Davos 2016: Can co-ops contribute to the 4th Industrial Revolution?

World leaders and business representatives met in Davos in January for the World Economic Forum, where co-operatives were represented by the International Co-operative Alliance. The theme of the...

World leaders and business representatives met in Davos in January for the World Economic Forum, where co-operatives were represented by the International Co-operative Alliance.

The theme of the 2016 World Economic Forum was ‘The Fourth Industrial Revolution’, inspired by a publication with the same title by World Economic Forum chair and founder, Klaus Schwabb.

In his article for Foreign Affairs, Mr Schwabb describes a future that works for all “by putting people first and empowering them”. Today’s decision makers, he argues, are too often trapped in traditional, linear thinking and sometimes fail to think strategically about “the forces of disruption and innovation shaping our future”. Mr Schwabb founded the Forum in 1971 and has been campaigning for a multi stakeholder concept ever since. He believes the management of a modern enterprise must serve not only shareholders, but all stakeholders.

Discussions focused in particular on the current and future disruptions caused by the digital revolution.

Klaus Schwabb
Klaus Schwabb

A report presented at the forum forecasts that 50% of today’s jobs could be lost as a result of artificial intelligence and robotics. Delegates also looked at how technological developments such as the sharing, collaborative economy create new notions of ownership.

President of the International Co-operative Alliance, Monique Leroux, thinks co-operatives can contribute to the fourth revolution by helping to regulate work in the “gig economy”, an environment dominated by contracts between organisations and independent workers for short-term engagements. Ms Leroux took part in the Forum where she represented the global co-operative movement. Prior to her role at the Alliance, she was chief executive, chair of the board and president of Desjardins Group, the largest association of credit unions in North America.

The Alliance’s president also spoke at a high level interactive session where she talked about Desjardins Group’s recent developments such as the ExcentriQ network and Desjardins Lab. Monique Leroux was elected president of the Alliance at the organisation’s General Assembly in Antalya Turkey in November 2015.

She said: “The gig economy includes crowd-work and work-on- demand via apps. The challenges are that workers become invisible. When you stream a movie online, the site will recommend another movie you may like. This recommendation is based on information supplied by workers who have hand-tagged TV shows and film for content, based on their knowledge. There is a worker behind the computer. But is this person benefiting from prevailing labour laws?

Ms Leroux believes a second challenge is the misclassification of employment status. “Many online platforms are quick to dismiss any responsibility as employers, categorising these workers as independent contractors. The rise
in the number of disputes and litigations on this issue indicates the need for responses. Workers have little recourse if their work is rejected by the ‘client’, inviting wage theft. Workers are ‘unlisted’ (or in practice, dismissed). Offering work on the market within the frame of a co-operative formalises: the co-operative provides a legal basis, which is still flexible enough to encourage entrepreneurs.”

Another area where she thinks co-ops could make a difference is financial inclusion. “The forum’s speakers emphasize that financial inclusion is critical to achieve stability, not only in emerging economies, but also in developed nations,” she said. “A striking finding is that 73% of the world is financially excluded. Exclusion and inequality cause societal issues like black markets and violence.

Monique Leroux with Robert Schiller at the World Economic Forum
Monique Leroux with Robert Schiller at the World Economic Forum

“As pointed out by Joseph Stiglitz at the forum: GDP is not a good measure of economic performance, but it is a good measure of well being. Financial inclusion is the basis to be recognised in society. It empowers people and is the basis for self-help, a dignified and sustainable way forward. Co-op banks and credit unions play a big role in improving financial inclusion and they should increase their global reach.”

Nobel Laureate Professor Michael Spence, of the Stern School of Business at New York University, spoke in numerous sessions at the World Economic Forum in Davos.

“I think the platform model for markets (broadly defined) and for organizations has a lot of power,” he said.

“It seems to me a merging of the Platform organization and the Co-operative form of organization makes a lot of sense.  The emerging sharing and gig economies have a lot of strengths.  But there are missing pieces in terms of legal form of organisation, legal and liability issues, insurance and what used to be employer based social security. Some serious research on this would be useful,” said Nobel laureate Professor Michael Spence of the Stern School of Business at New York University.”

Michael Spence with Monique Leroux
Michael Spence with Monique Leroux

The Forum has also looked at the purpose of organisations. The Alliance’s president argues that co-operatives have a “unique and authentic” sense of purpose embedded in their DNA.

“At the forum I have witnessed many discussions about a “purpose” which organisations should have – to succeed, grow and evolve. I like to point out that co-operative businesses have a sense of purpose embedded in them – it’s in our DNA, and we should capitalize on it to accomplish our missions,” said Ms Leroux. “The COOP Marque and the .coop domain are essential co-op marketing instruments to stand out, to express our common identity and to signify the unique sense of purpose which connects co-ops.”

In terms of growth through partnerships, co-operation is key to fostering successful collaborations, argues Ms Leroux. “Striking up authentic, sustainable and effective public-private partnerships, linking up the initiatives of corporations, public instances, local governments and citizens has been a major topic at the 2016 World Economic Forum.

“International organisations such as the Alliance have a key role to play. They unite members in a network rooted in economic activity around a common identity based on essential human values. All agree that such partnerships would help to develop much-needed education and infrastructure to start with. It is hard not to see the opportunity for co-ops in these fields, all the more since we have been acknowledged for our potential in managing infrastructure, in B20 recommendations,” she said.

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