maddog's Doghouse

At a GNU/Linux Meetup recently, I met a young woman who presented me a book that contained a chapter she had authored. The book is titled Ours To Hack and Own [1], and it discusses "cooperativism," the economic practice of running a company as a cooperative, wherein either the employees or the customers are the owners.

Many readers might stop at this point and ask, "How does this relate to Free and Open Source Software?" FOSS projects are typically the epitome of cooperativism, so please continue reading.

Many years ago, when I was a university student, there was a small grocery store in the heart of Philadelphia that was a cooperative ("coop" for short). The people who regularly shopped there joined the coop, and the money they paid for groceries went directly to buying the groceries, paying the salaries of the employees, and taking care of other expenses. Some of the people who shopped there also formed a board of directors, who helped govern the coop. These governors made the rules for running the coop, hired the Executive Director (who in turn hired the rest of the staff), and determined the Executive Director's salary. The Executive Director was responsible for running the coop efficiently and making sure the cooperative either put excess revenue back into the coop, to make it better, or lowered the prices to make sure the food was the best for the lowest price. People who actually belonged to the coop (and showed their membership card) got a small percentage off the already low prices and could attend the membership meetings once a year to vote for board members. The coop had no "owners" to siphon off "profits" to make the goods more expensive.

There are many examples of coops. I belong to a credit union, a type of bank that is owned by the depositors. Many rural electric companies are coops, owned by the people that buy the electricity. Early rural telephone companies were often coops, started by the users to provide telephone service when larger telephone companies did not see that segment of the population profitable enough to service. An association of these rural telephone companies helped coordinate their efforts to obtain low-cost loans to help establish their coops. Other examples include failing businesses that were purchased from the owners by the employees, who then turned around the business and made it self-sustaining, even after paying themselves better wages.

The essence of most coops is that the people who either work there or buy the products start the coop for their own needs – and not to generate money for remote stockholders.

So it is with many FOSS projects. Developers who start the project are usually passionate about some topic and start to write the code. In most of their minds, the object is to create "a really good piece of code" that they can use, not to create a product that they can sell to millions of people. Some projects become so large that the developers create a more formal way of driving development by establishing a board of directors who govern the project. The Debian distribution is a good example of this structure.

FOSS has inspired many other ventures, such as Creative Commons and the Open Hardware movement. Many of these projects appeared because people realized that when you "give away" certain things, it does not hurt the venture, and it often helps the project grow, either by attracting more developers or bringing more revenue into the organization from services. For more than 20 years, I have been talking about "making money with free software." In every discussion, I talk about the value of the cooperative model compared with creating a "sole proprietorship" form of business.

Cooperatives take more effort to start, but on the other hand, they allow the sharing of expensive resources over a (potentially) larger customer base. A single person will only be able to satisfy a certain number of customers, but a group of good people working together could satisfy a much larger number of customers.

More importantly, a coop would allow a greater diversity of expertise in the business, as well as a greater pool of talent to service customer needs. Many large companies will not do business with a single-proprietor business, fearing loss of data and service when that person dies, goes on vacation, or is overloaded with other work. A coop, because it is designed as a business from the start, can expand more easily in times of expanding business.

More importantly – particularly in the case of the employees (not the state or third parties) owning the coop – the decisions made by the coop are made locally, and not by a board of directors many miles away.