Building a Cooperative Economy: a Strategy for Community Based Economic Development

Abstract

central city ghettos and poor rural areas is now beginning to take hold wherever localities have been hit by problems of economic decline. At the same time, increasing interest is being expressed in worker coopera? tives and employee owned businesses as means for stimulating and controlling local economic development efforts.1 The purpose of this article is to outline a strategy for local develop? ment that combines the best features of community based economic development and cooperative ownership. While in comparison to con? ventional businesses, cooperatives have proven to be more efficient and to provide a higher degree of employee satisfaction, they have been plagued historically by problems of initial organization and insufficient supplies of capital. Because of its efficiency advantage, the adoption of the cooperative form of ownership could increase the rate of success for community development efforts, but in order to do so the problems of cooperative ownership must be overcome. What role can the commu? nity movement and the major institution it has fostered, the community development corporation, play in the creation and nurturing of cooper? ation enterprises? Why is a public sector role necessary in the building of a cooperative economy and what should that role be? These are the central issues to be taken up in this article after reviewing the advan? tages of cooperative ownership and the solutions to the problems of cooperative ownership implemented in the Mondragon system of coop? eratives. *0034-6764/84/1201 -339/$ 1.50/0. Recently in Youngstown, Ohio, an attempt was made to combine worker and commu? nity ownership in a proposal to purchase the Campbell plant of the Youngstown Sheet and Tube steel mill. [Zwerdling, 1981, pp. 195-200] The proposal failed because the federal government refused to give needed loan guarantees.