Wednesday, April 22, 2009

Updates and Rules for Cooperatives

We've all be working hard as we pull the last few weeks of work together for the SEA. It's hard to believe it is almost over, and yet as we settle in to write, it is amazing how much information and great ideas we've collected from everyone. So in advance, THANK YOU to all who have been so helpful to us.

The ideas of the day are now being funneled into the reports, but I can honestly say that Glenroy has some good ones coming up that are truly inspired.
Today we meet with the folks at Caroni (1975) Ltd. to go over their cooperatives models. There are a lot of challenges and a lot of opportunities here, and I'm hopeful that they are on the right path.

One of the issues we'll be talking about today is how to set up management institutions for cooperatives. This is based on neo-institutional political science theories which look at why do people get along in some cases and not others. (apologies to Professors Markus Crepaz and Bob Grafstein for the simplification)

Essentially if we look at institutions as rules of the game, the question then becomes how do you set up the rules so that everyone wins?

Elinor Ostrom, a brilliant woman who studies this issue and wrote "Governing the Commons"
outlines 8 design principles that exist in long lasting cooperatives

These are:

1. Clearly defined boundaries: essentially who has access to the particular project and who does not. In the case of the 2 acre Caroni farmers with property in the cooperatives - the holder of the lease, and those who work on the property have access. Those who don't fit this do not. It may require clarification in terms of taking of produce prior to official harvests, and there will need to be clear agreements on what the return on the investment will be to those leasing the land. 

2. Congruence between appropriation and provision: the rules have to match what the local conditions can provide. There must be sufficient resources for everyone to make a return on their investment. For example, if there is not enough water, there will not be enough crops, the investments won't yield the expected returns. This is important!

3. Collective-choice arrangements: who ever is governed by the rules of the cooperative has a say in modifying these rules at specific intervals. They need to know they have a right to help make the decisions.

4. Monitoring: the monitors who actively audit are accountable to all members of the cooperative and their findings must remain transparent at all times. This will be critical for these cooperatives to work.

5. Graduated sanctions: if there are violations to the operational rules, there are graduated sanctions depending on the seriousness of the offense. This applies to everyone working on and with the cooperative.

6. Conflict resolution mechanisms: if there is a disagreement, the members of the cooperative and the operators have access to a low cost local arena for resolution of the conflict. This should be done according to consensus based models to increase buy in and a sense of ownership in the outcome.

7. Minimal recognition of the rights to organize: this just means that the government agrees that these cooperatives have a right to be established and that they have a supporting structure for that without interfering in the governance of the cooperative.

and, for cooperatives that are part of other larger organizations:

8. Nested enterprises: meaning that the governance principles for the organization are reflected and supported by the next level up and, most importantly, they do not conflict with the operational rules set up at other levels. 

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