Rural Cooperatives Magazine - March/April 2001
Critical need seen to broaden, invigorate current approach to cooperative research
By James Baarda
Editor's note: Baarda is a former legal affairs specialist with USDA's Agricultural Cooperative Service and former educational program director for the National Council of farmer Cooperatives. He is currently an attorney with The Ackerson Group in Washington, D.C. This article was inspired by his recent international experiences dealing with cooperatives in former Soviet republics, by trends with new-generation cooperatives, the recent failure of a large U.S. cooperative, the restructuring of other cooperatives and member lawsuits that seek to force dissolution of their cooperatives. "These events challenge the very existence and character of cooperatives as we know them; combined, they suggest that cooperatives are indeed at a crossroads," says Baarda.
Creative thinking about cooperatives seems to have flagged during the past 10 years. Cooperative scholarship has become increasingly fragmented and, in some cases, irrelevant. Failure to bring the full range of scholarship, thought and research to bear on cooperatives (in disciplines other than traditional agricultural economics) may lead to an isolated, inbred field of co-op scholarship. Failure to produce meaningful research will ultimately do irreparable harm to the nation's cooperative movement at a time when it is in critical need of sound scholarship. Useful research is being done and excellent people are working on important cooperative issues. However, for two reasons, I do not believe that the overall impact of this work is meeting its potential.
My first concern is that each scholar/researcher is working in a vacuum without appreciating and incorporating what other researchers and scholars are contributing in other disciplines. Secondly, some cooperative scholars and researchers may be losing touch not only with other disciplines, but with fundamental changes throughout the agricultural sector that will determine the future of cooperatives in the United States and in significant portions of the rest of the world.
The time has come to break out from parochial views of cooperative theory and initiate a new campaign to revitalize cooperative scholarship.
The three major issues I see are: (1) The overly restricted scope of the current body of cooperative scholarship; (2)consequences of this narrowness for cooperative scholarship and cooperatives; and (3) the failure of institutions to address important issues and possible solutions.
1. Why traditional scholarship is failing to answer questions about co-ops
There are five areas in which cooperative research and scholarship does not adequately incorporate the full range of relevant scholarship, or is not oriented toward events that have the greatest significance to cooperatives.
Integrating legal and economic theory for cooperatives
Cooperative scholars have done a reasonably good job of borrowing from, and adapting corporate business theories. The work growing out of USDA Agricultural Cooperative Service's cooperative theory project about 15 years ago is one example. More recently, scholarship at several U.S. and Canadian universities and others have continued to explore the field. It appears to me, however, that the well of creativity is beginning to run dry and that recent work is more an exercise in re-casting established ideas in new terms or refining unresolved, but rather minor, problems.
This is not to say that economic theory has been applied adequately for cooperatives. Indeed, much research and methodology in economics has not yet been explored sufficiently, and no one seems to have successfully tackled new frontiers.
At the same time that economic theory has developed, nobody of legal theory has been developed for cooperatives that parallels corporate theory. Thus, the enormous deepening and broadening of ideas that exist in corporate legal theory, for example, have not progressed for cooperatives. This is not to say that cooperative legal analysis is lacking. But the fundamental rationale for cooperative law and economics has not been developed as well as legal theory and economics for corporations, partnerships, inter-firm arrangements and other forms of business organization.
Rich world of scholarship beyond cooperatives
I believe the most serious failing of cooperative research is that economic and business (or "firm") theory for cooperatives is restricted to basic economics and is further largely restricted to traditional economics with traditional underlying assumptions. The relationship between cooperative vs. corporate legal theory is almost nonexistent, as are the cross-linkages between corporate law and cooperative theory - and cooperative law and non-cooperative theory. This situation leaves fundamental questions unexplored that are of critical interest to cooperatives.
Nowhere is this more evident than in corporate legal theory. Current scholarship in corporate law theory is extraordinarily rich in ideas that are directly applicable to cooperatives. Needless to say, the theory of business organizations has been extensively explored incorporate legal theory. Corporate legal scholarship has progressed far beyond that, however, to address and challenge some of the foundations of corporate existence, structure and behavior.
Examples include corporation contract theories, theories based on public policy and public good, theories based on the sharing of responsibilities among participants, theories based on stakeholder obligations and fiduciary principles, and theories that challenge the "rationality" assumptions upon which economic theories are founded.
Contributions of research on individual and group motivation, the role of institutions, social consciousness, historical patterns and political science are incorporated into corporation legal theory far more than they have been for cooperatives. Corporate legal scholarship challenges the foundations of the assumptions of pure rationality upon which neoclassical economics is based, challenges assumptions of profit maximization and the assumed consequences, challenges assumptions of share-holder value maximization objectives in corporations and the assumed consequences, and adds the important elements of personal motivations. Corporate structure and operation is far more complex than anything that can be totally explained by simple theories as they now exist. This all rings true for cooperatives.
Cooperatives actually have more of an interest and far more at stake in the issues and answers discussed in corporate law theory than do corporations. Indeed, some of the challenges to standard corporate theory and the economic analysis of the firm are the very reasons why cooperatives were created, why they continue to exist and why they distinguish themselves from other businesses even though cooperatives, too, are corporations.
Yet all this has gone almost totally unexplored because cooperative theory at this point has no mechanism in which to address the issues. Corporate legal theory provides just such a mechanism. The results of such scholarship and the lessons that can be learned may be appropriated for cooperatives through fundamental research so long as the breadth of such research is adequate.
Fundamental changes in agriculture
It appears that there is a scarcity of careful and in-depth consideration of how three important "sea changes" in agriculture may relate to cooperatives. The first is that of the increasing prevalence of contract agriculture, the industrialization of agriculture and the resulting changes facing production agriculture, which is the foundation of farmer cooperation.
The second shortage of interconnected scholarship is related to biotechnology. This is similar to the industrialization issue, but addresses yet another process in the diminishing independence of farmers and their economic position as producers.
Third, the economic and social impacts of concentration have not received enough attention in cooperative scholarship. This includes concentration not only in the supply and marketing chains, but in the production subsector itself.
While others have written about these issues, no one is investigating the deeper meanings and foundations of such phenomena and relating them to theories of cooperatives to reach conclusions about cooperatives and their future. This needs to be based on scholarship and research rather than on opinion or casual observation.
Cooperative lessons throughout the world
Better understanding of international cooperatives is also needed to develop a deeper understanding of cooperatives, both in theory and in practice. My experiences in several former Soviet Union republics and other Eastern European countries have been extraordinarily enlightening regarding issues facing cooperatives in rapidly changing agricultural sectors. Not only are the changes rapid, but they are also directly connected to the most basic cooperative characteristics.
The enormous challenges facing cooperatives in the national economies and agricultural sectors of economies in transition, the varied and conflicting opinions of what cooperatives are and what roles they play, and the massive changes in legal and economic forces at work all paint vivid pictures of every aspect of cooperatives. They cast an entirely new light on cooperatives as businesses that are operated by and for farmers.
Public discourse in other countries is serious and important, addressing issues as fundamental as: "What is a true cooperative?" Because every issue is just as important for contemporary U.S. cooperatives as for cooperatives elsewhere, exchanges between U. S. and foreign cooperative scholars can be extraordinarily beneficial to both. Hard and painful lessons learned elsewhere may offer lessons we in this country cannot ignore.
Unification, leverage and multipliers
Finally, I do not see a concerted effort to integrate and use the results of all research and thinking done on cooperatives. Many research projects are, by their nature, rather narrow in application and cannot add much to a deeper understanding of cooperatives. Other projects are used only for the superficial results, but their broader implications are not appreciated when considered in isolation.
In some instances, follow-up projects or a concerted effort to draw the fullest implications from existing results would greatly magnify the usefulness of the research. This includes the failure to fully appreciate the interrelationships of different kinds of cooperatives.
In the United States, agricultural cooperatives too often have tended to consider themselves the true representatives of business cooperatives while other types of cooperatives are more the products of social, ideological and non-economically oriented ideologies. If the fundamentals of cooperatives and the distinctions between cooperatives and other kinds of businesses are to be fully appreciated, however, cooperatives of every type should be studied and the essence of cooperation drawn from comparisons and contrasts.
In short, a big-picture attitude toward cooperatives is needed; the scope of research and scholarship should be designed to reflect this perspective.
II. Consequences
The focus of any assessment or critique should naturally be on those things that lead to solutions and specific plans of action. I see three primary consequences.
Information and analytical tools
Interdisciplinary scholarship would establish a basis for a deeper understanding of cooperatives and their role in a profoundly changing agricultural system, as well as a dramatically changing world economy. The tools for analysis growing out of the new body of thought would be more powerful to explain cooperatives and predict the economic ecology in which they will exist in the next few decades, and would further enhance the tool kit that might be used to look into the future. Results of interdisciplinary research and scholarship would provide a significantly greater set of guides to cooperatives and those using cooperatives to respond to changing forces in agriculture and the economy as a whole.
An academic community of interest
Unfortunately, no broad-based community of scholars and researchers exists outside of agricultural economics in academia, government or cooperatives. As a consequence, the benefits of interdisciplinary exchanges are lost, as is the benefit of additional work contributed by those in other professional disciplines. They do not know or appreciate cooperatives or cooperative- oriented research. Needless to say, if cooperative researchers and scholars reach into other disciplines to draw from them what is useful for cooperatives, the breadth of available knowledge will be increased.
A quantum leap in the total "intellectual" power devoted to cooperatives would occur if researchers and scholars from many other disciplines began to produce articles, books, presentations and other products about cooperatives. This will not occur until those who set the agendas and produce the research in other disciplines realize that cooperative business is a subject worthy of their talents, time and professional career development.
I firmly believe that if an interdisciplinary approach to cooperatives mentioned in the first section were to be carried out effectively in the near future, and the commensurate professional results became part of the literature, many others would see the connection to their own disciplines and would eagerly turn attention to cooperatives.
Two additional benefits could realistically be expected. First, students would become interested through the influence of faculty and because cooperatives are inherently interesting. This would most certainly lead to graduate work and writing on cooperatives, would contribute to cooperative literature and would bolster the dwindling number of individuals who have at least a passing understanding of cooperatives.
Second, and of equal importance, those who teach would find that cooperatives provide an interesting and important addition to the topic taught. A cooperative element - or at least a mention - could be added to classes in law, economics, business and business management, finance, accounting, public policy, sociology, ethics, economic planning, community development, rural development, international development, international trade, government, political science and many others. This will not occur, however, until a professor's interest is peaked sufficiently or the topic is included in textbooks or other publications upon which the professor relies.
Guidance and coordination
Because cooperative scholars and researchers have not successfully established the kind of research and linkages mentioned earlier, little guidance exists for those who wish to explore new topics in cooperatives and no mechanism exists to show in what way effective research can or should be coordinated. The only coordination that would offer any cohesiveness is the individualized interest of researchers and students.
If, for example, a single research project identified a topic of substantial interest to multiple disciplines, projects to find solutions to the issues presented in each discipline would be a method of "passive" coordination, much like Adam Smith's" invisible hand." The self-fulfilling actions of many researchers and scholars would naturally lead to a growing body of knowledge on cooperative issues but only if the core research is done very well.
III. Responsibilities and solutions
At present, I do not see an organization or individual that has, or is prepared, to take the interdisciplinary, focused approach to research that is needed. None of the cooperative centers conduct the research required of the type of work suggested. Similarly, no universities appear to have the full complement of faculty, students and commitment to engage in this effort. No national organization is in a position to provide the leadership and coordination needed, let alone the professional capabilities to actually engage in the work.
Neither is there any mechanism - through funding or research project control - that can provide specific coordination and leadership to achieve a sustained and effective attack on the issues presented above. Rather, the only effective "coordination" appears to be provided by the leadership of one or more scholars who address the issues so effectively that they establish a focal point around which others wish to gather in a scholarly community of shared interests. If the true creativity and extraordinary professional interest in these topics exist and can be communicated well, I believe scholars in other professions will take up the cause.
To initiate this process, it will fall heavily on one or more scholars who are now steeped in cooperatives but who are also able and willing to conduct research suitable for publication in journals written for other disciplines. For example, to engage members of the legal profession who specialize incorporate legal theory in activities related to cooperative theory, someone "in cooperatives" will need to conduct research of such a kind that it can be published in law reviews or other specialized journals that are read by those who write and conduct research in corporate law theory. The greater the volume and extent of such publications by the cooperative researcher, the greater will be the response and the enhanced interest from outside the agricultural economics profession.
Several locations can be considered for the initiation of interdisciplinary projects. A university would seem to be well suited for this purpose, but universities face several drawbacks. Limitations include the specific interests of individual faculty members and the typical independence of faculty to pursue those interests, limitations on most university commitment to cooperatives, pressures on faculty to publish in their own profession, and teaching and administrative burdens preventing scholars from devoting the time and resources that it will take to be effective.
These observations apply to law schools and as well to agricultural economics departments. As noted above, I don't see much possibility that any of the cooperative centers will, or can, take on this task. And no national organization is capable of this work, nor would they he likely to allocate sufficient resources to such a project.
Clearly, USDA should be considered as a possible center of such broad-based, creative and interdisciplinary scholarship. The advantages of such an arrangement are that a focus on cooperatives and a long-term commitment to the idea of farmer cooperatives now exists at USDA's Rural Business-Cooperative Service. In addition, it is a center where public funding has been dedicated to improving cooperative businesses and public understanding of cooperatives.
Unfortunately, USDA faces some serious obstacles. Although USDA has a team of researchers who understand various aspects of cooperatives, no individual "faculty" member there is in a position to engage in the concentrated work needed to initiate the interdisciplinary work required by the above-mentioned issues or to carry it forward as an integral part of USDA's cooperative mission.
Neither can the allocation of research project funding on a piecemeal basis, even if such finding exists, effectively generate the results required. This is primarily because contracted projects are neither long-term nor typically granted to those who are already sufficiently knowledgeable about cooperatives to make efficient use of the finds rather than expend substantial resources learning the basics.
I am convinced from my current research and general observations that this effort is badly needed. The rewards to cooperatives will be immense, and the failure to explore interdisciplinary research and scholarship will place cooperatives in a very bad position when they are seriously challenged as they will be in the future.
New and creative scholarship based on fresh ideas is critically needed by cooperatives immediately, and little focused leadership appears to be in the wings to revive cooperative scholarship and appropriate research. I strongly recommend that USDA assert aggressive leadership to seek a solution to the lack of research, writing and thinking about critical cooperative issues that can only succeed by initiating a dialogue with other professions that will eventually yield information, analytical frameworks and a community of interest in cooperatives, unrestrained by boundaries of professional disciplines and that is not limited by traditional methods. [end]
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