed with a reasonable success rate they must be fostered and supported: While the view of co-operatives and community development as economic enterprises responding to economic changes and opportunities i s important, t h i s i s only h a l f of the equation. The other part i s that co-operatives and community development projects involve associations of people who have to be supported and educated i n order f o r the development i n i t i a t i v e s to be successful (Ketilson et a l 1992, 4). The r o l e of "fostering and supporting" the development of worker co-operatives and CED projects belongs to two main players: the established co-operatives and the government. Co-operative  development  will  require  considerable  c o l l a b o r a t i o n between p r o v i n c i a l and federal l e v e l s of government 95  and the co-operative sector but the ultimate r e s p o n s i b i l i t y f o r new co-operative  development  i s with  the  established co-operative  organizations. In t h i s context the term "established co-operatives" i s meant to apply mainly to national co-operative organizations such as the Canadian Co-operative /Association (CCA) and the Canadian Worker Cooperative Federation  (CWCF), but where appropriate, i t may  also  include some of the  larger, more well-established co-operative  institutions. You cannot expect to develop a l t e r n a t i v e business and economic structures i f people do not understand the basic p r i n c i p l e s of CED or co-operatives.  Established co-operatives must be the d r i v i n g  force i n generating awareness i n government and p u b l i c about co-operatives.  i n the  general  They must also be the d r i v i n g force i n  organizing the co-operative movement i n Canada.  Established co-  operatives must be prepared to support the development of the cooperative model, lobby governments, and provide education i n the ways of co-operation. In order f o r the co-operative sector to become more  fully  developed there must be a basic l e v e l of comprehension "out i n the world"  regarding the co-operative model.  D i f f e r e n t groups have  d i f f e r e n t educational needs, ranging from an introduction to the structures and benefits of co-operatives f o r government o f f i c i a l s and s t a f f , to generating interest f o r the co-operative model i n the general public, to providing s t a r t up educational resources to new co-operatives and CED groups. 96  Established co-operatives must educate the government about the r o l e co-operatives have to play i n community development. They must collaborate with government  to help  create the types of  p o l i c i e s , l e g i s l a t i o n , and programs that are needed to f o s t e r cooperative development. Established resources,  co-operatives  knowledge  and  must  technical  be  prepared  expertise, to  development of the co-operative movement. increase  integration  within  to use  their  f u r t h e r the  They must work to  the co-operative  movement  and to  encourage more co-operation among co-operatives. The 1992 Report to the Federal/Provincial Task Force on The Role of Co-operatives and Government i n Community Development had a  number of recommendations  f o r the r o l e  of established co-  operatives.  The focus of these recommendations was on the r o l e of  established  co-operatives  leadership,  technical  to provide  education  expertise, and funding  and  training,  support  to newly  developing co-operatives and community development organizations (for  a detailed  list  of these  recommendations  please  see the  Appendix) . In 1993 there were also a number of recommendations regarding the r o l e of the co-operative sector i n the economic development of B r i t i s h Columbia put forward i n a Report of the Working Party, The Consultative. Group  on the Role  Economic Development recommendations) .  of Co-operatives  i n Community  (please see Appendix f o r d e t a i l e d  list  of  Similar to the Task Force recommendations the  Working Party recommendations focus on the r o l e of co-operatives i n 97  providing education and generating awareness. recommendations,  however,  go a step  The Working Party  further because they  also  emphasize the need f o r widespread consultation between government and  co-operative  representatives  t o ensure  that  appropriate  l e g i s l a t i v e and taxation changes are made and t o encourage the creation of p o l i c i e s  and programs  which w i l l  help  f o s t e r co-  operative development. Both sets of recommendations r e f l e c t the need f o r established co-operatives t o take an active r o l e i n developing the CED and cooperative movements i n Canada.  The primary  areas  of a c t i v i t y  i d e n t i f i e d i n these recommendations include: generating awareness, providing  education,  legislative  training  and taxation  and  changes,  support,  providing  investigating input  i n t o the  development of p o l i c i e s and programs, and i n v e s t i g a t i n g arrangements.  funding  Both sets of recommendations suggest that r e l a t i o n s  with the government are the key t o any of t h i s work.  Without the  ongoing c o l l a b o r a t i o n and support of the government, the pace and q u a l i t y of CED and co-operative development w i l l be l i m i t e d . P r o v i n c i a l and federal l e v e l s of government must be open t o exploring the p o s s i b i l i t i e s of a l t e r n a t i v e forms of development, they must be w i l l i n g t o collaborate with the co-operative sector and a c t i v e CED groups, and they must be prepared to make changes i n the way development i s approached. The government must be w i l l i n g t o provide p o l i c y support t o co-operatives i n general and workers' co-operatives i n p a r t i c u l a r . They must also be w i l l i n g t o include the co-operative sector and 98  CED groups i n consultations concerning new p o l i c i e s ( i . e . , p o l i c i e s regarding economic development, s o c i a l welfare, o r education). The  government  operatives. taxation  This  must  provide  includes making  legislation  legislative changes  that would provide  support  t o co-  t o regulatory and  incentives and remove  b a r r i e r s t o co-operative development and ensure that co-operatives enjoy the same treatment  as t r a d i t i o n a l l y structured businesses.  For example, the Employee Investment Act (EIA) , which governs the Employee Share Ownership Program (ESOP) and the Working Opportunity Fund  (WOF) , prevents p a r t i c i p a t i o n by co-operatives.  The Small  Business Venture Capital Act (SBVCA) , which governs the Equity Capital Program, also precludes the p a r t i c i p a t i o n of co-operatives. This  means  that  tax c r e d i t  incentives  to encourage  investments are not available to co-operatives.  Lack of financing  i s often a problem f o r co-operatives and not having government  incentive programs  equity  i s a significant  access to  barrier  to co-  operative development. The government  can nurture the development of CED and co-  operative enterprises by committing adequate resources t o provide information  and t o support  training  f o r these  new  types of  initiatives. The financial  government support  development.  must that  be w i l l i n g will  foster  to provide CED  and  the kind of co-operative  Few governments are i n the p o s i t i o n t o commit large  amounts of new resources to new i n i t i a t i v e s but by r e s t r u c t u r i n g  99  e x i s t i n g development programs and p o l i c i e s  i t i s p o s s i b l e that  adequate f i n a n c i a l support could be made a v a i l a b l e . There needs to be  support  f o r the creation of development  agencies/resource groups to help promote and d i s t r i b u t e information on co-operatives and CED enterprises. These resource groups could also  initiate  pilot  projects and  support  the  start  up  of  new  initiatives. Education approaches.  i s the CED  key  to  i s based on  approach to decision-making  the  development  of a l t e r n a t i v e  a very democratic, p a r t i c i p a t o r y  that requires that everyone involved  have a c e r t a i n l e v e l of knowledge and s k i l l not only as f a r as the operation i s concerned but also i n terms of working with others i n a democratically run organization.  This means that interpersonal  s k i l l s must be developed r i g h t along with t e c h n i c a l business s k i l l s such as planning and budgeting.  There needs to be  considerable  investment i n developing education and t r a i n i n g programs that s u i t the unique needs of CED and co-operatives. Overwhelmingly, the most serious problems to a r i s e i n any project  stem from e i t h e r management d i f f i c u l t i e s  f i n a n c i a l resources support  (Wismer and P e l l 1983,  or a  CED  lack of  74) . There needs to be  f o r research into what can be learned about the  funding  arrangements and management structures of successful ventures. Access to f i n a n c i a l resources i s a continuous problem 1985b,  4,  Shera  1986,  126) .  There  is a  need  for  (Clague  financial  resources during the s t a r t up phase and i n the day-to-day operation of any organization. Established co-operatives and CED groups must 100  work to develop e x i s t i n g community funds (i.e. c r e d i t unions, union pension funds, church investment, community venture accounts) but there i s s t i l l a large role f o r government to p l a y i n providing financial  support  guarantees,  to  interest  new  initiatives  subsidies,  start  in up  the  form  grants,  of  and  loan  venture  c a p i t a l funds. The 1992 Report to the Federal/Provincial Task Force on The Role  of  Co-operatives and  Government  i n Community Development  outlined recommendations f o r the role of government i n Community Development  (please see Appendix f o r d e t a i l e d summary of these  recommendations) .  To understand  the complete  rationale  behind  these recommendations, one would obviously need to consider them i n the context of the Federal Task Force Report i n which they were written but  f o r the purposes  of t h i s  summary i t i s enough to  suggest that government must be seen as a f a c i l i t a t o r and supporter of co-operative development through the p r o v i s i o n of business and organizational assistance, through appropriate l e g i s l a t i o n ,  and  through  co-  educating  and  training  i t s own  personnel  about  operatives (Ketilson et a l 1992, 5). The  Federal  Task  Force  recommendations  on  the  role  of  established co-operatives and the r o l e of government i n creating a climate f o r co-operative community development were w r i t t e n by a research group from the Centre f o r the Study of Co-operatives i n Saskatoon.  This research group was commissioned by the federal and  p r o v i n c i a l ministers responsible f o r co-operatives. The P r o v i n c i a l Report recommendations on the role of co-operatives i n community 101  economic development were written by a committee of i n d i v i d u a l s including government o f f i c i a l s , representatives of co-operatives, c r e d i t unions,  Community Economic Development organizations and  trade unions. As  e f f o r t s that involved extensive c o l l a b o r a t i o n with two  l e v e l s of government and considerable input from the leaders of the CED  and co-operative movements, the recommendations contained i n  these two reports represent the best available opinions on the future d i r e c t i o n f o r the development of co-operatives and community economic development  i n Canada.  I f even a p o r t i o n of these  recommendations are realized, many Canadians w i l l have the opportunity t o improve the q u a l i t y of t h e i r  lives  through  i n t e r e s t i n g new perspectives and new economic structures. Planners have a role t o play i n bringing some of these new perspectives and new structures t o f r u i t i o n changes happen planners development.  but t o help make  must be open t o a l t e r n a t i v e  forms of  They must be w i l l i n g t o educate themselves about the  CED approach and they must be f a m i l i a r with the co-operative model and a l l the strategies CED has t o o f f e r . Planners must work towards educating l o c a l community o f f i c i a l s about CED options.  They must be w i l l i n g t o collaborate with CED  groups and the co-operative sector i n f a c i l i t a t i n g d i s c u s s i o n and education of the co-operative model and the CED approach i n the community. Planners must be prepared t o experiment with these d i f f e r e n t approaches i n t h e i r work.  The planner must be able t o understand 102  the r e l a t i o n s h i p between the economic and the s o c i a l development of a community and  to i d e n t i f y tradeoffs that have to be made by  communities engaged i n CED  (Boothroyd 1991,  1).  The r o l e of the planner w i l l vary according to community goals but i n general the planner needs to have a broad perspective, must be w i l l i n g to make planning processes more p a r t i c i p a t o r y and must be able to provide information and guidance to the community on the use of a v a r i e t y of CED structures. The purpose of t h i s thesis i s to generate awareness about the potential approaches  of to  CED  and  alleviate  economic d i f f i c u l t i e s .  the  co-operative  some of  model  Canada's  as  current  At the very least, CED  alternative social  and  has proven to be  useful i n encouraging communities and individuals to consider more than just the growth aspect of development.  By opening up  the  perspective on concepts of economy, community, and development, CED causes people  to consider a v a r i e t y of goals, p r i o r i t i e s ,  tradeoffs when making decisions.  There are co-operatives and  i n i t i a t i v e s operating i n the nooks and across the country.  CED  crannies of  and CED  communities  o f f e r s a promising approach to many of  Canada's s o c i a l and economic problems; f o r t h i s reason i t deserves to be developed further. By exploring the general concepts of  CED  and co-operation t h i s thesis lays the groundwork f o r research that can focus more on the d e t a i l s of how various CED i n s t i t u t i o n s can be created, organized and sustained over time. There i s much to be learned from cases l i k e CRS and the many other  co-operatives  and  CED  activities 103  c u r r e n t l y operating  in  Canada. also  Aside from the many spontaneous i n i t i a t i v e s , there are  provincially  supported  worker  co-operative  programs i n Quebec and Manitoba (Webb 1987,  development  84) . B r i t i s h Columbia  could benefit s u b s t a n t i a l l y from studying the funding models, the successes, and the f a i l u r e s of these programs. In order f o r the CED and Co-operative movements to continue to develop, upon.  weaknesses must be l i m i t e d and strengths must be This can only happen i f experiences  built  are documented  and  studied. The arena f o r further research on CED and co-operatives i s wide open.  104  APPENDIX A. ROLE OF ESTABLISHED CO-OPERATIVES (1992 Report to the Federal/Provincial Task Force on The Role of Co-operatives and Government i n Community Development) 1.0  I t i s recommended that co-ops educate t h e i r members, elected o f f i c i a l s and s t a f f , and the general community regarding the importance of community development i n i t i a t i v e s to the longterm v i a b i l i t y of the community, and hence, the long-term v i a b i l i t y of the co-ops.  2.0  I t i s recommended that co-ops become a c t i v e l y involved i n providing the infrastructure required for community development. This includes:  3.0  2 .1  Providing resources to allow communities to conceptualize the problems they face and solutions that can be attempted.  2.2  Providing education and t r a i n i n g regarding community development organizations; and  2.3  Providing technical expertise f o r such a c t i v i t i e s as project f e a s i b i l i t y assessment, the design of co-op s p e c i f i c f i n a n c i a l management systems, and exploring innovative funding mechanisms.  co-op  and  I t i s recommended that the established co-operatives provide leadership i n providing recognition and support to community development i n i t i a t i v e s . This would include: 3.1  P u b l i c l y recognizing the importance of an i n i t i a t i v e to a community, and lobbying on i t s behalf; and  3.2  Lobbying government on behalf of an i n i t i a t i v e to a s s i s t the project i n dealing with regulators.  4.0  I t i s recommended that co-operatives and c r e d i t unions take a lead r o l e i n providing loans, investments, and loan guarantees f o r co-op community development a c t i v i t i e s .  5.0  I t i s recommended that examples of funding models such as those provided i n the case studies be further supported, studied, and evaluated by co-operatives and c r e d i t unions f o r t h e i r general a p p l i c a t i o n to co-operative models of community development.  105  6.0  I t i s recommended that issues relevant to the f u l l e r p a r t i c i p a t i o n of women, aboriginal people, v i s i b l e m i n o r i t i e s and the disabled i n co-ops be discussed, reported and given p r i o r i t y by co-ops and c r e d i t unions.  B. ROLE OF ESTABLISHED CO-OPERATIVES (1993 the Report of the Working Party, The Consultative Group on the Role of Co-operatives i n Community Economic Development) 1.0  Recommended that e f f o r t s be continued to ensure that e x i s t i n g l e g i s l a t i o n treats co-operatives f a i r l y .  2.0  Recommended that the co-operative sector i n B r i t i s h Columbia and B.C. government o f f i c i a l s , i n consultation with the Cooperatives Secretariat of the Federal Government, develop an appropriate strategy f o r the c o l l e c t i o n of more complete s t a t i s t i c s on the B.C. co-operative movement.  3.0  Recommended that the co-operative sector and P r o v i n c i a l Government j o i n t l y develop an awareness campaign aimed t o promote the sector's development.  4.0  Recommended that a Working Party be appointed t o consider how access to t r a i n i n g f o r managers f o r new co-operatives and community development enterprises might be improved.  5.0  Recommended that representatives from the M i n i s t r y of Education be i d e n t i f i e d to meet with representatives of the co-operative sector t o : 5.1  Review the e x i s t i n g curriculum t o evaluate i t s treatment of the co-operative sector.  5.2  Identify ways i n which u n f a i r or incorrect references to co-operatives can be removed.  5.3  Advise on how information on co-operatives can be included i n the curriculum i n the same way that information i s provided on the p r i v a t e sector.  6.0  Recommended that the co-operative sector and the P r o v i n c i a l Government enter into discussions as to how co-operative studies might be encouraged i n post secondary i n s t i t u t i o n s .  7.0  Recommended that co-operative representatives be considered f o r i n c l u s i o n on more government commissions, boards of enquiry, and crown corporations.  8.0  Recommended that B.C. co-operatives be consulted and, as appropriate, involved i n a l l relevant p r o v i n c i a l trade initiatives. 106  9.0  Recommended that the B r i t i s h Columbia Government ensure that co-operatives are treated equally i n a l l the development a c t i v i t i e s i n which i t i s engaged.  10.0  Recommended that representatives from the co-operatives sector and the B.C. Government ascertain the approximate economic value of the roles played by co-operatives i n the province; and that co-operative development expenditures r e f l e c t the coop sector's r o l e i n the economy.  11.0  Recommended that the B r i t i s h Columbia Government consider extending taxation benefits t o members investing i n t h e i r cooperatives .  12.0  Recommended that the Government of B r i t i s h Columbia work c l o s e l y with the worker co-operative sector to encourage the further development of that sector.  13.0  Recommended that the B.C. Government, along with representatives of the First Peoples, appropriate representation from the federal departments concerned, and representatives from the B.C. co-op sector, investigate ways i n which F i r s t Peoples i n the province might become better informed about co-operatives.  14.0  Recommended that the Government of B r i t i s h Columbia designate a Minister i n a major Ministry responsible f o r r e l a t i o n s with co-operatives; that h i s or her M i n i s t r y a l l o c a t e resources to f o s t e r government r e l a t i o n s with co-operatives; and that h i s or her M i n i s t r y a l l o c a t e resources t o f o s t e r a better understanding of co-operatives among a l l government ministries.  15.0  Recommended that the Minister responsible f o r co-operations consider appointing a committee of co-operative leaders t o advise him or her on issues of concern and p o t e n t i a l of new co-operative programmes.  16.0  Recommended that the P r o v i n c i a l Government i d e n t i f y a working group from the Government Departments concerned with economic development that could work with representatives from the B.C. Region of the Canadian Co-operative Association to investigate ways i n which new co-operatives might be encouraged.  17.0  Recommended that an ongoing Advisory Committee on the r o l e of co-operatives and c r e d i t unions i n community economic development be established; that a working party of t h i s Advisory Committee be established to i n i t i a t e a c t i o n on the recommendations contained i n this report and other recommendations generated by the Advisory Committee.  107  C. ROLE OF GOVERNMENT (1992 Report to the Federal/Provincial Task Force on The Role of Co-operatives and Government i n Community Development) 1.0  I t i s recommended that government develop appropriate p o l i c y , l e g i s l a t i o n and programs that are f l e x i b l e and adaptable to s p e c i f i c project settings, adopting an " i n i t i a t i v e s " focus rather than a " s p e c i f i c programs" focus.  2.0  I t i s recommended that the r o l e of government be one of support rather than active development and that t h i s support extend to co-operative initiatives that will create sustainable development, such as co-operative development agencies not just new co-operative development.  3.0  I t i s recommended that government take a leadership r o l e i n recognizing the importance of community development initiatives.  4.0  I t i s recommended that community development programs promote intercommunity co-operation, not competition.  5.0  I t i s recommended that government develop programs which contribute to the development of s k i l l s within the target communities, rather than providing f o r the flow of resources and s k i l l s to those outside the community.  6.0  I t i s recommended that core funding f o r community be provided f o r a minimum of f i v e years.  7.0  I t i s recommended that p r o v i n c i a l loan guarantee programs be used to back up l o c a l funds, developed to provide loans f o r startup and expansion of community development i n i t i a t i v e s .  8.0  I t i s recommended that government be w i l l i n g to accommodate wide v a r i a t i o n i n the funding models employed and that examples such as those provided i n the case studies be further supported, studied, and evaluated for their general a p p l i c a t i o n to other provinces.  9.0  I t i s recommended that government provide adequate s t a f f and resource support f o r t r a i n i n g l o c a l people to d e l i v e r education programming i n t h e i r own communities and that t h i s educational programming focus on four areas: education s p e c i f i c to community development; education s p e c i f i c to the operation of business; education s p e c i f i c to co-operatives as an i n s t i t u t i o n ; and, education s p e c i f i c to the i n i t i a t i v e .  108  initiatives  10.0 I t i s recommended that government employees attend an o r i e n t a t i o n program regarding the c h a r a c t e r i s t i c s of cooperative organizations, most notably, t h e i r v i a b i l i t y as an organization with both economic and s o c i a l objectives. 11.0 I t i s recommended that government employees attend an o r i e n t a t i o n program regarding the c h a r a c t e r i s t i c s of cooperative models of community development. 12.0 I t i s recommended that a process to eradicate the b a r r i e r s faced by marginalized groups be established through education, l e g i s l a t i o n , p o l i c y and program development.  109  ENDNOTES 1. The " c r i s i s of the welfare state" i s r e f e r r e d t o by many authors. Please see; Boothroyd and Davis (1993), Bruyn (1987), Hunsley (1986), Ross (1986), MacLeaod (1986), and Clague (1985) . 2. For views r e l a t i n g CED t o concerns about the impacts of "globalization" and the degradation of the natural environment please see; Nozick (1992) , Plant & Plant (1992) , F a i r b a i r n e t a l (1991), Dauncey (1988) and Morehouse (1989). 3. The term "communities" i s meant t o include geographically defined communities as well as communities of i n t e r e s t . 4. This i s by no means an exhaustive l i s t of a l l the CED a c t i v i t i e s and ideas which were being developed i n the e a r l y 1980s but f o r a sample of some of the things that were happening across Canada please see: Wismer & P e l l (1981) , Campfens (1982) , Dorsey and T i c o l l (1982) and Clague (1985a). 5. Please see Nozick (1992), F a i r b a i r n et a l (1991) and Benello (1989) f o r more information regarding concerns over the impacts of g l o b a l i z a t i o n and environmental degradation. 6. The ideas of F r i t z Schumacher are referred t o by many CED a c t i v i s t s and writers. For further reference please see: Schumacher (1973), McRobie (1981), Wismer & P e l l (1981), Ross & Usher (1986), Nozick (1990), and Boothroyd & Davis (1993). 7. Please see Wismer & P e l l (1983), Newman et a l (1986), F a i r b a i r n et a l (1991) and Boothroyd & Davis (1993) f o r references regarding the h i s t o r i c a l relationship between the co-operative and the CED movements. 8. Please see C i r c l e s of Strength: Community A l t e r n a t i v e s t o A l i e n a t i o n edited by Helen Forsey (1993) f o r examples of i n t e n t i o n a l communities. 9. Please see Boothroyd and Davis (1993) o r (Boothroyd (1991) f o r d e t a i l s on t h e i r CED typology. 10. For d e t a i l e d d e f i n i t i o n s of community, economy and development please see Boothroyd and Davis (1993) pp 230-231. 11. Please see Boothroyd and Davis (1993) 234 f o r further references on comanagement, nature conservancies, community land t r u s t s and cooperative housing. 12. See also Clague (1985) , Wismer and P e l l (1983) and Newman et a l (1986) f o r s i m i l a r explanations of CED p r i n c i p l e s . 110  13. Please see Brett Fairbairn's paper "Co-Operatives and G l o b a l i z a t i o n : Market-driven Change and the Origins of Cooperatives i n the Nineteenth and Twentieth Centuries" in G l o b a l i z a t i o n and Relevance of Co-operatives f o r an extensive d e s c r i p t i o n of the e f f e c t s of the I n d u s t r i a l Revolution on "Cornmunity" i n B r i t a i n . 14. The figure of 12 m i l l i o n comes from the 1991 e d i t i o n of s t a t i s t i c s from the Co-ops Secretariat and includes the combined membership of a l l Consumer Co-ops, Credit Unions, Housing Co-ops, Marketing Co-ops, Service Co-ops, and Worker Co-ops across Canada. 15. (Co-op Working Party Report 1993, 18 and McGillivary. and Ish 1992, 20 but r e a l l y o r i g i n a l l y came from the ICA, "Report on Cooperative P r i n c i p l e s , p35) 16. Housing and f i n a n c i a l co-operatives are also considered "userbased" co-operatives but t h e i r contribution to the Canadian economy i s s i g n i f i c a n t enough to warrant separate descriptions i n t h i s section. 17. The following i s a statement of purpose from CCEC which bears many s i m i l a r i t i e s to the statement of purpose at CRS: 1. To promote group solutions to i n d i v i d u a l s problems through the development and maintenance of co-operatives and s e l f - h e l p groups responding to basic human needs and community needs, and supporting one another. 1  2. To support and promote responsible action i n the areas of s o c i a l j u s t i c e , r a c i a l and sexual equality, worker democracy, and conservation. 3. To develop, support, and promote models f o r economic organization that foster and further community, consumer, and worker control, and membership p a r t i c i p a t i o n . 4. To provide ourselves with needed f i n a n c i a l services reasonable costs.  at  5. To educate ourselves and the larger community i n the areas of finance, economics, and p o l i t i c s , towards the end of obtaining a more equal d i s t r i b u t i o n of wealth. 6. 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