Co-operatives have higher resilience in economic crises, explained the authors of a book on the global economic crisis and co-operatives at the academic Mainstreaming Co-operation conference in Manchester today.
Bruno Roelants and Claudia Sanchez Bajo, explored the problems and traps of the global economy that led to the economic meltdown in 2009, in their book: Capital and the Debt Trap: learning from co-operatives in the global crisis.
Mr Roelants explained that this was the first global economic crisis of its kind, through research they discovered there were three traps that the economy fell into: the consumption trap, the liquidation trap and the debt trap.
He said there were increasing debt practises, control had began to take precedence over ownership and that stakeholders were increasingly beginning to lose control.
Ms Sanchez Bajo said: “This shift in terms of control and ownership. Debt is used more than equity — you don’t need to own them, you need to control them. Control is the key question in establishing different responsibilities.”
They studied the work of co-operatives and found that they were not only resilient during this global crisis, but in many other forms of crisis as well.
Co-operatives are less likely to fail, because they have increased ownership and are able to plan and distribute their wealth over the long term.
“We have to keep in mind — growth is not the same as wealth, control is not the same as ownership, capital does not seem today to value any type of capital,” she added. “If we are all in and we all have a stake and we comply with it — there is a higher probability that we will not fall into a trap.”
Paul Hazen, Executive Director of U.S. Overseas Cooperative Development Council, spoke about the work co-operatives can do in food security. When talking about the recent crisis, he said: “Markets fail all the time. We have now a global market failure. Unbridled speculation and greed — this is a perfect teachable moment of the fundamental value of co-operatives.”
The speech was part of the Mainstreaming Co-operation: An Alternative for the 21st Century conference in Manchester run by the Co-operative College.