IS MOUNTAIN EQUIPMENT CO-OP A SOCIAL ENTERPRISE?: USING THE GENUINE WEALTH MODEL TO ASSESS MEC'S PLACE
IN THE SOCIAL ECONOMY
By
JASON PONTO
Integrated Studies Project
submitted to Dr. Michael Gismondi
in partial fulfillment of the requirements for the degree of
Master of Arts – Integrated Studies
Athabasca, Alberta
April, 2008
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Abstract
As the financial, social, and environmental imbalances of global capitalism become more apparent, increased numbers of market-based organizations are stressing social and environmental goals instead of financial ones. These organizations form the social economy, a sub-section of the social sector which includes some fair-trade organizations, non-profits, and co-operatives. In examining the characteristics of organizations in the social economy, I use the work of the British Columbia and Alberta Research Alliance on the Social Economy (BALTA). I build on Robert Dobrohoczki's (2006) philosophical work regarding globalization, identity, and co-operatives and discuss the implications of democracy and consumerism to determine that not all co-operatives are social enterprises. This paper examines Mountain Equipment Co-op (MEC), a large Canadian consumer co-operative, to determine whether it acts as a social enterprise. I adopt Mark Anielski's (2007) Genuine Wealth model, a model which incorporates five distinct types of capital (human, social, natural, built, and financial) and examine MEC's policy and operation with respect to each capital type. This analysis allows me to conclude that MEC is an important part of Canada's social economy. After reflecting on the shortcomings of corporate social responsibility and self-reporting, I use the Genuine Wealth model to propose the use of a Circle Index—a visual indicator of genuine wealth—to facilitate consistent reporting that would benefit social scientists, social enterprises, and community members. Finally, my analysis leads me to encourage MEC to take a leadership role in organizing a network of co-operatives and social enterprises which will maximize the genuine wealth of the communities in which it operates.
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Many community activists and scholars are turning to local, community-based
approaches to fulfilling people's needs and desires in reaction to neoliberal capitalism,
multinational corporations, and economic globalization. Some private businesses are putting
social and environmental goals alongside of financial ones. As well, the not-for-profit and social
sector has embraced an approach to social enterprise and business operations that understands
wealth as more than profits; wealth is the culmination of choices that emphasize personal,
social, and environmental values. This paper focuses on Mountain Equipment Co-op (MEC), a
large consumer co-operative, and examines MEC's business, employment, and community
policies and actions against criteria of the concept of Genuine Wealth, a model developed by
social theorist Mark Anielski which measures five types of capital: human, social, natural, built,
and financial. The paper argues that MEC operates from within the social economy, contributes
to its communities' genuine wealth, and could become a leader in co-operative social and green
enterprise.
Introduction
Before I can categorize MEC as an enterprise in the social economy, I must elaborate on
the nature of the social economy. I do this by examining the work of a collaborative
group of researchers who are examining the social economy in British Columbia and Alberta
(BALTA - http://www.socialeconomy-bcalberta.ca/) as part of a national investigation of the
social economy in Canada. As will become apparent, defining the social economy's borders
requires discussions on democracy, identity, globalization, and consumerism. The first part of
the paper explores these issues. To examine whether MEC's co-operative status guarantees it a
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position in the social economy, I build on Robert Dobrohoczki's work to argue that co-operatives
should not automatically be considered social enterprises; we must carefully examine each co-
operative on a case-by-case basis.
After discussing the theoretical qualities of organizations in the social economy, I
introduce Mark Anielski's Genuine Wealth model and draw on its five types of capital for a
framework with which to examine social economy organizations. I explain each kind of capital
and assess MEC's place in the social economy by thoroughly examining MEC's contribution to its
communities' genuine wealth with respect to each capital type. I then reflect on the
shortcomings of indicators used in business for self-reporting and corporate social responsibility
and instead return to the Genuine Wealth model to construct a Circle Index—a visual indicator
of genuine wealth—as a means of facilitating consistent reporting. This analysis allows me to
examine the extent to which MEC is a part of Canada's social economy.
Finally, my analysis leads me to encourage MEC to take a leadership role in organizing a
network or cluster of co-operatives and social enterprises at the neighborhood or city level that
will increase the effectiveness of its community programs, assist its employees with housing and
transportation, generate new thinking and synergies within the co-op by seeing itself as part of
something larger than MEC (the social economy!) and maximize the genuine wealth of
communities.
For the past year, I have worked at MEC's Edmonton store in full- and part-time
capacities. I have worked on the floor, as a cashier, and as a member service representative. My
wide-variety of responsibilities have given me an excellent understanding of MEC's day-to-day
operations. I have sat on committees, attended presentations, and have access to internal
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documents. In addition to having numerous critical discussions with staff members and the
Edmonton store's senior staff, I have been fortunate to have lengthy discussions with MEC's
Sustainability and Community Director, Community Programs Manager, and with its Chief
Executive Officer (CEO). Some of the ideas in this paper are based on those conversations.
Because I have studied MEC as an insider, my research has some roots in ethnography. My role
has primarily been that of “participant as observer” (Walsh 229). The Edmonton store's senior
staff are all aware that I am studying MEC. Likewise, in each conversation with MEC's executives
I have informed them that I plan to focus (or am focusing) on MEC as a part of my Master of Arts
final project. However, this study is not an ethnographic one and I have not structured my
argument around proper ethnographic methodology. It is important to acknowledge my
position at MEC and the context in which I have gathered my data. My experience at MEC adds
context and nuance to my archival research.
The Social Economy and BALTA
“The market” and “the economy” are broad terms that overgeneralize the exchanges
that take place in a society. After examining different types of exchanges, economists and social
scientists have divided “the economy” into three main sections: the first system (or private
sector), the second system (or public sector), and the third system (or social sector). Mike Lewis,
the director and lead investigator for BALTA, notes that the term 'sector' is inappropriate
because it implies that three separate economies independently exist (3). He prefers the term
'system' because it implies interaction between each section. I agree with Lewis' claim but I find
the numerical terminology (first, second, and third systems) vague, especially to those new to
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discussions about the social economy. For the duration of this paper, I will refer to the private
system, the public system, and the social system. These terms encompass the dynamics of
systems, reference each system's structure, and are appropriate for a broad audience.
An organization's means of ownership, allocation of surplus (profit), and goals (are they
social/environmental goals or financial ones?) map its place in the economy. Privately-owned
businesses and publicly-traded corporations, both acting primarily to maximize profits, compose
the private system. In the private system, social and environmental goals are secondary. In
contrast, the public system operates within a controlled economy. The organizations operating
within it are usually public-service branches of various levels of government, including public
health care systems, public schools, transportation infrastructure, and so on.
This paper focuses on the social system, which includes any organization not in the
private or public systems. The primary goal of organizations in the social system is to add
(subjectively defined) value to everyday life for the people it works with. Examples of social
system organizations are churches, social clubs (e.g., Rotary International), sports organizations
(e.g., community soccer leagues), health groups (e.g., The Multiple Sclerosis Society of Canada),
and human rights groups (e.g., Amnesty International). Notice that none of these organizations
base their existence on market-based activities. Some market-based businesses make social
and/or environmental goals their top priority and, consequently, operate in the social system.
Some co-operative businesses (including worker, consumer, financial, and housing co-ops) and
fair trade organizations are examples of market-based organizations in the social system.
Market-based organizations in the social system form their own sub-group: the social economy.
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Fig. 1. To visually explain the three systems at work in the economy, Mike Lewis presented this chart, based on John Pearce's work (Lewis 4). Original document: Pearce, John. Social Enterprise in Anytown. Calouste Gulbenkian Foundation (2003).
The social system emphasizes equal political and economic participation and has
important applications in the fields of economics, political science, and sociology. The British
Columbia and Alberta Research Alliance on the Social Economy (BALTA) is a collaborative effort
to understand the range and impact of the social economy. BALTA is composed of researchers
from seven universities and colleges in BC and Alberta1 (and several universities outside of the
1 These universities and colleges include Royal Roads University, Simon Fraser University, Athabasca University, University of Alberta, University of Victoria, University of British Columbia, and Newman Theological College
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region) and nearly 20 social economy stakeholder organizations (BALTA website). BALTA's
overall goal is “to strengthen the foundations of the social economy” (Lewis 1). BALTA
researchers are attempting to complete a map of the social economy in BC and Alberta by
documenting an assortment of organizations within the social economy (social enterprises). This
will help them characterize the dimensions of the social economy.
To map the social economy, BALTA researchers must define a “social enterprise”. Lewis,
citing John Restakis, defines social enterprises as “those organisations whose members are
animated by the principle of reciprocity for the pursuit of mutual economic or social goals, often
through the social control of capital” (2). Elaborating, Lewis explains social enterprises as
sharing the following five features:
1. Social enterprise elevates social goals as an explicit priority in the business. A social and economic return on investment is consciously pursued, whether or not there is any public investment.
2. Building the means by which people can organise on the basis of mutual support and solidarity is a preoccupation of social enterprise. One way this is pursued is through engagement of members and/or beneficiaries in the governance of the enterprise.
3. Selling into the marketplace is always a central feature.4. Collective ownership is an important means of achieving an integration of social and
economic objectives and accountability to a defined constituency and the wider community.
5. Profits, assets, and wealth are not distributed to individuals; they are held and invested for community benefit (7).
These five features help differentiate social enterprises from those that are not in the social
economy.
By claiming that some organizations are a part of the social economy and others are not,
we automatically assume that the social economy has borders. For example, in Figure 1 worker
co-operatives are shown on both sides of the social economy/private economy border. By
defining a social enterprise BALTA sets the social economy's borders. Lewis questions the
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placement of those borders when he asks if BALTA should “get the numbers up to reflect the
robust contribution of a sector worthy of much more policy attention”. Alternatively, rather
than “[rendering] the landscape murky with ambiguity”, Lewis asks if the social economy's
explicit values (“co-operation, decentralisation, inclusiveness, good work, sustainability, people-
centred”) should be reinforced to help the private and public systems to realize “the redeeming
benefits of integrating social goals more fully into economic life” (8). Lewis relates this issue
directly to co-operatives:
It is obviously important to resolve this question as we move forward in our mapping work. It may also be that such questions will lead us to some specialised survey work, for example in the cooperative sector, so we can become more precise about the values, policies, and practices that constitute, or not, a co-operative being qualitatively included in the social economy. Similarly, there may be some fruitful comparative case study work that could be undertaken that might provoke a deeper understanding (8).
This paper directly addresses this issue by examining Mountain Equipment Co-op and assessing
its role in the social economy. Before focusing on a specific co-operative, it is important to
understand co-operatives more generally and examine their operations on a theoretical level.
This will help us decide whether all, or only some, co-operatives should be understood as
operating in the social economy.
Co-operatives, Globalization, Consumerism, and the Social Economy
According to the International Co-operative Alliance (ICA), an international body
dedicating to promoting and serving the needs of co-operatives, “A co-operative is an
autonomous association of persons united voluntarily to meet their common economic, social,
and cultural needs and aspirations through a jointly-owned and democratically-controlled
enterprise.” (ICA website). The ICA states co-operative values: “Co-operatives are based on the
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values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition
of their founders, co-operative members believe in the ethical values of honesty, openness,
social responsibility and caring for others” (ICA Website). Each co-op recognizes the seven
principles of co-operation:
1st Principle: Voluntary and Open Membership2nd Principle: Democratic Member Control3rd Principle: Member Economic Participation4th Principle: Autonomy and Independence5th Principle: Education, Training and Information6th Principle: Co-operation among Co-operatives7th Principle: Concern for Community (ICA Website)
These seven principles put democratic power and economic equality at the forefront of co-
operative policy and ensure open accessibility for the public. When making decisions or voting
for a board of directors, most co-operatives give each member one vote. This “one member,
one vote” system ensures a more egalitarian democracy than the “one dollar, one vote” model
adopted by most large companies in the private system. To ensure equal economic
participation, many co-ops limit members to owning a single share. In contrast, a single person
can own virtually all of the shares in publicly traded corporation.
By adhering to the seven principles of co-operation, every co-operative should be an
open and non-discriminating, economically fair, democratically controlled, community-oriented
organization. By these standards, every co-operative should be considered a vibrant part of the
social economy. But, are co-operatives as beneficial to a community in practice as they are in
theory? Economic globalization imparts many effects that can trump the benefits of co-
operation. I will address this issue, first, by discussing the implications of democratic
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participation in co-operatives, and, second, by looking at some of the theoretical economic
implications of co-operatives, including the promotion of consumerism.
Identity and Democracy
In “Co-operatives as a Social Policy Means for Creating Social Cohesion in Communities”,
Robert Dobrohoczki examines the changing role of co-operatives under globalization.
Dobrohoczki asks, “How does globalization effect identities?” (139). He draws on Manuel
Castells' three-fold concept of identity which includes legitimizing identity, resistance identity,
and project identity. A legitimizing identity “[consists] of systems of meaning, symbols or icons
that are introduced and cultivated by dominant institutions” (Dobrohoczki 139). Legitimizing
identity includes notions like nationalism and community solidarity. Resistance identity is “the
construction of a different meaning system in response to dominant institutions that have
devalued or stigmatized them” (Dobrohoczki 139). Castells states: “[Resistance identity] may be
the most important type of identity-building in our society. It constructs forms of collective
resistance against otherwise unbearable oppression” (9). For some, corporate dominance is
“unbearable oppression”. Project identity, is “the construction of new identities to redefine a
people's position in society” (Dobrohoczki 139). Castells notes that project identity produces
“the collective social actor through which individuals reach holistic meaning in their experience”
(10). Project identity can include social, environmental, and/or religious affirmations. Social
movements, like the womens movement, civil rights movement, and environmental movement
are instances of project identities.
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Economic globalization accelerates the growth of power for transnational corporations.
As corporations transcend national boundaries there is little room for solidarity within a
national economy. With each local community's marketplace saturated with retail chains, the
perceived power of the local economy is minimized. As Dobrohoczki summarizes , “Castells
maintains that with globalization the nation-state has lost its role for legitimizing identity,
especially in the economic sphere” (139). The anti-globalization movement, a resistance
identity, resulted from fading local legitimizing identity. This movement climaxed in the late
1990's with massive protests in Seattle (1999), Genoa (2001), and Quebec City (2001).
Accompanying economic globalization, consumer culture reduced the emphasis on cultural
identity, tradition, and other (previously) strong social values.
According to Dobrohoczki, co-operatives can have a positive influence on each type of
identity. He writes:
cooperatives are one means of reinvigorating democracy within economic relationships. Cooperatives, as democratic bodies can draw on these conceptions of identity. For large existing cooperators, the co-op principles and co-op brand may manifest as a legitimizing identity. There is potential for cooperatives to serve as spaces of resistance, as a resistance identity against transnational corporatism and global capital, by alignment with fair trade movements for instance. Once drawn to this space, the transformative effect co-operatives can have through their democratic values such as tolerance, egalitarianism, and mutual respect, may have well the effect of sustaining or creating project identities, or newly constructed identities within society. (139)
By acting in solidarity and reinforcing community values, co-operatives can help restore
community and regional identities. The co-operative democratic structure ensures that
individuals throughout the organization are involved in the decision making process. This
bottom-up model is less authoritarian than the top-down structure used by most large privately
owned companies and can potentially impact the “structural domination” of the corporate
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legitimizing identity that accompanies globalization. By acting ethically and environmentally,
and by emphasizing community relations, democracy, and solidarity, co-operatives can actively
help resist the private, for-profit business model adopted by most corporations, thereby
influencing resistance identities and project identities in our society.
Dobrohoczki extends this argument to Jurgen Habermas' theory of legitimation crisis.
Habermas posits that there are two formations in a society: lifeworld and system. Lifeworld is
“the socio-cultural system of communicative action, of practical discourse, expression and
aesthetics essential for the development of culture, morality, and genuine knowledge
formation” (Dobrohoczki 140). Dobrohoczki describes system as:
dominated reason comprised of two steering mechanisms: the market and the state, with their mediums of money and power, respectively. The state dominates through its medium of power: its use of laws, regulations, police, censorship, and propaganda for instance. The market dominates through its medium of money: marketing, public relations, and market influence and so on. (140)
A crisis of legitimacy occurs when either the state or the market dominate lifeworld. Under
communism, the state dominated lifeworld. Under neoliberal capitalism, the market dominates
lifeworld. Dobrohoczki notes, “A healthy democracy is one in which there is a robust public
sphere” (140). Both the state and the market should exist to supplement lifeworld, not
dominate it.
Dobrohoczki explains that co-operatives can help keep balance in lifeworld. He writes,
“As democratic institutions, cooperatives have potential to recapture legitimacy. Co-ops can act
to balance market participation with community needs, the global with the local, and the
system with lifeworld. Co-ops fall in a unique domain between public and private
spheres” (141). He adds, “Cooperation can be a viable alternative in offsetting the adverse
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effects of globalization. Cooperatives must be part of and shape the inevitable process of
globalization by dealing with new global and local identities” (141). The consequences of
democratic participation in co-operatives are wide-reaching and vastly positive. There are also
several major economic benefits of co-operatives, but we must examine how those benefits will
hold up under neoliberal capitalism.
The Economic Benefits (and Shortcomings) of Co-operation Under Neoliberalism
Since the 1940s, economists have examined benefits of the co-operative business model.
In “Consumer Ownership in Capitalist Economies: Applications of Theory to Consumer
Cooperation”, Ann Hoyt explains that the economic study of co-operatives has usually
emphasized a microeconomic framework (269). Economists have found many positive effects of
co-operatives in the marketplace: they “[improve] the general economic welfare by maximizing
consumer surplus”; the local distribution of wealth can have stabilizing effects on the economy;
there is a “decentralization of economic decision making “; they can correct market failures;
they offer consumer protection; and, they can act as a “competitive yardstick for consumers in
oligopolistic food industries” (Hoyt 269).
Although it is important to mention co-operatives' benefits to the economy, it is
necessary to separate economic indicators, like Gross Domestic Product (GDP), from social
indicators. Consider Stephen Enke's purely economic perspective, as presented by Hoyt. Enke
“showed that a consumer co-op's optimum price occurs at that point 'where a decrease in the
co-op's profits from a unit increase in output is exactly offset by the increase in members'
consumer surplus'” (Hoyt 272). Hoyt elaborates:
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This is the point at which marginal cost and market demand intersect, which results in greater quantities being consumed at lower prices than in the Emelianoff model. At this point, the co-op's net earnings are less than they would be if profits were maximized, but the “sum of the co-op's net earnings and consumer surplus is greater” ... than in any other condition. Operation at the intersection of marginal cost and demand is the point at which resource allocation is most efficient and consumers' surplus is maximized. (272)
Although this study demonstrates that co-operatives can “[increase] the general welfare when
they act to maximize consumer surplus” (Hoyt 273), it is important to distinguish between
market benefits and social benefits.
The primary goal of the private system is to maximize market benefits; the social
economy aims to use the market as a tool to maximize social benefits. Therefore, social
enterprises should not strive for, “greater quantities being consumed at lower prices”. A purely
economic perspective can promote consumerism. There is considerable academic work that
focuses directly on consumerism; I will highlight three approaches.
Susan Long's “The Tyranny of the Customer and the Cost of Consumerism: An Analysis
Using Systems and Psychoanalytic Approaches to Groups and Society” takes an individualistic
approach and argues that “consumer discourse poses a belief in the sovereignty of individualism
and a sense that even if one feels exploited as a worker by an institution that no longer cares,
one can be free as a consumer” (724). She concludes that consumerism stimulates “an
unconscious escape into narcissism for the individual” (739) and has negative effects on the
relationships between individuals and on a community as a whole.
In, “Conceptual Con/fusion in Democratic Societies: Understandings and Limitations of
Consumer-Citizenship” Kaela Jubas adopts a feminist/critical studies approach to understand
consumerism's impact on citizenship. She explains that “British consumer co-operatives and the
establishment of the Women’s Co-operative Guilds in the 19th century [are] examples of how
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some politicized, working class, female consumers asserted their power and rights” (238). She
concludes that consumerism has the potential to have a positive influence on social conditions:
“Consumption can help uncover the struggles associated with citizenship and illustrate how
they are encountered and lived on a daily basis. At best, it has been used to publicize, politicize
and mitigate those struggles, but, even then, it represents only one dimension of a complicated
democratic citizenship.” (251-252). Examples of this include recent consumer trends like fair-
trade goods, sweatshop-free clothing, and organic produce. However, these trends are not
exclusive to co-ops and do not account for excessive individual consumption.
In “The Individualization of Consumption: A Trojan Horse in the Destruction of the Public
Sector?”, Michael Bottery writes, “Consumerism is part of this more general problem with the
commercial relationship, for not only does it distract us from other kinds of relationships; it also
reduces the kinds of relationships we can enter into, radically depressing our potentialities as
human beings” (281). Furthermore, he writes:
Should we, for instance, be concerned that the population of the USA consumes over five times more resources than its percentage of the world’s population? On the consumer model, apparently not: we can assume that any failure in the ability to purchase is based upon personal failure, and that if only these failed human beings worked a little harder, found a job, they could purchase the things that we ourselves enjoy. ... It cannot point the individual beyond the personal to structural reasons for failure, and it seduces the individual into not doing so. (281).
This explains the individualizing effect of consumerism. Bottery concludes that “In a world
dominated by consumerism, politics, public sector organizations and the welfare state become
the major casualties” (282). This relates to Pearce’s chart depicting the economy's three
systems (Figure 1), showing that as consumerism increases, the area representative of the
private system grows while the area depicting the public and social systems shrinks.
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Consumerism has vast implications to environmental, social, and political issues. With
respect to the environment, increased consumption results in an increased use of (non)
renewable resources, increased damage to delicate ecosystems, increased pollution, increased
greenhouse gas emissions, and increased waste in landfills. From a social perspective, increased
consumption can lead to consumers' increased reliance on wage-labour, which can lead to
decreased family and personal time. It can lead to an increased reliance on imported goods
(petroleum, palm oil, and so on) which may reduce the power of a local market (leading to
unemployment), increase pressure on the producers of goods to reduce costs by using the
cheapest labour available (leading to worker exploitation), increase international shipping
(leading to increased petroleum consumption and greenhouse gas emissions), and the
dependencies that accompany consumption may lead to increase political tensions between the
primary buying and producing nations. Finally, consumption acts as a positive reinforcer and
leads to more consumption. Constant growth and an ever-increasing gross domestic product
(GDP) are the goals of capitalist economics. Capitalism depends on increased consumption to
achieve these goals. Can we achieve a sustainable society through increased consumption and
economic growth?
When co-operatives strive for the same goals as a private enterprise (economic growth,
increased consumption) they are potential contributers to the aforementioned environmental
and social pitfalls. Just like corporations, large co-operatives can cause massive environmental
damage and support exploitive labour practices. Large co-ops take money from members in
rural areas and concentrate it at an urban center, damaging small-town economies. The urban
co-op's increased purchasing power leads to decreased prices, expediting the urbanization
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process. The mass transit involved in this process damages the environment and increases
petroleum dependency.
With their potential for social and environmental damage, how can we classify large co-
operatives as social enterprises? Dobrohoczki writes:
As [co-operatives] grow will they promote their cooperative democratic difference, rather than their locality? We can well imagine large cooperatives operating on a global scale not tied to a particular location. Mountain Equipment Coop is an example; based in Calgary2 it has over 2 million members (Mountain Equipment Coop, 2006). Will cooperatives market themselves as a democratic alternative to global capitalism, or will they themselves become more like corporations? The tendency for some cooperatives to operate corporately owned subsidiaries begs questions of cooperative identity and cooperative difference. ... Profits will flow out of one community into another, contrary to the cooperative principle of returning surplus to the users of the coop. Will cooperatives stay true to their cooperative principles as they grow, or will they look and act more like corporations? (154)
We must come to the following conclusion: co-operatives do not necessarily operate within the
boundaries of the social economy. Although co-op members are given democratic participation
and financial savings, large co-ops can maximize consumption and adversely effect our society
and the environment. Just as co-ops have the potential to greatly improve social relations and
minimize environmental impact, they can mimic the behavior of the worst corporations. When
mapping co-ops in the social economy we must examine each on a case-by-case basis and place
it in the social economy only if sufficient evidence merits that placement. Co-ops are social
enterprises only when they put social and environmental goals ahead of financial ones.
The Genuine Wealth Model
In The Economics of Happiness: Building Genuine Wealth, Mark Anielski, an economist,
describes a five-part notion of wealth. He asks how the meaning of wealth has changed from
2 Dobrohoczki is incorrect; MEC is actually based in Vancouver, BC, not Calgary.
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“the conditions of well-being”, which should include things like health, family, and community,
to meaning simply “much money” (22). To demonstrate that wealth (in the financial sense) is
not linked to well being, Anielski correlated changes in Alberta's GDP to social changes between
1961 and 1999. After tracking indicators like personal debt, ecosystem integrity, and rates of
poverty, divorce, suicide, and democratic participation (to name only a few), Anielski shows
that, in Alberta, GDP does not positively correlate with quality of life.
GDP is not an accurate measure of well-being in our society. GDP is usually measured as
follows:
GDP = [consumption] + [gross investment] + [government spending] + [imports – exports]
This formula measures economic success not social success. Every dollar spent, regardless of
where and how, contributes to increasing the GDP. The GDP is increased by alcohol and tobacco
sales, health care costs, criminal incarceration, and military expenditures. As Anielski puts it,
“The GDP's ideal economic hero is a chain-smoking, terminal cancer patient going through an
expensive divorce whose car is totaled in a 20-car pileup, as a result of being distracted by his
cell phone while munching on a fast-food hamburger – all activities which would increase the
GDP” (30). By the same logic, people who ride their bikes to work, grow their own food in their
gardens, and save money for their children's education are economic villains because they do
not contribute to the GDP. This startling notion caused Anielski to reformulate a means by
which a nation, province, business, or individual can calculate well-being without exclusively
using economic indicators as a measure of success. His ideas are directly transferable to the
social economy.
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Anielski proposes a five-dimensional model, which he calls the Genuine Wealth model.
He writes: “The ultimate goal is an economy and society dedicated to well-being. Well-being
constitutes a more compelling vision than simply more economic growth and more material
possessions; well-being is about quality of life” (65). Anielski's comments embrace the spirit of
the social economy. Instead of focusing exclusively on financial capital, Anielski proposes five
types of capital: human, social, natural, built, and financial. Success in these areas can not be
measured in dollars; doing so would utilize the flawed GDP-based model of wealth. This model
demonstrates that there are valuable aspects of life that do not (and should not) have monetary
value.
Human capital includes those things that are valuable for individuals. Anielski states:
“Human capital means people: the sum of our individual minds, bodies, spirits, souls, dreams,
visions, knowledge, skills, competencies, capabilities and other human attributes. Human capital
also includes our mental, physical, emotional, and spiritual health” (75). Attributes of human
capital are obviously subjective and we must take care in ascribing certain examples as positive
or negative. Should spirituality, for example, be considered a positive aspect of human capital?
A devoted Christian or Buddhist may strongly argue that it should be while an atheist argues
against it. Rather than the specific formation of individual beliefs, perhaps engaging in spiritual
dialog and coming to terms with one's own spiritual sentiment is in itself a positive form of
human capital. Personal health, the pursuit of new forms of knowledge, and peaceful
introspection are important aspects of any vibrant society.
Where human capital focuses on individuals, social capital emphasizes the relationships
formed by individuals. Anielski writes, “[Social capital] refers to intangible qualities like trust, the
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ability to work together towards common goals, shared responsibility, reciprocity,
neighborliness and a sense of belonging in community” (75). Social capital includes formal social
structures and accomplishments like democratic participation, community solidarity,
acknowledgment of human rights, and peaceful collaboration between individuals,
organizations, and nations. These concepts are valuable to societies and this must be formally
acknowledged.
A society cannot be sustainable without the conservation of natural capital. Anielski
explains that
Natural capital includes the free gifts from nature: natural resources (forests, agricultural soils, oil, natural gas, coal and mineral resources), land, ecosystem services like clean air, water and climate regulation from forests, watersheds and wetlands. While natural capital may be freely given by nature, it is perhaps the most important form of wealth. We cannot survive without it. (75-76).
Natural resources and systems are important forms of natural capital. Clear-cutting trees
reduces natural carbon sinks and increases the potential for landslides; releasing greenhouse
gases into the atmosphere contributes to global warming; the over-fertilization of crops and
high volume of livestock fecal matter pollutes our waterways. Each of these are examples of
how we reduce natural capital. Natural capital is the only form of wealth that humans cannot
produce. Depleting our supply of natural capital would be disastrous.
Built capital includes the physical tools that our society needs to flourish. According to
Anielski,
Built capital includes all things that have been made or manufactured with both human and natural capital including equipment, factories, tools, buildings and other physical infrastructure. ... [Built] capital includes private and public infrastructure: homes, household appliances, cars, factories, hospitals, schools and roads. It also includes new technology, designs, processes, and ideas (76).
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Built capital provides us with a means to develop other types of capital. Health care
infrastructure (built) improves personal health (human). The Internet (built) can increase
personal knowledge (human) and improve democratic participation (social). Built capital can
also reduce our stock of natural capital. The practices of oil extraction, clear cutting forests, and
dredging3 all harm ecosystems. Our vast transportation network (personal vehicles, semi-trucks,
shipping vessels, and airplanes) emits massive amounts of greenhouse gases. As a society, we
must balance the gains we make in one form of capital with our losses in another. This is the
point of the Genuine Wealth model.
Anielski describes financial capital as “money or anything denominated in monetary
terms including cash, savings, investments. This includes debt, mortgages and other loans” (76).
He adds, “Most money in our modern economies is in the form of debt or financial liabilities to
which interest charges are attached” (76). Financial capital allows us to create or acquire built
capital. Rather than defining financial success by sheer magnitude, in the Genuine Wealth
model true financial success is having just enough financial capital to purchase the built capital
needed to facilitate and stimulate the growth of our own human and social capital, while
minimizing our usage of natural capital. If we can do this, we are genuinely wealthy.
Genuine Wealth and the Social Economy
Building on the theoretical benefits and limitations of co-operatives, we can use the
Genuine Wealth model to redefine participation in the social economy. An organization which
operates in the social economy is one whose activities are market-based and whose primary
goal is to maximize the genuine wealth of the community in which it operates, rather than
3 Dredging is the fishing equivalent of clear-cutting.
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maximizing only its own financial wealth. By relying on the Genuine Wealth model, this
definition incorporates Lewis' five features of a social enterprise and gives social economy
researchers a consistent framework with which to examine social enterprises. This definition
keeps the spirit of the social system by focusing on an organization's contribution to its
community through human, social, and natural capital. Because social enterprises are market-
based, built and financial capital are relevant indicators of economic viability and independence.
By examining how MEC uses its built and financial capital to increase the human and social
capital of its communities (while minimizing its use of natural capital) we can use this definition
to determine whether or not MEC operates in the social economy.
Mountain Equipment Co-op
Like most co-operatives, MEC was born out of necessity. In the late 1960s and early
1970s, technical alpine climbing equipment was a scarce commodity. I have heard from people
in Edmonton, AB, who had to drive to Seattle, WA, to buy a pair of climbing boots. A few
members of Vancouver's climbing community decided to band together and form an
organization that would help them buy the specialized gear that they needed to pursue their
passions. In August 1971, MEC was founded in Vancouver, BC, as a consumer co-operative. This
small co-operative evolved into one of the largest co-operatives in Canada.
MEC describes itself this way: “We help people enjoy the benefits of self-propelled
wilderness-oriented recreation. We do that by selling outdoor gear, clothing, and services. We
match our members with gear that suits their needs.” (MEC “Charter”). By focusing on “self-
propelled wilderness-oriented recreation” MEC refrains from selling goods that apply directly to
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motor-sports or hunting. MEC focuses exclusively on hiking, camping, climbing, cycling, canoing,
kayaking, cross-country skiing, and alpine-tour skiing4. Because MEC tries to accommodate its
members' “needs” it refrains from selling goods that exist primarily for their stylistic properties.
I will return to this theme when I discuss MEC's product design philosophy.
Economic Participation at MEC
Each one of MEC's customers are, in theory5, equal shareholders. Each member has
purchased a single share in the company. Since 1971, the value of one share has been five
dollars (it is not subject to market fluctuations). Because all customers are actually members of
the co-operative, MEC and its employees actively refer to customers as “members”. For
example, rather than “customer service”, “member service” is the preferred term. This slight
change in terminology reflects how MEC views its transactions; it is catering to members' needs
rather than selling to customers.
Economic participation, and the notion of each member owning a single share, is quickly
distorted as members make purchases. Because the annual sum of purchases at MEC varies
from person to person, so too do their share values. With each purchase that members make,
they effectively buy a portion of MEC's net assets and accumulate the wealth for themselves.
Because their total share value is linked to their annual purchases, over time each member's
share value increases disproportionately. Because MEC is dedicated to equal economic
participation, it has a mechanism in place to account for unequal growth in share values. Every
4 MEC does not directly cater to downhill skiers or snowboarders because the use of chairlifts takes them out of the “self-propelled” category.5 As I will discuss later, not all of MEC's customers are members. It is common for a person to make a purchase
under the membership of their parent, child, spouse, sibling, and so on. MEC does not officially sanction these transactions, but they happen.
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year, the sum of each member's annual purchases is multiplied by MEC's net surplus as a
percentage of total sales. This value is then divided by five (the dollar value of a single share)
and the result is that member's increase in shares. Consider this example. In one year, a
member spent $1,000 at MEC (this is the sum of all purchases at each MEC store, as well as
orders made online and by telephone). That year, MEC calculated that its surplus as a
percentage of total sales was 4%. (That is, MEC made a 4% profit.) As a result, in that year the
member gained eight shares in the co-operative. ($1,000 x 4% = $40; $40 ÷ 5 = 8 shares.)
To prevent share values from increasing indefinitely, to preserve economic equality, and
to prevent the co-operative from accumulating a huge surplus (that is, to prevent it from
hoarding its profits) in any given year MEC is obliged to use its surplus in certain ways. In its
Rules, MEC clearly states what it can do with its surplus:
5. Allocation of surplus 5.01 The Co-operative must set aside out of surpluses from its business any reserve
required by the Act. 5.02 Subject to Rule 5.01, the Co-operative may apportion surpluses from its business
to any or all of the following: a) declaring patronage returns, and distributing them to the members as set out in Rule 5.03, b) declaring dividends and paying them to the members at a rate not to exceed 8% yearly, c) retaining all or part of the residue for the purposes of the Co-operative, d) donating all or part of the residue for charitable or educational purposes.
5.03 1) In each financial year, each member must apply the whole of any patronage return to which the member is entitled, net of any withholding taxes, to the purchase of shares in the Co-operative. 2) Each member directs the Co-operative to purchase such shares or fractional shares in the Co-operative in the name of the member, and to apply the whole of any patronage return to which the member is entitled for that purpose (MEC “Rules”).
As stated here, for any given year in which MEC accumulates a surplus, it is obliged to either
declare patronage returns in the form of shares (this takes the form of increasing members'
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share value), declare dividends, retain funds to reinvest in the co-operative, or donate funds to
charitable or educational purchases. When MEC declares dividends, it essentially buys back
shares from members who have accumulated a share value which exceeds an arbitrarily
determined amount. For example, in a given year, for all those members whose share value
exceeds 200 shares (a value arbitrarily defined by MEC for that year) MEC may decide to
purchase all but 20 shares. These values are calculated based on the amount of money that
MEC has allocated to declaring dividends. In 2005, MEC declared nearly $2 million in dividends
by issuing share redemption cheques to approximately 21,000 members (MEC “2005
Accountability Report” 8). In MEC's 36-year history, it has declared share redemption cheques
seven times, totaling over $7 million (MEC “2005 Accountability Report” 8).
MEC's Decision-Making Structure
Each one of MEC's (approximately) 2.6 million members is eligible to vote for the board
of directors. The board of directors is responsible for setting MEC's policies, overseeing financial
management, and helping to establish and evaluate strategic objectives. The board consists of
nine elected positions, with each board member serving a three-year term. Every year, three
board positions are voted for. The board also hires and directs MEC's CEO. That position is
currently filled by David Labistour. Like any other company's CEO, David Labistour is responsible
for large-scale business decisions and day-to-day operations. Under him, there are several
senior managers who are in charge of areas like human resources, buying and design, and
sustainability. These positions (and many supporting positions) are based out of MEC's head
office in Vancouver, BC. On the store level (depending on size) each store is headed by a
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manager, an optional assistant manager, and several senior staff. The Edmonton store, a mid-
size store, has a single manager and nine senior staff. The senior staff positions include human
resources, sustainability coordinator, learning coordinator, and team leaders from the different
areas of the store (backstock, clothing, and so on). Each of the many staff members report to a
specific team leader. In all, MEC employs over 1300 people across Canada.
The majority of MEC's decisions are made at head office. Because MEC is careful not to
over-expand and to wear its resources thin, each new store opening is a calculated decision.
Head office staff carefully choose which companies they will do business with, what products
they will purchase and in what quantities, and to which stores they will ship them. Each store is
aware of what products it will receive, but, aside from personal conversations with buyers, the
stores have no control over their inventory. Head office controls signage, seasonal promotions,
the production and distribution of MEC's biannual catalog, hiring policy, wages, and benefits.
Individual stores have control over how they organize their stores and over their day-to-day
operations. Through conversation, I have learned that after a period of financial hardship in the
mid-1990s, MEC eliminated several non-essential positions and centralized its decision-making
process.
Recently, MEC attempted to redefine its purpose and guide its operations into the future
through its “Futures Project”. To develop a new charter, MEC collected opinions from members
and staff regarding what policy and goals should guide MEC . The final outcome of this project,
under the heading, “What guides us as we go”, states:
Quality: We offer high-quality, high-performance products at very competitive prices.Integrity: We listen carefully to one another. We deal in good faith. We are honest, fair,
and ethical.
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Co-operation: We understand the power of community and co-operative principles. We draw on the strength of people working together.
Creativity: We embrace original ideas and fresh ways of looking at the world. We draw on these to build and evolve our heritage.
Leadership: We lead by example. We seek to motivate other individuals and organizations to act for people and the planet.
Sustainability: We work to make and market our products sustainably. We strive to build and operate our facilities with minimum ecological impact.
Stewardship: We act to preserve and restore wild places. We do so actively, consistently, and generously.
Humanity: We work actively to ensure those who make our products are treated with respect.
Adventure: We believe in living life to the fullest, with a spirit of adventure, a thirst for challenge, and a desire to learn. (MEC “Charter”)
Under the heading “Where we want to go”, MEC's charter states:
We aspire to be the most viable, vibrant outdoor retail business in Canada. We want to bring about a future where Canadians of all ages, and especially our youth, play outdoors in self-propelled ways more often and in ever-increasing numbers; have access to a comprehensive, carefully nurtured network of parks, wilderness, and outdoor recreation areas; and have a connection to nature that is stronger than ever. We want MEC and our members to set examples that inspire other organizations and individuals towards environmental, social, and economic sustainability. In short, we want to leave the world better than we found it. (MEC “Charter”).
MEC's charter demonstrates its values and emphasizes MEC's commitment to social and
environmental leadership.
Genuine Wealth at MEC
In this section I will examine specific examples of how MEC is increasing the genuine
wealth of those in the communities in which it operates. Although each example is described
under the heading of a specific type of capital, it is important to notice implications to other
types as well.
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Human Capital
We should consider MEC's contribution to human capital in three major areas: its
members, its employees, and those workers around the world who produce MEC's goods. When
describing their own human capital, many people would explain the personal benefits of
outdoor activities. MEC's main contribution to its members' human capital is to help them
pursue outdoor activities. High output activities like trail running, cycling, and cross-country
skiing offer measurable health benefits. Many people participate in activities like hiking and
paddling to “get away from it all”. These activities offer relaxation, peace of mind, and a fulfilling
connection with nature. Without the competition of cell phones, televisions, advertisements,
and the full range of stimulation that accompanies city life, people who participate in outdoor
activities are able to communicate and develop relationships on levels that are difficult to
achieve in an urban setting.
Most companies would argue that their products increase human capital. Kentucky Fried
Chicken could say that their ready-to-pick-up meals save precious time and, by bringing families
together, increase human capital. Television producers could argue that their programming
offers viewers a much needed means of relaxation, another form of human capital. The validity
of these claims, as well as the one that MEC increases human capital by encouraging outdoor
activities, are highly subjective and can only be evaluated by individuals on a case-by-case basis.
I believe that participation in outdoor activities is a significant source of human capital, more so
than most products, but because of the impartiality involved in making such a claim, my opinion
is of little academic significance here.
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MEC strives to ensure that its members can participate in outdoor activities. Because its
primary point of contact with members is through its cashiers and floor staff, MEC makes a
great effort in training its staff to be knowledgeable in a wide range of areas. Every staff
member who works on the floor has received a minimum of nearly three weeks of paid training
—a rarity for retail stores. This ensures that the staff is able to competently engage members in
conversations related to equipment, functional apparel, and the techniques, strategies, and
locations of a variety of outdoor activities. MEC's staff are a valuable resource for its members
and the community regarding outdoor pursuits.
MEC offers several services that help its members pursue outdoor activities. MEC
provides rental equipment for members at minimal prices. Items rented include tents, sleeping
bags, cross country skis, snow shoes, avalanche safety equipment, canoes, and kayaks. This
rental service (one not provided by most, if any, other retailers) encourages members to
participate in outdoor activities by reducing the burden of purchasing this expensive equipment.
MEC holds gear swaps (basically a huge, well-organized outdoor goods garage sale) at its stores
to encourage the re-use of equipment and to help members find affordable gear. MEC also
facilitates an online gear swap on its website. The Edmonton MEC store held cross-country ski
waxing clinics to help members understand the subtle techniques of waxing their own skis.
An interesting example of MEC's commitment to its members' human capital (and social
capital) is its upcoming expansion into the bicycle market. This expansion is not publicly
promoted information, and is still unknown to most people. The bike industry is not an
exceptionally profitable industry. Currently, most of the bike industry's efforts are aimed at
high-end bicycles. For example, an “entry level” road bike can cost well over a thousand dollars,
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with high-end bikes reaching upwards of ten thousand dollars. Although these are high quality
bikes, they are not built for the average cyclist, one who participates in bicycling through
commuting and casual road cycling. Few bikes are designed specifically for this market. Within
the next few years, MEC will start producing high quality (but low cost) bicycles designed for
commuting and casual road cycling. Through conversation with some of MEC's executives, I
have learned that MEC expects to make little or no money from this expansion. MEC's primary
goal is to grow the market for average cyclists, an action which will benefit the environment and
the health of those who commute to work on bicycles. MEC genuinely believes that Canada, and
the communities that form it, would be a better place if more people commuted to work by
bike. Through its expansion into bicycle sales, MEC is dedicating a large amount of built and
financial capital to increasing human capital and maintaining natural capital.
MEC greatly impacts the human capital of its approximately 1300 employees. A positive
work experience can lead to fulfillment, challenge, a sense of accomplishment, a sense of
belonging, important social networks, access to health care, security, and, more generally,
happiness. MEC's 2007 employee engagement survey is an excellent reference to how its
employees see its contribution to their own human capital. This report, designed and written by
Hewitt Associates (a third party organization), collected survey data from 1090 employees
nation-wide (79% response rate) during the fall of 2007 (MEC “Engagement Survey”). The data
available to me compares the results of the Edmonton store against MEC as a whole.
Hewitt Associates define an engaged workforce as one that demonstrates measurable
emotional and intellectual commitment to an organization. In 2007, MEC's engagement score
was 64%; the Edmonton store's score was 56%. As baselines, consider that, according to Hewitt
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Associates, the average for retail businesses in 2006 was 61%, the Canadian average was 62%,
and the best employers of 2007 received scores above 77% (MEC “Engagement survey”).
Regarding specific topics, the most positive feedback came from abstract areas like respect,
manageable amounts of stress, MEC's support of learning and development, and a lack of
discrimination. On the contrary, consider the percentage of people who agree with the
following statements: “At MEC, we are retaining the people we need to achieve our
goals.” (Edmonton store: 25%; MEC overall: 36%); My pay is appropriate for the role I have at
MEC.” (Edmonton store: 27%; MEC overall: 43%); “There are career opportunities at
MEC” (Edmonton store: 35%; MEC overall: 49%).
MEC does an admirable job of helping employees find work/life balance, ensuring that
they have ongoing learning opportunities, and have access to the outdoor pursuits that the
employees are passionate about. Consider these examples from the Edmonton store. There are
frequent, and well organized, trips available to employees. Cycling tours, cross country ski
clinics, ice climbing trips, kayaking sessions, and canoe trips are all available to employees and
are geared towards novice staff who are trying to increase their aptitude in a specific area or are
simply looking to try something new. Courses in areas like bike mechanics and photography are
offered. Staff are encouraged (and often paid) to volunteer at local events. There are tuition
benefits for full and part-time employees to facilitate ongoing learning. The Edmonton store is
unique in that it has a “staff development fund”, which funds (at least in part) any course or
activity that will aid in the personal development of a staff member. This activity could include
outdoor education, yoga, art courses, or anything that the staff feel are valuable in their own
personal development. MEC's staff is unusually well-educated in areas of social and
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environmental concerns. The frequency of critical conversations makes staff to feel like they are
a part of a social movement. As these examples show, MEC creates an extremely positive and
engaging workplace.
MEC offers an excellent benefits package to full- and part-time staff, but many staff
members feel that its wages are too low. This is a significant reason why the Edmonton store's
employee engagement score is lower than that of MEC overall. MEC aims to match the high-end
of standard wages offered by the retail industry. Currently, starting wage at MEC is $11 per
hour. All staff working in a contract, part-time, or full-time position start at this wage. After 500
hours of work, the employee is given a twenty-five cent raise. Senior staff are paid salaries (the
amount depends on the time worked). MEC attempts to keep rates of pay across the
organization fairly equal compared to other large corporations. The CEO, the highest paid staff
member, is paid about eleven times more than an average staff member (MEC “Sustainability
Report” 33). This salary is low considering that many CEOs are paid more than 170 times more
than an average employee.
I strongly believe that any enterprise that exists within the social economy should be
able to offer its full-time employees self-sufficiency. That is, in the very least, full-time
employees should have access to basic medical benefits, have an opportunity to pay into some
form of retirement plan, be able to choose to live alone (that is, be able to afford at least a one-
bedroom apartment), afford a healthy diet, and enjoy a modest lifestyle (pay for cable/internet
access, be able to afford occasional entertainment, and perhaps own (or have access to) a cheap
vehicle or save for a holiday. As of the second quarter of 2007, the average monthly rental rate
of a one-bedroom apartment in Edmonton is $814 (CB Richard Ellis Alberta Limited). Under
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current market conditions, MEC's $11 per hour wage does not allow its full-time workers to live
in self-sufficiency. Most employees are forced to rely on a partner/spouse or to work at a
second job to make ends meet. Access to outdoor pursuits and ongoing learning are excellent
opportunities, but the employees of an organization in the social economy must be able to live
in self-sufficiency. It is important to note that self-sufficiency does not necessarily depend
entirely on wage increases. In the financial capital section I will discuss the financial reality of
raising wages and in the reflections section I will discuss how MEC can help its workers achieve
self-sufficiency in a non-individualized way by coordinating a co-operative network.
In addition to its own employees, MEC impacts the human capital of those working in
the factories that produce MEC-brand goods. In 2005, 67.6% of MEC-brand apparel was
produced in Canada (a rapidly decreasing figure) but only 2.5% of MEC's hard goods (tents,
sleeping bags, backpacks) were manufactured in Canada (MEC “Accountability Report” 17). In
2006, its goods came from 56 factories in 17 countries (MEC “Ethical Sourcing” 5). In MEC's own
words,
MEC is a co-operative retailer operating in a market economy. We’re constrained by the same laws of supply and demand as commercially driven retailers. This means we’re required to be a strong retailer in a highly competitive market. We must be service-oriented, have the right products, and be financially sound. This also means we need to source products from all over the world. (MEC “Ethical Sourcing” 3).
They continue,
Sadly, we live and conduct our affairs in a world that is flawed. There are human rights issues in every country and factory throughout the world, even here in Canada. ... we do buy from countries and factories that have troublesome human rights records. Emotionally, we don’t agree with this. But from a business perspective, our choices are limited. (MEC “Ethical Sourcing” 3).
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I have written extensively about MEC's ethical sourcing policy in a paper titled, “A Marxist
Interpretation of Labour Relations in a Consumer Co-operative: Mountain Equipment Co-op”.
For a complete discussion on MEC's labour relations, please see that document. In this paper, I
will simply outline MEC's ethical sourcing policy.
To ensure acceptable working conditions in the factories that produce their goods, MEC
has implemented a factory audit system. In 2006, MEC audited 18 factories, which collectively
produced nearly 70% of its gear (MEC “Ethical Sourcing” 6). Factory audits look for infractions
such as blocked fire exits, excessive work hours, under-payment of legally entitled benefits and
wages, existence of child labour, instances of harassment and abuse, discrimination, and
freedom of association. In all, 30% of the factories had infractions related to wages and benefits
and 40.8% had health and safety infractions (MEC “Ethical Sourcing” 7). After a full audit, each
factory is given a letter grade to represent their performance. In all, 24 factories were given
letter grades. Using a four point scale (A=4, F=0), the factories that produce MEC's products
have a Grade Point Average of 1.5. That is, MEC's factories have a D+ average, which includes
five B's (four by Canadian factories) and two F's (both Chinese).
Despite the seemingly dismal outcome of the reports, the fact that MEC actively audits
its factories is a huge step. Each year the Ethical Trading Action Group (ETAG) ranks 30 major
companies (including Nike, the Gap, Wal-Mart, and Sears, to name a few) in its Transparency
Report Card. In 2006, MEC was the second highest ranked organization, behind only Reebok,
with a score of 74 out of 100 (ETAG “Transparency Report Card”). For comparison, only nine of
these thirty companies scored over 50 and twelve of these thirty companies scored less than 10.
Acknowledging the problems that exist in factories around the world is a huge step. The next
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step, which is not as simple as the first, will be to ensure that adequate factory conditions are
upheld.
Because MEC does not control the factories that produce its goods, there is little that
MEC can do to ensure that factory workers in countries around the world have proper access to
human capital. If MEC chose to terminate its relationship with a factory that exploited workers,
then that factory would likely go on exploiting workers by producing cheap goods for some
other corporation. For MEC, terminating relationships with non-compliant factories is a last
resort. MEC believes that more can be achieved in improving working conditions by working
with its suppliers to create a positive work environment. By doing so, MEC helps to increase the
human capital of those who produce its goods.
Social Capital
MEC's democratic decision making process, its partnerships, and its extensive grants and
donations to community groups are the major sources of social capital for its members and
communities. Dobrohoczki outlined the philosophical benefits of democratic participation under
neoliberal capitalism, but are those benefits being realized at MEC? MEC's rate of democratic
participation is exceptionally low. In 2005, only 1.2% of eligible members6 voted for the board of
directors, a drop of 0.2% from the year prior (MEC “Accountability Report” 50). Considering that
there are over 2.6 million members, MEC is not a flourishing democracy. Voting has recently
closed for the 2008 election, but results are still unavailable. To stimulate voter turnout, MEC
has installed promotional displays in its stores, distributed voter information pamphlets,
decorated its tills with balloons stating, “VOTE MEC”, and has announced that ten lucky voters
6 MEC members must be at least 16 years old to vote for the board of directors.
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will receive an MEC gift card worth $250. Rates of democratic participation are dropping at all
levels (federal, provincial, and municipal politics). If people are disinterested in voting for their
federal government, should a low voter turnout at a retail store be a surprise? How do MEC's
members view their co-operative? Do they understand its structure? Do they understand the
abstract benefits of co-operation? If not, are they merely consumers?
Although some of MEC's members truly comprehend the nature of consumer co-
operatives and understand MEC's role as an ethical and environmental leader, I believe that this
group is a minority. Based on my experience, the majority of MEC members know that MEC is a
co-operative (they may even know that they own a share) and know that MEC is an
environmentally friendly organization, but they are unable (or unwilling) to extend their
knowledge to the abstract (but important) benefits of co-operation. There is also a substantial
group of MEC members who have no knowledge of MEC's co-operative status and view MEC
only as a place to buy cheap goods. Many people think that their membership may have expired
(like a membership at Costco or a video rental store). Other people think that the purpose of
their membership card is to acquire points, much like the card distributed at Shoppers Drug
Mart. These examples demonstrate that not all of MEC's members fully understand their role in
the co-op. MEC must find a better way to help educate members about the structure and
benefits of co-operatives. Only when members understand the benefits of the social capital that
MEC offers can that social capital be realized.
Purchases by non-members, although not officially allowed, make up a significant
amount of sales each year. Non-member purchases are usually made by the friends, parents,
children, siblings, or close relatives of members. These purchases may be made when the
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member hands the non-member his or her card while waiting in line. Alternatively, when asked
for a name or phone number (to search for a membership number—a prerequisite for each
transaction) the non-member may give information leading to a person who they know is a
member (for example, a son may give his father's phone number). Although the member may
acknowledge and sanction this kind of transaction, they are officially disallowed at MEC.
Nevertheless, it would be difficult for MEC's cashiers to vigilantly prove membership status in
each transaction. I challenge MEC to accurately measure the volume of non-member purchases
and to be more stringent on their “members only” policy.
MEC increases the social capital of the communities in which it operates though
generous amounts of grants and donations. MEC is a member of the organization, “1% For The
Planet”. According to their website, “1% For The Planet is a growing global movement of 800
companies that donate 1% of their sales to a network of 1,438 environmental organizations
worldwide” (1% For The Planet). Members of this organization directly donate to any recognized
non-profit, environment-based organization. 1% for the Planet is not responsible for financial
transfers. By joining this organization, MEC has pledged to donate one percent of sales (not one
percent of surplus), to environmental organizations. Any donations that MEC makes to an
environment-related organization, through community donations or capacity building grants,
and on either the national or store level, contribute to its promised donation target of 1% of
sales.
Through the Edmonton store's sustainability coordinator I have learned the net value of
MEC's local and national grants and donations. Nationally, MEC donated a combined $1,635,395
to 400 projects. The smallest donation was $500 and the largest was $100,000; the average
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donation was $10,625. In Edmonton, MEC gave $7,500 in grants and $16,828.75 in donations. It
also donated a variety of goods, including lights, water bottles, and 105 fleece blankets.
Community groups and organizations can apply for specific types of grants. In Edmonton, a
grant review committee (formed by four members of the Edmonton store's staff and one
member from the community) examines proposals and awards funds to successful applicants.
Because the Edmonton store serves a huge region (from Red Deer, AB, to Jasper, AB, to
Yellowknife, NWT, to Saskatoon, SK) grant applications come from a large portion of Canada.
This demonstrates that although MEC is located in Edmonton, it serves the surrounding
communities as well.
MEC makes donations through its no-bag donation policy. To reduce waste by
preventing unnecessary bag usage, whenever a member decides not to take a bag MEC makes a
five cent donation. In Edmonton, when the sum of these donations reaches $2000 the staff
votes on an organization that they want to receive that money. The process then repeats itself
and a new organization receives the next donation. In 2007, the Edmonton Bicycle Commuters'
Society (EBC) received this donation. EBC is an organization dedicated to improving bike
commuting infrastructure in Edmonton. In addition to organizing bike awareness events and
workshops, EBC operates “bikeworks”, a bicycle repair shop. For a very small fee, members of
the community are able to bring their bike to the shop and, with the guidance of a volunteer
mechanic, use EBC's tools to repair and maintain their bicycle. The net result is helping
members of the community to increase their knowledge of bicycle maintenance and promoting
bicycling as a valid transportation alternative. In this example, MEC donated its financial capital
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($2000) to help EBC purchase built capital (bike tools and utility bills), thereby increasing social
and human capital and reducing natural capital usage.
Although MEC's donations are positive and beneficial to its communities, partnerships
are a better measure of MEC's attempts to increase social capital. The contributions to social
capital described thus far have, for the most part, taken the form of donations. In many ways,
MEC's donations are better suited to a discussion on financial capital. By making donations, MEC
is not actually increasing social capital but it is helping other organizations to do so. MEC
increases social capital when it participates in (non-financial) partnerships with other
organizations. The Edmonton MEC store has partnerships with organizations like Dirt Girls,
Canadian Parks and Wilderness, the Edmonton Bicycle Commuters' Society, Edmonton Outdoor
Club, and the University of Alberta Outdoor Club. Dirt Girls, for example, is a group of girls who
are passionate about mountain biking. MEC serves as a meeting place, information distribution
center, and collection agency for membership fees. Basically, the Edmonton MEC store uses its
built capital to help this group attain the human and social capital that results from their
organization. By doing so, MEC helps add value to the community.
Natural Capital
MEC's most direct attempt to preserve natural capital is an ambitious new project
coordinated by MEC and the Canadian Parks and Wilderness Society: The Big Wild. This project
will likely be one of Canada's largest land conservation efforts to date. Canada is home to one of
just three of the worlds remaining wild spaces. Wild spaces are defined by proximity to roads,
cut lines, and other development, as well as their adjacency to other wild spaces. Wild spaces
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are large, uninterrupted pieces of land that allow natural migration patterns, wildlife diversity,
and ecosystem homeostasis. Canada's expansive boreal forest joins a large forest in northern
Russia and Brazil's rain forest as the last remaining wild spaces on Earth. Currently, only 10% of
Canada's wild spaces are protected. The Big Wild's ambitious goal is to protect at least half of
Canada's wild spaces. This figure is based on conservation science studies that conclude that in
order for an ecosystem to survive, at least half of the original ecosystem must exist (The Big
Wild website). This includes species diversity, access to water, migration patterns, and so on.
The Big Wild is both a land conservation effort and public awareness campaign. Its vision
and strategies are reproduced on their website, stating:
Our vision is to keep at least half of Canada's public land and water wild forever. We are realizing this vision by supporting wilderness conservation campaigns across Canada. The Big Wild helps these campaigns by,
• educating people about the urgent need to protect one of the world’s last remaining wilderness areas – which amounts to 20% of all that’s left on the planet
• raising funds for wilderness protection• enabling people to show decision-makers they support wilderness protection
(The Big Wild website).
The Big Wild website is simultaneously an information distribution center and a social space.
The website brings people together to support the initiative by facilitating user profiles and
hosting user-uploaded pictures and videos which pertain to the Big Wild. Users can describe
their recent trips into the wilderness, discuss issues, promote local land conservation
campaigns, and support a variety of initiatives. Rather than trying to conserve land across
Canada, the Big Wild tries to empower local groups to do their part, raises funds for local
chapters, and acts as a collective voice for Canadians who are concerned about land
conservation.
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To raise funds, The Big Wild has implemented the Big Wild Challenge, a pledge system
for the completion of outdoor pursuits. For example, a group of friends can organize a two-
week long canoe trip and ask their friends, family, and co-workers to pledge donations to the
Big Wild campaign. By doing so, the Big Wild raises funds and awareness for their cause. MEC is
matching all funds raised. There are three categories in the Big Wild Challenge: Epic
(significantly challenging outdoor pursuits: a month-long canoe trip, for example), Adventure
(challenging personal pursuits in either wild or urban areas), and Family Affair (the goal of this
category is to get a family together in the wilderness for a 24-hour period). Participants in the
Big Wild Challenge can raise pledges in any of these three categories. The group that raises the
most money and the one that has the highest number of supporters will each win a $500 MEC
gift card (donated by MEC) for each member of their group. The Big Wild challenge raises
awareness (social capital), money (financial capital), and encourages participation in outdoor
pursuits (human capital) in order to conserve Canada's vast wilderness (natural capital).
Natural capital is intricately linked to built capital. Ultimately, every form of built capital
is the result of a reduction of natural capital, either through the natural space destroyed for its
creation or in the pollutants and bi-products released during the manufacture and
transportation processes. For the remainder of this section, I will describe the steps that MEC
takes to ensuring that it uses as little natural capital as possible. Here, I will focus my attention
on MEC's processes and its outcomes. In contrast, the built capital section will focus on how
MEC's products and buildings affect natural capital.
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MEC attempts to reduce energy consumption, maximize green and renewable energy
sources, minimize emissions, and maximize waste diversion. MEC specifies some of these goals
in its Energy Master Plan (EMP):
Our EMP provides a structure for systematically encouraging decisions and practices. The long-term goals included in our EMP are:
1. Continuous improvement in energy conservation, energy efficiency, and energy intensity (e.g., eco-efficiency, or maximizing units of useful output per unit of energy input).2. Use of green and renewable energy resources (e.g., solar, wind, mini-hydroelectricity, sustainable biomass, ground- or water-source heat pumps).3. Reduction in greenhouse gases and other harmful emissions, eventually achieving a zero net emissions rate.4. Setting an example of responsible energy management and providing leadership and positive influence to our members, suppliers, and other organizations. (MEC “Accountability Report” 23).
By addressing these energy concerns, MEC is able to minimize the loss of natural capital.
MEC carefully measures its natural capital usage by calculating energy usage and
greenhouse gas emissions. After investigating its major sources of energy consumption in 2003,
MEC discovered that the Edmonton and Calgary stores, despite representing only 15% of MEC's
facilities, consume 23% of its facilities' overall energy (MEC “Accountability Report” 23). More
disturbing is the fact that the majority of Alberta's electricity is generated by coal-burning power
plants—an intense greenhouse gas emitter. To reduce greenhouse gas emissions, MEC procured
wind-powered electricity for its Edmonton and Calgary stores. Two-years later (in 2005), even
though its facilities' net energy consumption increased by 1.5%7, its facilities' net greenhouse
gas emissions decreased by 52%8. Although this example demonstrates MEC's ability to measure
and decrease their greenhouse gas emissions, it also demonstrates the high rates of pollution
7 MEC opened a new store in North Vancouver in that period, thereby raising energy consumption for the organization as a whole.8 This figure is slightly misleading. MEC's facilities (stores, distribution center, and so on) account for only 20% of MEC's net emissions; the other 80% is due to the transportation of goods (MEC “Accountability Report” 29). Therefore, the 52% greenhouse gas emission reduction by facilities represents only about 10% for MEC as a whole.
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that accompany Alberta's energy infrastructure. In 2005, MEC stated that its next move was to
reduce greenhouse gas emissions in its Toronto and Halifax stores, its next biggest polluters. By
transitioning to using 100% biodiesel fuel it expects to show another net decrease in
greenhouse gas emissions (MEC “Accountability Report” 24).
One of MEC's long term goals is to be able to exist without producing any waste, a term
they call zero waste. In its 2005 Accountability report, it states:
In natural systems, waste does not exist. Take a forest, for example. All “waste” materials are recycled back into the natural system. We asked ourselves: is this possible in a world of manufactured products and global trade? Could the concept of zero waste serve as a long-term goal achievable through a systematic and incremental approach? And could it be a prompt for continuous improvement, innovation, and creativity? We think so. (MEC “Accountability Report” 25).
To achieve zero waste, MEC works with suppliers to minimize packaging and to emphasize the
use of recyclable materials. Each MEC store has procedures in place to ensure that as little mass
as possible ends up in a landfill. In Edmonton, for example, in addition to the prevalence of
recycling bins and compost systems, staff are able to streamline the disposal of goods that may
still have functional value. MEC offers a lifetime guarantee on every product it sells; this results
in a significant volume of goods that return to the store because a member feels that the
product has not lived up to his or her expectations9. Rather than dumping returned goods in
landfills, staff are able to use creative means to divert waste. Some returns are pillaged for parts
so that similar returns can be repaired rather than returned and disposed. Some returned goods
are donated to charitable organizations. Recent donations include hats for people in Nepal,
running shoes for people in Africa, and camping equipment for a program that helps inner-city
youth experience the benefits of outdoor pursuits. There are many other examples of waste
9 MEC's emphasis on quality ensures that its rate of returns are well below the industry average. Nevertheless, some goods do come back and must be processed.
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diversion in MEC: used paper and out-dated forms are re-used as office supplies; miscellaneous
parts and goods are diverted to a “free bin” for use by resourceful staff members; returned
Lexan plastic-based goods have recently been broken down for use in road signs.
MEC systematically measures its waste diversion rate. All waste, recyclables, and
compost are systematically measured before they leave the store. In addition to these
measurements, twice a year each store executes a “dumpster dive”. By sorting through its
waste, each store can pinpoint types of waste that can potentially be diverted away from a
landfill. MEC calculated that in 2005 only 16.7 percent of its waste went to a landfill (MEC
“Accountability Report” 25). Interestingly, the 2005 Accountability Report notes that, in 2005,
the average cost to landfill a tonne of goods was $213 but to recycle a tonne cost only $73 per
tonne (26). In all, waste diversion saved MEC $90,236 in 2005 (MEC “Accountability Report” 26).
Built Capital
To ensure that its buildings maximize human and natural capital, MEC pledges to ensure
that all future buildings will meet LEED certification or an equivalent standard (MEC
“Accountability Report” 24). The United States Green Building Council (USGBC) has
implemented a means by which to measure the degree to which a building is socially and
environmentally responsible. According to its website,
The Leadership in Energy and Environmental Design (LEED) Green Building Rating System™ encourages and accelerates global adoption of sustainable green building and development practices through the creation and implementation of universally understood and accepted tools and performance criteria. (USGBC “What is LEED?”).
Further, it states: “LEED promotes a whole-building approach to sustainability by recognizing
performance in five key areas of human and environmental health: sustainable site
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development, water savings, energy efficiency, materials selection and indoor environmental
quality.” (USGBC “What is LEED?”).
The USGBC developed a LEED for retail program (a pilot project), which accounts for the
unique circumstances that retail buildings face. To ensure proper levels of development density
and community connectivity, organizations must:
[either] Construct or renovate [its] building on a previously developed site AND in a community with a minimum density of 60,000 square feet per acre net) ... [or] ... Construct or renovate [its] building on a previously developed site AND within 1/2 mile of a residential zone or neighborhood with an average density of 10 units per acre net AND within 1/2 mile of at least 10 Basic Services10 AND with pedestrian access between the building and the services (USGBC “LEED for Retail” 12)
The LEED for Retail program is built around stringent limits on water consumption, energy usage
and efficiency, and material reuse in the construction process. Retail spaces must be located
near public transportation nodes and must include bicycle storage space for patrons and
changing areas and showers for employees (USGBC “LEED for Retail” 15). Preferred parking
must be allocated for low-emission vehicles (USGBC “LEED for Retail” 16). The certification
process considers air quality and access to natural light for the inhabitants of buildings. LEED
certification takes huge strides in maximizing human capital and minimizing the natural capital
that built capital usually depletes. Although not all of MEC's existing buildings are LEED certified,
they do incorporate many of the LEED criteria and directly address the aforementioned issues.
MEC's products are one of its most significant forms of built capital. We must consider
both the materials of goods and their design. All of MEC's cotton goods are constructed with
100% organic cotton. Organic produce increases farmers' human capital (mass exposure to
herbicides and pesticides has detrimental health effects) and maintains natural capital in
10 According to the same document, basic services include things like banks, day cares, fire stations, laundry mats, post offices, theaters, and so on (USGBC “LEED for Retail” 12). Their list is quite extensive.
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surrounding areas (run-off containing excess fertilizer is a major source of ground-water
pollution). The 2005 Accountability Report estimates that by using only organic cotton, MEC was
able to avoid using 42,600 cubic kilograms of chemicals (13). In 2005, MEC was one of the
world's top twenty-five purchasers of organic cotton. Polyvinyl chloride (PVC) also has negative
repercussions to levels of human and natural capital. MEC developed a PVC-free alternative for
use in its personal flotation devices and drybags—an industry first. Polyester, a petroleum
product, is one of very few clothing materials that is (relatively) easy to recycle. MEC recently
initiated a polyester recycling program in each of its stores. MEC's goal, which is now limited by
technology and infrastructure, is to sell 100% recycled polyester goods, all of which are
eventually recycled into new products. This cycle represents a closed loop in which no new
goods are produced. When its members require shopping bags, MEC minimizes its
environmental impact by distributing biodegradable corn starch-based bags. MEC has deemed
that the long term benefits of these expensive bags (they cost nearly twenty five cents per bag)
far outweigh the environmental damage caused by their cheap, plastic alternatives.
MEC's goods are designed for functionality and durability. Where most retail stores sell
fashionable clothing, MEC sells functional clothing. It may sell a functional jacket that looks
good, but it will never sell a jacket only because it looks good. MEC purposely styles its clothing
in simple ways; nearly everything sold is a solid color. By not adhering to seasonal fashion
norms, MEC reduces the risk that its clothing will be unfashionable a short time later. This
promotes long-term wearability and further increases the lifespan of the garment. By producing
functional and durable goods, MEC reduces the waste associated with overproducing fragile,
poorly-constructed, and potentially unfashionable goods.
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MEC offers an outstanding guarantee on each item it sells to its members. Its “Rock Solid
Guarantee” is worth citing because of its implications for members and for MEC's buying and
design team. MEC's “Rock Solid Guarantee” states:
Like many retailers, we guarantee our products; if an item hasn't met your expectations, you can bring it back. Unlike most retailers, we also guarantee the product selection advice offered through our catalogue, website, and staff; if an item you've purchased based on this advice turns out to be unsuitable, you can bring it back. In either case, simply return the item for exchange, refund, repair, or credit. (MEC “Rock Solid Guarantee”)
The entire guarantee is built on each individual member's expectations and the guarantee has
no time frame. Notice also that not only is the product guaranteed, so too is any advice that
MEC gives a member when making a purchase. Any product that does not live up to a member's
expectations, or any product which proved inadequate for its intended purpose, is eligible for
return, regardless of when it was purchased.
MEC's Rock Solid Guarantee makes it accountable to its membership. Many companies
offer guarantees that are void by either time or usage. Moreover, these guarantees are often
based on the company's expectations of their product. For example, the lifetime guarantee on a
car's muffler may refer to the manufacturer's expected lifetime of the muffler, a figure which
may fall short of the customer's expectations. In this example, the standard of acceptable
quality is set by the manufacturer. For the most part, retail organizations are not directly
accountable to their customers. At MEC, the standard of acceptable quality is set by the
consumer. An organization operating within the social economy should be directly accountable
to those with whom it conducts business.
Because everything that MEC sells is subject to its guarantee, its buyers and product
design teams must ensure the quality of the goods that they order and produce. Each MEC
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product must be made with high quality materials and must be designed in a way that promotes
the longevity of the product. By producing products that out-last the industry average, over
time, MEC is able to make fewer products because it replaces fewer worn-out goods. This
process has obvious environmental implications. By advocating and maintaining their Rock Solid
Guarantee, MEC is able to increase human, social, and natural capital with their built capital.
Financial Capital
In the “Financial Overview” section of the 2005 Accountability Report, MEC describes the
breakdown of costs from each dollar that members spend at MEC. Based on figures from 2005,
from each dollar, 65.8 cents cover MEC's cost of purchasing gear; 14.8 cents are spent on the
staff's salaries and benefits; 5.1 cents are put towards supplies and services; occupancy and
depreciation account for 6.4 cents; the community contributions described earlier cost 2.1 cents
per dollar; 5.6 cents go towards patronage returns; finally, 0.2 cents take the form of surplus
(MEC “Accountability Report” 11).
MEC's most recent financial statement (from its 2006 fiscal year) describe the
organization's financial capital in full (MEC “2006 Financial Statement”). In 2006, MEC's sales
were $222,812,000. Its cost of sales totaled $147,539,000. The organization's end of year
surplus was $30,000. MEC's financial assets summed $72,336,000 and its property and
equipment was worth $56,597,000, a combined $128,933,000 in assets. In 2006, MEC spent
$10,345,000 on its employees' salaries, wages, and benefits.
MEC's financial capital is relevant to an earlier discussion: MEC's insufficient wages.
Using an individualistic model of self-sufficiency, what is the financial reality of MEC raising its
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wages to levels that financially support self-sufficiency? Currently, MEC's starting wage, $11 per
hour, grossly underachieves that goal, especially in booming economies like Alberta. (In Alberta,
MEC would need to raise its wages by a dollar per hour merely to combat inflation and rising
housing costs.) Through conversation with MEC's executives, I have learned that raising MEC's
starting wage by one dollar per hour will cost the organization about 1.5 million dollars. Given
their extremely small surplus, to achieve a one dollar per hour raise, MEC would have to
increase sales by about $15 million. Without substantially raising prices or opening more stores,
this is not possible in the near future.
There are two ways that MEC could help its employees achieve self-sufficiency. First,
MEC could raise wages by several dollars per hour. As we have seen, this is simply not a
financially viable option. This option also adopts and promotes a very individualistic approach to
self-sufficiency. Although the term “self-sufficiency” seems individualistic, it need not be. The
second way that MEC could help its employees achieve self-sufficiency is by developing,
promoting, and fostering a network of co-operatives that could help fulfill its employees' needs
and desires. I will develop this idea more completely in the “Reflections” section of this paper.
Summary
At the start of this paper, I set out to describe the social economy and to help define its
boundaries by examining a specific organization, Mountain Equipment Co-op. Early in this paper
I cited Mike Lewis, the director of the BALTA project, as listing five characteristics of a social
enterprise. Lewis explained that in a social enterprise, “a social and economic return on
investment is consciously pursued” (7). He emphasized the importance of “mutual support and
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solidarity” and a collective ownership structure that holds assets for the benefit of the
community, not for individuals (7). He also specified that selling into the marketplace is a central
feature of social enterprises.
To add structure to this case study, and to provide a framework with which to conduct
future case studies, I introduced Mark Anielski's Genuine Wealth model. I proposed a definition
for organizations which exist in the social economy: An organization which operates in the social
economy is one whose activities are market-based and its primary goal is to maximize the
genuine wealth of the community in which it operates, rather than maximizing only its own
financial wealth. By incorporating the Genuine Wealth model, we are able to use five types of
capital to efficiently and consistently discuss social enterprises. These categories contain key
indicators that should prove useful in organizing future studies about social enterprises.
Is MEC a part of the social economy? That is, does MEC actively seek to maximize the
genuine wealth of the communities in which it operates? Yes. Mountain Equipment Co-op is a
market-based organization which seeks to increase the genuine wealth of its staff, its members,
and those in the communities it serves, and is, therefore, a vibrant part of Canada's social
economy.
MEC seeks to increase the human capital of its staff, its members, and the community.
MEC's primary means of increasing human capital for its membership is by promoting and
supporting outdoor pursuits, both for individuals and for the community. MEC treats its staff
with respect and helps them balance life and work by helping and encouraging them to pursue
their outdoor passions. MEC offers its employees an excellent benefits package but, currently,
its attempts to help its staff achieve self-sufficiency are inadequate. MEC's ethical sourcing
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policy is one of the best in the big-business world. By co-operating with fair labour organizations
and by actively auditing the factories that produce its goods, MEC is able to work with factories
to increase human capital for those workers. MEC deserves credit for the leadership role it has
taken in improving working conditions in factories overseas, but the conditions in those
factories are still only minimally acceptable. More work is needed in this area.
Of each type of capital, MEC's work in social capital is one of its weakest areas. If we
include MEC's generous and extensive donations (especially environmental ones), then MEC's
contribution to social capital is strong. However, because MEC's donations primarily take the
form of financial capital exchange, this is not purely social capital. To increase social capital for
its members and for the communities in which it operates, MEC should increase and further
develop its non-financial partnerships and, most significantly, improve democratic participation
in the co-operative. Improving democracy will prove a very difficult task, but it is necessary to
realize MEC's full social capital potential.
When describing the philosophical benefits of the co-operative structure, I summarized
the work of Robert Dobrohoczki. Building on Manuel Castells' threefold concept of identity, and
on Jurgen Habermas' notion of legitimation crisis, Dobrohoczki wrote, “As democratic
institutions, cooperatives have potential to recapture legitimacy. Co-ops can act to balance
market participation with community needs, the global with the local, and the system with
lifeworld” (141). With a rate of democratic participation that is under two percent, and with a
membership base that does not entirely understand the nature of co-operatives, MEC is acting
in the best interests of the community, but it is not necessarily acting on behalf of the
community. Until MEC's members better understand the co-operative structure and actively
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participate in the democratic decision making process, MEC does not utilize its potential to, in
Dobrohoczki's words, “recapture legitimacy”. To fully realize its social capital potential as a co-
operative, MEC must find a way to educate its members about the benefits of co-operation,
restrict sales exclusively to members, and improve voter participation in its democratic decision
making process.
MEC is taking great strides in preserving our planet's natural capital. MEC's partnership
with the Canadian Parks and Wilderness Society in forming the Big Wild campaign has the
potential to be one of Canada's most significant land conservation programs ever. MEC has
taken commendable steps in measuring and reducing its greenhouse gas emissions and energy
usage. Procuring wind power for its Alberta stores is an example of alternative energy usage.
MEC makes great efforts in diverting waste from landfills and measuring those results.
As outlined earlier, massive over-consumption has vastly negative impacts on levels of
human, social, and natural capital. Given that MEC is a large-scale retail organization, one that
sources its goods from all parts of the globe, we must acknowledge that it contributes to our
society's addiction to consumption. Aside from reiterating the social and environmental
drawbacks of the over-consumption encouraged by retail in general, I can find nothing negative
to say about MEC's efforts in minimizing natural capital. MEC is as close to environmentally-
friendly as a large-scale, consumption-based organization can be. MEC cannot save the planet
by producing more goods, but it can help by teaching other organizations how to produce goods
in a better way.
MEC is able to effectively use its built capital to increase human capital and minimize the
usage of natural capital. By striving for LEED standards, MEC ensures that its buildings conserve
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natural capital, encourage community development, and facilitate human capital by
encouraging alternative modes of transportation. MEC's merchandise, a form of built capital,
utilizes materials which increase human and natural capital level (e.g., organic cotton and PVC-
free materials). MEC strives for a closed-loop production system by offering products made of
recycled polyester and operating a polyester recycling program. MEC designs its merchandise to
be functional and durable, two characteristics often overlooked in the retail business.
MEC effectively uses its financial capital to increase the other forms of capital, especially
human, social, and natural capital. This is the central feature of an organization which seeks to
improve genuine wealth and, subsequently, one which operates in the social economy. From
each dollar spent at MEC, the organization spends a combined 88.3 cents on purchasing
environmentally-friendly and ethically-sourced goods, paying its staff's benefits and wages,
making financial contributions to community organizations, and making patronage returns (MEC
“Accountability Report” 11). In 2005, only two cents from every ten dollars in sales took the
form of surplus. Because MEC operates as a retail co-operative, it actively minimizes surplus.
MEC reinvests its assets into the community rather than holding them for accumulation by
individual people. This fulfills Lewis' fifth characteristic of a social enterprise. In 2006, from
$222,812,000 in sales, MEC collected only $30,000 as surplus (MEC “Financial Statements”).
These figures, combined with the previous summaries of human, social, natural, and built
capital, demonstrate that MEC efficiently and effectively uses its financial capital to maximize
genuine wealth, not to increase financial wealth. MEC is an important part of the social
economy.
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Reflections
To examine the financial records, ethical sourcing policy, labour statistics, community
development efforts, and the environmental impact of an organization, academics,
stakeholders, and the general public largely rely on that organization's self-reports. This
research relied on MEC's self-reports, primarily its 2005 Accountability Report. With that in
mind, it is important to consider the nature of self-reporting and discuss how it can be
improved.
Corporate Social Responsibility
Why should we trust an organization like MEC to present information about itself in a
fair and impartial way? As mentioned earlier, the Ethical Trading Action Group ranked MEC as
the second most transparent organization in their study of major organizations who source their
goods in other countries. This is a compliment to MEC and their transparency in this area adds
credit to the legitimacy of their claims. As a part of the International Cooperative Alliance's
“Global 300”, a publication which highlighted the largest co-operatives in the world, the ICA
released a document outlining corporate social responsibility (CSR) among co-operatives (ICA
“Corporate Social Responsibility”). Although MEC is not one of the three hundred largest co-
operatives in the world, it was one of only seventeen co-operatives discussed in the report. It
was one of only four that were not among the largest 300 co-operatives. In 2006, the Globe and
Mail reported on CSR amongst businesses operating in Canada. MEC led the way in the “Big
Retail” category, being ranked first above organizations like Ikea, Home Depot, and Wal-Mart.
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Specifically, the report states that MEC “scores well above its peer group across the board, and
its co-operative membership structure encourages employee and customer involvement.”
There is an inherent difference between the co-operative model and the private model
of business. In “Corporate Social Responsibility and Codes of Conduct: the Fox Guarding the
Chicken Coop?” Ineke C. Locke examines how the corporate business model effects the
potential for effective social reporting. In examining the structural logic of the corporation, she
writes, “The idea of 'limited liability' is central and essential to the operation of the capitalist
free-market system. This failure to assign responsibility constitutes one of the fatal flaws of
reliance on the corporate form to organize production” (123). The acceptance of limited liability
can potentially compromise a corporation's ability to act (and report) with the best interests of
the community in mind. She explains that corporations in Canada have a fiduciary duty to
maximize the returns on investment to stockholders (124). This means that, legally, a
corporation is bound to maximize financial wealth rather than genuine wealth. Locke states,
In effect, the argument that corporations should be responsible to groups of public stakeholders rests on shaky legal ground. This raises serious contradictions for CSR as a means of reform, leading corporate lawyer Harry Glasbeek to label the CSR movement 'a politics of impotence' (124).
Locke concludes by stating, “As long as the corporation remains designed to pursue profits to
the maximum extent possible and limited liability laws shield it from extended responsibilities,
CSR will continue to raise serious contradictions for both the corporate purpose and the
ideology of free-market capitalism.” (133). Through the co-operative structure, MEC is bound to
its 2.6 million members and the communities in which it operates, not to its primary
shareholders. Because it not structured as a corporation, MEC is able to report on itself and act
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in ways that most corporations are unable to do. The co-operative structure lends itself to
effective CSR policy and reporting.
Indicators in the Genuine Wealth Model
Although MEC includes a list of Global Reporting Initiative (GSI) indicators as an appendix
in its 2005 Accountability Report, it may be to MEC's advantage to structure its report around
the Genuine Wealth model. Anielski has done groundbreaking work in corporate social
accounting and presents a compelling case for doing so. He explains that “the Genuine Wealth
model measures and reports on the sustainability and financial, social and environmental
performance of any enterprise in the economy”, specifically stating that it is applicable to the
social economy (148). He designates a full chapter of his book to demonstrating how Genuine
Wealth can be applied to business organizations like MEC.
Anielski proposes that several indicators, representative of each type of capital, can be
plotted together on a Circle Index. Each indicator is given a value between 0 and 100 (the best
possible score). The Circle Index is a circular plot laid out with 0 at the center and 100 at the
perimeter. Each indicator is marked as a line starting at the origin (0), and extends outwards to
its radial value between 0 and 100. Figure 2 demonstrates a Circle Index that is based on
fictional data. By grouping similar indicators by relevant types of capital, and by ensuring equal
numbers of indicators from each type of capital, a single Circle Index can quickly demonstrate
the extent to which an organization is equally pursuing each type of capital, and, subsequently,
genuine wealth. The indicators plotted should be measurable aspects of MEC's business like
employee engagement, rate of democratic participation, member satisfaction in key areas,
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amount of community donations, percentage of goods made with organic and/or recycled
content, waste diversion, greenhouse gas emissions, energy usage, total sales, and surplus.
Fig. 2. An example of a Circle Index, composed from fictional data. Notice that the plot quickly shows that this organization demonstrates high amounts of natural capital but low levels of social capital. In an actual Circle Index, each data point (an indicator of genuine wealth) would be labeled for quick reference.
Some of the proposed indicators are based on fixed figures, rather than percentages.
This means that some adjustments must be made to incorporate the data into a Circle Index. In
these cases, a scale must be applied. A score of 100 should be the ideal scenario, based on
MEC's long term goals. The indicator value could be calculated as the current value's percentage
of the ideal scenario. Although the values from the first Circle Index will be largely arbitrary and
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somewhat meaningless, if MEC commits to publishing a consistent Circle Index, over time
important trends will emerge. If MEC commits to increasing genuine wealth then each year it
will see the area formed by the plot increase. This serves as a visual indicator of genuine wealth.
There is much academic work on sustainability indicators. In “New Civic Epistemologies
of Quantification: Making Sense of Indicators of Local and Global Sustainability”, Clark A. Miller
argues that “ISD [indicators of sustainable development] are important features of new,
emerging civic epistemologies in local, regional, and global settings. They are technologies
through which people are coproducing new ways of knowing and ordering the world at these
scales.” (405). Miller examines five projects which measure ISD. Of these, “local ISD” is most
similar to the indicators that MEC would likely adopt. Community organizations like Sustainable
Seattle and Sustainable Calgary, examples of local ISD, create lists of indicators and then
measure and publish reports on the ISD in that region. Although Miller outlines the benefits of
local ISD projects, he is rightly critical about their consistency. “These lists look like what they
often are: grab bags designed to include everyone’s favorite indicators” (Miller 417). He
explains, “Despite the extensive involvement of NGOs as facilitators, consultants, and advisors
to communities, there is a remarkable absence of standardization in local ISD projects” (417).
Without any formal standardization, it is likely that MEC will add to this inconsistency.
During a meeting of The Royal Statistical Society which focused on “alternatives to
economic statistics as indicators of national well-being”, Roger Levett presented a paper titled,
“Sustainability Indicators—Integrating Quality of Life and Environmental Protection”. In his
presentation, Levett explained “the need for context” amongst indicators (291). Levett writes,
“Indicators are not neutral technical entities: they are inescapably value laden. They are inputs
59
to policy as well as consequences of it.” His ideas show some consistency with the work of the
French philosopher, Michel Foucault11. Social economy researchers (and social enterprises like
MEC) can use the Genuine Wealth model as a framework to form reports which include
comments about consistent subjects and measurements taken with consistent methodology.
There are research and policy advantages to having access to consistently formulated Circle
Index plots from several different social enterprises.
MEC and the Potential for Co-operative Network
By acting on the sixth principle of co-operatives (Co-operation among co-operatives),
MEC would be able to increase relationships with community organization and help their
employees achieve self-sufficiency without dramatically increasing wages. Earlier in this paper, I
explained that to increase social capital, in addition to making financial donations to community
organizations, MEC should actively engage in community partnerships. I also explained that to
increase the human capital of their employees, MEC needs to address the issue of self-
sufficiency. Each MEC store should actively promote and work with existing co-operatives in its
community and encourage the development of new co-operatives.
Many co-operatives exist in each city that MEC does business. In Edmonton, for example,
the Northern Alberta Cooperative Housing Association is a network of housing co-operatives.
There is a small organization called The Car-Sharing Co-operative of Edmonton. The People's
Pedal is a bicycle commuting co-operative. There are local organic produce co-operatives.
Rather than raising wages and promoting individualism, MEC should address its employees'
11 In addition to examining the legitimacy of making claims from a Foucauldian perspective, it is interesting to note the connection between elaborate systems which measure indicators of sustainable development and Foucault's notion of biopower. For more on biopower, see the chapter titled “Right of Death and Power over Life” in Foucault's The History of Sexuality, Volume 1: An Introduction.
60
need for self-sufficiency by making the services of local co-ops available to employees. For
example, rather than raising wages so that employees can buy a car, the Edmonton MEC could
pay each employee's base fee for The Car-Sharing Co-operative of Edmonton, giving each
employee access to a vehicle whenever he or she needs it. Each MEC store could form a
partnership with local housing co-operatives to ensure affordable housing for its staff. By
promoting and fostering co-operatives, and making these organizations easily accessible to staff
members, MEC can achieve self-sufficiency for its workers without dramatically raising their
wages.
MEC should use its vast resources to organize smaller co-operatives into a vast co-
operative network. Currently, the nearly all of MEC's donations are to self-propelled,
environment-based organizations. MEC should reconsider their donation criteria to better
support co-operatives in its communities through financial donations. MEC can be a hub of co-
operative activity in each community that it operates. There is huge potential for a co-operative
network that would drastically increase the genuine wealth of the local community. MEC should
become a leader among co-operatives. Just as it promotes sustainability in the marketplace,
MEC should take a leadership role in promoting sustainability in the community by advocating,
creating, and nourishing a co-operative network.
Conclusion
The Canadian economy's social system is an important part of everyday life for people
across Canada. The social economy uses the marketplace to provide an increasingly important
alternative to the traditional capitalist for-profit business model. By minimizing surplus,
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maximizing social and environmental return on investments, and emphasizing democratic and
economic equality, but while maintaining financial viability in a market-dominated world, social
enterprises are able to address citizens' human needs. That is, in addition to food, clothing, and
shelter, the social economy can provide people with trust, compassion, and community. The
social economy replaces disdain for corporate giants, revitalizes the local marketplace, and
brings people in communities back together. By principally advocating social and environmental
goals, the social economy allows communities and nature to flourish together. Mountain
Equipment Co-op is an important part of the Canadian social economy. Its social,
environmental, and financial successes serve as a model for new social enterprises. MEC has an
opportunity to bring the social economy together and advocate on its behalf. As the social and
environmental faults of neoliberal capitalism become apparent in years to come, MEC and other
major players in the social economy will emerge ready to lead the world to a sustainable future.
62
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