Wealth Inequality & The Co-Op Solution

Wealth inequality is destroying our civilization, ripping through the fabric of our society and tearing countries apart. It has led to the violent destruction of many nations in our history and birthed corruption that could come straight out of a fiction book. Though there is no one solution to our woes, there are various remedies and methods that we can employ to fix the broken machinery of our communities. One solution many people propose, and that I personally support, is a cooperative economy. An economy that would reduce wealth inequality, helping to place back some of the missing cogs in the mechanisms of our society.

Now obviously before I try to convince you to become a supporter of this solution, I need to make sure you know what I mean when I talk about a cooperative economy: A cooperative economy is a system in which the majority of companies are owned and operated collectively by those who are closest to it, such as workers or consumers.

One of the biggest issues and points of friction in our civilization is wealth inequality. It has caused countless wars, debates and political movements. Wealth inequality is one of the biggest hindrances to the average American, with its gini coefficient of 0.49 ( 0 being perfect equality and 1 being one person owns everything) it is safe to say wealth inequality is the reason for the disconnect between GDP growth and an actual improvement in your day to day life. A cooperative based economy is the solution to this ridiculously high rate of inequality. This system’s unique ability to enrich the common working man and keep money grounded within the local economy is the silver bullet to wealth inequality. By distributing proceeds more evenly to workers the system works to close the wealth gap between the average working man and corporate higher ups.

At this point you may be wondering how exactly this is the silver bullet to wealth inequality. The gap is a bit smaller than usual, so what? Well, I would ask you what’s the first thing you do when you get a bit more money in your pocket ? I’d guess that you’d spend it, am I right? (I’m going to continue as if I guessed right, since statistically you would!) These people working in cooperatives, receiving a more equal share of the wealth they generated, would theoretically spend this money on local consumer goods from corporations in their community (in a cooperative economy these other corporations would likely be co-ops). This increased spending among the local population would then signal to these firms to expand, hiring more employees, increasing wages, and producing more goods. This would hypothetically trigger a cycle in which everyone in the local area, including those not employed by a cooperative, would see an increase in wealth generated, further closing the gap between poorer communities and wealthier ones. Alula, editor of the Boston Ujima Project, had this to say about the co-op concept’s effects on the Black community: “I absolutely think co-ops will be beneficial in the long-run for Black communities.”

The proceeds of these cooperatives are shared among the workers and members of these local communities. And beyond just sharing more of the profits these cooperatives also democratically govern themselves, making decisions collectively and minimizing the risk to the local communities they operate in. Imagine going to work day to day and being the one in charge of your life, the lives of those dependent on your income. Alula also states: ”cooperatively-owned businesses better withstand recessions and other trials that affect businesses, especially in their first few years of operation.”

You may have noticed my use of the words “hypothetically” and “ theoretically,” which might have made you consider just how functional a cooperative economy really is. When I first came upon this concept I wondered the same thing, could a system like this actually work if we could convince people to actually enact it? The Mondragon Cooperative is a large spanish organization boasting 81 different cooperative enterprises, and looking at its effect on its surrounding area should be enough to convince you of the merits of a cooperative economy.

In the Basque region of Spain, where the Mondragon cooperative primarily operates, we can see that the cooperative theory does in fact work to reduce wealth inequality. The Basque region of Spain possesses an inequality rate of 0.271, this is compared to the rest of Spain with an average inequality rate of 0.337. This would suggest that the Mondragon cooperative has effectively reduced inequality, including wealth inequality, and enriched the local communities greater than other communities who operate within the default system.

But maybe far off examples of this system’s success won’t convince you of its merits, maybe you require examples closer to home. Boston’s Ujima Project is an organization dedicated to enriching local communities through investments and as their editorial manager Alula Hunsen says: “…we do this investment via a democratic process led by our membership.” The Dorchester food co-op is a cooperative corporation aided by the Ujima Project helping to enrich its local community and provide food to an area which would otherwise be a food desert. This is another example of how this system could work to combat wealth inequality and aid our local communities.

After reading the reasoning of this system and the real world examples of its success and those trying to bring it to our local communities I hope you have come to support this concept and perhaps aid in its implementation across not only America but the world at large.