The cooperative economy is a prosocial platform system that first and foremost serves societal values, while acknowledging natural resource constraints. The cooperative economy diverts attention away from a materialistic orientation and follows a more balanced perspective that does not mix the means (accumulation of wealth) with the ends (striving for happiness). This proposed system adopts design principles that limit consumption and profit making while facilitating economic equality. The system serves the interests of consumers, vendors, and employees while preventing the accumulation of power by the platform owner who operates it. Unlike the greed that drives the current economic system, the engine of the cooperative economy is prosocial behavior. The system scrutinizes greedy individuals and penalizes opportunistic behavior such as false disclosure of information and arbitrage attempts, while motivating and rewarding prosocial behavior. Once opportunistic behavior becomes a deviant practice, self-reinforcing prosocial behavior can overtake it, leading to a more just distribution of value in the system.

The main novelty of this system is the reversal of the subsidization process. Instead of having most consumers, including the poor, subsidize the rich capital owners, the cooperative economy leverages price discrimination whereby high-income consumers subsidize low-income consumers. Prosocial behavior is the principle that underlies this subsidization process, with consumers enjoying the happiness that comes with donation and influence, while leveraging the cushion that protects them from misfortune. Unlike progressive taxation in which the state steps in as a political intermediary that imposes a burden while depriving taxpayers of their discretion and sense of contributing to society, price subsidization creates a perception of unmediated donation to community members, and thus carries the benefits of prosocial behavior. The cooperative economy also provides employees with the freedom to pursue a profession of choice or start a business without worrying too much about failure or financial distress. Hence, the system encourages entrepreneurship rather than discourages it. Free riding is also discouraged by requiring low-income consumers who receive donated products and services to repay in kind.

I discuss this and other design principles in my book, The Cooperative Economy, available from Routledge or Amazon. For more information, visit www.cooperativeeconomy.net