Consumer cooperatives and automation

We endorse the cooperative movement, though we usually discuss worker cooperatives as a mean to achieve self-employment and economic democracy. Consumer cooperatives have received very little attention at this site.

As a general rule we believe that consumer cooperatives are best suited for capital-intensive industries, i.e. businesses where most work is done by machine with little to no human involvement. On the other hand, labor intensive industries are more suited for worker cooperatives.

The main aim of a consumer cooperative is to reduce prices for its members. Price reduction can be achieved in two ways: eliminating mark ups (i.e. the “profit” part) and reducing the costs of production. As a consumer cooperative is owned by its customers profit would flow to its members either as dividend or as a discount.

Like other types of business employees are an important factor in the costs of running a consumer cooperative. So a consumer coop has a clear interest in minimizing its wage costs and hence there is a clear incentive for automation. Machines have no family to support nor have any desire to consume, so the costs of machines are limited to acquisition and maintenance.

A real life example of increasing automation is Amazon’s grocery shop without checkout lines. By using an app, the shop register what product consumers put in their shopping basket and once the shopper left, the money owed is taken from the consumers account.

In a grocery shop there are basically two groups of employees: cashiers and shelve stockers. Amazon’s experiment will eliminate the former group and it is quite conceivable the latter group will disappear as well, as result of automation.

A fully automated grocery shop with no human employees is, of course, a perfect business to be run as a consumer cooperative. People go to a grocery quite frequently and usually go to the same shop, therefore consumers are more likely to become a member of such coop.

Automation might shift priorities from worker to consumer cooperatives. Consequently the cooperative movement should explore the consequences and possibilities of automation.

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