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An Italian Region Where Co-Ops Produce a Third of GDP (2016)

206 points by danielam 9y ago

dang 9y ago
Also https://thenextsystem.org/learning-from-emilia-romagna https://thenextsystem.org/learning-from-emilia-romagna, via https://news.ycombinator.com/item?id=16553612 https://news.ycombinator.com/item?id=16553612.
register 9y ago
Extract from https://thenextsystem.org/learning-from-emilia-romagna https://thenextsystem.org/learning-from-emilia-romagna: "The founding principle was based on common economic action as part of a general vision of society not based on individualism and self-interest".
michaelgiba 9y ago
“About two out of every three inhabitants are co-op members, together producing around 30 percent of the region’s GDP.” - does this mean the 1/3 that isn’t a part of the co-op accounts for 70% of the GDP? Could someone clarify?
- toyg 9y ago
  “Member” is a very light concept: if you open a savings account with them, or a fidelity store card, you become a member, even if you work in a completely different field and for a regular company. So the coop sector as a whole produce 30% of gdp, but this is not related to the gdp output of members.
  - michaelgiba 9y ago
    I see, thanks!
toyg 9y ago
Funny, I grew up there. At scale, Emilia co-ops are the same as any other business: they want to make money, screw workers. The veneer of social conscience is pretension, these days. A lot of jobs (most?) higher in the food chain are assigned through old-boys’ networks and political patronage (which is common even in the private sector, in Italy). Most large coop groups are struggling and surviving only with mergers. As the political system that allowed them to get established (stable 50-year left-wing governments across the whole region) slowly crumbled, their markets were blown open to competition, and they reacted by turning into more and more traditional businesses - or going bankrupt under clouds of political scandal. A lot of people in the area think this type of development has fundamentally betrayed its origins and should be reformed at the very least. EDIT: re-reading, I might have been a bit unfair. Coops had a tremendous social impact, until around the early 1980s. They were part and parcel of a development model that had little to envy to Scandinavian social democracy. It's just that they eventually changed, as all institutions do, prioritizing self-preservation and enrichment over their social role. This is particularly true for larger ones (generally in construction, food distribution, maintenance services, banking, and insurance).
- coliveira 9y ago
  These coops may be challenged by other, leaner coops. There is no indication that the problem is, by itself, the fact that these companies are run as coops, since traditional companies are plagued by the same issues you mentioned.
  - toyg 9y ago
    Absolutely. The point is, though, that the model isn’t intrinsically better than public corporations, once you reach a certain size.
- woodpanel 9y ago
  Interesting to see, how perceptions differ when you're from the place. I've experienced this too when progressives from the US at home praise certain German policies as the way to go, yet they never seem to put the same effort into researching the local criticism as they put to in taking the positive claims at face-value. I'm a fan of co-ops, but gave up on the idea of replacing the private sector with it. If there's a market for them, they can compete easily (usually through quality). I'm inclined to see them as better agents for social welfare programs [1]. I'd like to hear from the author why they focus on some (in foreign eyes) romantic region in Italy and don't look at the dryer examples of large-scale co-ops that exist throughout the rest of Europe: Germany's and Switzerland's biggest retailers are co-ops (Rewe, Edeka and Migros, Coop). Italy's biggest retailer is also a co-op. German co-op retail-banks claim 20% market share. Austria's Reiffeisen Bank is the country's third largest bank. The world's biggest sugar-producer Südzucker is a co-op. The list of old co-ops that have scaled over time is long and studying them I think would provide much needed insight if we are to claim the "advancedness" of co-ops. Specifically all the scandals that have popped-up, like the "co-op-Scandal" of the late 1980s, one of Germany's biggest cases of financial fraud. [1] For example don't let the city/state build cheap housing, rather subsidize housing co-ops. Once you do that, you get political entanglement in return and in general the imbalance of the private-sector being marginalized. But I prefer that anytime over government housing. Germany is full of both (co-ops and city-run housing, with the latter being usually run-down and the former trumping median private-sector housing while being 30%++ cheaper).
d215 9y ago
> Having “intrinsic motivations”, sometimes a true passion, for what the social service worker does is the best prerequisite to have a satisfactory relation with clients. This. Doesn't this hold for so many professions or just so many things we do in life? What an excellent interview and what good to see such a positive insight on (a part) of Italy's economy. In the aftermath of the financial crisis in 2008 a lot of Italy bashing (together with basically all Southern European EU countries) has been going on, most of it completely based on stereotypes. Also makes me wonder if cooperations like these are one of the reasons why (Northern) Italian design is so damn good.
- toyg 9y ago
  Italian design is a result of a 2000-year-old legacy of excellence in art and, sadly, has nothing to do with cooperation. The famous names (Bertone, Pininfarina, Ferrari etc) have always been regular companies, and Emilia is not really a traditional center of design activity - for that you would look at Milan, Rome, and Turin. You do have the DAMS in Bologna, aka "Umberto Eco's faculty", but it's always been more about media than design. The somewhat-distributed coop model traditionally helped and incentivised STEM-oriented schools. Emilia has some of the best engineering schools in the country, both at university level and below, and a huge network of engineering-based companies working in industrial automation and precision instruments - including the Motor Valley of Ferrari-Lamborghini-Ducati fame. Even there, you really remember the cars designed by Bertone and Pininfarina, studios based further North.
fbn79 9y ago
Im from that region. Coop are anti-meritocracy. Many times the coops is a way to bypass tax and rules and do unfair concurrency. Coops give low pay to workers and they can because workers are considered company members. Coops are very politically connected and many time implied in corruption cases.
- luckydata 9y ago
  concurrency = I think you mean "competition". source: My native language is also Italian
  - theseatoms 9y ago
    Interesting. What Italian word best maps to "concurrency"?
    - usrusr 9y ago
      Probably something that is close to the German "Konkurrenz" (edit: which "maps" to concurrency, by the unwritten rules of how English and German map their respective loan words from Latin, but translates perfectly to competition, but not at all to concurrency)
    - toyg 9y ago
      The correct translation is "parallellismo", which has an obvious etymology.
      - davidw 9y ago
        Parallelism isn't concurrency, though!
        toyg 9y ago
        You would make the distinction by prepending “fully” (parallelism) or “partially” (concurrency). Unfortunately the language of Dante doesn’t really allow for the finer points of CS :)
ucaetano 9y ago
Co-ops are just the same as guilds, oligopolies, etc. They are (usually government-sanctioned or government-protected) producer organizations that set quotas and approval processes to reduce the threat of competition and new entrants, usually relying on official government policy to enable them through import tariffs, "cultural protection" regulation and subsidies (such as tax waivers). The result is an inefficient system that incentivizes inequality and lowers productivity, protecting the interests of the insiders in detriment to society. And, from what I hear from Italian friends, they are usually linked to the local mafia group.
- coldtea 9y ago
  >They are (usually government-sanctioned or government-protected) producer organizations that set quotas and approval processes to reduce the threat of competition and new entrants, usually relying on official government policy to enable them through import tariffs, "cultural protection" regulation and subsidies (such as tax waivers). None of the above sound bad in themselves. In many areas we could do with less competition, more tariffs, and more cultural protection and subsidies.
  - ucaetano 9y ago
    > None of the above sound bad in themselves. Actually, all of them are bad in themselves. Government-granted monopolies reduce innovation and consumer surplus, inhibit competition and stagnate an economy, leaving it weak and unable to compete internationally. > In many areas we could do with less competition, more tariffs, and more cultural protection and subsidies. No, we could not.
    - dv_dt 9y ago
      Private sector markets can show all those negatives, and companies can compete not on inherent efficiency of capital operation, but on who can more cheaply acquire low waged employees. Especially today, we should not believe blindly that capitalism that will automatically be better for society. The question isn't which abstract model is better, the question is how we build some sort of conventions that work better than what is happening now.
Proven 9y ago
And the rest of the country somehow “deserves” their fair share of that. No wonder the productive are fed up with the EU and country level socialism.
runeks 9y ago
> According to Zamagni, in the wake of a 1971 law that exempted co-ops from certain kinds of banking limitations, Coop was able to raise a lot of money in small amounts from many, many members. Coop became the Italian retail leader in part because it could tap its already sizable membership base for the loans it needed to expand. In my opinion, we are truly shooting ourselves in the foot by giving banks a monopoly on financing. Credit is the blood in the body economic, and by making banks an accessory to every credit transaction we greatly reduce its flow through the economy.
jduda 9y ago
Interesting to see this pop up here! I'm the author, and work for a research institute looking to learn from examples like this one to build a more resilient and democratized economy in the US. While Emilia-Romagna isn't perfect, one really interesting thing it shows is that you can build a high growth, integrated industrial ecosystem using cooperative capital, with the appropriate policy supports and federation structures. In some ways it is more interesting than Mondragon (the other big proof of concept for at-scale worker cooperatives) because it is far less monolithic. Anyway, if you are interested, check out more of our work at https://thenextsystem.org https://thenextsystem.org and https://democracycollaborative.org https://democracycollaborative.org
- camillomiller 9y ago
  As an Italian I would like to point out that there is a lot of political clash about this. This ecosystem has bred a lot of leftist politicians over the year and this has continuously been exploited by the right to attack the “coops” as “coperative rosse” (red coops), which - in the Right’s view - leverage political networks and contacts to gain subsidies and tax exemptions on social activities. I personally do not agree, but it is true that Emilia Romagna has historically been one of our most socialist/communist regions. Please note that in Italy “communist” is not an insult (unless you use it like that as Berlusconi does), but it technically just referred to being a voter of the historical Communist Party (recognized as one of the most important elements of our democracy until the 80s). In regard to Retail, this has led to a long-term spat between Mr. Bernardo Caprotti, the CEO of Esselunga until 2013, and COOP, the Retail cooperative mentioned in the article. Esselunga is a large retail chain, particularly popular in the center-north. In 2007, Mr. Caprotti wrote a book called “Falce e Carrello” (literally sickle and shopping cart, a play on falce e martello, Italian for sickle and hammer) which became sort of a bestseller. In the book he accused COOP of unfair market practices to block the expansion plans of Esselunga in the so-called red regions, with Emilia Romagna as the central stage for these accusations. Although Caprotti passed away in 2016, a lawsuit brought by COOP against him is still ongoing. First and Second grade had opposite results so far. The case is now being examined by the Italian Appeal Court, which will have a final say on the case. I’d just like to add that the COOP’s supermarkets are probably the best food shopping experience you can think of. If you’re visiting Emilia Romagna, just get into one. You’ll see that the stereotypes about Italian food quality and variety are true! Edit: toyg’s comment, below, has a great take on the critical points of the COOP system. (Just to clarify: Caprotti’s accusations were driven by opposing ideology and personal grievances, but they weren’t completely unfactual)
asveikau 9y ago
I'm reminded that years ago I read about Barcelona during the Spanish civil war, how some factories there developed internal structures inspired by communism or anarchism, and that they were productive in that mode. As an American born in the 80s, the decade where we seemed to begin blindly accepting that such structures "cannot" work, it was a fascinating concept. Then I got to the tech industry and found I worked best in small, decentralized teams without a lot of top-down control and decision making. Plus it doesn't hurt if everybody has some equity. It seemed like the same phenomenon at work.
- tonyedgecombe 9y ago
  There are some interesting efforts around bottom up democracy in Northern Syria, the BBC had a fascinating program about it recently.
  - deleted 9y ago
    [deleted]
  - tao_oat 9y ago
    I believe the program was called Accidental Anarchist: https://m.imdb.com/title/tt6130010/ https://m.imdb.com/title/tt6130010/
    - tonyedgecombe 9y ago
      That was it.
walterstucco 9y ago
This is a good summary of the crisis Italian coops are going through. It's in Italian, but should be easily translated by Google translate http://espresso.repubblica.it/inchieste/2017/11/24/news/l-era-delle-coop-e-finita-1.314659 http://espresso.repubblica.it/inchieste/2017/11/24/news/l-er...

206 points by danielam 9y ago

dang 9y ago

Also https://thenextsystem.org/learning-from-emilia-romagna https://thenextsystem.org/learning-from-emilia-romagna, via https://news.ycombinator.com/item?id=16553612 https://news.ycombinator.com/item?id=16553612.

Extract from https://thenextsystem.org/learning-from-emilia-romagna https://thenextsystem.org/learning-from-emilia-romagna: "The founding principle was based on common economic action as part of a general vision of society not based on individualism and self-interest".

michaelgiba 9y ago

“About two out of every three inhabitants are co-op members, together producing around 30 percent of the region’s GDP.” - does this mean the 1/3 that isn’t a part of the co-op accounts for 70% of the GDP? Could someone clarify?

toyg 9y ago
“Member” is a very light concept: if you open a savings account with them, or a fidelity store card, you become a member, even if you work in a completely different field and for a regular company. So the coop sector as a whole produce 30% of gdp, but this is not related to the gdp output of members.
- michaelgiba 9y ago
  I see, thanks!

toyg 9y ago

Funny, I grew up there. At scale, Emilia co-ops are the same as any other business: they want to make money, screw workers. The veneer of social conscience is pretension, these days. A lot of jobs (most?) higher in the food chain are assigned through old-boys’ networks and political patronage (which is common even in the private sector, in Italy). Most large coop groups are struggling and surviving only with mergers. As the political system that allowed them to get established (stable 50-year left-wing governments across the whole region) slowly crumbled, their markets were blown open to competition, and they reacted by turning into more and more traditional businesses - or going bankrupt under clouds of political scandal. A lot of people in the area think this type of development has fundamentally betrayed its origins and should be reformed at the very least. EDIT: re-reading, I might have been a bit unfair. Coops had a tremendous social impact, until around the early 1980s. They were part and parcel of a development model that had little to envy to Scandinavian social democracy. It's just that they eventually changed, as all institutions do, prioritizing self-preservation and enrichment over their social role. This is particularly true for larger ones (generally in construction, food distribution, maintenance services, banking, and insurance).

coliveira 9y ago
These coops may be challenged by other, leaner coops. There is no indication that the problem is, by itself, the fact that these companies are run as coops, since traditional companies are plagued by the same issues you mentioned.
- toyg 9y ago
  Absolutely. The point is, though, that the model isn’t intrinsically better than public corporations, once you reach a certain size.
woodpanel 9y ago
Interesting to see, how perceptions differ when you're from the place. I've experienced this too when progressives from the US at home praise certain German policies as the way to go, yet they never seem to put the same effort into researching the local criticism as they put to in taking the positive claims at face-value. I'm a fan of co-ops, but gave up on the idea of replacing the private sector with it. If there's a market for them, they can compete easily (usually through quality). I'm inclined to see them as better agents for social welfare programs [1]. I'd like to hear from the author why they focus on some (in foreign eyes) romantic region in Italy and don't look at the dryer examples of large-scale co-ops that exist throughout the rest of Europe: Germany's and Switzerland's biggest retailers are co-ops (Rewe, Edeka and Migros, Coop). Italy's biggest retailer is also a co-op. German co-op retail-banks claim 20% market share. Austria's Reiffeisen Bank is the country's third largest bank. The world's biggest sugar-producer Südzucker is a co-op. The list of old co-ops that have scaled over time is long and studying them I think would provide much needed insight if we are to claim the "advancedness" of co-ops. Specifically all the scandals that have popped-up, like the "co-op-Scandal" of the late 1980s, one of Germany's biggest cases of financial fraud. [1] For example don't let the city/state build cheap housing, rather subsidize housing co-ops. Once you do that, you get political entanglement in return and in general the imbalance of the private-sector being marginalized. But I prefer that anytime over government housing. Germany is full of both (co-ops and city-run housing, with the latter being usually run-down and the former trumping median private-sector housing while being 30%++ cheaper).

d215 9y ago

> Having “intrinsic motivations”, sometimes a true passion, for what the social service worker does is the best prerequisite to have a satisfactory relation with clients. This. Doesn't this hold for so many professions or just so many things we do in life? What an excellent interview and what good to see such a positive insight on (a part) of Italy's economy. In the aftermath of the financial crisis in 2008 a lot of Italy bashing (together with basically all Southern European EU countries) has been going on, most of it completely based on stereotypes. Also makes me wonder if cooperations like these are one of the reasons why (Northern) Italian design is so damn good.

toyg 9y ago
Italian design is a result of a 2000-year-old legacy of excellence in art and, sadly, has nothing to do with cooperation. The famous names (Bertone, Pininfarina, Ferrari etc) have always been regular companies, and Emilia is not really a traditional center of design activity - for that you would look at Milan, Rome, and Turin. You do have the DAMS in Bologna, aka "Umberto Eco's faculty", but it's always been more about media than design. The somewhat-distributed coop model traditionally helped and incentivised STEM-oriented schools. Emilia has some of the best engineering schools in the country, both at university level and below, and a huge network of engineering-based companies working in industrial automation and precision instruments - including the Motor Valley of Ferrari-Lamborghini-Ducati fame. Even there, you really remember the cars designed by Bertone and Pininfarina, studios based further North.

fbn79 9y ago

Im from that region. Coop are anti-meritocracy. Many times the coops is a way to bypass tax and rules and do unfair concurrency. Coops give low pay to workers and they can because workers are considered company members. Coops are very politically connected and many time implied in corruption cases.

luckydata 9y ago
concurrency = I think you mean "competition". source: My native language is also Italian
- theseatoms 9y ago
  Interesting. What Italian word best maps to "concurrency"?
  - usrusr 9y ago
    Probably something that is close to the German "Konkurrenz" (edit: which "maps" to concurrency, by the unwritten rules of how English and German map their respective loan words from Latin, but translates perfectly to competition, but not at all to concurrency)
  - toyg 9y ago
    The correct translation is "parallellismo", which has an obvious etymology.
    - davidw 9y ago
      Parallelism isn't concurrency, though!
      - toyg 9y ago
        You would make the distinction by prepending “fully” (parallelism) or “partially” (concurrency). Unfortunately the language of Dante doesn’t really allow for the finer points of CS :)

ucaetano 9y ago

Co-ops are just the same as guilds, oligopolies, etc. They are (usually government-sanctioned or government-protected) producer organizations that set quotas and approval processes to reduce the threat of competition and new entrants, usually relying on official government policy to enable them through import tariffs, "cultural protection" regulation and subsidies (such as tax waivers). The result is an inefficient system that incentivizes inequality and lowers productivity, protecting the interests of the insiders in detriment to society. And, from what I hear from Italian friends, they are usually linked to the local mafia group.

coldtea 9y ago
>They are (usually government-sanctioned or government-protected) producer organizations that set quotas and approval processes to reduce the threat of competition and new entrants, usually relying on official government policy to enable them through import tariffs, "cultural protection" regulation and subsidies (such as tax waivers). None of the above sound bad in themselves. In many areas we could do with less competition, more tariffs, and more cultural protection and subsidies.
- ucaetano 9y ago
  > None of the above sound bad in themselves. Actually, all of them are bad in themselves. Government-granted monopolies reduce innovation and consumer surplus, inhibit competition and stagnate an economy, leaving it weak and unable to compete internationally. > In many areas we could do with less competition, more tariffs, and more cultural protection and subsidies. No, we could not.
  - dv_dt 9y ago
    Private sector markets can show all those negatives, and companies can compete not on inherent efficiency of capital operation, but on who can more cheaply acquire low waged employees. Especially today, we should not believe blindly that capitalism that will automatically be better for society. The question isn't which abstract model is better, the question is how we build some sort of conventions that work better than what is happening now.

Proven 9y ago

And the rest of the country somehow “deserves” their fair share of that. No wonder the productive are fed up with the EU and country level socialism.

runeks 9y ago

> According to Zamagni, in the wake of a 1971 law that exempted co-ops from certain kinds of banking limitations, Coop was able to raise a lot of money in small amounts from many, many members. Coop became the Italian retail leader in part because it could tap its already sizable membership base for the loans it needed to expand. In my opinion, we are truly shooting ourselves in the foot by giving banks a monopoly on financing. Credit is the blood in the body economic, and by making banks an accessory to every credit transaction we greatly reduce its flow through the economy.

jduda 9y ago

Interesting to see this pop up here! I'm the author, and work for a research institute looking to learn from examples like this one to build a more resilient and democratized economy in the US. While Emilia-Romagna isn't perfect, one really interesting thing it shows is that you can build a high growth, integrated industrial ecosystem using cooperative capital, with the appropriate policy supports and federation structures. In some ways it is more interesting than Mondragon (the other big proof of concept for at-scale worker cooperatives) because it is far less monolithic. Anyway, if you are interested, check out more of our work at https://thenextsystem.org https://thenextsystem.org and https://democracycollaborative.org https://democracycollaborative.org

camillomiller 9y ago
As an Italian I would like to point out that there is a lot of political clash about this. This ecosystem has bred a lot of leftist politicians over the year and this has continuously been exploited by the right to attack the “coops” as “coperative rosse” (red coops), which - in the Right’s view - leverage political networks and contacts to gain subsidies and tax exemptions on social activities. I personally do not agree, but it is true that Emilia Romagna has historically been one of our most socialist/communist regions. Please note that in Italy “communist” is not an insult (unless you use it like that as Berlusconi does), but it technically just referred to being a voter of the historical Communist Party (recognized as one of the most important elements of our democracy until the 80s). In regard to Retail, this has led to a long-term spat between Mr. Bernardo Caprotti, the CEO of Esselunga until 2013, and COOP, the Retail cooperative mentioned in the article. Esselunga is a large retail chain, particularly popular in the center-north. In 2007, Mr. Caprotti wrote a book called “Falce e Carrello” (literally sickle and shopping cart, a play on falce e martello, Italian for sickle and hammer) which became sort of a bestseller. In the book he accused COOP of unfair market practices to block the expansion plans of Esselunga in the so-called red regions, with Emilia Romagna as the central stage for these accusations. Although Caprotti passed away in 2016, a lawsuit brought by COOP against him is still ongoing. First and Second grade had opposite results so far. The case is now being examined by the Italian Appeal Court, which will have a final say on the case. I’d just like to add that the COOP’s supermarkets are probably the best food shopping experience you can think of. If you’re visiting Emilia Romagna, just get into one. You’ll see that the stereotypes about Italian food quality and variety are true! Edit: toyg’s comment, below, has a great take on the critical points of the COOP system. (Just to clarify: Caprotti’s accusations were driven by opposing ideology and personal grievances, but they weren’t completely unfactual)

asveikau 9y ago

I'm reminded that years ago I read about Barcelona during the Spanish civil war, how some factories there developed internal structures inspired by communism or anarchism, and that they were productive in that mode. As an American born in the 80s, the decade where we seemed to begin blindly accepting that such structures "cannot" work, it was a fascinating concept. Then I got to the tech industry and found I worked best in small, decentralized teams without a lot of top-down control and decision making. Plus it doesn't hurt if everybody has some equity. It seemed like the same phenomenon at work.

tonyedgecombe 9y ago
There are some interesting efforts around bottom up democracy in Northern Syria, the BBC had a fascinating program about it recently.
- deleted 9y ago
  [deleted]
- tao_oat 9y ago
  I believe the program was called Accidental Anarchist: https://m.imdb.com/title/tt6130010/ https://m.imdb.com/title/tt6130010/
  - tonyedgecombe 9y ago
    That was it.

walterstucco 9y ago

This is a good summary of the crisis Italian coops are going through. It's in Italian, but should be easily translated by Google translate http://espresso.repubblica.it/inchieste/2017/11/24/news/l-era-delle-coop-e-finita-1.314659 http://espresso.repubblica.it/inchieste/2017/11/24/news/l-er...