Co-operatives are the alternative business model. Yet, as businesses, we play the same game as profit-driven/shareholder-owned companies, which can have negative effects.
In terms of legislation we want an equal footing, but when it comes to the effect that private companies have on financial markets is it fair for co-ops to be impacted by this?
Co-ops largely survived the fallout from the 2008 financial markets crash, but it wasn’t without pain.
Another game that co-ops have to play is the variations of the foreign exchange market. We live outside the bubble of profiteering from global financial markets – we are only players when we take on debt-for-capital (which is another conversation).
Brexit has seen a falling pound leading to more expensive imports, but cheaper exports. One of the parts of the co-operative sector to be affected by this is one of the most important and vulnerable, smallholder farmers around the world who benefit from Fairtrade sales.
The UK is the largest consumer of Fairtrade products by far. Last year, sales reached £1.6bn – and when looking at the top six Fairtrade countries, this amounts to over 50% of the total taken.
Globally farmers received an additional €138m as part of their Fairtrade premium. The majority of Fairtrade sales are dealt with in dollars, and with the pound falling against the currency by 18% it is going to be more expensive to import.
It’s likely that prices will rise across supermarkets, ultimately leading to a squeeze on Fairtrade producers. But the UK’s Fairtrade Foundation recognises that while Brexit brings short-term risks, it can also present opportunities when sealing trade deals with other countries.
However, events such as Brexit do not have to affect co-operatives.
For centuries, people and businesses have been creating their own currencies (free from external influence). To combat fraud, 18th century businesses minted their own coins in local areas. Today, local currencies allow money to kept in small trading areas.
Different forms of bartering exists too. In the gift economy, Ithaca allows people to earn one hour notes and spend that time on services. This concept was even trialled by co-operative socialist Robert Owen who paid people in hours at his factory.
Today’s modern equivalent are digital cryptocurrencies, such as Bitcoin and Ethereum, which are based on blockchain technology. Within 24 hours of the Brexit announcement, Bitcoin’s value surged by 20%; giving great confidence to a market that is normally directed by the value of gold.
Unsurprisingly, there is a co-operative alternative out there. Faircoin has created a currency based on co-operation, not competition. It aims to distribute the virtual coins to social projects worldwide.
Using this same technology, co-operatives can create its own international trading market – a way to be free from the grip of a profit-driven world. We have also explored how some co-operatives are leading the way with this type of technology.
A future co-operative exchange can allow co-operatives to trade together outside of the restrictions of the foreign markets. By trading in a fair and equitable global currency too, co-operatives can seek alternative forms of capital for growth, too.