How Communists and Catholics Built a Commonwealth with highest median family income in Italy, with the lowest unemployment rate and the highest participation

By Nathan Schneider, author of Everything for Everyone (a great Christmas present!) in America Magazine, Sept 2017

Boulder, Colo., is a town full of characters, and Richard Warner was one of them. Dr. Warner—a psychiatrist, anthropologist and transplanted Englishman, with ruddy cheeks and wavy hair—held a particularly zealous conviction that any patient with mental illness could recover and, further, that the best medicine is living as normal a life as possible. He could not tolerate any clinical ambition he perceived to be short of that. He wanted to care for people in a way that did not seem to add up, business-wise—at least until he borrowed an idea from Italy.

Dr. Warner died in 2015. His chief legacy is a company, Colorado Recovery, that provides services in the Boulder community to adults with serious mental illness. It is housed mainly in an office on a residential street, its Ionic columns and white fences tucked behind a pair of trees along the sidewalk. Some of the 150-or-so clients it serves in a given year live in a group home a short walk away. Other companies have wanted to buy Colorado Recovery over the years; some still call and make offers. But by the time of his death, Dr. Warner transferred ownership and control of Colorado Recovery to its employees, along with some families of its clients, who hold non-voting investor shares. The clients have a budget to design their own services. Dr. Warner knew that no buyer—whether an aggressive holding company or a well-intentioned nonprofit—would run it the way he had, so he turned it into a cooperative.

“It’s a very unusual for-profit model,” says Ruth Arnold, Colorado Recovery’s chief executive officer. “It’s not really profit-driven. We’re charging as much as we need to survive.”

Dr. Warner’s widow, Lucy Warner, summarizes the model this way: “It’s sort of where radical and duh come together.”

Colorado Recovery’s structure is an anomaly in the U.S. health care industry, but it was an outgrowth of something larger and older. Since the 1970s, Dr. Warner had been watching a kind of business model that was spreading across Europe, beginning in a part of Italy better known for its antiquities than its innovations, a place where this kind of shared ownership had become a common practice. Warner was trying to build more than a company in Colorado. He was after a commonwealth.

Shared Responsibility

The Social Cooperative of Young Binders appears to be an ordinary print shop, housed in an office park in Imola, a town halfway between Bologna and Ravenna. Founded in 1983, it now does about $1.7 million in business a year, with services ranging from making copies to housing and cataloging the archives of local manufacturing companies. Increasingly the company is getting into waste management as demand for printing on paper declines. More than two dozen workers depend on Young Binders for their livelihood; about half have disabilities that would make it nearly impossible to find work elsewhere. Many of those workers are also co-owners of the company. If you were to visit and ask who the disabled workers were, you would be shown the door.

In 1991 Italy passed a law to enable a corporate container for a kind of business that had been happening already for decades: cooperatives specifically designed to provide social services.

These “social cooperatives,” according to the law, could come in two forms. The first consists of co-ops that provide public services, usually as a contractor for government welfare programs—like in-home care for seniors or childcare. These replaced profiteering private ownership and top-down state control by sharing control over these services between providers and recipients. The second form includes enterprises that employ and train people with a range of “disadvantages”—people like those with physical or mental disabilities, for example, or the incarcerated. These can look like Young Binders, or a trattoria in the Trastevere neighborhood of Rome run by the lay Catholic community of Sant’Egidio, or a monastery-turned-guesthouse along a canal in Venice. When the painter Mark Bradford created his installation for the U.S. pavilion at this year’s Venice Biennale art exhibition, he carried out what artists lately call “social practice” with a social cooperative through which local inmates grow produce and make crafts.

Both types of social co-ops need to be solvent businesses. They are not charities. But rather than maximizing profit, their purpose is to harmonize the interests of the stakeholders they serve. They can include in their ownership structures a blend of workers, patients, volunteers, investors and donors. The model has proliferated exponentially. Social co-ops have a dedicated statute in Italy, but they are not an isolated experiment. This is a country where the two largest grocery-store chains are cooperatives—one owned by its consumers, the other by local retailers. Co-ops also own Unipol, one of the largest insurers, whose modern skyscraper towers over Bologna’s terracotta rooftops. In northern territories like Tuscany, Trentino and above all Emilia-Romagna, with Bologna as its capital, cooperatives organize the shape and tempo of the whole economy.

In part because of its culture of cooperatives, Emilia-Romagna has the highest median family income in Italy. Tweet this

Co-ops there carry out activities as varied as construction, garbage collection and production of a best-selling brand of boxed wine. You can visit a showroom of sophisticated dental chairs at a worker-owned factory or buy bonds from a dairy co-op backed by wheels of its Parmesan cheese. Cooperative networks enable small- and medium-sized enterprises to remain dominant in a region that exports world-renowned food and automobiles. In part because of its culture of cooperatives, Emilia-Romagna has the highest median family income in Italy, with the lowest unemployment rate and the highest participation of women in the workforce. The early industrial radicals’ dream of a fully democratic economy, a “cooperative commonwealth,” is unusually alive and well there. And this came about because of two otherwise opposing factions: the Communists and the Catholics.

Northern Italy: Land of Co-ops

Most visitors encounter Emilia-Romagna as a place of narrow medieval streets, Baroque churches and Bolognese sauce. The trains run more or less on time, and the hospitals treat foreigners without fuss. One tends not to notice the politics at work behind it all. But the politics are interesting. It’s a region that has been, since the late 19th century, a leftist stronghold.

Communists and socialists dominated the first national cooperative association, Legacoop, founded in 1886 in Milan, only 15 years after the unification of the nation of Italy itself. Catholics, searching for their own responses to the era’s conflict between capital and labor, formed another association, Confcooperative, in 1919. Confcooperative later led the development of the social co-op model, while Legacoop feared that social co-ops would be a vehicle for privatizing state-run services. Today, however, the two organizations have come to regard their ideological differences as negligible. They have initiated a merger.

“The Berlin Wall doesn’t exist anymore, but we in Italy realized it only recently,” remarks Gianluca Laurini, a Legacoop official in Bologna. “Ideology aside, a co-op is a co-op.”

The 1991 social co-op law is just one among several policy devices that Italian co-ops have designed for themselves. The national constitution itself has a provision, Article 45, that enshrines free, cooperative enterprise as a right—much-needed in the wake of Benito Mussolini, who regarded co-ops, rightly, as a threat to his Fascist regime. He dissolved both Legacoop and Confcooperative, and tried to replace them with a federation of his own, but after his demise they promptly reorganized and gained the political might to write their own rules. Cooperators from around the world now come to Italy to study these legal arrangements.

A law passed in the early 1970s, for instance, allows co-ops to hold tax-free “indivisible reserves,” making it easier to raise capital from members. During the following decade, co-ops gained the ability to own and manage noncooperative subsidiary firms. A 1992 law required co-ops to contribute 3 percent of their surpluses—profits, in capitalist-speak—to their associations, for the sake of financing new co-ops and the growth of existing ones. The result has been an ever-more self-perpetuating system, a network of companies that aid each other’s flourishing. While Colorado Recovery has had to struggle for survival mostly on its own, Italy’s co-ops have one another.

The eminent scholarly exponents of the Italian co-op sector are Vera and Stefano Zamagni—a historian and an economist, wife and husband. Vera once served as the equivalent of lieutenant governor of Emilia-Romagna; Stefano was an architect of Pope Benedict XVI’s economic doctrines, which more quietly prefigured Pope Francis’ concerns for the environment and critiques of capitalism. Both teach at the University of Bologna, Europe’s oldest university, founded in 1088 as a kind of cooperative among students who hired professors to teach them. When the Zamagnis talk about the origins of what modern Italian cooperation has accomplished, they start not with the 1948 constitution nor with the earliest Italian co-ops a century before that. They start with the Middle Ages.

Since then, says Vera Zamagni, “Italy has tried to substitute economies of scale with economies of network.” The northern Italian districts where cooperation now flourishes tended to be, in an age of emperors and princes, republican city-states. From these came some basic features of the modern market economy—double-entry accounting, insurance, municipal regulation, professional guilds. The Zamagnis distinguish this “civil economy” from the capitalism that would emerge elsewhere in Europe to fund colonial expansion and exploitation.

The system of interlinked, human-scaled co-ops in northern Italy is a remnant of habits that date back to the vibrant, participatory city-state republics that governed the region in the Middle Ages. The comparative lack of co-ops in the southern part of the country, in turn, seems to reflect the monarchic rule that long prevailed there. When the political scientist Robert Putnam studied variations among Italian regional governments starting in the 1970s, he also noticed this correlation. “Mirroring almost precisely that area where the communal republics had longest endured five centuries earlier,” he wrote, “the medieval traditions of collaboration persisted, even among poor peasants.”

According to the International Co-operative Alliance, the international association established in 1895 to promote the co-op model, “cooperatives are businesses owned and run by and for their members.” This is part of the basic definition, recognized around the world, including in Italy. But in Italy one hears executives and boards also insist that their co-ops are not for their members—they are for future generations. They are for the community. One hears this from both the big-time manufacturing bosses and young back-to-the-land farmers. The members are stewards, like a family with an apartment in what was once a regal palazzo, like the people who sweep the tourists’ trash at a Roman ruin. This sense of history has helped make Italy’s co-ops among the world’s strongest, but history also tolerates their contradictions, their tendencies to drift into oligarchic control or capitalist conformity.

“I rebuke them every day,” Stefano Zamagni says. “When a cooperative loses its mission, it has no reason to exist.” But he is patient. With time, even partial manifestations of the cooperative commonwealth help the ideals spread.

The canon of international guidelines and principles for co-ops can be deceptive; it seems to claim that there is a formula. Shared principles really just string together the cooperative habits that diverse peoples have carried with them and that they bring to the common challenges of 21st-century survival. Economy is a form of culture. This is why a Kenyan woman I know who works at the Vancity credit union in Canada could start a lending circle with fellow Kenyans, while the idea baffles her native-born Canadian friends—even those at the credit union where she works. They did not grow up watching their mothers go to lending-circle meetings, as the Kenyans did.

Contradictions

If members from small, radical and allegedly pure grocery co-ops in the United States were to go on a field trip to visit an Ipercoop in Italy, they would find a dilemma. Ipercoop is the largest kind of store in the Coop Italia system, a national chain resulting from decades of mergers among local consumer cooperatives throughout the country. It is not pure. Picture, on one end of a sprawling strip mall, a gigantic superstore with globalization’s full variety of cheap, imported household goods beneath overhead banks of fluorescent suns. Employees, many of them part-time, are not especially well-paid or empowered in their workplace. Only 20,000 of nearly nine million consumer-members take part in meetings. But the in-house brands avoid controversial ingredients like G.M.O.s and palm oil, and suppliers—many of which are themselves Italian co-ops—must conform to certain codes of ethics in their labor practices. Things could be worse. But this is unapologetic consumerism, for a competitive price.

Would the visiting cooperators want this for their co-ops? Most probably would not. If it’s our company, we’d like it to be pure. But purity means accepting the fact that in addition to shopping at our co-op we are probably also stopping by Target or Walmart for bulk necessities, or condescending toward our neighbors who do so. Ipercoop stands for the impure claim that if people are going to do gross consumerism anyway, they can at least not funnel the profits to investor-owners somewhere else; its consumer-owners can add the leftovers to their savings. They can manage their own compromises.

Fluorescent superstores are only the start of the contradictions in Italy’s cooperative commonwealth. At the headquarters of Sacmi, an international manufacturing conglomerate near Bologna, one finds a prosperous machinery factory behind a pristine office building with its own museum. Sacmi is a worker co-op in which only about a third of the more than 1,000 eligible Italian workers are actually members. Among the company’s dozens of international subsidiaries, the Italian worker-owners do not bother promulgating cooperative values or possibilities in any way. And this is one of the real co-ops—a dues-paying, upstanding Legacoop member. There are also tens of thousands of “false” co-ops in the country, firms that permit no oversight from the big associations and whose sole purpose is often to enable erstwhile employers to bypass workers’ collective-bargaining rights. Even the storied social co-ops can play this kind of role. As critics feared, their rise has coincided with a long process of privatizing public services, enabling local governments to deliver services without paying government-level wages.

“Cooperatives have transformed into institutional loopholes,” contends Lisa Dorigatti, a researcher at the University of Milan who has studied co-op labor markets. Even Pope Francis has noticed the problem. “Counter the false cooperatives,” he told a 2015 Confcooperative meeting, “because cooperatives must promote an economy of honesty.”

Today, the pioneering types of people who built Italy’s cooperative movement a century ago are not necessarily flooding into co-ops. They are not attending Coop Italia’s annual meetings or holding out hope of becoming a Sacmi member. If they are organizing co-ops, they are often treating the required board structures as a legal formality and governing themselves more like an open-source software project—whether they are writing code or growing vegetables. They are forgoing co-op language altogether, speaking instead about “political consumerism” and “solidarity purchasing.” Yet according to University of Bergamo sociologist Francesca Forno, “I think we are going back to the roots of cooperativism.” They want something more cooperative than an Ipercoop superstore.

Insiders and outsiders alike frequently mistake cooperative enterprise for a utopian project. But it never has been that, or it never remains one for long. Constructing a commonwealth is not an instant cure. It is recovery.

Co-ops in the United States

We in the United States would do well to learn Italy’s lessons. The list is growing of cities that have recently drafted policies to promote worker-owned cooperatives. New York has put several million dollars into worker co-op development; Madison, Wis., has passed its own co-op ordinance, and so have Austin, Tex., and Oakland, Calif. Cleveland, Ohio, has its struggling, but widely promoted, Evergreen Cooperatives, with businesses like solar retrofitting and an urban greenhouse; other cities have dispatched field trips of policymakers to visit them. The country now has a few shining examples of functioning worker co-ops, which beckon hope for more. Advocates are hoping to find candidates among the millions of Baby Boomer-owned businesses now poised to close with no succession plan. This past May, Bernie Sanders led a group of Democratic senators and representatives to propose ambitious federal legislation on behalf of worker ownership, part of the party’s newfound appetite for progressive economic proposals.

I watch the news of these co-op developments closely. But when I first heard from Felipe Witchger, the young executive director of the Community Purchasing Alliance, I had never heard of him or his organization. And when I attended the group’s last annual meeting in a Washington, D.C., school’s multipurpose room, I realized what a lapse this was. (I delivered the keynote address at that meeting and was compensated for doing so.)

Seated around me were representatives of the 160 D.C.-area organizations—mainly churches and charter schools—that used C.P.A. for purchasing such unglamorous necessities as electricity, security, sanitation and landscaping. After three years in existence, the co-op had saved them nearly $3 million. (A woman seated next to me, a part-time church staffer, said she had cut out $17,000 on copier contracts alone.) Many of them were switching to renewable energy, and their purchase of 580 solar panels had already brought down the price of solar for everyone in the region. In the back of the room were staff members from a black-owned security company whose size more than doubled because of C.P.A. contracts. Witchger was talking with some of the group’s contractors about converting their businesses to worker ownership. But worker ownership was only part of the commonwealth he and C.P.A. members were building.

A new generation has rediscovered cooperative enterprise in the United States since the 2008 financial crisis. Perhaps it is a kind of Marxist hangover that inclines us to believe economic change must always begin with labor. Take the popular left-wing economist Richard Wolff, who has become a leading co-op promoter through his writings, radio sermons and an advocacy organization called Democracy at Work. The locus of production is so important to him that he would reserve certain governance rights solely to “producer” workers, who physically make a given widget, over the “enablers,” who answer phones, sweep floors and craft contracts and the like. This kind of laborist fixation does not do much to serve a post-industrial economy of increasingly automated production, permanent part-time, and peer-to-peer services over online platforms. It also inclines us to neglect how pockets of commonwealth might emerge from zones of economic life other than factory floors—from schools, from churches, from taking out the trash.