Category Archives: Values

Equitable distribution of surplus in cooperatives

Equitable distribution of surplus in cooperatives

René Mendoza Vidaurre[1]

Paying back is improving

The revolution and the agrarian reform came, people knew the word and their eyes were opened, many organized into cooperatives and received land, seed and technology, and they said “we are in power.” Within years they sold the land and forgot even the word. They received it, and lost it.

A woman received a cow and in months paid for it with a calf, which was given to another family. She understood that the cow pays for itself, she felt that she paid back, and made an effort along with other families. Paying back is improving.

(Based on a conversation with Gregorio Solórzano, Municipality of Cinco Pinos, Chinandega, Nicaragua)

This parable recalls the historic rules of indigenous and peasant communities. If the action of “giving” is connected with “paying back”, like the woman with the cow and the calf, their lives improve. While “receiving” unilaterally, without “paying back” to the community, creates a false world (“we are in power”) where people are left worse off (“without land and power”). The paradox is that “paying back” is not losing, it is gaining: it makes the person “make an effort” within a collective framework and community space.

That collective framework constitutes the paradoxical difference. In the case of the woman who received a cow and paid back with a calf, an arrangement (agreement, rule) underlies which she fulfills, an arrangement that is connected to a virtuous millennial indigenous institution, “giving-receiving-paying back”[2]. In the case of the beneficiaries of land on the part of the government, a damaging arrangement  underlies it, subordinating oneself and depending on the government, something that leads them to be connected to another historical institution, this time a counterproductive institution, “easy come, easy go”; people lose and the government loses. The gaze of the woman is toward the community, while the gaze of the people in the cooperative is directed outside the community.

Giving-receiving-paying back is growing in collective spaces mediated by rules that are connected with virtuous endogenous institutions of the people themselves. Within this framework, how can distributing (“paying back”) in the cooperatives be the key for growing with equity? Perhaps diminishing is growing?

In this article we study these questions in light of the cooperatives, even though it can be generalized to associations, associative enterprises or NGOS with initiatives under the framework of the social and solidarity economy. We start conceptualizing distribution as a different idea from the neoliberal economy, where the market is the great distributer. Then we look at five ways for the distribution of surpluses: legal reserve, cooperative reinvestment, social-educational fund, direct resources to members, and retribution by way of a member´s rights.  Then we work on how to carry them out. We conclude reconceptualizing equitable distribution as a cooperative concept and one from the social and solidarity economy, that goes along with the democratization of cooperatives, and connected to endogenous institutions of the peasantry.

1.    Distribution rules and policies

In capitalism “the invisible hand” attracts resources and distributes them with inequality, in dependence on the financial power of the actors, their connections, the support of the State for elites (e.g the policy of low taxes for mono-cropping enterprises), and guided by the rule “even the monkey dances for money”. The mediation network captures the resources and returns them as money that buys new products (and labor), mediated by institutions that worsen that inequality: usury, future purchases (crop lien system) and indebtedness. The capitalist, be it merchant, banker or industrialist, is the absolute owner of the surplus.

Polanyi (1976)[3], in an anthropological study, worked on the idea of reciprocity, distribution and interchange. For the topic that concerns us he says: “distribution designates the movements of ownership toward a center and then toward the exterior”, and added, “distribution depends on the presence to some extent of centrality in the grouping”” (1976:7). Santana (2014: 91)[4], rereading Polanyi, indicates that “what is unique here is that there must be trust and loyalty to be able to group the assets in that centrality, knowing that later it is going to be returned in an equitable way.” Let us reread both authors: resources come toward a center, let us say toward a cooperative (like taxes to the State), from there is “goes outside” of the cooperative, to the members in an equitable way. For those “movements of ownership” to happen, there has to be “centrality in the grouping”, which is possible if there is “trust and loyalty”. Without trust and loyalty, there is no “movement.” When is there trust and loyalty that takes resources to the cooperatives and makes them be  “paid back”? Our argument: there is trust and loyalty when the rules of the cooperative, connected to endogenous virtuous institutions, guide the cooperative from its beginnings with a societal and communitarian perspective. In other words, the cooperative, from and for the communities, is responsible for the distribution with equity.

Cooperatives currently, nevertheless, are formed and achieve a partial “movement”: they attract resources from dozens of their members, but it is difficult for them to “pay back” the surplus and pay them back in an equitable way. There is the challenge. For that reason, there are written rules. What are they?

Cooperatives include in their statutes, following the laws of each country, the distribution of profits[5]. Cooperatives include a percentage (%) for legal reserve, % for the social or educational fund, % for distribution among the members according to their contributions or economic transactions in the cooperative – note that improvement in the price of the raw materials is not mentioned as “distribution of surplus”, because it is not, the surplus is calculated after the annual financial year. This is consistent with the principles of historic cooperativism: among the Rochdale principles of 1844 is the “payback of surplus”, then  in 1966 the International Cooperative Alliance (ICA) reformed those principles and replaced it with “the surplus belong to the members”, and finally in another reform in 1995 the ICA said “the economic participation of the members”; in all of them the spirit of the distribution of surplus is maintained. These rules can be connected to the virtuous institutions of agrarian societies, giving-receiving-paying back, the gift that Mauss (1979) described.

Consistent with this cooperative and communitarian principle, the International Fair Trade Movement (FLO), begun in the 1980s and 1990s, in their policy of offering better prices to products coming from families that are organized, included a “fair trade premium”, which in the case of coffee, for example, is US$0.20/lb., a fund so that the members of a cooperative might decide to use it in educational, health projects, and farm improvements or investment in processing installations. Other buyers tend to include also a “cooperative premium”, a fund that the members might decide to use for collective investments that would benefit everyone.

In addition to rules, cooperatives have mechanisms for complying with them. They have their oversight board, the assembly, the education committee, there is also the administration with accounting that issues financial reports. In some countries the State has a role of comptroller of the cooperatives. The international fair trade organizations include their FLO certifier that audits the use of the Fair Trade premium and the democratic processes of the cooperative; social banks require financial statements and balance statements; aid agencies ask for audited reports and evaluate the projects that they finance, and in some exceptional cases withdraw their support when the cooperative fails to fulfill their rules for equitable distribution[6]; likewise some companies that buy coffee or cacao[7].

Having gotten to this point, what do we observe? In spite of having rules and mechanisms for distribution, it is rare the cooperative whose members participate in the decisions on the use of the social fund, reinvestment fund, or on the cooperative premium; it is rare the cooperative that is transparent with its members on the use of these funds; and it is rate the international aid agency or buyer who ensures this transparency, and that the surplus be distributed. In other words, the rules of the cooperative and the organizations are systematically not met; consequently, there is no confidence nor loyalty, which is why the “movement” is in only one direction: the resources from the members go to the cooperative and then to the companies (fair trade, direct trade, or independents), who do not “pay back” the surplus to the members. The rules of the cooperative and the organizations do not end up connecting to the virtuous endogenous rules.

2.    What opposes the distribution of the surplus

Even having rules and mechanisms, why do  cooperatives not distribute their surplus? It seems a matter of adding and subtracting, of knowing rules, signing and complying with agreements; it is not a technocratic matter, that a “scholarly” person might resolve; it implies adding and subtracting, showing the strength of the old anti-cooperative model, and of perceiving their own attitudes. Here we start with three interconnected responses, of the several that exist. See Figure 1.

First, the “business foot” of the cooperative, and organizations-international enterprises coincide in the fact that the business (sale-purchase of the product, disbursement-payment of the loan and execution of the project) works, not so much that the cooperative works.

They are content with the protocol, written and legal proof about the functioning of the cooperatives, proof that the elites of the cooperative learn to quickly fabricate: minutes that prove that the organs meet, audits with authorized signatures, financial and narrative reports including registry of data, and even members “trained” to repeat what the organizations want to hear, when some organizations visit. This practice, in turn, is read by the members as something that confirms their ideas that the cooperative does not change at all their way of working and selling their products: “If the organizations says that it is fine, surely it is fine, as we have always worked.” This is the formal structure that covers over the fact that the cooperative does not distribute its surpluses in accordance with its own rules, and the millennial aspiration of indigenous and peasant families.

“The peasant is interested in selling his product, he is not interested in whether there are surpluses”. This phrase presidents and managers of cooperatives repeat, along with buyers and international aid agencies, as well as technicians and boards of NGOs. This phrase underlies century old institutional practices. What are they? It is the institutionalized idea in the hacienda owner or the capitalist, that they have the exclusive rights to surpluses, that the peasantry were born to sell their labor and/or their raw materials. It is the same idea that the peasantry reproduces: “My country ends with my fence of piñuelas”, says the peasant family; “they pay my wage, that is all I ask”, says the working person (field-hand or peon); they never ask themselves about the surplus that their work or their product generates, they take it as given that it is not theirs. That institutionality absorbed the cooperatives and made them forget about the reason for their origins and their rules for distribution, and with that buried even more that indigenous-peasant right to the value that their work creates. So it is that the members demand that they increase the price of their sun-dried coffee, cacao pulp or their sugar cane; in some cases they demand an “adjustment”; “if we got credit as a cooperative so that you pay us a certain price for coffee, and if you paid us as the market price a little less than that set price, then pay us the adjustment”; no one demands their surplus; the presidents and managers behave like the hacienda owner or capitalist.  Figure 2 illustrates this institutionality: the worker reaches the wall of their days wage, the peasant their fence of piñuelas, the “business foot” of the cooperative goes as far as the “wall” of the port, and the buyers-roasters-distributors to the sale or even the cafeteria. Each one, and in each wall, seem to follow the rule of “I don´t touch you, and you don´t touch me.”

Second, the organs of the cooperatives are left bound up, because their rules are replaced by others that respond to what Polanyi (2001)[8] called the “market society”, and respond to colonial and patriarchal structures. One of those rules is: “To distribute, first you have to grow.” This rule comes from neoliberalism, that “economic growth is development”, from trickle-down economics: capturing the wealth of the members so that the cooperative might invest and accumulate in the short term, and benefit the members in the long term. This “development” and that “long term” with “benefits”, nevertheless, tends not to arrive; in other words, “they do not pay back”. Consistent with neoliberalism, the cooperatives assume that “distributing decapitalizes the organization” and they embark on the path of the “big headed dwarf”, whose head is large and is made of steel (concentration of physical investments and resources), and whose feet are clay (impoverished members who do not participate in the decisions of their organizations nor rotate offices). In this logic the managerial staff or the president tend to end up feeling themselves to be the true owners of the resources of the cooperative, that it is “their effort”, while the board members tend to abandon the volunteer nature that their offices imply, and seek any gap to take advantage individually, be it through travel allowances, loans on top of loans, or benefitting themselves from the donations that the cooperatives eventually might receive. Also consistent with neoliberalism, the fair trade and direct trade bodies reduce their relations with the cooperatives to just the financial aspect, and treat the cooperatives as just “businesses”.

Distribution, expressed in colonial rules, says to the members: “We always need a patron.” The field-hand depends on the patron, who “provides” for him (future purchase of his labor), like the peasant depends on the trader who “provides” for him (future purchase of his product). For them, this “providing for” is the best “distribution”; they know no other. This is what penetrates into the cooperative where the members confirm naturally that they never had rights to the surplus.

Distribution is also expressed in the heart of the family. There, the patriarchal rule says, “The father decides to leave the inheritance to the eldest son, and that will be carried out when he dies.” That will is conceived as something sacred. The family is an institution that attracts resources because of the family labor of its members, and in the end “pays back” (inherits) in an unequal way, leaving tacit that that older son is going to distribute the inheritance among his brothers and sisters, and what happens? Not always, but generally, that older son takes over the inheritance, or sells it and squanders it. That family institution also penetrates into the cooperative, where many times the person who occupies the presidency or management is seen like that “eldest son”, while the rest of the members are submitted to his will, in spite of the fact that they are the “parents” (owners of the cooperative) of that “eldest son.”

The cooperative, guided under this capitalist, colonial and patriarchal spell, tends to start with enthusiasm and when it capitalizes, the board members or the administrative staff turn into elites, exclude those who question them, and privatize the cooperatives. Thus, W. Berrios, from the CAFOD aid agency, observes, “In my years of work in Central America I have seen that it is in the maturation curve that the cooperatives go broke.” Infrequently they restructure the cooperative into a private enterprise, but many times they make it function as a private enterprise sheltered under the legal status of a cooperative, or under the discursive mantle of the social and solidarity economy.  In both cases the members are treated as simple sellers of raw materials.

Finally, there is dovetailing between the mentality of international organizations (buyers, banking institutions, certifiers and aid agencies) and that of the members. The international organizations turn a blind eye to the lack of compliance with the rule of distribution, because, following Streeck (2019), “the policy of distribution only function in nations; in world society there are donations,” global governance “is not democratic”, because “above the nation-state there is only the “international free market”, which consists in large enterprises that are free to do whatever they want.” That mentality leads them to have a mentality of turning a blind eye to distribution, which coincides with the mentality of the members, who have never had access to surpluses, they always saw them as something that belonged to the patron or intermediary, from there it is that the members also turn a blind eye to their right that they be “paid back” (distribute) the surplus. This is what Figure 2 expresses with the walls, “I don´t touch you and you don´t touch me.”

3.    Distribution of the surplus (“paying back”)

How can cooperatives unbind this adverse triangle and distribute the surplus? By distribution people tend to fall into two beliefs: that it is “distributing financial surpluses” and that it is “distributing all the surplus to the members.” From here comes the idea that “distributing is decapitalizing.” In this section we break down what equitable distribution of surplus is, expanding the content of the distribution already described in the rules of cooperatives.

Let us start with the attached graph. This illustrates the components of this “paying back” that include collective forms (legal reserve, reinvestment fund and social fund), and the individual forms that the members receive directly (distribution to members and payments when they leave the cooperative). The percentages in the graph are arbitrary estimates, they vary depending on the laws in each country, and the decisions of the cooperatives agreed upon in their statutes.

Note that this graph breaks with the belief that “distributing decapitalizes”: the reinvestment fund refers to the fact that their own fund or their own “capital” grows in accordance with the percentage approved in the cooperative. The assumption in the graph is that exercising distribution in the five ways, combination of collective-community and individual distribution, builds trust and loyalty, which makes the members turn in their products to their organizations in larger amounts and with better quality; from here distribution instead allows the economic transactions of the cooperative to increase, and therefore the entirety of their funds grow; in other words, ”decreasing” (paying back or distributing) is “growing” in resources. The graph also shows the underlying reason for cooperativism, that it is not to accumulate just to accumulate capital, the cooperative is a means, and the members and their communities are the end (final objective). We break down these funds in what follows, including some important remarks.

3.1  Components of collective distribution

Let us describe those funds that are in the statutes, let us clarify and add what they can have which is unique. “Legal reserves” is to cover losses that eventually the cooperative might have during the year in the economic fiscal year; it is a financial cushion that prevents the cooperatives from going broke. In the case that there are no losses, that reserve could swell the investment fund, or, for example, cover legal paperwork expenses, the opening or updating of bank accounts, the legal defense of the cooperative in the face of lawsuits from third parties, the legal defense of the members in cases that affect the cooperative, or to have legal counsel in the face of certain situations or issues.

“Cooperative fund” or “reinvestment fund”, belongs to the cooperative. In addition, some buyers tend to increase the price of the product that they buy with a “cooperative premium” or with an “infrastructure fund”, resources that are added to the funds of the cooperative. These funds are to buy equipment that the cooperative might need, repair or enlarge the infrastructure (building, harvest collection center) of the cooperative, and/or to increase the funds of the cooperative itself, which would increase the loan portfolio, or would pre-finance the payment that the members make on receiving products, while they process and sell them – avoiding the need to seek outside credit.

“Social or educational fund”. It is a fund from the rules of the cooperative itself, and is a fund that increases if the cooperative sells its product through fair trade organizations or buyers that condition a certain amount for a social fund. In general, cooperatives use it to finance some demand of the community school, provide backpacks to the children, provide support to the local sports team, or for trainings that their education committee might organize. Even though these initiatives are praiseworthy, physical investment in the school is the obligation of the State for which society pays taxes. The sports teams are going to function with or without the support of the cooperative, the children will go to school with an old or new backpack. Some innovative cooperatives use that fund under the following criteria: invest in something that generates value for the community, that is not the role of another institution, and doing so as a long-term investment. An example of this is the fact that two or three cooperatives from the same community might invest in libraries for children under 7 years of age, story books that their families might borrow to read to them before going to sleep, promoting reading in the family itself, and that the cooperative might organize reading circles with the support of people who promote reading; the long-term impact of this initiative in the creativity and cooperative spirit of the community can be significant.

3.2  Components of individual distributions

Following graph 1, 50% of the surplus of the cooperative is distributed to its members directly. The criteria for that varies from cooperative to cooperative, and depends on the services that they offer. In some cases, it is in accordance with the contributions of each member. In other cases, it is in accordance with the volume of product transacted with the cooperatives that collect the harvest and sell the product of its members. In other cases, it is in accordance with the quantity of products bought in their cooperative. And in other cases, it depends on the amount saved in their cooperative. There are cooperatives with similar services, and that “pay back” under different criteria; for example, the peasant store Los Encinos in Honduras “pays back” 100% of the amount of the agreed upon contribution, while the Esperanza of the Campesinos Cooperative with several supermarkets, “pays back” based on the amount that each member buys from those supermarkets.

These criteria promote the capacity of each member, and increase their trust in the collectivity that the cooperative is. There are members with more financial capacity and do not necessarily have larger contributions in the cooperative; it depends on the trust that the members have in their cooperative, and on the opportunity cost that each member thinks their resources have. In this sense, the biblical parable of the talents (Mt 25: 14-30) illustrates part of what the cooperative looks to incentivize with direct distribution; in that parable three people receive talents, one 5, another 2 and another 1, “in accordance with their capacity”. After a time, the person who received 5 and the one who received 2 double theirs, and the one who received 1 maintained it. In light of this, the person who gave them the talents rewarded the first two, and took away the only talent from the third, “because he who has, will be given more, and they will have an abundance, but he who does not have, even what they have will be taken away from them.”

From the religious context, this indicates that God gives people talents in order to develop them, which reveals an individual vision, where each person is responsible for duplicating their talents. From the cooperative context, one is “paid back” in proportion to the trust and loyalty of that member, demonstrated by contributions, savings, delivery of product or amount purchased; that “payback” is not taken away from them in the cooperative, in contrast with what happens in the parable of the talents, where each individual responds individually with the talents received; instead, there is cooperation among the members mediated by commonly agreed upon rules, compliance mechanisms and there is accompaniment so that each member might increase their capacities; there is individual responsibility within the framework of collective responsibility.

3.3  Compensating by rights those who resign from the cooperative

Following cooperative statutes, the member who resigns from the cooperative has the right to the return of their extraordinary contributions, and the “reimbursement of social assets” (shareable surplus) within a term generally of 90 days. This “departure” arrangement should be thought of and agreed upon from the beginning when the cooperative is founded, even though it is clear that in the beginning, being immersed in making the cooperative survive, no one thinks about this; it should be done, because it is thinking about the future, and because each member should be clear about their rights from the very beginning[9].

In our societies the member who resigns from the cooperative tends to leave without recovering, many times, not even their contributions; likewise, those who die, their relatives do not tend to receive any benefit that by rights the family members are due. For some members, having joined a cooperative is even a financial loss. In the case that there are voices that are raised about this, some board members pull out the ghost that “distributing is decapitalizing”.

If the cooperative does not pay the member who resigns, or the relatives of those who die, in accordance with their rules and the rights of each member, the cooperative signals distrust in its own future, and sends an erroneous message that they are not members, that the “cooperative does not belong to its members”, which undermines any sense of ownership of those who stay in the cooperative, and those in the community who observe it. If in contrast, the members fulfill the rights that each members has on leaving the cooperative, that they be paid the part that corresponds to them that the cooperative has at that moment, probably that person will leave with a good amount of resources, and happy for having been a member of a coop. In the short term, this is a hard moment for the cooperative, because it is going to disburse in cash resources what it surely needs; at the same time, each member will see themselves in the person who resigns: in the same way that they treat the person who leaves, they will treat me. If the member joined the cooperative with little, and leaves with a good amount of resources, those who remain will ask themselves: if after the cooperative fails, will we be the most unlucky ones? The doubts will keep them up at night. But in the long term, those who are left are less, which means that they will receive more from the future resources that the cooperative accumulates; more than that, each member, seeing that the one who left took what corresponded to him, will confirm that in truth he is a member of the cooperative, that the cooperative really does belong to him.

Let us talk about numbers to estimate the amount that could be due to a person who resigns. What is the arrangement with the member who leaves? A member who leaves or dies, that person or their relatives have the right to part of the assets or resources that the cooperative has generated. Let us help ourselves with an example. If through the use of the “cooperative fund” or the “reinvestment fund”, extraordinary contributions of $100 per member, and donations that the cooperative received, a cooperative has assets valued at $200,000; if that cooperative had 20 members at its founding 10 years ago; then if one of them resigns from the cooperative, they are due $10,000 (200,000/20 = 10,000). This amount could be paid over a term that the statutes indicate, or, if the cooperative does not have the $10,000 available, they can arrive at friendly arrangements for the time frame for the payment.

The biggest impact of this fact, nevertheless, is not in the financial “payback”, but in the fact that the 19 remaining members, and the rest of the community, confirm that effectively the cooperative does belong to its members. This is the seed of incomparable ownership. This implies greater trust, loyalty and the deployment of individual and collective capacities.

Concluding this section, distribution in the cooperative generates equity, and incentivizes the development of each member. An estimate of 40% of the surplus protect the cooperative from losses, increases their investments or their own capital fund, and contributes to the community with unique investment in education. With an estimated 50% of the surplus, the cooperative incentivizes the development of the capacities of each member, their trust and mutual loyalty. And with an estimated 10% of the surplus, the cooperative ensures the recognition of members who leave the cooperative, far from seeing it as a “financial loss”, they recognize the rights of the cooperative member and with that plant the seed of ownership. This collective and individual outcome is the way in which the cooperative distributes its surplus with equity, which is connected to the virtuous peasant institutions of giving-receiving-paying back, expressed in shared labor, sharecropping, and shared harvesting, among other institutions.

Now that distribution with equity appears obvious, along with its importance. How can it be carried out?

4.    How to implement equitable distribution

Inequitable pay back… breaks down the organization

The Spanish, Mexicans and US tried to dominate the Apaches; they failed. The Apaches had the nant’an as their leaders, they were decentralized, operated in circles. Their adversaries, as they did with the Aztecs and the Incas, did away with the

nant’an, but the Apaches did not fall apart, immediately another nant’an would emerge. But one day the North Americans donated cattle to the nant’an; since cattle were scarce, the nant’an had the power to distribute them, so everyone wanted to be nant’an, the egalitarian power structure became hierarchical. The Apaches were defeated.

(Based in Brafman, O. and Beckstrom, R.A., 2007, The spider and the starfish. Barcelona: Empresa Activa).

This historical passage shows us that distribution is more than distribution of surplus. It is important to have holistic egalitarian structures that include equitable rules and mechanisms for carrying them out. Before continuing, we cannot avoid comparing this event of the Apaches with the action of the government in the parable at the beginning of this article; the government in the parable, and the North Americans in this other one, seek to subordinate the cooperative or the Apaches, the first donates land to them, and the second donates cattle, in both cases without “payback”, thus they undermine them before their members, leave them not looking toward their community, which causes the cooperative and the Apaches to fall apart. Militarily the Apaches were indomitable, but a simple donation eroded their entire organization, like termites on wood. How did this happen?

The Apaches lacked equitable rules for the distribution of assets donated to their leaders. The North Americans took advantage of that gap, and donated the asset that was the scarcest, cattle, directly to the nant’an and not to the Apache tribe that surely had their own organization. This practice internally stirred up the Apaches, who fought over being nant’an, for having that connection to the North Americans and accessing the cattle; surely, like the managers or presidents in conventional cooperatives, the nant’an said to their tribe that the “cattle had cost them”, that they should be content with what “trickled down”, that they were their “connections”, and that without them they would all die of hunger -or in other words, the evil of the “big headed dwarf” began to corrode the minds of the nant’an and sow distrust in the rest of the tribe. This process led them to become hierarchical structures, and consequently to collective failure; it is what has also happened to most of the conventional cooperatives.

Cooperatives, in contrast to the Apaches, have rules and mechanisms for equitably distributing the surplus (including donations), but they lack democratic processes in their functioning, which is why they do not comply with their rules for equitable distribution. In many cases the cooperatives were started by the State with donations in land or other assets, undermining them from their own beginnings. International organizations (buyers, financiers and donors) have continued on this same path. Like the North Americans with the Apaches, they only connect with the nant’an of the cooperatives (managers or presidents), and they are not interested in knowing the consequences that their actions provoke. How can cooperatives fulfill their rules and make distribution their most valuable attribute for growing equitably?

This point about the Apaches leads us to understand that a cooperative that distributes its surplus with equity is that which, in addition to having rules for it, is democratic and transparent: See Figure 3.

If the organs, in democratic exercise, ensure the fulfillment of the agreements about equitable distribution, that cooperative will embark at a good port. In the case of the Apaches, their organs operated around resisting militarily, including their food, but they lacked the rules for donations and relationships with external actors. We can imagine that the Apaches, in decentralized groups, hunted animals for food; for which they had their rules and they applied them, but not so that some nant’an individually might receive 10 head of cattle as a gift behind the backs of the tribe, even precisely for their tribe.

This combination (rules-democracy) requires, nevertheless, a third foot: transparency. It is depressing to find members who after contributing for 5, 10 or 15 years do not know how to add up their contributions, and that do not recognize their rights over the surplus. It is not just having democratic economic management coherent with the rules themselves and the rotation of members in the different offices and decision making in the corresponding organs, but informational transparency with the members and with the allies. The idea of transparency or accountability in the cooperative is not being subject to trial, measured and humiliated by “the magic of the numbers”. It is sharing information that in turn forms and commits the members. A member can understand that their surplus might be $30 per qq of coffee that they have delivered to the cooperative, if he is informed about how that surplus was produced; otherwise that person will see that surplus as “an award” or a “favor” of the patron, as his historical rules make him see it. Distributing surplus implies distributing responsibilities (democracy) and information; the way “the legal reserve”, “investment fund” and “social fund”; the expenses and income… were produced and used. This information forms people and commits them: the member, based on transparent information, will want to participate in the definition of the goals for the year for their cooperative, and will want to be part of the implementation of those goals, because he recognize that his individual surplus will increase, that the benefits to his community will improve, that if the cooperative increases its reinvestment, any member who leaves will be able to go with more resources. In addition, if the first tier cooperative is a member of a second tier cooperative, the member also needs to be informed about the second tier cooperative, know how surplus is generated in that organization, and how much is due his cooperative, and how much of that amount is due each member. That explanation can happen in an assembly, in visits to each member family, on whiteboards or through brochures, and on the day of the distribution of surplus, combine festivities and information.

Correspondingly, transparency implies being accountable; for example, it is commendable that the credit record include columns for the amount of credit, amount past due and contributions; it is also commendable that the record include the amount that the member is leaving for “legal reserves”, “social fund” and for the “reinvestment fund”; the first format for the record contains control information for the member, and the second format has the accounting of the cooperative to its members. Being accountable in the assembly about their resources expresses the rights of each member, and it is an obligation of the cooperative that each member know that. From here, if the members are informed about each step of their cooperative, they will be committed to their cooperative, if their cooperative faces difficulties, they will sweat the fear of failing and will row the canoe together even in the midst of the biggest waves.

Equitable distribution is possible within a framework of democracy and transparency. There, being a cooperative member is thinking beyond salary, beyond raw materials and beyond exported product; it is thinking about the entirety of the cooperative, and the entirety of the chain of actors where value is created. In other words, it is breaking down the walls of Figure 2 and understanding that what creates value is the human work of the working person, producer, processer, importer, roaster and seller of the coffee in the stores and coffee shops. It is “I touch you and you touch me”, entering into different worlds. This implies including the international organizations and companies, which goes in the direction of global triangulation that we worked on in several other articles, about an alliance of actors that work for equitable distribution.

5.    Conclusions

You read a book from beginning to end. You lead a business just the opposite way. You start with the end, then you do what you have to in order to achieve it.

Harold Geneen, 1984, Managing. New York: Double-day

At the beginning of the article we asked ourselves how cooperatives can distribute (“pay back”) in order to grow with equity. Equitable distribution in a renovated cooperative is very different from the distribution of the market in the neoliberal economy, which is one unilateral way, from society to businesses and institutions, from which there is no “pay back” beyond what “trickles down”.

In the renovated cooperative, and in alliance with global actors, equitable distribution is illustrated in Figure 4.

It is the distribution of surplus combining the collective (social fund, reinvestment fund, and legal reserves) and the individual (direct distribution to the member for their differentiating actions and payment of what by right is due the member who leaves); it is financial and social distribution. Then, equitable distribution implies that the organization be democratic (rotation of officers, collegial decisions and compliance with the rules). Then equitable distribution implies distributing information under the maxim that the more informed the members are, the better their decisions will be.

This notion of equitable financial, social and political distribution (democratic and transparent), mobilize energies and hearts when it is connected to the endogenous institutions of the members, in our case, the peasantry. Consequently, each member feels part of the cooperative, seeks to know its goals, have an impact on them and commit themselves to fulfilling them.

Finally, when the members and their global allies follow equitable distribution connected to endogenous institutions, that is when they see the entirety of the cooperative and the entirety of the value-added chain with equity. Far away are left the “walls” that separated the worlds. Paraphrasing Harold Geneen, we organize a cooperative from its end, from its equitable distribution to the benefit of the members and their local and global communities. The more that is distributed, the more that it grows.

[1] René has a PhD in development studies, is a collaborator of the Winds of Peace Foundation, member of the COSERPROSS cooperative, and associate researcher of the IOB-University of Antwerp (Belgium). rmvidaurre@gmail.com

[2] Mauss (1979: 204-211), based on a type of distribution known as potlach, practiced in Eskimo societies in the Northwest of the US, finds the triple obligation of the gift culture: giving, receiving and paying back. “You do not have the rights to reject a gift, a potlack, because acting in this way makes clear that you are afraid to have to pay back and be left diminished, it is losing the “importance” of your name, it is declaring oneself beaten in advance, or in some cases proclaiming oneself victor or invincible” (p. 208). Marcel Mauss, 1979, Ensayo sobre los Dones. Motivo y forma de cambio en las sociedades primitivas, en: Sociología y Antropología, Madrid. Note that this identified institution is pretty similar to institutions of indigenous communities in Latin America.

[3] Polanyi, K., 1976, El sistema económico como proceso institucionalizado, en: Antropología y Economía (ed. Godelier, M.), Barcelona pp. 155-178

[4] Santana, M.E., 2014, “Reciprocidad y Redistribución en una Economía Solidaria” in: Ars & Humanitas 8/1. Slovenia.

[5] Surpluses result from deducting costs and expenses of the cooperative, amortization (value for deterioration of fixed assets). In associative organizations the term “profits” is used more, which is pretty similar to “surpluses”. The term “earnings” is different, there could be earnings through a discount if a product is sold above its acquisition price.

[6] W. Berrios, from the CAFOD aid agency, refers to the fact that some aid agencies linked to churches in Europe tend to withdraw their support for organizations that in theory assume the social and solidarity economy approach, but in practice do not follow it, and that instead become part of conventional mediation.

[7] Several buyer companies left Fair Trade on realizing that their premium payments were not getting to the member families, so they formed another movement called direct trade, to get around “cooperative mediation”. There are also European enterprises and cooperatives that buy coffee or cacao in Central America and want the cooperative that they work with to distribute their surpluses; correspondingly, some of them avoid the second-tier cooperatives and prefer buying directly from the first-tier cooperatives.

[8] Polanyi, K., 2001, The Great Transformation: The Political and Economic Origins of Our Time. Second Edition. Google Books. (First publication in English in 1957).

[9] See: Jack Stack, 2002, A Stake in the Outcome, New York: Doubleday. Stack, along with other workers, founded an innovative enterprise in the United States. In this book he recounts how they struggled with this issue from the beginning of their company. If they did it as a company, how much more should a cooperative!

When A Man

When a man acts, he pronounces himself to the world.

When a man who has become a leader enriches himself and his family at the expense of his followers, he is a syphon;

When a man speaks words that betray reality, he is a liar;

When a man sees himself as the only answer to every question, he is a fool;

When a man is willing to sacrifice the good name of another to protect his reputation, he is a traitor;

When a man berates and belittles others to make himself appear strong, he is a bully;

When a man delights in the death of another- any other- he is a tin man;

When a man professes his innocence in the face of his guilt, he is a coward;

When a man must sing his own praises in order to be noticed, he is a braggart;

When a man has dealt away his dignity and his morality, he is without a soul….

 

Bleak House

“It is said that the children of the very poor are not brought up, but dragged up.”                                                    Bleak House, by Charles Dickens

It’s an image that is haunting, and daunting, this observation from 1852 Victorian England:  the idea that some children- many children, in fact- in the very prime of their learning and forming years were forced to find their way to young adulthood through the hauling  and heaving of desperate poverty and abuse.  It was a reality distinctly at odds with the Victorians’ self-proclaimed progressive era of reform and improved societal standards.  Author Charles Dickens made his mark, in part, chronicling the sad realities of the time.

That was a long time ago.  The pokes at our collective conscience by Dickens have persisted since his time, as his works are among the most revered and widely-read in the English language.  As a result, we should have every reason to expect that, with the passage of time and a presumed greater enlightenment about healthy societies, our nurture of children might have changed since 1852.

Not so.

Dickens would find endless fuel for his anger today.  Even a short visit to the Mexico-U.S. border would engender sufficient affront for him to create two volumes the size of Bleak House.  The experiences of border children is little better than those endured in the streets of London more than 150 years ago.  The realities of the War in Yemen have claimed 85,000 children under the age of 5 since 2015,  more than enough to flame Dickens’ sense of outrage.  The outlook there suggests the potential demise of another 14 million people over the next several years.  And if the well-known writer deigned to travel to the U.S., he would be dismayed to learn that the British progeny has fostered more than 16 million hungry children in 2018.  If Dickens took a side trip down to Nicaragua, he would encounter children facing family upheavals, disappeared parents, and poverty that is among the worst in the entire Western Hemisphere.  He might begin to wonder whether his famous works really made any impact at all.

I’ve re-read a number of Dickens’ classics in recent years, including Bleak House, Our Mutual Friend, Oliver Twist and A Tale of Two Cities.  I’m drawn to his characters and the ambience of the times in his writings.  But I also find myself distracted by the conditions encountered by many of his characters, especially the children.  The stories are uncomfortable.  The children’s circumstances are often abhorrent, to the point occasionally when I think that Dickens has likely exaggerated the realities faced by his young protagonists.  But I read on in the certain hope that things will get better by the tale’s end.

Dickens’ hopes for any kind of empathetic reforms or changed sensitivities as a result of his works would be shattered in the face of today’s world.  The travesties of Victorian England are comparatively small compared to the cold calculations of despots today. Reading fictional accounts of treachery and evil pales in comparison to the very real atrocities that we tolerate repeatedly on the world stage today.

A Christmas Carol delights audiences because of its ability to take us from the depths of human greed to the pinnacle of generosity and redemption.  It makes us feel good in the hope that it creates for eventual justice.  I wonder if Dickens would be inclined to write very different conclusions to his stories today….

 

 

 

 

“No one would like to have a murderer as the woman who gave you life”

This is an interview done this week of Zoilamérica Ortega Murillo,  Rosario Murillo´s daughter, and Daniel Ortega´s step daughter. (She is mentioned by Pinita in the previous post). Here she compares her experience of being an abuse victim of her stepfather and the complicity of her mother, with the current experience the country is undergoing.

Zoilamérica Ortega Murillo

“No one would like to have a murderer as the woman who gave you life”

“Daniel Ortega and Rosario Murillo no longer have a way out”, stated Zoilamérica, daugher of Murillo in exile in Costa Rica.

By Yamlek Mojica Loásiga, August 21, 2018 in Seminario Universidad

“We are facing a fundamentalist sect”, Zoilamérica Ortega Murillo.

The name of Zoilamérica has been in the collective memory of Nicaraguans now for decades. Daughter of Rosario Murillo, and step-daughter of Daniel Ortega, who in 1998 she denounced for having raped her for more than 20 years, and Murillo for being an accomplice of those crimes. Since then she has been the victim of harassment and intimidation on the part of the presidential couple. Five years ago, due to that same persecution, she went into exile in Costa Rica.

Zoilamérica is a sociologist and currently works as a university professor. She states that what is happening in Nicaragua is a case of a fundamentalist sect similar to the Nazis.

In this interview she analyses her mother´s way of governing, and the persecution of the Nicaraguan state against opposition actors of Ortega even on Costa Rican soil.

Do you think there are similarities between the crisis of Nicaragua and your history of abuse?

There is a sensation that life trained me to experience the first symptoms of the cruelty, manifested in the abuse, as well as in the terrible vengance that my mother undertook in order to get from me a retraction of my denouncement of Daniel Ortega for sex abuse. And to silence and isolate me.

I feel that the most difficult part is not that the brutal and ever more unscrupulous forms of repression against the people be repeated in the scenario, but rather the way in which the exercise of power has been internalized.

I have compared it exactly to the dynamics between sexual abuse and the abuser, in the sense of this first stage that the cycles of abuse have, of manipulation, of the creation of conditions to get one to consider the right of possessing. I feel that unfortunately the revolution has become a great tool for manipulation.

In my case there were the family connections between the abuser and myself: in this case it was the manipulation of the symbols of the revolution, the discourse, the sentiments, all the history. That manipulation worked, I believe, in the same way that it works in sexual abuse. On that basis we give over quotas of our will to that person. In the case of sexual abuse, out of fear, because of the co-dependency, a point arrives where the abuser annihilates all your will. Likewise in Nicaragua we were giving over quotas of power that ended up building this abysmal concentration, that annihilation of will.

Then, I had no other option than remaining isolated for a long time, remaining for a long time under the effects of what the violence then was. But the hardest thing is seeing how this process of manipulation in the violence in Nicaragua, the concentration of power, was also similar in terms of the silence that surrounded me for many years.

In what sense?

I remember that after I made the denouncement, the question most asked of me was whether anyone knew. Now we can ask ourselves: Did no one know that there had been so much electoral fraud? Did no one know about a political pact that was done to distribute among themselves the branches of government? Yes they did know. Why did no one say anything? It is confirmed that complicity does work, and that sexual aggressors clearly choose those they want to convert. We were vulnerable coming from a context of dictatorship, and we thought that we were going to get out of it, fully believing in someone.

It is the same thing that happened with a ten year old girl who came from a world of deprivation and that suddenly the revolution comes, added to that power, and invents for her a world of protection that then turns into a world of abuse. I believe that the most complicated part for me has been that it is being repeated today. The complicity of my mother becomes present again. A complicity with two actors who have as their only purpose in life keeping and sustaining political power. Exactly in the same way in which they stated their alliance around denying the facts about which I accused them, that capacity continues functioning in the same way that they try to disguise and give another version of the facts.

Why do the ranks of the Sandinista Front of National Liberation keep quiet about Ortega?

I think that part of this manipulation has to do with turning loyalty into complicity. On the other hand, if we take that path, denouncing is a synonym of betrayal, thinking differently is also a synonym of betrayal. In this fundamentalist culture that the Sandinista Front has, enough mechanisms have been found to also subdue willpower. This subjugation also is marked by opportunism, because there are also those who have been paid to quit thinking. Nevertheless, I believe that we should not assign the same responsibilities to the leaders, as to people who so far continue expressing to being close to feeling that the FSLN is their option. They are people who, in spite of everything they see, want to try to rewrite history. There are people who will continue saying that they are sandinista, and that they are going to continue supporting a sandinista government, even though they are not allowed to say that Daniel Ortega is not the one. I think that it is important to understand the quota of pain, of sacrifice of many people. Still in Costa Rica there are people who say they have contradictory emotions, of course, because it hurts them to say that they gave everything in exchange for nothing.

You talk about loyalty. Is the FSLN loyal to Rosario Murillo?

I would not call that loyalty, but submission, She has a capacity to exercise leadership in a ruthless manner. Being ruthless implies that everything that is in front of you should be useful to your purposes. Without being able to say no. Loyalty assumes your willingness, but none of these people are asked if they want to be loyal to her, but rather today are trapped in a power dynamic that they cannot get out of. Even this mechanism of turning everyone into murderers so that in the end all are accused is part of the same dynamic. That is not loyalty. It has to do with methods of profound subjugation. This that I am telling you has to do with that Machiavellian capacity for subjugation. She is an expert in creating forms of submission. I do not know if there is another person with the same capaity for impregnating fear. It is very interesting because suddenly in the Nicaraguan imagination, even up to a very short time ago, Daniel was the good one and Rosario was the evil one. This precisely has to do with the fact that his gift is manipulation, and her gift is creating terror.

Why the insistence of Murillo on minimizing people? Why does she need to describe the oppositon as “residue” and “scraps”?

Something that for me was always difficult was the indifference. In other words, with that indifference the message is: “you do not exist”. I did not exist as her daughter for ten years, ten years of not knowing absolutely anything until I withdrew the lawsuit, because I couldn´t do it any longer, because that was being translated into revenge. Where I am getting at, on the one hand, is that profound conviction that “no one is as great as them.” On the other hand, is the mystery of the verbalization in order to be small. I do believe that people have compared the Nazi context and the superiority of the races to them. Here also we are facing a fundamentalist sect, only that it was created tailor-made to the need itself for alienation. It is an act of absolute arrogance and superiority that turns into something very dangerous, because no one is like them. This means that everything that surrounds them should be eliminated, and even more so the smaller they are. In this search for answers they think that they have some type of insanity, and in that way we excuse them because “they do not know what they are doing”, and that is not true. Or we give them the proper title of dictators and we think then this justifies their political logic, but what we have in Nicaragua is worse than that; it is a case of political alienation. They are alienating everything that would justify them as the omnipotent and only ones with the power to lead the country.

What do you feel when you see the name of your mother accused of so many crimes?

In one of the vigils for Nicaragua I had a very intense experience, because seeing a sign of Rosario Murillo and Daniel Ortega with a big sign of murderers still touches my conscience. I think that no one would want to have a murderer as the woman who gave you life. It is profoundly contradictory. It still is a blow to my humanity. Nevertheless, it is the reality that I have had to live with and about which I continue to learn, above all, trying to understand what this is going to mean for me in the future. This is the most difficult thing. There are people who do not know the difference between them and me; there will be a time at the end of their days that I will have to articulate where their story ended and where mine ended.

You fled from Nicaragua in 2013. Do you identify with this exodus of Nicaraguans who are fleeing out of fear of your family?

There is a principle of refuges status that is interesting, and it is called fleeing out of a well founded fear. I would say that for Nicaraguans you will have to open a chapter that would be called “well founded terror.” If I could express the level of terror that I experienced on knowing that my own mother could be capable of hurting me and hurting my children, I can understand that the situation of fleeing is because they are sowing terror. They want left in Nicaragua those who accept being subjugated, they do not care how many of us leave, as long as those who stay accept being in jail, kidnapped, and that they are not going to accomplish. Definitely those who come from Nicaragua are people who cannot live with that fear that they are sowing. It will have to be seen what it means to have a wave of terrorized immigrants with the conditions that implies. They are designing a country tailor-made for the reign that they need.

Persecution from paramilitaries has been denounced within Costa Rica. Do you believe it?

I think it is very difficult for the government of Costa Rica to admit it, but the geographic closeness would allow one to think that this risk exists. It is a serious situation. Above all because of the possibility that they might have deserters within their own ranks fleeing to Costa Rica, and they can be the people who supply information that can implicate them. It has to be understood that Daniel Ortega above all is going to avoid a trial for crimes against humanity; the family, better said. We have to be careful in not placing in doubt the capacity of the Costa Rican state to protect us; rather, it is recognizing that they can turn any circumstances into circumstances of risk.

What other things have you experienced here? Have you been the victim of xenaphobia?

Costa Rica is a country with highly advanced legislation on all these issues; nevertheless, in the case of xenaphobia, historically it has had to share the country with immigrants. This can generate contradictory feelings. On the one hand, admiting the ethnic diversity of this country, the labor participation that we have. Nevertheless, the level of acceptance of us foreigners can be increased. I think that at times we have very marked cultural differences and this can generate reactions of exclusion and very big distances.

The people mention a lot “the New Nicaragua”. What does this mean for you?

The New Nicaragua for me means an educational process that tries to deal with this legacy. If my family sowed anti-values and perverse practices, I would like to contribute with something, deconstructing that or giving testimony about what I had to do to be less Ortega Murillo and more Zoilamérica. That which is coming also is an unresolved stage. No more leading roles, no more the need to be highlighted as the best option. Every time a person uses the social networks, they are using a mechanism of power that is outside of him. First let us reconnect with our own power.

How do you see the future of Daniel Ortega and Rosario Murillo?

I feel like there is no way out. In the pursuit to build a trap and a jail for all of Nicaragua, they built their own; they are trapped. The problem is that they still have with them all the victims of that spiderweb of power that they wove. Gradually that will be freed up. The stage that we will still have to see will be when their own people turn on them and say: “this is as far as we go.” Surely that moment for them will be the most difficult one. So far, they continue accustomed to the fact that no one objects to their will. The international community is going to have to test out ways, like they did with the peace accords. I am sure that this also is going to imply moving from this type of mechanism to something that might be truly effective, and, if not, it will be up to us Nicaraguans to do it.

 

Father’s Day

Yesterday was Father’s Day in the U.S. , that commercial innovation designed to sell goods and greeting cards and, oh yes, to recognize the important role of dads in our society.  The date also happens to be my wedding anniversary, that moment in time forty-six years ago when Katie and I formed our official Sheppard partnership.  It’s a nice overlap.  Certainly, the marital partnership led to the four children who called their father yesterday with thanks and good wishes.  Marriage and fatherhood.  It was a good day.

It seems conventional and predictable, to celebrate these kinds of events in our lives.  That does not diminish their enjoyment, but it recognizes the expectation that celebrations of family are meant to happen, and often.  I felt a special gratitude yesterday, maybe because I keep getting older, with an increasing awareness that, despite their regularity, these special days are finite in life.  Or maybe there was a nagging awareness in the back of my mind about children elsewhere in our country being separated from their fathers and mothers in the name of the law.  And that is disturbing.

My intention here is not to wade into the great immigration debate within our country; there are enough voices disagreeing about that already.  But there is a distinction between enforcing border security versus tearing families apart as a punishment for border violation.  The practice is not only philosophically reprehensible, even as a deterrent to illegal immigration, but carries an eerie similarity to the separation of Jewish children from their parents at Nazi concentration camps.  Our nation’s posture on this matter is an expression of our values and our morality; I wonder whether this is truly a reflection of who we have become as a people.

The U.S. Attorney General has responded to the criticisms of this policy of separation by observing, “Well, we are not putting them in jail.”  To excuse an abusive and inhumane practice by comparing it to something even worse is no excuse at all.  At the end of the day, after all the explanations and defenses and rationalizations, children are being taken from their parents. In some cases, according to government personnel, they are taken under the pretext of taking them for a bath, and with no guarantee of ever being reunited with mom and dad.  It’s a punishment which the children do not deserve in any context.  But here in the U.S.?

Further defense of the practice falls along the lines of “the law,” that the law requires that this practice be carried out, and that if the practice is to end, it must be the U.S. Congress (noted these days for its inability to pass any kind of meaningful legislation) which takes the responsibility.  But it must be noted that the immigration law being referenced in this defense was also the law under at least two previous administrations.  In neither case was the separation of families used as a means of torture.

We are at an immigration crossroads in our country.  The topic has been discussed and debated, leveraged and used, with words couched in sympathy and actions devoid of empathy: more than 1300 children have been separated from their families thus far.  The untruths about which political party is more to blame is meaningless.  On Father’s Day, 2018, children are being separated from their families.  That’s all we need to know.

I had a memorable Father’s Day and anniversary yesterday.  It was a good day.  But it could have been a lot better….