Business

How Cooperatives Are Driving the New Economy

The corporate workplaces probably aren’t in sync with our evolutionary roots and may not be good for our long-term success

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By Eric Michael Johnson

A century ago, industrialists like Andrew Carnegie believed that Darwin’s theories justified an economy of vicious competition and inequality. They left us with an ideological legacy that says the corporate economy, in which wealth concentrates in the hands of a few, produces the best for humanity. This was always a distortion of Darwin’s ideas. His 1871 book The Descent of Man argued that the human species had succeeded because of traits like sharing and compassion. “Those communities,” he wrote, “which included the greatest number of the most sympathetic members would flourish best, and rear the greatest number of offspring.” Darwin was no economist, but wealth-sharing and cooperation have always looked more consistent with his observations about human survival than the elitism and hierarchy that dominates contemporary corporate life.

Nearly 150 years later, modern science has verified Darwin’s early insights with direct implications for how we do business in our society. New peer-reviewed research by Michael Tomasello, an American psychologist and co-director of the Max Planck Institute for Evolutionary Anthropology in Leipzig, Germany, has synthesized three decades of research to develop a comprehensive evolutionary theory of human cooperation. What can we learn about sharing as a result?

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Tomasello holds that there were two key steps that led to humans’ unique form of interdependence. The first was all about who was coming to dinner. Approximately two million years ago, a fledgling species known as Homo habilis emerged on the great plains of Africa. At the same time that these four-foot-tall, bipedal apes appeared, a period of global cooling produced vast, open environments. This climate change event ultimately forced our hominid ancestors to adapt to a new way of life or perish entirely. Since they lacked the ability to take down large game, like the ferocious carnivores of the early Pleistocene, the solution they hit upon was scavenging the carcasses of recently killed large mammals. The analysis of fossil bones from this period has revealed evidence of stone-tool cut marks overlaid on top of carnivore teeth marks. The precursors of modern humans had a habit of arriving late to the feast.

However, this survival strategy brought an entirely new set of challenges: Individuals now had to coordinate their behaviors, work together, and learn how to share. For apes living in the dense rainforest, the search for ripe fruit and nuts was largely an individual activity. But on the plains, our ancestors needed to travel in groups to survive, and the act of scavenging from a single animal carcass forced proto-humans to learn to tolerate each other and allow each other a fair share. This resulted in a form of social selection that favored cooperation: “Individuals who attempted to hog all of the food at a scavenged carcass would be actively repelled by others,” writes Tomasello, “and perhaps shunned in other ways as well.”

This evolutionary legacy can be seen in our behavior today, particularly among children who are too young to have been taught such notions of fairness. For example, in a 2011 study published in the journal Nature, anthropologist Katharina Hamann and her colleagues found that 3-year-old children share food more equitably if they gain it through cooperative effort rather than via individual labor or no work at all. In contrast, chimpanzees showed no difference in how they shared food under these different scenarios; they wouldn’t necessarily hoard the food individually, but they placed no value on cooperative efforts either. The implication, according to Tomasello, is that human evolution has predisposed us to work collaboratively and given us an intuitive sense that cooperation deserves equal rewards.

The second step in Tomasello’s theory leads directly into what kinds of businesses and economies are more in line with human evolution. Humans have, of course, uniquely large population sizes—much larger than those of other primates. It was the human penchant for cooperation that allowed groups to grow in number and eventually become tribal societies.

Humans, more than any other primate, developed psychological adaptations that allowed them to quickly recognize members of their own group (through unique behaviors, traditions, or forms of language) and develop a shared cultural identity in the pursuit of a common goal. “The result,” says Tomasello, “was a new kind of interdependence and group-mindedness that went well beyond the joint intentionality of small-scale cooperation to a kind of collective intentionality at the level of the entire society.”

What does this mean for the different forms of business today? Corporate workplaces probably aren’t in sync with our evolutionary roots and may not be good for our long-term success as humans. Corporate culture imposes uniformity, mandated from the top down, throughout the organization. But the cooperative—the financial model in which a group of members owns a business and makes the rules about how to run it—is a modern institution that has much in common with the collective tribal heritage of our species. Worker-owned cooperatives are regionally distinct and organized around their constituent members. As a result, worker co-ops develop unique cultures that, following Tomasello’s theory, would be expected to better promote a shared identity among all members of the group. This shared identity would give rise to greater trust and collaboration without the need for centralized control.

Moreover, the structure of corporations is a recipe for worker alienation and dissatisfaction. Humans have evolved the ability to quickly form collective intentionality that motivates group members to pursue a shared goal. “Once they have formed a joint goal,” Tomasello says, “humans are committed to it.” Corporations, by law, are required to maximize profits for their investors. The shared goal among corporate employees is not to benefit their own community but rather a distant population of financiers who have no personal connection to their lives or labor.

However, because worker-owned cooperatives focus on maximizing value for their members, the cooperative is operated by and for the local community—a goal much more consistent with our evolutionary heritage. As Darwin concluded in The Descent of Man, “The more enduring social instincts conquer the less persistent instincts.” As worker-owned cooperatives continue to gain prominence around the world, we may ultimately witness the downfall of Carnegie’s “law of competition” and a return to the collaborative environments that the human species has long called home.

Originally published here.


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  • pluviosilla

    Corporations are themselves examples of collective action, and the top-down corporate command and control structures you describe as unnatural are actually a natural product of any collective effort larger than a dozen people. Worker coops would not remove that essential downside any more than democracy does. Politically talented people will always dominate in such structures. Genuine freedom consists in informal coordination of the sort you see between private businesses. That also requires an evolved commitment to cooperation in the form of laws and rules but it is less susceptible to capture by political entrepreneurs and there for less prone to petty tyrannies.

  • Swami Cat

    Once again, Johnson tries to write a “sciency” sounding article to prove his biases.

    He takes an attack on a particular individual’s absurd and long since repudiated idea (Carnegie) projects it willy nilly across institutions spanning billions of people and two hundred years and assumes the readers are ignorant enough to just agree that social Darwinism is the dominant ideology of free markets. It is simply a smearing tactic. Bad form.

    I have no bias for or against worker-owned coops. There is nothing stopping workers from forming coops — indeed there are various examples of these in existence within markets, though they have not tended to be particularly successful. I believe it has to do with agency issues, risk diversification, and specialization. Employees are not likely to be the best sources of diversified capital, and capital isn’t going to want to invest in a company where the agents running it are incentivized to optimize employee outcomes over investors. Conflicts of interest abound. It has become kind of an evolutionary dead end.

    The final two paragraphs of the article reveal a fundamental confusion about markets. Prosperity involves huge cooperative endeavors requiring massive capital and often tens or hundreds of thousands of people. These are not local community affairs, and if they were the benefits of specialization, comparative advantage and scale could not play out. Without these you don’t have the scale and productivity necessary to support the endeavor. And if you did have a massive corporation which was contained in just one small community, you would have a community guaranteed to die with no next round of creative destruction.

    Large corporations work by balancing the interests of investors, managers, other employees, various communities, cooperative vendors and most importantly, consumers. Each relationship or interaction, whether a sale, a job, an investment or whatever is a voluntary interaction expected to be positive by all parties in the transaction. Investors gain profit (at real risk of loss), employees and managers get wages, vendors get revenue, communities get local jobs and economic gains, and most importantly consumers get a cornucopia of higher quality goods and services at reasonable prices. Everybody wins, or expects to win.

    Quaint little forager coops are great for small numbers. They simply are inadequate to handle the scale of cooperation necessary for the modern economies which 7 billion people depend upon.

    Let me end that I think Johnson not only doesn’t get markets (even slightly) he really doesn’t get evolution either. He assumes he can rationally envision a better way of organizing markets despite all empirical evidence to the contrary. A central insight of evolution is that it is often smarter than us. Via a process of variation, selection and replication it can discover what really works even when the ideas seem contradictory to our values (which formed in an evolutionary landscape entirely different from modern conditions.). He is trying to force his top down design on a complex system.

    • Duncan Cairncross

      I am beginning to see a pattern here

    • Paul McConnell

      I think you make some strong points; clearly it’s a massive stretch to apply this theory to cooperatives, I think it also needs to consider the propensity that so many have for authority. Consider Milgram’s studies on obedience, or Moral Foundation’s Theories finding that half the population see obeying authority as on more or less equal footing with ‘do not harm’ or ‘fairness’ concerns.

      Nevertheless there’s not nothing to what’s being said. Groups can be bound together by common goals, and Wilkinson and Picket’s work on less inequality leading to more socially cohesive and healthy societies suggests that horizontal, cooperative endeavours my lead to more productive, happier, healthier workers. And while you say that investors wouldn’t invest in companies that don’t prioritise investors over employee outcomes, well that may not be so as there’s some evidence that cooperative workers are actually more productive, and with greater focus on sustainability. https://www.thenation.com/article/worker-cooperatives-are-more-productive-than-normal-companies/?page=full

      In any case, good food for thought.

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  • Duncan Cairncross

    Excellent start and basics
    The structure of corporations is a bit more complex
    The overall goal of “enriching the shareholders” becomes split into lower level goals like getting today’s orders out
    The team cooperation bit works at that level

  • Dave Carr

    Corporations, by law, are required to maximize profits for their investors. What law?

  • rcmarsh

    I’ve been studying cooperatives, worker cooperatives in particular, Japan’s worker cooperatives specifically, for 25 years now. Worker cooperatives are a fine idea and work well once they get started. Now I’m reaching the conclusion they are not the tree shrews to the corporate Triceratops and the Bush Recession was not the Yucatan asteroid that would clear the way for them. If we recognize that human social relations are strategic -that what we get from interaction depends not only on what we do, but on what others do in turn – we can recognize that there are three patterns of interaction available to us and no one is evolutionarily dominant, but all three are contingent. These are competition, cooperation and domination/subordination, call it hierarchical.

    We use the word ‘growth’ to describe the impetus for expansion inherent in capitalist enterprises, modeling our human strategic relation of employer-employee as a natural process because as investors gain income and then wealth from each next worker hired, they have a constant motivation to increase their revenue, adding and subtracting workers as they figure out how to sell more of what they have at higher returns. As economists have long known but deliberately neglected, the tendency is toward monopoly, not equilibrium, among firms.

    But because worker cooperative members do not make more income from each next worker’s contribution to production, but they do take on additional risk with expansion, unless there is a mechanism built in right from the start, and which has to be a deliberate ideological position to justify taking on this risk, worker cooperatives will not try to get bigger. It may be even that people who are predisposed to form worker cooperatives are more risk-averse than capitalist investors.

    Consequently, it is very hard for me to see where capital-intensive worker cooperatives would ever come from, very hard to see how they could ever come to dominate investor-owned capitalist firms thru market competition. The story of Fagor’s rise and demise is a fascinating one, filled with difficult decisions and questionable judgments from the start, but part of a deep ideological commitment to worker cooperation.

    So I am now thinking about this in broad phases, foraging, hort, ag, indust, IT and so on, that we will have to reach the point of industrial saturation without boiling ourselves to death, and find a way to raise standards of living for more and more people without the need for each person to add value to raw materials thru labor. This is a ways off yet, even tho it is often discussed. Did Adam Smith foresee Standard Oil, Toyota or Apple? When will turning less and less of the earth into stuff come to be a general positive value, rather than a “depression?”