10 years since the financial crash we’ve learned that there exists in the US not just one economy, but many, as well as many kinds of economic actors. From platform cooperatives to cryptocurrency, people are continuously building economic alternatives. So says Nathan Schneider, crusader for collective ownership and author of “Everything for Everyone: the Radical Tradition That Is Shaping The Next Economy.” Plus, professor and author Virginia Eubanks on how government and corporations are erasing social services through unequal digital practices.

Photo by Lukyclover

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At the heart of our supply partner chain is a sewers cooperative from Croatia. With a fixed percentage of our net sales we support garment workers in South Asia in their fights for better working and living conditions. This way, we want to create a positive impact for both workers in the alternative and in the mainstream economy.[1]

After two successful crowdfunding campaigns[2] and almost three years of business experience, we are now planning to take the next step by developing an innovative web platform which ultimately shall be collectively owned and governed by every party involved in the value chain; from the producers of the raw material all the way to the people who buy the clothes.

From platform capitalism to platform cooperativism

Never was it more obvious than today that capitalism fails to deliver on its promise of benefiting the many and not just the few. By grabbing after the internet, capitalism has given birth to business platforms that increase inequality, undermine democracy and lead to monopolies. The likes of Airbnb, Uber, Amazon and facebook are transforming our workplaces, relationships and societies and we have virtually no control over them. While nearly all aspects of our lives are being shifted online, a new and fairer model for the digital economy is needed. A promising model in that regard is co-ownership, transparency and democratic governance as promoted by an emerging number of so-called platform cooperatives. Contrary to venture capital funded platforms and their systemic flaw having to excessively extract and maximize value only for their shareholders, platform coops seek ways of including everybody who is affected by the platform’s activities in the equation.[3]

Applying the platform coop model to the buyer driven and undemocratic garment industry

How the industry works

Global fashion online sales are expected to grow massively from €415 billion in 2018 to €615 billion in 2022.[4] Approximately 75 million people are employed in the textile, clothing and footwear sector worldwide. Most of them are women. The industry is buyer driven which means that corporate giants such as H&M, Inditex, Primark or Kik usually do not own any of the factories they produce with, yet they basically control them. Their buying power lets them dictate where to produce, what to produce and at what prices. This, together with the rise of fast fashion, a business practice where the brands change their collections in very short time frames, puts enormous pressure on farmers, factory owners and workers. Supply chain transparency is another big issue.

Ways to gain power for workers

One way for workers to turn their often poor labour conditions into good or at least better conditions, has always been by organizing in independent labour unions and subsequently force the employers to negotiate collective agreements. However, this is easier said than done because anti-union practices are widespread in the global garment industry. Even though fundamental rights to join a union and bargain collectively are guaranteed in the big brands’ code of conducts and through various certification schemes, reality on the ground often looks very different.[5] Hence, the percentage of unionised garment workers in today’s main producing countries is very low.

Another way for workers to gain collective power and a higher level of self-determination is by organizing into worker cooperatives. Here, the workers collectively share the ownership of their workplace. Consequently, their work benefits themselves and their local communities rather than just filling the pockets of external shareholders, bosses or factory owners. However, there are currently just very few garment factories operating as a worker cooperative. In the first step of the value chain though, there is already a considerable amount of smallholder cotton farmers who are organized in cooperatives, primarily because together it is easier for them to sell their product and it also allows them to reach a higher price.[6]

Revolutionizing our garment value chain by becoming a platform coop

As of today, our immediate supply chain consists of three main partners. We buy 100 percent organic cotton for our fabric via Fair&Organic from India. The Social Cooperative Humana Nova receives these fabrics and sews them into t-shirts. Printex finishes these shirts with screen prints using water based eco-colours. Counting in the employees of the small manufacturers Fair&Organic works with, the combined number of people working for these three partners is likely to be around 50 to 60. It is safe to say that at least half of them in one way or another work for us during the realisation of a certain project. We should of course not forget all the additional people involved in logistics and transportation as well as in the raw material production. The products offered on our platform/website are only possible through the combined efforts of farmers, mill workers, fabric cutters, patternmakers, sewers, truck drivers, just to scratch the surface.

Now, imagine if all these hard working people were to become co-owners of the dna merch platform.

The co-ownership model would not only allow them to raise their voices concerning issues that affect them (e.g. delivery times, labour costs/wages and working hours), it would also make them eligible to a share of the surplus revenues generated by the platform.

And now try to imagine if all the other people in the value chain will become co-owners as well, those who will be using the platform to buy t-shirts and other garments either for their own use or to source and retail. If implemented properly in a truly inclusive way, this will lead to a fully democratised value chain in which both consumers and producers are empowered likewise. The technology for them to finally meet on eye-level and practice solidarity through direct interaction and trade is available. With the dna merch platform we want to put it in practice.

But why would it be so empowering to facilitate that sort of direct interaction between consumers and workers/producers? Two popular beliefs in today’s mainstream sustainability debate are that a) consumers have the power to make globalization fair and sustainable by shopping ethically and consciously, and b) that companies, to build trust in consumers, should certify their supply chains and guarantee universal standards through the means of independent audits.

While there is absolutely no doubt that our day-to-day shopping decisions matter and can drive companies to adjust and change their policies in a progressive way, it is way too easy to put all the responsibility in the end consumer’s pocket. We think it is hardly possible to always filter all products according to their social and ecological footprint and always make a conscious and ethical decision without going crazy, especially when the majority of products are known to be produced under poor conditions. What’s most important though, is that an approach which solely relies on the consumer power tends to treat workers in the global south as passive subjects who depend on our goodwill and help. Hence, it hinders us from seeing them as people just like us and makes it harder to create relations on eye level.

Audits are problematic, too. The vast majority of them has proven to be merely a paperwork exercise and does not lead to sustainable improvements of working conditions. A study from 2016 titled “Ethical Audits and the Supply Chains of Global Corporations” concludes that audits “are ineffective tools for detecting, reporting, or correcting environmental and labour problems in supply chains [and] they reinforce existing business models and preserve the global production status quo.” As with the consumer power argument, the biggest problem with audits is the passive position that the workers are put in.

We believe that it is the people themselves who know best what needs to be improved at their workplace or their favourite product. So, equipping people with the right tools to connect directly with each other, and putting them in a position where they no longer depend on powerful and manipulating intermediaries like most of today’s corporations are, they will figure out ways that benefit all those involved. With the dna merch platform coop we are determined to set out and prove it.

Lean proof of concept: Focussing on our status-quo

With our platform we want to address three dominant problems of the garment industry, i.e. lack of fairness and democracy, non-transparent prices and supply chains that hinder buyers from making informed decisions, and the fact that there is currently no easy way for workers and consumers to directly connect with each other.

To get things going we will make use of what we already have, a transparent supply chain for t-shirts with a self-organised sewers cooperative at the core, our existing website with a lot of transparent information and a network of customers comprising of trade unions, music bands, retail shops and crowdfunding supporters. We have various functionalities planned for the platform and will add and test them step by step along the way. First, we will add options to start one’s own crowdfunding campaigns and group orders. The idea is to make it possible for bands, organizations and individuals to initiate t-shirt pre-order campaigns to collectively pre-finance the production costs. If wished, users can add a margin on top of the costs to raise money via a public campaign.

Over time, we want to extend the product portfolio and offer not just customized printing on standardized garments but also enable e.g. young fashion designers to realize their first collection through the platform.

In terms of our organizational restructuring process from a German civil law partnership towards a platform coop with a legal structure yet to define, we aim to have an established organisation by mid of 2019 with at least 5 co-owners each from our producer part and the consumer/retailer part of our value chain (e.g. 3 workers from the sewers cooperative, 2 from the print shop, 1 band, 2 crowdfunding supporters, 1 fashion designer, 1 graphic designer)

Our biggest challenges and questions

1.       How exactly could a membership and governance structure look like in practice?
2.       How can we convince our stakeholders to embrace the undertaking of becoming a platform coop?
3.       What are the arguments and incentives that are valid for everybody?
4.       Which ones differ between the various actors?
5.       How will we ensure real participation of the coop members?
6.       Which tools and forms of communication will we need?
7.       How exactly will the business model look like?
8.       Transaction fees, membership fees …
9.       Coop shares
10.       Sales of own collections
11.       Consulting services for onboarding further producer partners
12.       Commission fees for fashion designers who win contracts through the platform from other users?
13.       How exactly can we make use of the Blockchain technology and other recent inventions that foster decentralisation?
14.       Which tools are readily available that we can make use of?
15.       Which impact on membership will the power imbalance in our supply chain most likely have, e.g. the fact that other than the     sewers cooperative all other partners are conventionally structured businesses?
16.       Should co-ownership of the platform become a prerequisite for being able to access all services and functionalities of the platform?

Call to action

We need and want more people to get involved in this!

Please get in touch by briefly mentioning what aspect interests you the most and where your expertise lies. We definitely need people with a technical background, people with experience working in coops, people with knowledge of the garment industry, social media and marketing experts, organizational theorists and probably a lot more that we cannot think of right now : )

Also, please feel free to reach out if you just want to comment on the idea as such or on one of the questions and challenges mentioned above or if you would like to add another one.

We are grateful for every input and consideration that you share with us!

You can best reach us via email or you can directly comment on the document here.

Doreen & Anton

[1]

[2] See https://www.startnext.com/dnamerch and https://www.startnext.com/dna-merch-vol-2

[3] For more info visit https://platform.coop

[4] See https://www.shopify.com/enterprise/ecommerce-fashion-industry

[5] See e.g. http://speri.dept.shef.ac.uk/wp-content/uploads/2016/01/Global-Brief-1-Ethical-Audits-and-the-Supply-Chains-of-Global-Corporations.pdf

[6] See e.g. https://www.ica.coop/en/media/news/small-scale-farmers-achieve-a-26-higher-share-of-consumer-price-when-organized-in

The post dna merch: A Platform Co-op in the Making appeared first on P2P Foundation.

De cultural center De Besturing in The Hague found an interesting individual solution. They started paying rent for the free space, and used the accumulated capital as down payment for rebuying the space from the city.

From Cooperative City:

De Besturing was founded in 2006 in an industrial area of The Hague and over the years it has been transformed from a temporary studio complex into a sustainable collective of artists and designers. Initially rented out for free on a temporary basis from the municipality, the community nevertheless collected the rent from tenants, constituting a capital that made possible the building’s purchase in 2017.”

The post De Besturing – From tenancy to collective ownership appeared first on P2P Foundation.

He recently authored a chapter of the new book on Platform Co-ops Ours to Hack and Own, in which he states:

“Platform cooperatives – as a direct affront to the platform monopolies characterizing digital industrialism – offer a means of both reclaiming the value we create and forging the solidarity we need to work toward our collective good. Instead of extracting value and delivering it up to distant shareholders, we harvest, circulate, and recycle the value again and again. And those are precisely the habits we must retrieve as we move ahead from an extractive and growth-based economy to one as regenerative and sustainable as we’re going to need to survive the great challenges of our time.”

In the run up to the Open 2017 – Platform Co-ops conference in London, Oliver Sylvester-Bradley explores some of Douglas’ ideas:

OSB: You’ve mentioned that “the model of the ever expanding economy is bankrupt” and highlighted the “corporate charters” and “central currency” as the core components of the present “bankrupt” system. How can we hope to challenge the corporate charters?

DR: Well, you sound like you believe the way to change corporate structure is for citizens to take action against the corporations. That’s certainly one possible approach, and useful in a situation where there are no human beings within the corporation who are willing or able to change the corporations from the inside. What might be surprising to you is that most of the people in corporations actually do not want to kill people, do not want to be enslaving children in resource-rich nations, and do not want to make the planet uninhabitable. They are the ones in the best position to change corporate actions, since they are inside the companies themselves.

They simply need to be educated about what is possible. I tried to do some of that in my book. CEOs and Boards of Directors need to understand that they do have legal authority to act in the best long term interests of the company. So-called “activist” shareholders really cannot sue Boards for hurting the short-term value of shares – especially when the Boards are acting in the long-term interests of the shareholders. Not destroying the planet is in the best long-term interests of shareholders. Likewise, companies can restructure and reorient from within to favor dividends and public reinvestment over capital gains and extraction.

So, as I argue in my book, the key is to convince CEOs and others who are running corporations that they can exercise human agency in their decisions. They do not have to behave automatically. They can use their decision-making authority. They need to communicate with shareholders, and explain the advantages of getting lots of dividends instead of a one-time “pop” of share price, followed by an inevitable decline. Companies can actually make more money with ongoing revenues than blindly pursuing growth.

They can stop selling off their most productive assets, and instead remain powerfully competent companies. Steady state economics is about maximizing circulation rather than extraction. To anyone who understands how business works, they should see how this is a healthier choice for those within the business, as well as the distant shareholders who only want money at any cost.

OSB: You have described how “digital giants are running charter monopoly software…” and that their “technology enforces the monopoly”. At Open we are keen to see NGOs, co-ops, non-profits and even Local Authorities start to utilise open source software and, in return, to fund the development of a suite of open source apps which facilitate collective ownership and collaboration. What steps do you think are required to disrupt the digital giants’ monopolies?

DR: Of course, I was using the word “software” a bit metaphorically. The corporate charter is itself a program that can be changed. Instead, it is being further amplified by technology. What I mean by that is that the corporation works in a particular way, as dictated by the charters and contracts making up their business plan. So a company’s core code – long forgotten – may assume that the way to make money is to prevent people in the regions where the company operates from making any money. And while that may have been a good strategy for maintaining a slave state in the 1400’s, it doesn’t work so well in places where people are supposed to be free or employed.

But the company’s directors may have forgotten all of this by the 21st century, and simply implemented new plans based on the same strategy of exploitation and extraction. So now they are writing software and building platforms that embed these same assumptions about their users. And they end up extracting value and time from people without helping them create or retain any for themselves.

Or a business plan might be to make money by extracting metal ore from the ground. Then, the company builds technology to do that, which makes the extraction happen a lot faster. They don’t realize that extracting so quickly and totally may deplete things in new ways. And because they don’t realize that the core “code” of the company is actually changeable, they don’t see any way out of the problem.

Now, you’re talking about software solutions themselves, and how people from the outside can give up entirely on the corporate solutions, and build alternative software that works in greater consonance with the needs of real people and places. That’s pretty easy to do. We can write an alternative Uber that lets the drivers participate in the profits. Or an alternative Facebook that doesn’t manipulate people’s news feeds to try to program people’s future choices. The trick is getting people to use the alternatives when they’re not so pretty or universally accepted.

OSB: It has been suggested that the open-source / platform co-op alternatives to corporate software solutions will need to do two things at least:

1. Be easier to use / provide a better experience
2. Cost the user the same or less (i.e. provide better value for (conventional) money.

What do you think about the possibility of an “open app ecosystem” (a library of interoperable apps, covering all aspects of communication, organisation and even trading needs) sweeping into dominance over the corporate alternatives once it provides the same level of utility, at the same price, as the present corporate systems?

DR: The easiest tactic is to help people experience the impact of various pieces of software on their own existence. Does Facebook make them happier? How is it helping them take command of their lives? People sometimes have to become more aware of the surveillance state, the extractive quality of these tools, and the nauseous, empty, angry feeling they have after using this stuff in order to feel motivated to make a change.

OSB: Your chapter in Ours to Hack and Own entitled ‘Renaissance now’ explains how we are on the verge of a modern-day renaissance. There is no doubt that revitalising and retrieving lessons, techniques and habits from the past could help bring about change but the last renaissance was also driven by a shift in intellectual thinking. Do you have any thoughts on how, and where, an intellectual shift might come from?

DR: I think changes in experience can change people’s world view. If they have terrific experiences working in co-ops or using local currency or simply sharing stuff, then their world view will change.

OSB: You explained how “banks were invented to extract value from our transactions not to authenticate transactions”. Do you have any thought on why LETS and time banks haven’t made a more effective transition to the web?

DR: I think part of the reason LETS and alternative, trust-enabling systems have not developed is that most people are not actually proud of the value they create. Too many people feel that they don’t have enough to offer, and need to hide behind anonymous cryptocurrencies and traditional anonymizing monetary systems in order to mask things. Meanwhile, if a person is sitting in a cubicle working for a mortgage broker or collecting debt from student loans, how are they supposed to participate in a local LETS system? What real value are they creating for others? Such people find it easier to take some of the cash they’ve made and “invest” it in Ethereum than… become part of some local favour bank. To create and exchange value, you have to be able to create some value for other humans – not just help some corporation extract value from people.

OSB: I am excited about the idea that platform co-ops and the collective ownership of our local facilities and businesses could potentially completely disrupt capitalist democracy as we know it. Where do you stand on ‘working with and within the present system’ vs ‘building a new system which makes the present system obsolete’?

DR: Well, I don’t think it’s one or the other. People can vote on public and municipal activities through traditional democratic participation, and people can vote on private and business activities through their participation in cooperatives. I do believe that the more influence real people have on the private sector, the more freedom our public activities will be from corporate control. A platform cooperative is not going to lobby the government for destruction of the environment where its workers are living. So government ends up able to deal with reconciling the different views of its people, rather than that of its people with that of its non-human corporate actors.

Conversation with Rushkoff revealed there is a direct and inverse relationship between external investment from VCs and the real value a business has to society. The more external investment; the more the business is forced to follow money making objectives regardless of the impacts on the customers or users; the more value is extracted to pay back shareholders who may have no interest in the success of the idea or project, other than their personal ROI. By comparison, if an organisation or business is owned by its members its entire purpose can be very different. The objective of a member-owned co-op, or a platform co-op, is normally to benefit and support its members, meaning it’s focus shifts from irrelevant profit seeking to good wages for workers, equality and the long term sustainability of the organisation.

OSB: Do you think there is a direct correlation between the amount of external investment an organisation accepts (and hence ownership / governing authority it relinquishes) and the real value an organisation has for society?

DR: Well, it has more to do with how much a business actually needs to operate and satisfy its market. If a business is really inexpensive to operate, then it doesn’t make sense for that business to take billions of dollars in investment. I know that sounds crazy, but it’s true. If you take billions of dollars of investment, then the people who gave you that money expect to get that money back. This means you need to make billions of dollars in revenue. That’s really hard – especially if you’re a small business that can actually function with just a few thousand dollars. If you take less money, then you are not obligated to grow the business so fast. You are still *allowed* to grow your business fast, but you don’t have to become a multi-billion-dollar business right away.

The more money you take, and the less proportioned to the real size of your business, the more power you have to surrender to the people giving you the money.

OSB: We are often exposed to the vision of a world full of hate and extremism and scarcity but rarely hear about a positive alternative. If platform co-ops, the solidarity / generative economy take hold it strikes me we could be living in a very different world in the future. Can you describe what you think this world might look like?

DR: I’m not a utopian, so I don’t envision a world or economy entirely transformed into a new state where all the value people create is properly registered, the commons is reinstated and appropriately governed, and selfishness is exchanged for true compassion.

“The generative, solidarity-inspired economy I envision is one where humanity stands a good chance of making through the next century without going extinct.”

The generative, solidarity-inspired economy I envision is one where humanity stands a good chance of making through the next century without going extinct. I am trying to envision a world where global warfare won’t be the only way to prevent impoverished populations from enacting violent revolutions on their own governments. I’m imagining a world where the wealthy don’t simply try to earn even more money in order to insulate themselves from the problems they’ve created by “externalizing” the real costs of their business practices.

So the radical alternative I’m envisioning is simply a world where the most extractive and destructive practices don’t absolutely dominate us. Where people have the ability to work for one another if there are no corporate jobs available.

I can imagine a near future without people starving in the streets, without China cashing in its chips by purchasing America’s greatest companies and properties, and without a continuation of the shift of wealth from the poor to the rich. I can imagine it not getting significantly worse than it is now, but that will take a huge shift in power and attitude.

OSB: What do you see as the main stepping stones for this vision to become a reality?

DR: Well, from a policy standpoint, I think a shift in tax policy would do a lot: punish capital gains and reward dividends and revenue. Right now, we punish companies and people who earn money, and reward those who simply extract capital out of the economy. That has to be reversed.

People and companies have to look toward earning money with the thing they do, rather than by selling the company itself. You can earn money, or you can “flip” your business (sell it to short-term investors). The latter leads to really bad practices.

We also have to accept that growth is an artefact of a currency system, not necessarily a symptom of a healthy economy. There are some economies that may be full grown.

OSB: Thanks Douglas, you have given us plenty of food for thought. The proposal that the users might buy back Twitter seems to demonstrate the growing appetite for platforms which are owned and controlled by their members. Here’s hoping more people start to realise the benefits of member ownership and governance, and how this creates a virtuous cycle of value creation. As you say, it seems essential if we’re going to survive the great challenges of our time.

To stay up to date with the latest news about platform cooperatives and the new collaborative sustainable economy follow @open_coop and join the mailing list (form in the right hand column) and buy your tickets now.

Cross-posted from The Open Coop
Featured image credit: Frontline/ WGBH, second image credit Seth Kushner.

The post Re-writing the core code of business: A Q&A with Douglas Rushkoff appeared first on P2P Foundation.