Social Capital and Membership

Social capital, as distinct from private capital, is a philosophical foundation of cooperatives and a kind of ultimate realization of our efforts. Social capital is what is owned by all and should be utilized for the benefit of all. Yet few people, even in co-ops, recognize the term. This neglect may help explain some unfortunate and dangerous practices in food co-ops, and I will conclude with a stark example from two leading retails.

In my view, no statement or person or institution exists outside its social context. Our efforts of today stem from those who preceded us, and the realization of our efforts depends on those who will succeed us. Thus are our "individual" lives delineated. And like our communities, cooperatives are much more than simply doing together what we cannot do separately. The whole is greater than the sum of its parts.

This outlook leads to cooperative enterprise and to social capital as embodied in the co-op. The co-op manages the social capital accumulated through serving past and present members, in particular funds reserved for the co-op without allocation to members. Maintaining the co-op enterprise for future service is dependent on recognition by members and management that the co-op has needs that should not be neglected or subordinated to individual benefits.

In the present cultural circumstances, understanding of social capital (or of solidarity or of social class) is obscured by dominant messages which subtly and unsubtly focus on "me": What's yours is yours. Get ahead. Get everything you want. Get it as cheaply as possible.

In this context even cooperatives, which are by definition a collaboration, are seen by many as a form of private capital, a means for individual gain and not also as a greater good in themselves. In food co-ops, members expect immediate returns in the form of discounts; and boards often feel pressured to return all the annual earnings to the members. Such practices handicap management and board's planning and leadership responsibilities and fail to give recognition to social capital, to the needs of the co-op.

Recently I had the pleasure of hearing Ian MacPherson, a professor of historv in Victoria, British Columbia. He chaired the International Cooperative Alliance (ICA) committee which worked at great length to produce the new "Statement of Cooperative Identity" adopted in September 1995. His talk at the NASCO (North American Students of Cooperation) Institute touched on the ICA discussion around social capital. He reviewed the text for the third principle, on member economic participation:

Members contribute equitably to, and democratically control, the capital of the cooperative. At least part of that capital is usually the common property of the cooperative. They usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible, benefiting members in proportion to their transactions with the cooperative, and supporting other activities approved by the membership.

This principle and accompanying explanation address the issue ofsocial capital and the purpose of cooperatives. The hedged, somewhat awkward references to common property and to indivisible reserves are in part a result of disagreement among conferees. The prevailing understanding among international cooperative communities represented at the ICA, according to Macpherson, is of a cooperative as an entity with its own purpose and needs that extend beyond those of the individual members. On the other hand, German and North American representatives strongly resisted inclusion of language recognizing social capital and a larger identity and purpose for the cooperative.

The latter representatives and other co-op leaders who promote cooperatives as just a form of private enterprise do a great disservice to cooperatives and to those of us who are trying to build something larger and deeper.

At any rate, such thinking may help explain why many food co-ops continue practices that actively undermine not only the accumulation of social capital but even any growth in membership or member sales. In these cooperatives the evident acting member principle, rather than "Eat the rich," is "Eat the co-op."

Illustrating this, a few weeks ago I read in a leading retail co-op's newsletter a comparison of their store with another co-op (both in the $4-million sales range). The article reviewed the other co-op's practices and noted that the manager identifies the most important issues facing the co-op as employee training, membership structure, growth/expansion, and a vision for the future.

The article concluded with the two paragraphs quoted below. Note the parenthetical remark; I have added nothing, changing only the names. This passage may make more clear the point of my comments above and the serious problems created by lack of commitment to the cooperative as social capital:

Only 30 percent of Co-op X's shoppers are members - low for a cooperative business. On the other hand, the store loses money when members shop, due to the discount structure (which is identical to our co-op's). The board has been unwilling to take up this issue in past years, but the finance committee is now actively pursuing member input. The manager feels that the co-op must either go to an annual patronage refund based on profits, or move to articulate the coop's purpose in terms other than membership development. In the meanwhile, the unofficial policy has been to not actively promote membership.

Co-op X's vision for the future hinges on the issues of membership and growth, and its 25th anniversary next year may be a turning point in determining where the co-op is headed.

See other articles from this issue: #068 January - February - 1997