The Paper Clip Kid
November 2007
Last summer, newspapers reported Kyle MacDonald’s incredible experience, the experience of a young Montrealer with a small red paper clip. A simple little paper clip, yes, the kind we use to keep our papers neat and tidy. A tiny little metal implement commonly used offices and homes around the world. Well, MacDonald decides to offer his little red paper clip on the internet in exchange of something more expensive. A rather odd proposition, don’t you think? Yet it worked: in exchange for his paper clip he received a fish-shaped pencil. Once again, he offers this pencil in exchange for a more expensive item, and receives a door knob. He exchanges this door knob for a portable camping stove. The media is getting excited: how far will this go? After one full year of exchanging miscellaneous items, MacDonald gets hold of a house in Kypling, Saskatchewan. Yes, unbelievable but true, a little, tiny red paper clip produced a house.

Crazy as a fox this MacDonald kid! In my opinion, either he never studied economics or he has the surprising ability to disregard any and all generally recognized and accepted ideas and principles. Because this experiment, however amusing, goes against the archetypal theory that suggest that each partner involved in a transaction is guided by the desire to maximize their personal profit. So in this context, who among us would have dared offer a paper clip in the hope of getting a house? And yet, MacDonald’s experiment proves that the decision to close a business deal is much more complex than the commonly believed notion that everything is profit driven.

Yes indeed, economics is a part of humanities!

The red paper clip story brings us back to the deeper motivations that drive our transactions. Whether we like it or not, when it comes to human motivations, nothing is guaranteed. The plethora of business deals being concluded around us do not fit into a single box or follow a specific formula. They are often based on intangible elements: trust, humour, pride, and a million other states of mind that can neither be named or numbered. And yet, these elements will either increase or decrease the value of a business proposition.

If I am talking to you about this, it is because this paper clip kid’s story reminds me of a lesson I learned a few years ago as I attended the Economics and Management of Co-operative Enterprises’ program. Stefano Zamagni, an economist, explained why, above and beyond financial considerations, some businesses, simply because of who and what they are, seemed to better satisfy their clientele and survive the test of time. And among his examples were cooperatives. Zamagni stated that by since cooperatives were the property of its members, it naturally adopted a business strategy with a strong relationship component – to everyone’s obvious satisfaction. The recognition, active listening, and sharing found in a cooperative, as with its community by-products, are just a few of the advantages that add value to a transaction. Although rather abstract and qualitative, this added value is experienced and is translated by a connection, a loyalty, a feeling of belonging to the cooperative.

All of these components are a bonus to the cooperative proposition.

As for the paper clip kid’s experiment, we can assume that the people involved agreed to a lopsided exchange for the fun of it, for purposes of curiosity, sympathy or even for the vanity of being part of his story (history) – who knows what goes on in people’s minds? As for our story, that of the cooperative world, it’s clear to see that the social premium that comes with our products and services and transforms transactions into responsive encounters adds value to a commercial proposition that is already very competitive. Our members and customers know this well. Let’s not forget that behind each and every transaction there are people. People who make choices, who operate according to their values, who know their priorities. And thank goodness, that’s what makes people who they are.

 

Colette Lebel, agr.
Director of Cooperative Affairs
La Coop fédérée
Email: colette.lebel@lacoop.coop
Fax: (514) 858-2025
 



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