Article: Hippie Capitalism: How An Impoverished U.S. City Is Building An Economy On Co-ops

By Emily Badger,

With sky-high unemployment, Richmond, California, is not a place where traditional business models alone can dent poverty. The city has turned to co-ops in hopes that people who might be unemployable in the traditional economy gain access to both jobs and control over their own labor.

At the height of the recession, the unemployment rate in Richmond, Calif., topped out at a dismal 19%. That figure has more recently crept down about three points, an improvement that might be worth celebrating if the city didn’t still have so far to go.

City councilman Tom Butt deadpans that Richmond, a city of about 100,000 people in the San Francisco Bay Area just north of Oakland, is a place with “more than the usual number of socioeconomic challenges.” A large share of the immigrant population doesn’t speak English. Crime is high--Richmond is regularly ranked among the most dangerous cities in the country--meaning local residents who’ve gone through the criminal justice system have even rougher odds of landing a job. This is not, in other words, a place where traditional business models alone can dent poverty.

“There’s not a lot of help coming from the federal government, or the state government,” says the city’s Green Party mayor, Gayle McLaughlin. “So we’re kind of on our own.” Two years ago, she went all the way to Spain in search of another economic model that might reinvigorate her city, once the locus of bustling shipyards that produced hundreds of boats for battle during World War II.

The Basque Country in Spain is home to the world’s most famous worker-owned co-op, the Mondragon Corporation, based in the town of Mondragon. The 55-year-old corporation includes some 250 smaller co-ops, with more than 80,000 employees, the vast majority of them members and owners themselves. Mondragon is today the seventh largest company in Spain, with its fingers in finance, retail, and manufacturing, and it has become a kind of Mecca for far-flung groups eager to learn how to create their own co-op businesses.

“I found that the values of people in Mondragon were very much in line with the values that we were putting forward as part of our political movement in Richmond: standing for equity, standing for justice, standing for community empowerment,” McLaughlin says. And so she brought the idea back to California and hired what is probably the only official municipal worker co-op consultant in the country. As of January, the first co-op born from this campaign, the aptly named Liberty Ship Café, is up and running, with plans for new bike shop, bakery, urban agriculture, and solar installation co-ops on the way.

“I’m working and dreaming and putting my efforts behind the dream of having Richmond become the national capital of worker co-ops,” McLaughlin says. “I really believe we can be that. We have the need, and that’s one thing they told us in Mondragon.” The first and most important thing anyone needs to make this work, the folks in Mondragon said, is need itself. And that is the one thing Richmond has in spades.

To outsiders, all of this might sound like some pretty hippie stuff. You may be more familiar with the concept of a co-op if you’ve been chuckling at the Humus Wars at the Park Slope Food Co-op, or if you know anyone who grew up “out at the co-op,” the universal shorthand for '60s-era communes on the outskirts of some progressive towns. But co-op businesses are still a form of capitalism. The people who work in and own them still want to turn a profit. In this model, however, there is no gulf between the lowly employee and the business partner. All decisions are made communally. And by starting their own businesses, people who might not be employable in the traditional economy gain access to both jobs and control over their own labor. The idea is a good fit for communities dense with immigrants--the beauty of co-ops is that anyone can start them--although Richmond isn’t limiting its efforts only to its immigrant population.

“It’s the kind of thing for example that the U.S. Chamber of Commerce would probably sneer at,” Butt says. “But at the end of the day, it’s just a business model, and business is business. And whatever you can do to create economic activity and create jobs, it’s all business. It just shows there’s more than one way to do it.”

In January, the Liberty Ship Café launched in a booth at the local farmer’s market, with the help of the California Center for Cooperative Development, which is also working with the city to fulfill McLaughlin’s vision. The café today has just three worker-owners, immigrants from Guatemala and Mexico, and it does not yet provide a full-time job for any of them. Every Friday, they sell healthy sandwiches, salads, and empanadas at the farmer’s market, and the business is expanding into lunchtime catering around town. Richmond has a long way to go from this one fledgling co-op to a community that will be transformed by the idea in the way that Mondragon has been over decades.

But already the Liberty Ship Café has begun to put a tangible face on all the talk around town about co-ops. “The whole worker-owned co-op thing, it’s most beneficial for the people directly in the co-op, but there’s a trickle-out effect, and we want to talk to people about that,” says Lexi Hudson, a co-op specialist with the California Center for Cooperative Development who has been working with the café. “When one person in the community feels empowered to own their own business and make their own decisions, they’re absolutely going to be affecting everybody else in the community.”

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