I hung out a while yesterday at the Vancouver Occupation, and was impressed with their efforts at radical democracy. Many in the mainstream press have been quick to pile on for how time-consuming decision-making can be under this model, but perhaps they have not spent enough time in legislatures and committee meetings and public consultations. Democracy takes time, so what?
From the outset, the Occupy movement has been united in standing against the massive increase in inequality in our society. That inequality poisons the limited amount of democracy we have, so people increasingly feel they have nothing vote for, and that, in the end, ostensibly progressive, charismatic leaders will only betray those who supported them. On the ground, there is a feeling of despair about the future, while insiders rake in millions if not billions. So is it any surprise that the Occupy movement, while diverse, is rooted in youth who practice consensus-based democracy?
In that spirit, and its origins on Wall St – the epitome of corruption, greed and an unfair economic system – can a deeply democratic spirit be channeled into economic institutions that better meet our needs and don’t destroy the ecosystems that underpin a viable human civilization? Historically, protests against inequality, injustice and a lack of democracy of unfettered capitalism have led to diverse opposition movements: trade unionism, socialism and communism get the most attention, but the cooperative movement is part of that anti-capitalist response as well, and could ultimately be what resonates most as an alternative economic model.
The link between the radical democracy of the Occupy movement and coops is straightforward. Coops are member-owned and more deeply anchored in the local economy. They are a way of doing business that is not capitalist but democratic (though you probably won’t see any hands twinkling in the air at general meetings). There is a rich history of coops around the world, as reviewed by John Restakis of the BC Cooperative Association in his book Humanizing the Economy (reviewed by yours truly here). Based on principles of cooperation and reciprocity, the mandate of coops is to serve members, not maximize profits for distant shareholders.
Coming back to finance, credit unions are of great interest, as “banking cooperatives” that are better at the bread-and-butter business of banking than banks themselves. While banks have moved to investment banking, high transaction fees, securitization and “wealth management” to make their money, it is credit unions that focus on the heavily lifting of providing mortgages, personal loans and financing for small and medium sized businesses. Even the rabidly right-wing Canadian Federation of Independent Business notes in a survey of its members that credit unions provide better service than banks, with smaller fees and a lower loan rejection rate.
There is also good evidence that credit unions can play exactly the stabilizing influence on the economy that averts the type of crisis we find ourselves in. Based on some research I’ve seen, bank lending tends to be more volatile, with big surges in loans up to the peak of the economic cycle then crashing when a recession hits (a familiar story for those following the current crisis), while credit union loans tend to be relatively steady. Banks basically tend to take on riskier loans as the business cycle progresses, then have much higher rates of write-offs down the road. A number of structural factors – built-in risk aversion, inability to easily raise equity in the financial markets, and stronger regulatory oversight – mean that credit unions better embody the “public purpose of private banking” than do the big banks.
OK, credit unions are not exactly a rallying cry for revolution. But it is a simple and tangible act to close your bank account and join a credit union. In fact, an action I saw on facebook yesterday asked for this exact thing this November 5.
More support for credit unions and cooperatives is but one piece of a bigger puzzle about how develop and more just and sustainable world. Humanizing the economy and democratizing the production system recognizes that humans need goods and services but not necessarily transnational corporations and banks to provide them.