Co-ops: A Good Alternative?

It's sad to think that "let the buyer beware" should apply to credit unions, which so many progressives conscientiously choose over Wall Street-operated banks, but recent news bears out that warning: when a North Carolina credit union declared that credit unions should lead the way in transparency and made public its CAMEL rating (a metric of its health), the National Credit Union Association immediately took steps to prevent members from getting that information. How disappointing.

Historically, the co-op model has offered a workplace theory far superior to capitalism. Not driven by the profit motive, co-ops ought to be worker-empowering, democratic, healthier, less expensive, and more responsive to employee and community needs—valuable traits during this period of capitalist meltdown.

At this economic moment, as I found myself wondering whether I should get seriously involved in a co-op again, I began to investigate a few in Northern California near where I live. What I found inspired me, and also inspired caution.

Co-ops can sometimes go right, but they often seem to go wrong in one of two ways. The first is by becoming adolescent circuses (Berkeley's legendary Barrington Hall, for example, has become an excellent venue for punk bands but remains unattractive to the elderly and most people with kids). The second way they go wrong is by becoming successful.

Some agricultural co-ops and credit unions have become big, professional, and distant from the membership. Does anyone think "Progress! Democracy!" upon hearing the names Sunkist, Land O'Lakes, or Ocean Spray? Sad to say, some of these purported co-ops resemble monopolistic cartels that promote only the interests of their own restricted memberships. Several years ago, Ocean Spray even faced an antitrust lawsuit from Northland Cranberries, which alleged that the cooperative had unlawfully monopolized the cranberry products industry to the detriment of its competitors and consumers.

The credit union I currently belong to, First Tech, is technically a co-op, but I never receive a dividend, and recently I was handed an onerous set of new fees, including a fee if my savings account didn't show activity every single month. Over the years, First Tech has switched hands several times (it was called University and State Employees and then called Addison Avenue before it was given its current name). With each buyout, the credit

Co-ops run the gamut from corporate-style entities like Ocean Spray, which has been accused of monopolizing the cranberry industry, to the inspiring co-ops launched by Women's Action to Gain Economic Security, which works with Latina immigrants to create green business cooperatives.

What makes some co-ops better able to stay true to their progressive ideals? Here, the author stands outside the Audre Lorde Co-op, a housing co-op in Madison, Wisconsin, that articulates an explicit commitment to racial justice and feminism.

union became more indistinguishable from a bank. Except for structural differences mandated by law and a slightly higher interest on certificates of deposit and checking accounts, First Tech feels exactly like a bank.

A Mixed Bag

Shouldn't a co-op be a haven of sanity in the financial maelstrom? Some co-ops—though forbidden to invest in certain kinds of real estate—managed to sink along with the banks. For example, Valley Credit Union, the credit union located nearest me, was placed into conservatorship with the National Credit Union Administration in September 2008; or, in other words, it was taken over by the feds. Originally designed to protect poor people from loan sharks, credit unions are often hard to distinguish from their banking kin.

Why doesn't the co-op model make much difference? Perhaps they fall prey to the same problems as the savings and loan associations, another co-op venture that began with philanthropic objectives. According to John A.C. Hetherington, author of a scholarly study from 1991, Mutual and Cooperative Enterprises: An Analysis of Customer-Owned Firms in the United States, savings and loans associations sprang from "the efforts of philanthropists and...