When Co-op Principles Go Digital

Image source: Unsplash

To listen to the talk, click on the audio version available here. German version here.

Picture a scenario in which the economy truly fosters equality and democracy for all. But, in order to realize such vision, many barriers must be overcome. For instance, couriers who deliver our meals often feel isolated and invisible in the gig economy. They face substantial power imbalances, safety risks, and have no control over the systems they rely on. Amidst the reality of inadequate labor laws, we witness the scourge of low wages, abusive work conditions, and lack of job security and benefits. These challenges reveal the need for an economic system that values worker and community well-being.

While there is no shortage of books that critically analyze the platform economy, only a small number of people have taken the leap to envision and help build near-term alternatives. The challenges of the platform economy are complex and multifaceted, and various theories of change propose to create a more equitable system. From unionization and worker councils to employee ownership, many ideas have been put forward. Regulation is also critical, but it can be a slow process, and workers need solutions that can benefit them today, next week, and beyond. But how? While there is no one-size-fits-all solution, combining different approaches may be the key to bringing about real change.

Many decades ago, in the 1930s, a great spirit of self-reliance and mutual aid was on display in rural regions of the United States, where electric cooperatives were formed to bring power to underserved areas. Today, these cooperatives have electrified over 42% of the country, showing the potential for cooperatives to address pressing needs. When faced with crises, people often turn to each other to meet their needs, rather than relying on safety nets provided by markets, governments, or families. In these situations, cooperatives can emerge as a way to provide support and fulfill the needs of those involved, without necessarily trying to eliminate competition or outcompete established players.

Cooperatives attract people for various reasons. While some seek to fulfill their immediate economic concerns, others are driven by the desire to challenge or destroy the capitalist system. Despite ideological differences, cooperatives serve as a rare point of consensus that brings people together to collectively address shared challenges.

Since the 19th century, when industrialization was reshaping communities, the cooperative framework has guided many groups. The Rochdale Equitable Pioneers Society, founded in 1844, established principles like democratic decision-making, fair profit distribution, and member education that still shape the modern cooperative movement. The International Cooperative Alliance estimates that over 1 billion people worldwide are affiliated with cooperatives, indicating a significant impact on the global economy despite the fact that they are hidden in plain sight.

Many “platform cooperatives” belong to a subset of labor-managed cooperatives that provide an alternative to traditional platform businesses. The commonly used definition reads as follows:

Platform cooperatives are businesses that sell goods or services primarily through a website, mobile app, or protocol. They rely on democratic decision-making and shared platform ownership by workers and users.

In the world of the cooperative digital economy, over 542 projects are thriving in 49 countries and that includes only the ones known to us. Balancing their cooperative identity with the development of successful digital businesses is a genuine challenge for many platform cooperatives. Historically, the cooperative movement has been rigid in adhering to cooperative principles but less open to digital experimentation. In contrast, some technologists and entrepreneurs have been too lenient with cooperative rhetoric. The cooperative principles, long-standing and steadfast, ought to be the yardstick against which cooperative identity is measured in both traditional and digital settings. A quick reminder:

  1. Voluntary and Open Membership
  2. Democratic Member Control
  3. Member Economic Participation
  4. Autonomy and Independence
  5. Education, Training, and Information
  6. Cooperation among Cooperatives
  7. Concern for Community

Let’s talk about them. First penned by the Rochdale pioneers, a group of 28 weavers in Rochdale, they started out as guidelines for cooperatives, but over time they evolved into the seven principles we know today. These nearly 200-year-old principles, which were last revised in 1995 by their global steward, the International Cooperative Alliance, serve as a compass for cooperatives as they pursue their purpose. They are fundamental values and should be understood as operating guidelines that are adaptable to various contexts. Considering the principles in the context of the digital economy can help us identify potential tensions and alignments and navigate the constantly evolving online economy. Having a set of guiding principles, such as these, is significant because it can help to ensure continuity of values.

The Rochale Equitable Pioneers. Photo: Trebor Scholz

Voluntary and Open Membership

The principle of voluntary and open membership emphasizes that cooperatives are inclusive organizations that do not discriminate based on factors such as gender, social status, race, political affiliation, or religion. Membership is open to anyone who is able to use the cooperative’s services and is willing to take on the responsibilities of being a member. In this way, cooperatives promote equality and foster a sense of community among diverse groups of people.

The Sewa Federation in India provides women from all castes with ownership and has 300,000 members. It is a good illustration of the first cooperative principle of voluntary and open membership. Since its introduction in 2019, Sewa Federation’s Farm2Table platform co-op has linked over 200 farmers and 2,000 consumers, offering an inclusive platform for women from lower castes. Meanwhile, Up&Go, a platform cooperative for home cleaning services in New York City, only charges a 5% commission, with 95% of the profits going to Latina, primarily immigrant female member-owners. Up&Go is a successful model because of its democratic decisionmaking process and the Sunset Park Family Center’s strong institutional support. Up&Go gives workers the power to manage the platforms they use and flips the power dynamics of the gig economy on its head.

But not all platform co-ops have open membership. Stocksy United, a platform cooperative for stock photography and video  with over 1,800 members from 65 countries, offers a 50% revenue share to its members, while also having a more selective application process than Harvard University. Most platform cooperatives excel at voluntary and open membership, and we should acknowledge that their digital accessibility may broaden their inclusivity beyond that of traditional cooperatives in different geographic regions.

The second principle of cooperatives is centered around members democratically controlling capital and allocating surpluses for co-op development and supporting approved activities, which holds true for gig workers who start a co-op as well. Each member is expected to contribute funds to the cooperative, either through a subscription fee or a lump sum. And to ensure that the cooperative stays true to its principles, financial transparency and accountability to all members is a must.

Independence and Autonomy

The next cooperative principle emphasizes the importance of maintaining independence and autonomy, with cooperatives being self-help organizations fully controlled by their members. This can be challenging for platform cooperatives, as they must balance the need for external funding and regulatory support with the need to maintain democratic control by their members. Notably, leading cooperative scholars like Jonathan Birchall have stressed the significance of autonomy and independence for cooperatives, particularly from the government. So what do we do with the following examples?

In India, the government of the Southern state of Kerala plans to establish 4,000 platform cooperatives as part of the Comprehensive Programme for Employment of the Educated Unemployed, to create more equitable relationships between platforms and providers. The Kerala Food Platform, which is currently still a blueprint, is coming out of the same context. It is being developed to create a cooperative network consisting of thousands of primary agricultural cooperatives, 3,000 banks, totaling 11,000 cooperatives. The aim is to improve soil quality and well-being of small farmers by sharing knowledge and resources among participants. The project aims to connect farmers, who have small landholdings of 0.18 hectares on average, which is roughly the size of two basketball courts or slightly smaller than a tennis court. The government in Kerala is facilitating this cooperative network to provide necessary resources and support to these farmers. This alliance of small cooperative players allows them to compete in the market. However, this also raises questions about the balance between the involvement of government and the autonomy of cooperatives.

Let’s shift our attention from India to Italy. During the pandemic, the municipal government of Bologna brought together unions, co-ops, the university, store and restaurant owners, and food delivery couriers to create the platform cooperative Consegne Etiche. This cooperative emphasizes sustainable and transparent delivery services, prioritizing fair pay and representation. They even wrote a manifesto about digital labor. Although Consegne Etiche did not approach this project sufficiently as a business, it’s a positive example of how municipalities can facilitate the creation of cooperative networks and coordinate stakeholders for shared benefit. Similar to the approach in Kerala, the municipality in this case facilitated the process of bringing together stakeholders to form a platform cooperative, rather than creating it themselves.

Or look at Brazil where President Luiz Inácio Lula da Silva encouraged the creation of platform worker co-ops to address income inequality and the precarious nature of gig work. He cited the success of Coomappa, a taxi platform cooperative in Araraquara that takes only a 5% cut of the revenue, provides benefits such as insurance discounts and legal services to its drivers, who earn 40% more than they would on other platforms. Similar to the approaches taken in Kerala and Bologna, the mayor of Araraquara encouraged taxi drivers to establish a cooperative, demonstrating a facilitation role. Lula views cooperatives as a practical solution for municipalities to partner with in creating initiatives that offer gig workers the benefits and protections they require.

However, one may wonder how cooperatives can maintain their autonomy not only from government but also venture capital while seeking funding. An example of a successful cooperative that has received non-controlling vc-funding is Savvy Cooperative. Savvy, founded in 2018, is a digital health platform coop and online community that connects patients and caregivers with health industry organizations seeking input and feedback. Members participate in research activities and receive compensation for their time and insights, promoting patient-centered research and advocating for greater patient representation in healthcare decision-making. Savvy’s VC funding, a true rarity in co-op circles, is noteworthy because the principle of independence and autonomy emphasizes that cooperatives should be financially independent without taking controlling financial interest from third parties, which would otherwise follow the extractive shareholder logic of capitalism. While such investments are generally avoided in the platform co-op world, the success of Savvy Cooperative shows that it’s possible to find creative solutions. In a recent policy paper my co-authors and I also suggested the idea of non-controlling investments by municipalities in platform cooperatives. This would further engage the municipality in the work of the cooperative without removing member control. But to be completely clear none of this changes the fact that controlling venture capital is diametrically opposed to the ethos of platform cooperatives.

A coastal view of Kerala’s trees and beach. Photo: Trebor Scholz

In any case, the collaboration between cooperatives and local governments is essential to promote the growth of platform worker co-ops and provide gig workers with the benefits and protections they require. This approach has been seen in various cities, including Araraquara, Kerala, and Bologna, where local governments facilitated the establishment of cooperatives for gig workers. This kind of collaboration with municipalities and governments is a particular sweet spot, and one of the most successful examples of this is Drivers Cooperative in New York City.

The United States’ largest worker cooperative, Drivers Cooperative, has emerged as a trailblazer for creating a more equitable and sustainable ride-hail industry. Established in 2019, it has over 8,000 drivers today and they have already served more than 200,000 trips. Drivers Cooperative has raised close to 2 million dollars. The funding sources for platform cooperatives in general include member contributions, crowd equity, and loans, with some loans being provided by cooperative banks and credit unions.

Drivers Cooperative works very closely with the city of New York and has taken on rides for the Metropolitan Transport Authority which services people with disabilities. This tight-knit collaboration with the city of New York has allowed the platform co-op to survive. Drivers Cooperatives makes use of city procurement in this way which allows it to compete not solely through business from individuals that hail a ride. The platform pays drivers $30 per hour, ensuring they are compensated fairly, regardless of ridership. Passengers also enjoy an average of 10% lower fares compared to other ride-hail platforms. Drivers Cooperative operates democratically, with each member, regardless of seniority, having one vote. In addition, the co-op has an ambition to launch a global federation of worker-owned ride-hailing platforms by offering their digital infrastructure to cooperatives worldwide.
So, looking at New York City, Araraquara, Kerala, and Bologna, it is clear that close collaboration between municipalities and platform cooperatives is crucial for their survival and success.

Education and Training

Cooperatives not only invest in educating and training their members, but also in spreading awareness of cooperative culture and principles to elected representatives, workers, and youth, with the goal of fostering a greater understanding and appreciation of the cooperative model. This can be achieved through a range of methods, such as billboards, social media, and policy briefs. However, it is also important for all cooperatives to prioritize education not solely about the model itself but also about conflict resolution, democratic decision-making, and alternative approaches to leadership, such as sociocracy.

Education is essential to the establishment of platform cooperatives, especially in the Global South, where digital literacy and technical skills may be woefully insufficient. Cooperatives may empower their members and contribute to the development of a more equal and just digital economy by investing in educational opportunities.

By contrast to business-as-usual gig economy platforms that consider workers as disposable assets, Stocksy United, provides an exemplary demonstration of this principle in practice. The platform’s member portal presents photographers with training, including guidance on enhancing the likelihood of successful photo submissions for their website.

Cooperation Among Cooperatives

The principle of cooperation among cooperatives is especially important in the digital economy, where smaller platform co-ops may struggle to compete against larger and more established players. By working together and forming alliances, smaller platform co-ops can pool resources and share knowledge, allowing them to better serve their members and compete in the marketplace.

Cooperation is crucial to the success of cooperatives, particularly in the digital economy, where data sharing is key. The Data Commons Cooperative has worked in this space for a very long time. Platform cooperatives can contribute to the formation of a new digital commons based on shared data standards.

While Mondragon in the Basque Country and Cecosesola in Venezuela are examples of cooperatives that have formed networks, they have not publicly experimented with data commons. Mondragon’s network includes tens of thousands of cooperative members in the Basque Country, supported by 125 non-coop subsidiaries worldwide, while Cecosesola operates a network of 50 organizations with 20,000 members. With the emergence of technologies and methodologies like sociocracy, there is potential for a more inclusive approach to govern data within such networks, beyond traditional voting.

The principle of cooperation among cooperatives is critical to scaling platform cooperatives. They scale  through replication, social franchise, federation, and protocol adoption. I have to stop myself right there having to add that the word scaling is very complicated here because this is not the same scaling that your ears may be used to from Silicon Valley; this is a kind of scaling that also accounts for scaling deep scaling wide. Examples of such platforms include EVA Cooperative’s social franchise model, the CoopCycle network of bike delivery cooperatives, and Polypoly‘s protocol that enables the creation of digital cooperatives with shared governance and ownership over data. 

CoopCycle offers an open-source software that allows members of the federation, comprising over 60 courier worker cooperatives in Western Europe, to advance worker ownership, democratic decision-making, and sustainable business practices. Moreover, in the digital age, emerging women’s cooperatives leverage the organizational form of co-ops to build and sustain data cooperatives that prioritize decentralization and transparency. These co-ops allow for greater control over the collection and flow of data while democratically determining commission rates and provisions concerning algorithm privacy and access. Data cooperatives offer a glimpse of a possible future that emphasizes cooperation, democracy, and transparency in the management and sharing of data.

Leveraging data in cooperative networks is not a novel idea, but the establishment of a data commons and shared data standards in cooperative ecosystems is still in its infancy. That’s been a lack of decisive action from large coop associations but more importantly, the significance of the ecosystem of platform cooperatives and its potential impact on the world economy is also limited by the lack of alternative cooperative/public Internet infrastructures that can rival those of Amazon, Google, and Apple. Therefore, the work of the European Union in establishing a third way that differs from the American and Chinese approach to internet infrastructure is crucial in promoting a more public-minded, democratic way forward.

But then in the ecosystem through which I’m walking you, there’s much experimentation with data. So, let’s go to Mexico to look at one of the sites of experimentation. PescaData, a platform co-op created by Comunidad y Biodiversidad, connects small fishing co-ops across Latin America and the Caribbean, providing them with a platform to share sustainable fishing practices and track monthly catches. This app strengthens collective organization and informs data-driven policies affecting the industry. While the collection of some data is mandated by the government, PescaData is looking to collect more data to potentially create financial benefits or other forms of benefit for the community. The challenge of creating financial benefits through data cooperatives remains given the relatively small amounts of data collected, even with tens of thousands of fishers involved in PescaData.

Fishermen evaluating PescaData in the field - El Rosario, BC
Fishermen evaluating PescaData in the field – El Rosario, BC. Image rights by Cobi

While significantly monetizing data may only be feasible for companies like Google that have strong network effects, there are still other benefits to be gained from data, as exemplified not only by PescaData but also by DriversSeat Cooperative. The latter data cooperative helps app-based drivers gain a better understanding of the income they earn through corporate platforms such as Uber, which is obscured by these companies.

The six principle of cooperation among cooperatives shows great promise for building a Cooperative Commonwealth, but their full potential has yet to be realized. To achieve this, scaling and standardization of data will be critical, as well as replication through shared digital infrastructure. However, the success of these efforts will also depend on effective regulation to level the playing field against big industry giants.

One field of experimentation is the creation Distributed Autonomous Organizations (DAOs). These digital entities operate without traditional centralized management or decision-making structures, using smart contracts and blockchain technology to manage their operations and decision-making processes. In other words, they are token-coordinated internet-native organizations that use blockchain at their core.

In addition to traditional platform cooperatives in the music and art sector like Ampled, Brooklyn Raga Massive, Resonate, and Groupmuse, there are also more lighthearted examples such as SongADao. SongADao is a creative and fun use case for a DAO, offering a new model for compensating and supporting artists, while promoting transparency and community engagement in the music industry. For over 14 years and 51 days, the artist Jonathan Mann has been writing and playing a song every day. That’s 5,164 songs! Here is a fun example from this fun DAO, registered in Colorado.

Similarly, Breadchain Cooperative is a community of decentralized, cooperative projects that are working together to advance a progressive vision for blockchain technology and its effect on society. To become a member of Breadchain Cooperative, you must be approved by the multisig wallet, and members receive access to exclusive resources such as grants from Gitcoin.

Although distributed autonomous organizations have been a fruitful source for experimentation, they have also been a breeding ground for fake cooperatives and ideological dead-ends. However, within the sea of fraudulent cooperatives, it is important to note that there are also genuine efforts that adhere to cooperative principles, and the examples I have provided fall within this category.


Concern for Community

The last cooperative principle prioritizes the sustainable development of communities, which is particularly relevant in the digital economy. To apply this principle, platforms can be built that prioritize the well-being of their users and communities, and are committed to social and environmental justice. Social.coop, a cooperative instance of Mastodon. With Twitter’s decline and Mastodon‘s rise, questions about tech ownership and governance are being raised. Social.coop provides a democratic decision-making model where elected working groups handle moderation, administration, and tech work, while members use Loomio to make decisions. With over 13,000 federated network instances, Mastodon shows how democratic decision-making and cooperative governance can be achieved in the digital age.

Social.coop shows that the impact of platform co-ops is not limited to fixing problems with digital platforms but extends to creating new forms of social organization that can transform the way we live and work. They transform social and cultural values, and their importance goes beyond economic development or business.

As I conclude our discussion, it is important to reflect on their advantages and factors that underpin their success. Platform cooperatives require a strong focus on business and entrepreneurship, as well as strong benevolent leaders. They are better at retaining workers and more likely to survive after the first 5 years of operation. Platform cooperatives offer numerous benefits, from better compensation in sectors like care and home cleaning and working conditions for members to shared responsibility and environmental sustainability. A cooperative culture that promotes mutual aid and shared purpose is crucial, with co-designing platforms with stakeholders ensuring their needs and priorities are addressed.

However, these co-ops face numerous obstacles, including legal and regulatory barriers and a lack of awareness in certain countries. Community control over capital and engaging members are important considerations, with concerted efforts against worker ownership in some regions. Retaining workers can reduce recruitment and training costs while increasing morale, job satisfaction, and productivity. The absence of venture capital funding hinders platform cooperative growth. Nonetheless, some unions have strongly supported and even founded platform co-ops like AlliedUp. In general, it is easier to start from scratch than to convert existing cooperatives.

Despite these challenges, the Platform Cooperativism Consortium (PCC) has made a significant impact on the promotion and development of platform cooperatives. Through international conferences, a fellowship program, research reports, and resource building and maintenance, the PCC has built a global community and contributed to a more democratic and equitable platform economy. The 8th PCC Conference “Roots of Resilience” will be hosted in India this year in late November.

After providing numerous inspiring examples, it may not be surprising that political parties such as Germany’s Social Democrats and the UK’s Labour Party, as well as Lula’s government, have sought to align themselves with platform cooperativism. This idea, whose time has come, strikes at the heart of the online economy, providing an alternative for users who want to eschew big Tech incumbents and serving as an antidote to the increasing skepticism and distrust of Silicon Valley behemoths. 

Platform cooperativism addresses growing economic inequality and precarity, especially in the gig economy, where insecure work is prevalent. It represents an economic rebellion and a narrative that challenges the dominant stories coming out of Silicon Valley, doing so with a spirit of experimentation that’s open to necessary compromises and the spirit of fallibility. However, my ultimate goal is to leave you with a grander vision of a pluralistic commonwealth, a society based on cooperative ownership, democratic control, and shared prosperity.

Today, this vision of a pluralistic commonwealth has expanded to include platform cooperatives, unionized co-ops, and small private enterprises, providing an alternative to traditional capitalist models. It promotes worker liberation and a more democratic internet. It is not just a theoretical concept but a reality in the world today. The choice is yours: ignore it, resist it, or contribute to this growing framework in which everyone has a stake in the future.