Capitalism in Crisis

The Financial Times is currently running a series entitled “Capitalism in Crisis”. In a nod to the fact that the crisis facing the world economy is not simply one of poor quantitative indicators, they note that “[p]ublic confidence in shareholder capitalism can only be restored if owners recognise their responsibility.” They acknowledge that the crisis is testing public tolerance of inequality.

These are not unanticipated challenges, nor are they new. Owner responsibility and equality are principles built into the co-operative model. They arose, not from the “invisible hand” that capitalism has held up as its mystical justification for avoiding accountability. Rather, these principles were deliberately incorporated into the co-operative enterprise model by thoughtful individuals who believed that an economic model ought not to be divorced from a social model.

While it is tempting to label these early co-operators prescient, that would be too lax on those who have profited from the current dominant economic model, with calloused rationalisation for the “collateral damage” of those left in its wake. The early co-operators were responding to conditions around them, which destroyed the livelihoods and lives of so many. These conditions were not isolated to Rochdale and Fenwick, but were marching across Europe and the world. And so the early co-operators thought through how a responsible system would function, and they tested and refined it.

Capitalism is, indeed, in crisis, but the world need not be. Ed Mayo, Secretary General of Co-operative UK, has published a report on Global Business Ownership 2012, noting that there are today three times as many member owners of co-operatives as individual shareholders. Even after factoring in the indirect owners of share companies, i.e. those benefiting from pension fund investments, the co-operative ownership figures are higher.

Co-operatives are not only an effective way for people in a community to successfully meet their common needs; we know from the ICA Global 300 Report that the co-operative model is scalable. The 300 largest co-operatives in the world have an aggregated turnover of USD 1.6 trillion. They are large, successful, values-based enterprises.

The co-operative model stands ready as a solution to capitalism’s crisis. The UN International Year of Co-operatives is a platform to share that important message to those still fully hitched to the capitalist model, blinders intact.