Cooperatives Provide Viable Alternative to Capitalism

which nonetheless is a very large player functioning successfully alongside the other systems. Co-operatives make up a large percentage of the global market place. They provide over 100 million jobs around the world: 20% more than multi-national enterprises. In fact, co-op membership is now approaching a billion people!

Part of the reason co-ops are so infrequently discussed is that they aren’t traded on the stock market. They seldom make the business news, yet they are responsible for generating billions of dollars.

Baby boomers may remember the food co-ops of the 60s, when hippie groups bought food from local farmers and everyone then took turns managing the store for members in whatever basement they could rent. In reality, co-ops can be that simple, but they can also be extremely sophisticated.

What is a co-op? According to the International Co-operative Association (ICA) based in Switzerland, “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.”

The most productive region in Italy, the one with the lowest unemployment and highest social safety net in Europe, is around Bologna. It is no accident that this is the area with the highest number of co-ops, which operate in several business sectors. Ranging from small-scale to multi-billion dollar businesses, co-operatives function across all industries, including agriculture, fisheries, dairy, insurance, manufacturing, financial services, and housing, to name but a few.

One of the major differences between capitalism and co-operativism is that co-ops put people at the heart of their businesses; however this doesn’t mean they ignore profitability. Rather, they don’t just talk about values in mission statements on websites: they live them. Because co-operatives are member owned and democratically controlled by their members, profit is balanced against member and community needs. This concept is over two centuries old, and it operates on all major continents.

Many countries have co-operative trade associations which in turn belong to ICA. ICA then represents their interests with the UN and promotes not just the cooperative concept but good governance as well. Founded in 1895, ICA is an independent, non-governmental association with 220 member organizations from 84 countries. They also work on gender, fair trade and HIV issues.

Most importantly, they work on promoting sound accounting practices and legislative frameworks, because even co-ops can fall victim to human greed. Without a structure in place, temptations are greater. However, to date, co-ops have not produced anything close to an Enron-level scandal.

In 2006, ICA launched the Global300 Project to call attention to “The importance of the world’s co-operative and mutual businesses – many of them successful, large-scale enterprises with social and ethical principles at the heart of their operations.” ICA wants to demonstrate that values and competitiveness can go hand in hand, and that alternatives to the dominant investor-oriented model not only can exist, but do succeed. A complete list of the successful 300 co-ops can be found on the Global300 website.

ICA has documented evidence that many of these major businesses, some over 100 years old, out perform stock-market businesses. Part of the reason is that co-ops satisfy their stockholders by looking for long-term rather than short term profits. Ninety percent of the companies in the Global 300 were formed before 1980. Together they represent more than US $888,383 million, more than many of the world’s largest economies. For example Canada, the ninth largest economy of the world, had a GDP of $1,113,810 billion in 2005, according to the World Bank.

People who belong to credit unions, one of the most common types of co-ops, know that unlike banks, credit unions return most of their profits to their members, with both higher interest rates on savings and lower interest rates on loans. They may be small, such as fifty women in Vietnam pooling their savings and loaning out small amounts to support a food stand for one of its members. Others, like the US Navy Federal Credit Union or the Canadian Vancity Credit Union, have billions in assets. Vancity, with 10.5 billion in assets, returns 30% of its profits to its community for a vast number of social service projects. However, almost all Canadian credit unions give at least five percent of its profits back to meet social needs.

Few credit union members realize they are part of a worldwide movement begun in Germany during the 1800s after a famine.

Although under-reporting of their success by the press is standard, co-ops include Switzerland’s largest employer, France’s largest bank, a New Zealand co-op that oversees a third of the international dairy trade, India’s largest food processing business, the Netherlands’ top healthcare provider, North America’s market leader in canned and bottled juices and juice drinks, and Canada’s largest multi-product insurer.

But some organizations do know co-ops exist: in 2004, the Co-ops International Labour Organization identified co-ops as “one of the pillars of national and international economic and social development.”

Moreover, the United Nations has declared July 7 as International Co-operative Day. The theme this year is “Co-operative Values and Principles for Corporate Social Responsibility.”

This theme was chosen to highlight how cooperatives balance or integrate economic, environmental, and social imperatives while at the same time addressing member needs and expectations, stakeholder expectations yet promoting corporate social responsibility.

As the ICA says, “Co-ops are self-help, not charity; empowerment, not aid.” That alone is a good reason either to do business with co-ops or to become a member and/or employee of one.

About the Author
D-L Nelson is a Swiss-American living in Europe. She is the author of two novels, Chickpea Lover: Not a Cookbook and The Card.
She is also editor and publisher of www.Cunewswire.com an electronic news service for Canadian credit unions.