Exploring Italian Social Cooperatives with Vera Negri Zamagni: Lessons for Platform Cooperatives

Last week’s seminar with guest speaker Professor Vera Zamagni explored the various forms of value generated by Italian social cooperatives. Zamagni, an expert in economic history, particularly in the field of Italian social cooperatives, outlined the history and current prevalence of cooperatives in Italy, which are active in multiple sectors, including retail, distribution, agriculture/-food, housing, credit, and the production of goods and services. She noted that cooperatives were strengthened in Italy following World War II as a result of a provision in the country’s Constitution that mandates assistance for cooperatives and small to medium-sized businesses. During the 1980s then, there has been an increasing need for social services in Italy, as families have become less capable of caring for vulnerable groups. As a result, associations and worker cooperatives emerged to supply these services, with social cooperatives emerging as the favored legal structure.

Zamagni reviewed the value provided by cooperatives through the lens of non-GDP assessment tools, emphasizing the unique approach of Italian social cooperatives to providing essential services, which benefits both their members and the community, inspiring other countries like Portugal, France, Spain, South Korea to form similar organizations.

Italian cooperatives, especially social co-ops, have become a major player in personal services, stressing multi-stakeholder participation and serving the public welfare rather than just their members. Since 1991, social cooperatives have provided roughly half of Italy’s welfare services and excel in providing safe and comfortable retirement homes for seniors, along with medical care and recreational and social activities to keep residents active and connected to the community. The biggest purchasers of social services are municipalities. Social co-ops provide vocational training for people with disabilities and contract with private companies for labor-intensive production processes.

The article of the Constitution obliges social cooperatives to employ at least 30 percent people with disabilities who are already supported by the state. Social cooperatives are involved in urban regeneration, social tourism/Bed & Breakfast, social farming, gardening, and more. The funding for these social co-ops mainly comes from the welfare benefits of the Italian state, which is administered democratically.

Social or multi-stakeholder cooperatives in Bologna provide 85 percent of care services for children, elderly people, the poor, the disabled, and other vulnerable populations. There are over 11,000 social cooperatives throughout Italy’s 110 provinces, with over 700 in Emilia-Romagna, thanks to a 1991 law (Cooperative Law 381/1991 for the legally curious) that fostered their formation by providing preferential tax rates to cooperative organizations and their investors.

Italian community cooperatives are forming to combat depopulation and revitalize small villages and towns by offering a range of services and activities, managed flexibly and inclusively with a broader mission than social cooperatives. This cooperative model helps to ensure that critical services such as farming, hospitality, and postal services remain available in these communities by offering a variety of services under one cooperative, preventing the loss of local jobs and contributing to the drive against depopulation. Zamagni views the community cooperative model as evidence that the cooperative model can satisfy community needs where the private sector and the State cannot, and it has become increasingly popular, especially in small villages that need support. This multi-purpose approach has proven successful in many isolated parts of Italy and is seen as a potential option to generate more sustainable and resilient communities.

Beyond this, Zamagni highlighted the importance of social cohesion and integration of migrants in Italy through social cooperatives, and mentioned the legislation that prohibits hospitals from discriminating against migrants and the importance of preserving culture. She also talked about the concept of the “second welfare” where private companies offer services to their workers in kind instead of increasing their wages, which is taxed. Social cooperatives are then called upon to provide most of these services.

During the Q&A session, a listener raised a concern about the existence of cooperatives in Italy that do not operate ethically or lawfully. In response, Zamagni acknowledged the existence of such cooperatives and explained that out of the approximately 70,000 cooperatives, representing approximately 7% of national GDP and over 11 million cooperative members, a significant number is not inspected by the state, and many of them are not affiliated with any umbrella organizations. Zamagni also discussed the reintroduction of cooperative teachings in Italian universities after disappearing from textbooks following Americanization after World War II. She and her husband have written on the subject to show support for cooperatives. Umbrella organizations in Italy offer legal and administrative services to cooperatives, as well as some initial capital. There is an effort to introduce cooperative topics in secondary schools, for example, through a contest for the best proposal on forming new coops. Zamagni also mentioned the importance of teaching both competition and cooperation principles together in economics. Marcelo Cohen asked about key points for replicating Italy’s cooperative scenario worldwide, and Zamagni suggested that government support is essential but not sufficient, and that cultural factors also play a role. Zamagni argues that Italians refuse big business because they prefer to work for themselves or in cooperatives. As a result, the domestic market is less competitive than places like the United States. However, Italy has many highly specialized and competitive medium-sized companies that are often part of cooperative networks, which is a specialty of Italian cooperation.

In her talk, Professor Zamagni mentioned that platform co-ops have not made inroads in Italy to date, at least they have not scaled, but her insights on social cooperatives can inspire the emerging platform cooperative movement.

The video recording is linked here.

Key Takeaways for Platform Co-ops:

  • Importance of alliances, consortia, networks, and federations for scaling: One key lesson for scaling is the importance of alliances, consortia, networks, and federations. In Italy, small cooperatives have traditionally relied on joining consortia to improve their strategies, competitiveness, and access to resources. Social cooperatives in Italy have established 452 consortia as early as 2011, providing a valuable example for platform cooperatives to leverage partnerships and collaborations to achieve economies of scale, access know-how, and synergize with other cooperatives.
  • Participation of many stakeholders: Italian social cooperatives have emerged as a key player in personal services, promoting multi-stakeholder engagement and promoting the public welfare rather than simply their members.
  • Value beyond economic activity: Zamagni examined cooperative value through the prism of non-GDP assessment instruments such as the Gross National Happiness index and the UN Sustainable Development Goals, underlining the distinctive contribution of Italian social cooperatives.
  • Importance of government support, cultural factors, and connections between people: Government support is essential but not sufficient, and cultural factors also play a role in replicating Italy’s cooperative scenario worldwide. The importance of connections between people and building relationships in order to survive in a highly competitive market was also emphasized.
  • Italian community cooperatives are multipurpose: offer a range of services to combat depopulation and revitalize small villages and towns, contributing to sustainable and resilient communities. Platform co-ops could emulate that model.