Cooperatives

A cooperative (also co-operative and co-op) is an autonomous association voluntarily formed to meet its members' economic, social, and cultural needs through a jointly owned, democratically controlled enterprise. Cooperatives are created by a pooling or mixing of economic interests or labors. Members “throw in their lot”with others who do the same, with a view to realizing certain benefits impossible by action on their own—such as economies of scale or increases in productivity. A cooperative is distinguished from a capitalist enterprise by its goal, structure, and status: Its goal is the mutual benefit of members, with the result that if profit is sought, it is as a means only, not as an end. Equally, cooperatives are autonomous with regard to states, even though they are typically socially owned in undivided shares.

Because of their distinctive property form, neither private nor public, cooperatives are said to be part of a “third sector”or “social economy.”Under the latter category are grouped other democratic economic practices such as fair trade, social currencies, and credit unions. Advocates of cooperatives and the social economy differ with respect to viewing cooperatives as either complements to capitalism or replacements for it. At the World Social Forum held in Caracas in January 2006 under the slogan “Another world is possible,”over one third of all sessions were devoted to cooperatives and the social economy, mostly as replacements for capitalism.

As for producer cooperatives, most comparative studies show them to be more productive and profitable than similar capitalist firms, especially in networks. Thus, a cooperative sector, not just the odd co-op, might outcompete and replace traditional firms. Co-ops' comparative advantage may be due either to the stake each worker-owner has in the coop's success or to the freedom of co-ops from the burden of costly managers and absentee shareholders. In a cooperativized economy, instead of capital hiring and bringing workers together, workers first voluntarily join together and then hire capital for their ends.

Any business activity can be run on the cooperative model. Cooperatives may be generally classified [Page 394]either as consumer or producer co-ops, or by sector. They exist in the traditional economic sectors of agriculture, banking and credit, consumer, fisheries, housing, insurance, travel, and production (workers' cooperatives). Each of those eight sectors has its own global organization whose members are the corresponding national associations that represent their nation's individual co-ops of these types. Uniting the eight global organizations is the International Cooperative Alliance, headquartered in Geneva and a part of the International Labor Organization, which is, in turn, an agency of the United Nations. But cooper-ativism currently permeates many other activities, including car-pooling, child and elder care, health and social care, funerals, computer consultants, orchestras, schools, sports, tourism, utilities (electricity, water, gas, etc.), and transport (taxis, buses, etc.).

Cooperatives are major economic actors. Over 800 million people worldwide are members of a cooperative. Cooperatives provide 100 million jobs worldwide, 20% more than multinational enterprises. According to the International Cooperative Alliance, in Europe, the most cooperativized continent, there are 140 million members of cooperatives of all kinds. In France, typical of several other Western European nations, 10% of all employment is in cooperatives. In the United States, the National Co-operative Business Association reports that co-ops of all kinds serve some 120 million members, or 4 in 10 U.S. citizens. These co-ops include 10,000 credit unions, 1,000 rural electric co-ops, 1,000 mutual insurance companies, 6,400 housing co-ops, 3,400 farmer co-ops, 270 telephone co-ops, and about 300 worker co-ops. In Venezuela and Argentina, worker cooperatives are the most frequently encountered type;in Mexico, it is credit unions, and in Cuba and Brazil, it is agricultural co-ops.

...