Renewing Worker Cooperatives for the Digital Age

A new movement in the U.S. is trying to bring the principles of cooperatives to the online world. Internet-based (platform) cooperatives and freelancer cooperatives may be crucial to maintaining workers rights in our digital future.

The Digital Age is bringing unprecedented changes to how people work. The new digital technologies have potential to improve our working lives – or to further exacerbate trends toward greater inequality and corporate monopolies and dominance. Which future will prevail? That question will be decided over the next 5 to 15 years.

Germany already has been a leader in crafting economic strategies designed to foster more of a Social Europe. These strategies include codetermination (Mitbestimmung), vocational training/reskilling, job sharing and short work (Kurzarbeit), and worker, producer, consumer and housing (Wohnungsgenossenschaften ) cooperatives. The early phases of the German labor movement were initially shaped by the triad of trade unions, political parties and cooperatives. But the digital future requires modernization of old strategies, and adoption of new ones.

There is no reason why Uber’s online ridesharing platform can’t be done better by a drivers’ co-op

A new movement has arisen in the United States to try and bring the principles of cooperatives to the online world. As the digital economy and platform capitalism have emerged as the latest twist in capitalist business development, a parallel movement has arisen for bringing cooperative structures and philosophy to this new frontier. It’s called “platform cooperativism” and it is attempting to combine the principles of cooperatives with 21st century technologies.

There is no reason why Uber’s online ridesharing platform can’t be done better by a drivers’ co-op; or that an on-demand housecleaning service like Handy or home sharing service like Airbnb can’t be owned and operated by the hosts that provide most of the value for these businesses. The internet to some degree reduces the startup costs of new online services and platforms, so in theory these services could be initiated at a reasonable cost and done better by a democratically-controlled and managed operation.

Professor Trebor Scholz, a German-born academic from the New School for Social Research in New York City, is a leader in the new movement for platform cooperatives. He and others have launched the Platform Cooperative Consortium that acts as an online resource for the movement. He says, “Whether you are thinking about secure jobs, minimum wage, safety, health insurance, pension funds – none of these issues can be addressed fundamentally without the reorganization of work, without structural change.” Platform cooperativism, he says, will “reinvigorate solidarity, change ownership, and introduce democratic governance.”

Providing an alternative for consumers that puts market pressure on the big for-profit corporations could spur better commercial behavior. A network of platform co-ops in the digital era could lead to a cooperative renaissance and create a new dynamic which leads to worker-friendly businesses. Perhaps one day some of these nascent businesses will even give some real competition to Silicon Valley companies. Already a number of platform cooperatives have formed, such as:

Stocksy United, a commercially successful stock photo platform that is collectively owned by nearly 1000 professional photographers, with a stated mission to pay fair wages and create sustainable careers for its members;

Green Taxi Co-op, an 800-person ride-hailing cooperative based in Denver, Colorado that launched in 2015, created its own app, and now controls around one-third of the total market in the metro area. Other successful taxi cooperatives in the US include Union Cab in Madison, Wisconsin and Union Taxi in Portland, Oregon; in other countries, there is Coop Taxi in Montreal, Canada and COOP Taxi in Seoul, South Korea;

Up & Go, a digital platform in New York City that allows consumers to hire house cleaners from already-existing worker-owned cooperatives;

Home Green Home, a worker-owned natural cleaning cooperative in San Francisco, in which the worker-owners participate in key business decisions and share profits, and their use of natural, non-toxic cleaning products protects the health of the workers and the environment.

The different types of cooperatives operate uniquely, but they all share a similar goal – shared democratic governance and worker ownership of the enterprise. What Scholz hopes to see out of the platform cooperative movement is a collection of more localized, collectively-owned platforms that can offer alternative businesses for consumers, workers, producers and entrepreneurs.

Building tools to solve challenges

The small but growing movement in the US has made progress in attracting attention from activists, scholars and foundations. But one of the persistent problems that platform cooperatives have faced is a lack of startup capital, or also later stage funding that allows a successful startup to scale. This often is true of startup platform companies in general, but the challenges are even more severe for platform cooperatives since part of the guiding philosophy includes an inherent distaste for generating profits for investor-shareholders. Other fundraising strategies, such as crowdfunding, philanthropic investment and worker- or member-based stock ownership have proven to be inconsistent and unreliable.

The platform cooperative movement is endeavoring to create a number of resources and toolkits.

Especially for any kind of Internet-based company, startup capital is necessary to create an attractive and smoothly functioning website, an efficient app, and depending on the type of business, enough capital to store inventory. An effective website must facilitate product selection by the customer, and then connect that to a number of databases that must all smoothly and efficiently transform that customer order into product fulfillment and delivery, as well as continuous tracking of the mass inventory. Amazon’s website is easy to use and efficient –- like a great musician or other artist, its facility looks effortless but in fact is a result of great expertise and significant financial investment. There is a lot on the back end of such a website that is not apparent to the user, who sees merely the front end of the user interface. Without those integrated components, an Internet-based business can find its service and product delivery greatly crippled, which in turn hurts brand reputation with customers as well as with producers and traders.

To help solve these and other kinds of problems, the platform cooperative movement is endeavoring to create a number of resources and toolkits. One platform co-op, called Start.coop, is acting as a seed funder and accelerator for other platform co-ops, providing some training, mentorship and key infrastructure for startups. Scholz’s Platform Cooperative Consortium is producing a Platform Co-op Development Kit that will help bridge worker cooperatives into the digital world. With a $1 million startup grant from Google.org (the company’s philanthropic arm), the Kit will include trainings, online tutorials, co-op case studies, and social networking so that interested workers can upgrade their skills and learn from each other’s experiences. There also will be technical support, like a legal resource center Scholz and his colleagues are establishing via a partnership with Harvard Law School to equip workers with guidance as they build out their cooperative platforms. Workers that have already organized as a cooperative could use the Kit resources to develop a great website to take their business online as a platform co-op that can sell its services over the Internet.

These different tools will be rolled out as they are developed, but already in the early stages they are helping a diverse range of worker groups to form co-ops and develop online platforms. Those groups include a network of 3,000 babysitters in Illinois, organized by the Service Workers Union, that needs assistance creating a labor and purchasing platform. Also receiving assistance is a group of refugee women in Hamburg, Germany, starting with Syrian, Albanian, and Iranian women, who plan to offer a platform co-op for child care services and elder care.

Scholz is hoping to reach a number of sectors with the kit, especially home senior care and domestic cleaning work, which are in high demand but have always been tough sectors to organize. “By joining these workers with the digital economy, we will help them communicate better with each other” and help them forge their own economic destiny, says Scholz.

Progress and problems in Germany

The growing movement for platform cooperatives has now planted seeds outside the US. There are about 350 projects in the ecosystem stretched across 26 countries and 97 cities, either a new platform co-op or other organizations supporting them. 

Germany has become a focus of activity in Europe. Cooperatives have been active in Germany since the mid-19th century and today almost 20 million Germans – a quarter of the population – are members of one of nearly 6000 different co-ops (though most Germans are unaware of this affiliation). Germany has spawned about a dozen platform cooperatives, including one offering IT services, a sports co-op that provides access to sports facilities, another offering financial services, and Cosum, which enables shared local ownership of resources. One of the best known is Fairmondo, a cooperative online retailer started in Berlin that competes with Amazon, Zalando and Etsy to provide an online marketplace for “ethical goods and services;” recently it has expanded to the UK. Another is Resonate, an artist-owned music-streaming cooperative based in Berlin that, unlike services Spotify and iTunes, gives the artists a fair share of profits.

But support from the German government for development of platform co-ops has been lacking. While both federal and state governments have prioritized helping startups, cooperative startups have not had the luxury of that support. Indeed, they find themselves misunderstood by the German legal landscape.

Felix Weth, the founder of Fairmondo, says that as the co-op model has tried to go digital in Germany, it has run into problems with backward laws. “According to German law, co-ops need a hand signed letter from every new member,” he told me, over a savory Indian lunch of chana masala and malai kofta in Berlin’s Neukolln neighborhood. “People can’t just sign up online or via their smart phones,” and that significantly hampers their growth potential.

Also, platform cooperatives have had a harder time accessing the generous flow of the federal government’s seed money that is available for startups. “The Ministry of Economic Affairs funds many startups,” says Weth, “but we’ve had a hard time accessing that because we are a cooperative.”

Which is unfortunate, because a competitive diversity of business models that includes more support for co-ops would better advance successful evolution of these platforms. According to Weth, German labor unions also could do more to support platform cooperatives.

“The unions don’t seem to understand that who owns and controls these platforms is key. They are perfectly fine with these big corporate platforms as long as the workers get their share.”

A new platform cooperative movement can create opportunities for economic democracy and extend workers’ rights and democratic ownership.

No question, ownership and management of the large platforms has enormous consequences. But perhaps this relationship is about to change. In 2018, Andrea Nahles, leader of the Social Democratic Party (SPD), met with Scholz and held a joint public event at the SPD headquarters in Berlin. Nahles emphasized her strong support for platform co-ops and the need for the SPD to help them develop in Germany “in the same way as we do today with normal start-ups.” She specifically cited the development of the platform co-op for refugee women in Hamburg as a key pilot project worth supporting.

The European Commission also could do a lot more to promote platform cooperatives. There are some 250,000 cooperatives in the EU, owned by 163 million citizens (nearly a third of the EU population) and employing 5.4 million people. The Commission has an ambitious digital agenda, including spending billions of euros for startup seed and incubator money, and trying to stimulate investment and development in artificial intelligence/machine learning. But in its “Lisbon Strategy” drive for competitiveness, the Commission has been obsessively guided by the “consumers first” values of Silicon Valley. Consumers and businesses are important, but so are workers, producers, families and communities, which are nurtured by other values such as democracy, accountability, fair competition and shared prosperity.

So the Commission and Germany both should make room in their economic visions for a new platform cooperative movement, which can create opportunities for economic democracy and extend workers’ rights and democratic ownership and control as a counterbalance to consumer rights and corporate ownership and control.

Cooperatives for self-employed workers.

Besides on-line platform cooperatives, there is another typology of cooperative that has great relevance for precarious workers today. Business and Employment Cooperatives (BEC) could play a key role for freelancers and solo self-employed workers.

In France, a business and employment cooperative is know as a Cooperative d’Activités et d’Emploi (CAE). The CAE is a cooperative to help the self-employed secure support for their occupations. Members of a CAE avoid going it alone by becoming employees of the co-op, legally speaking, which results in greater worker rights. Co-op services provided to CAE members include affordable workspaces, office services, invoicing and debt collection (for customers that refuse to pay), help with marketing, low-cost insurance and a collective system for securing sickness and benefit payments from the government.

The CAE often operate almost like guilds by specializing in a particular trade sector

In addition, because CAE enterprises are considered a startup, they qualify for subsidies provided by the French government and the EU. One such CAE is Coopaname, founded in 2004 in France, which has more than 850 members including craftspeople, freelancers and service providers. It is a co-op for those working alone or in co-operative groups and delivers assistance to members at various stages of their development. Coopaname provides for a range of economic and service needs, and it offers all members the opportunity to integrate co-operatively. Members of the co-op are paid partial salaries based on the revenue that their business is earning, as well as provided social protection benefits. They are in effect employees of the CAE, which helps these freelancers and entrepreneurs to succeed by providing some of the infrastructure as well as legal protection of a traditional employer. In return, the CAE receives 10% of the gross revenue earned by those working under its umbrella. In this way, freelance entrepreneurs can be „independent without being independent.“

The CAE model has expanded in France to become a national network of 72 local cooperatives employing more than 5000 entrepreneurs. In different localities, the CAE often operate almost like guilds by specializing in a particular trade sector, such as Coopénates, which specializes in home care services, Artenréel, which works with regional artistic and cultural workers, and Antigone, which works with a variety of self-employed workers.

The success and expansion of the CAE network in France has inspired similar business and enterprise co-operatives across Europe. SMart in Belgium operates as a social cooperative for creative industry workers in commercial art and design. It enables members to avoid the burden of setting up as a company of one. It provides workspace and office services for the self-employed, support and training from a specialist advice and legal team, invoicing and debt collection, and access to finance, equipment and vehicles. SMart members must contribute €25 a year plus 6.5% for each invoice processed. It now has 12 offices in Belgium and 75,000 members, and has now expanded across Europe with offices in Germany, Austria, France, Hungary, Italy, the Netherlands, Spain and Sweden.

Online platform cooperatives and freelancer cooperatives are mutually complementary. If they can gain sufficient traction, both could empower freelancers and independent workers to control and manage their economic destinies. They could help overcome years of stagnant wages, gutting of the safety net, and declining job quality and underemployment, and provide new incentives that foster a more broadly shared prosperity. Germany and Europe should join these nascent US efforts to expand the impact of cooperatives and deepen their roots in the digital economy.