Co-operatives co-operate for a better economy

Co-operatives take the ‘one member, one vote’ rather than ‘one dollar, one vote’ principle around the world from Argentina to Uganda . . .

The word that crops up most often in the speeches of government ministers about development policy is ‘business’. It is worth asking, perhaps, what kind of business they mean.

Doing business with foreign multinationals was once described to me as feeling like being a minnow in the sea when the sharks are around. What the sharks say is: "It is a free market, so let’s trade. You take a bite out of me and I will take one out of you." This may be business, but it is not about equality of power.

Business can only ever be one part of the equation for human development. But there are forms of business that offer a more hopeful alternative model.

Co-operatives are self-help enterprises owned by their members. They are run on democratic lines with the principle of ‘one member, one vote’ rather than ‘one dollar, one vote’. What is interesting is their sheer reach and growing success. Three billion people, according to the United Nations, help to secure their livelihood through co-operatives.

When Argentina ran into default on its debts in 2001, unemployment rocketed to one in four of the population. As companies collapsed in the economic downturn, workers responded by occupying factories and continuing to trade in the new form of worker co-operatives. What the workers were doing was illegal, but it made good sense in a country with the majority of people in poverty and with few other options to them.

Around 170 businesses, some with over 200 employees, were rescued in this way by their workers. Of these, 93 per cent of these are still operating.

In Bangladesh dairy co-operatives have helped small farmers to get a better deal.

Milk is a good bet for small farmers. It is a daily product. It has a ready market and families can use some of what they produce. But milk is perishable and it is difficult to transport, so private dealers with milk dairies and distribution chains operated a monopoly that could charge what they liked. By forming as a co-operative enterprise, farmers, predominantly women, broke out of the poverty trap. Their earnings have increased tenfold.

In Santa Cruz, Bolivia, 96,000 people are owners of the water co-operative that, with other co-ops, provides over 90 per cent of the city’s water. Charges are low, well within the affordability limit of 5 per cent of income for unskilled workers. It has recently been named as one of the best-run water companies in Latin America, with a low level of water leakage, a high level of staff productivity and universal metering.

From shoe-shiners in Uganda, sex workers in India through to farmers across Latin America, co-operatives offer a model of business in which people can be stronger by coming together. Not surprisingly, three quarters of all fair trade is sourced from co-operatives. In fact it was a co-operative in Oaxaca, Mexico, (the Union de Comunidades Indígenas de la Región del Istmo) that launched the first ever certified fairtrade product, sold to consumers in the Netherlands under the label of Max Havelaar.

In Africa one in 13 people is a member of a co-operative and there are six times as many co-operative owners as there are shareholders. In the fast-growing BRIC countries (Brazil, Russia, India and China) there are four times as many co-operative members as direct shareholders. Fifteen per cent of their population are co-operative members, compared to only 3.8 per cent who are shareholders.

Worldwide, there are now three times as many member owners of co-operatives as there are individual shareholders. In recognition, and linking to global development goals, the United Nations has declared 2012 as the International Year of Co-operatives.

Self help, though, starts at home. Here in the UK, you can be a part of the emerging co-operative economy. You can switch your telephone and internet to the Phone Co-op. You can move your money from the banks that caused the credit crunch to the Co-operative Bank, Nationwide or to local credit unions. You can move your investments to Shared Interest, which is itself a co-operative and invests in co-operatives overseas. Or even join the people around the country who are starting their own food co-ops to source ethical food at affordable prices.

We want business and markets. We just want them run on the basis of human need rather than for the interests of the powerful.

• This article was originally published in Action, the magazine of the World Development Movement (WDM). Ed Mayo will be speaking on co-operatives and global justice at WDM’s London conference on 23 June.

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