Building a Distributist and a Catholic Economy through Cooperatives

[ 11 ] October 11, 2011 AD |

I currently live on an island somewhere in the Philippines, in a city called Cebu. Here is where I’m studying to get my marketing degree and possibly in the near future, a degree in economics. I lived here since I was seventeen and I guess I could already call this place home.

But that’s not the focus of this article. Before I decided to study in Cebu City, I grew up in a small town in the island of Leyte named Palompon, which used to be a small community mostly run by Spanish Jesuits back in the colonial era. It’s a second class municipality and is a great place for tourists who’d wish to look at the mangrove islet of Tabuk or the white sand beach of Kalanggaman.

The PACCI House, better known as the PACCI hotel.

It is also there that one would find a certain cooperative entity, the Palompon Community Multi-Purpose Cooperative Incorporated (PACCI), which had been serving the town’s populace for years. I’ve observed that the cooperative has indeed done so much for the town’s commercial needs, as well as providing social justice for its members and for society as a whole.

To give examples, PACCI administers a daycare center where I was in before I was sent to Catholic school for my pre-school and primary education. During my elementary years—if I could still recall—the cooperative even suggested that we’d try out their program where kids could open their own savings accounts.

PACCI also has land-transportation services. Whenever someone speaks of travelling to Tacloban City, they would usually say that they would “… ride a PACCI,” that is, they would ride a bus of the cooperative which transports passengers from Palompon to Tacloban and vice-versa at reasonable rates.

When speaking of commercial establishments, PACCI has a hotel in the heart of the municipality which includes amenities such as a restaurant, a convention area, etc. I don’t think any pension house or lodging house could stand up to PACCI’s hotel, and the services it renders.

That being said, I can firmly attest that any cooperative or credit union would play a very great role in molding society towards progress and at the same time, providing justice. Just imagine if there were more of them. Or better yet, just imagine a society whose economic foundation rests upon cooperatives and credit unions.

Let us first define a cooperative as …

… a private business organization that is owned and controlled by the people who use its products, supplies or services.

This is for the members’ mutual benefit—which would then benefit society as a whole due to the cooperative’s democratic nature. They not only work for the business; they also own the business, unlike corporations where only a few stockholders who merely invest are “owners” and where workers or employees are actually “owned” by whom they work for, at the mercy of contracts and being given wages or salaries.

One might dismiss cooperatives as something unimportant and inferior in comparison with corporations. But certain cooperative models have actually been proven to be at par or even more successful than corporations. Of course, we probably have the best model for that, and that is Mondragón, which I’ve already mentioned in my previous article and which is the seventh largest Spanish company in terms of asset turnovers.

Mondragon, probably the best example for distributism and a cooperative economy

In recent years, many successful cooperatives or cooperative models have sprung up and they’ve rendered a great deal of service to society and the economy.

Farmers’ cooperatives manage 99% of the Sweden’s dairy production, 95% of Japan’s rice harvest, 75% of Canada’s grain and oilseed output and 60% of Italy’s wine production.[1] There are also major commercial banks in Europe which are cooperatively owned: RaboBank in Holland (a global leader in Food & Agri Financing and sustainability-oriented banking), DZ Bank in Germany and Credit Agricole in France (the largest retail banking group in the country). Housing cooperatives are also very prominent, as there are 10,614,000 of them in Europe.[2]

Given the statistics, it would be quite naïve to dismiss cooperatives as something inferior to corporations. Furthermore, in terms of job stability, working as a member of a cooperative is better than working for a corporation. Cooperatives also improve the income of their members who would get better prices, lowered cost of inputs and greater gains in control of market channels.[3]

This is quite thought provoking considering that we live in a society where we work for somebody else and not for ourselves, no matter how we put it. Cooperatives allow us to own our jobs and would allow ownership of businesses to spread forth.

An economy built on cooperatives? Sounds like a distributist economy rooted in Catholic Social Teaching, don’t you think? Considering ownership is not concentrated on a few stockholders, workers would get their share, and property—which Pope Pius XI spoke of being essential to the development of the individual—would be widely distributed.

That being said, I would love to hear your opinions.

 

Jared blogs regularly at Verum Nocet, The Distributist League of the Philippines and his personal blog, The Secular Catholic.

 

[1] A Cooperative Economy – What Might It Look Like by Jake Karlyle, given at the Hobart conference: Community, Economy and the Environment: Exploring Tasmania’s Future, 15 October 2005

[2] Ibid.

[3] Cooperatives: An Investment in Democracy and Economic Growth, ACDI VOCA

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Category: Jobs, Life, Money & Finance

About the Author ()

Iconoclast, interested in economics, history, philosophy, Catholicism and a whole lot of other stuff.
  • http://lasteuropeans.blogspot.com Titus

    I would only add that your quibble, of course, is not with the corporate form, per se, but with business models that concentrate ownership away from employees in general. A corporation can be the mechanism for operating a cooperative, if the stock were held by the employees or members. In common-law jurisdictions that do not have strong traditions of cooperative entities (apart from credit unions and farming coops), the use of the corporate form in this way could decrease transaction costs, which otherwise might be quite high, in forming cooperatives.

  • http://secularcatholic.blogspot.com/ Jared Dale Combista

    Titus,
    Thanks for the elaboration. I used the term corporation in a way that it adopts the model in which ownership is concentrated on a few stockholders. Nevertheless, there are cooperative entities which also refer to themselves as corporations (like Mondragon) yet they adopt the cooperative system.

  • http://thepulp.it/ Tito Edwards

    Good job Jared.

    I’ve been a staunch Capitalist and an admirer of Von Hayek, but I’ve been trying to learn more about Distributism and still have a long way to go.

    Your article is important because we as Catholics have yet to scratch beyond the surface on Distributism and this will contribute to the conversation in our community.

  • http://secularcatholic.blogspot.com/ Jared Dale Combista

    Thanks, Tito. :)

  • Joseph

    Definitely. The co-op, especially when formed in smaller communities, enhances the life and livelihood of the community toward which it lends itself, much like the guild model. Distributism is especially local, reserving resources and using those means available to move the local economy forward. Here we can see the positive impact this can have for quality of life.

    The problem with corporatizing the co-op is that it can remove the personal dimension essential to Distributism. Stock-holding is capitalist in nature, a practice which quickly reduces to a sort of degenerate greed. The co-op becomes a means for one, not for all.

    Tito: I recommend thedistributistreview.com to you. The articles and commentary there are invaluable resources for the deeper philosophy of Distributism. Also, Chesterton’s “Utopia of Usurers” and Belloc’s “Servile State” are THE literature to read on Distributist economic philosophy.

  • http://evangelizela.com Ricky Jones

    Love the idea of cooperatives and would like to see more of them here in the US. Thanks for sharing your thoughts on this from a Catholic perspective.

  • http://lasteuropeans.blogspot.com Titus

    Stock-holding is capitalist in nature, a practice which quickly reduces to a sort of degenerate greed. The co-op becomes a means for one, not for all.

    See, this is the sort of statement that makes Distributists look silly. Why does it make Distributists look silly? It does so by revealing that the person speaking has no idea what he is talking about.

    “Stock holding” is merely a legal device for recognizing the ownership structure of an artificial entity. A cooperative, if its organizers have any hope of doing anything with it, needs to be an artificial entity: it needs a legal structure under which people who have an ownership interest are distinguished from those who do not, and through which the first group of persons control its operation. Most American cooperative have “members”: being a member is almost precisely analogous to owning stock in a corporation, with the sole exception that membership is not a transferable interest and stock usually, but invariably, is. A corporation can be set up to be a cooperative. So could a limited-liability company, a limited partnership, a business trust, etc. One legal device no more inherently contributes to greed than any other. Nor should one make the original author’s mistake and haphazardly redefine stock to mean “the kind of stock you see talked about on MSNBC.” Stock is not a synonym for publicly traded stock.”

    If people are going to have an intelligent discussion, it will first be necessary to stop making up new definitions for words (e.g., using corporation to mean only “publicly traded corporations” or maybe even “publicly traded corporations operated in a way I dislike”) and, furthermore, to stop treating the morally neutral cosmetic elements of various legal structures as some kind of bugabear (e.g., stock makes people greedy). You can read the Distributist Review until the cows come home, but if you still don’t understand the basic principles of the law of business entities, you will continue to sound silly, no matter how valid the underlying concepts you attempt to defend.

  • http://secularcatholic.blogspot.com/ Jared Dale Combista

    Titus,

    Thanks for pointing that out. Perhaps I should have been more specific on how stocks and corporations in themselves have been defined in the strictest sense instead of rashly throwing around those terms to mean only those which refer to the ones publicly traded.

    The original topic, however, is not whether stocks are for evil capitalists with fat bellies and big hats or if corporations are a bunch of greedy entities as what Joseph above seemed to display, but about the feasibility of a cooperative economy.

    I do not wish to appeal to emotion here, but I am still learning after all and comments like yours are very much appreciated.

    Blessings.

  • http://lasteuropeans.blogspot.com Titus

    The original topic, however, is not whether stocks are for evil capitalists with fat bellies and big hats or if corporations are a bunch of greedy entities as what Joseph above seemed to display, but about the feasibility of a cooperative economy.

    I understand that entirely, and I think that there is quite a lot that can be and needs to be said for distributist principles and a distributist economy. I only revisited the subject of usage (albeit in a rather poorly formatted manner) after Joseph brought it back to the fore with his comment: I found your original explanation perfectly understandable.

  • KDA

    Thanks for all this information on Distributism, especially the examples of it, during these difficult economic times. My question is did American Motors meet the definition of Distributism &, if so, what can the USA learn from AM’s history in considering the development of a distributist economy?

  • KatQ

    Hi! Do you know the contact number of PACCI in Palompon? Thanks!

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