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Tuesday, November 4, 2014

Cooperatives : A Saviour Of The Economically Less Prosperous Sections Of The Society



A cooperative is an autonomous association of persons who voluntarily cooperate for their mutual social, economic, and cultural benefit.The very early forms of co-operatives dates back to the 15th century in alpine environments, where trade could only be maintained in organized cooperatives to achieve a useful condition of artificial roads such as Viamala in 1472.
In 1761, the Fenwick Weavers' Society was formed in Fenwick, East Ayrshire, Scotland to sell discounted oatmeal to local workers.Its services expanded to include assistance with savings and loans, emigration and education. In 1810, Welsh social reformer Robert Owen, from Newtown in mid-Wales, and his partners purchased New Lanark mill from Owen's father-in-law David Dale and proceeded to introduce better labour standards including discounted retail shops where profits were passed on to his employees. Owen left New Lanark to pursue other forms of cooperative organization and develop co-op ideas through writing and lecture. Cooperative communities were set up in Glasgow, Indiana and Hampshire, although ultimately unsuccessful. In 1828, William King set up a newspaper, The Cooperator, to promote Owen's thinking, having already set up a co-operative store in Brighton.
The Rochdale Society of Equitable Pioneers, founded in 1844, is usually considered the first successful cooperative enterprise, used as a model for modern co-ops, following the 'Rochdale Principles'. A group of 28 weavers and other artisans in Rochdale, England set up the society to open their own store selling food items they could not otherwise afford. Within ten years there were over 1,000 cooperative societies in the United Kingdom.

Robert Owen's Statue in Manchester,in front of the Co-operative Bank

The cooperative movement has been fueled globally by ideas of economic democracy. Economic democracy is a socioeconomic philosophy that suggests an expansion of decision-making power from a small minority of corporate shareholders to a larger majority of public stakeholders. There are many different approaches to thinking about and building economic democracy. Both Marxism and anarchism, for example, have been influenced by utopian socialism, which was based on voluntary cooperation, without recognition of class conflict. Anarchists are committed to libertarian socialism and have focused on local organization, including locally managed cooperatives, linked through confederations of unions, cooperatives and communities. Marxists, who as socialists have likewise held and worked for the goal of democratizing productive and reproductive relationships, often placed a greater strategic emphasis on confronting the larger scales of human organization. As they viewed the capitalist class to be politically, militarily and culturally mobilized for the purpose of maintaining an exploitable working class, they fought in the early 20th century to appropriate from the capitalist class the society's collective political capacity in the form of the state, either through democratic socialism, or through what came to be known as Leninism.

In the same year when Robert Owen took the initiative of creating cooperatives,the very famous slogan  -  "Eight hours labour, Eight hours recreation, Eight hours rest" was coined.


Capital and the Debt Trap reports that "Cooperatives tend to have a longer life than other types of enterprise, and thus a higher level of entrepreneurial sustainability. In one study, the rate of survival of cooperatives after three years was 75 percent, whereas it was only 48 percent for all enterprises ... and after ten years, 44 percent of cooperatives were still in operation, whereas the ratio was only 20 percent for all enterprises" (p. 109). "Cooperative banks build up counter-cyclical buffers that function well in case of a crisis," and are less likely to lead members and clients towards a debt trap (p. 216). This is explained by their more democratic governance that reduces perverse incentives and subsequent contributions to economic bubbles.
(Intrinsic values are considered to be a part of the positive feedback mechanism rather than the negative feedback mechanism,though these values are hard to observe in real-life market.)



We will now discuss a few types of cooperatives briefly.






  • Non-monetary cooperative - A non-monetary cooperative provides a service based on entirely voluntary labour in the maintenance and provision of a particular service or good, working in the identical manner of a library. These co-ops are locally owned and operated and provides the free rental of equipments of all kinds (bicycles, sports, gear). This idea has been said to reduce general human consumption of goods and is a key subject in sustainable development.
  • Retailers' cooperative - A retailers' cooperative (known as a secondary or marketing cooperative in some countries) is an organization which employs economies of scale on behalf of its members to receive discounts from manufacturers and to pool marketing. It is common for locally owned grocery stores, hardware stores and pharmacies. In this case the members of the cooperative are businesses rather than individuals.
  • Worker cooperative - A worker cooperative or producer cooperative is a cooperative, that is owned and democratically controlled by its "worker-owners". There are no outside owners in a "pure" workers' cooperative, only the workers own shares of the business, though hybrid forms exist in which consumers, community members or capitalist investors also own some shares. In practice, control by worker-owners may be exercised through individual, collective or majority ownership by the workforce, or the retention of individual, collective or majority voting rights (exercised on a one-member one-vote basis). A worker cooperative, therefore, has the characteristic that the majority of its workforce owns shares, and the majority of shares are owned by the workforce. Membership is not always compulsory for employees, but generally only employees can become members either directly (as shareholders) or indirectly through membership of a trust that owns the company.
  • Volunteer cooperative - A volunteer cooperative is a cooperative that is run by and for a network of volunteers, for the benefit of a defined membership or the general public, to achieve some goal. Depending on the structure, it may be a collective or mutual organization, which is operated according to the principles of cooperative governance. The most basic form of volunteer-run cooperative is a voluntary association. A lodge or social club may be organized on this basis. A volunteer-run co-op is distinguished from a worker cooperative in that the latter is by definition employee-owned, whereas the volunteer cooperative is typically a non-stock corporation, volunteer-run consumer co-op or service organization, in which workers and beneficiaries jointly participate in management decisions and receive discounts on the basis of sweat equity.
  • Social cooperative - A particularly successful form of multi-stakeholder cooperative is the Italian "social cooperative", of which some 7,000 exist. "Type A" social cooperatives bring together providers and beneficiaries of a social service as members. "Type B" social cooperatives bring together permanent workers and previously unemployed people who wish to integrate into the labor market. 
  • Consumers' cooperative - A consumers' cooperative is a business owned by its customers. Employees can also generally become members. Members vote on major decisions and elect the board of directors from among their own number. The first of these was set up in 1844 in the North-West of England by 28 weavers who wanted to sell food at a lower price than the local shops.
  • Business and employment cooperative - Business and employment cooperatives (BEC's) are a subset of worker cooperatives that represent a new approach to providing support to the creation of new businesses.Like other business creation support schemes, BEC's enable budding entrepreneurs to experiment with their business idea while benefiting from a secure income. The innovation BECs introduce is that once the business is established the entrepreneur is not forced to leave and set up independently, but can stay and become a full member of the cooperative. The micro-enterprises then combine to form one multi-activity enterprise whose members provide a mutually supportive environment for each other.

Both logically and ideologically (of course a true ideology is logical),cooperatives can be the solution to eradicate the problems regarding credit such as debt traps.Collectivism cannot be intellectually denied or defended and is probably one of the most convenient methods to strengthen the economy and its bond between the economically less prosperous sections of the society.The balance within absolutism and liberalism is required.If the system is too liberal to let open economy prevail fully,it will be more troublesome and difficult for the primary sector to thrive and will cause serious issues in the economy from the very basic levels,which is highly undesirable for the national economy to prosper.There should be a balance within the two and ardent efforts to give a definition in reality to utopian socialism.From a more political perspective,we can have aims to have a balance in absolutism too,for there is no guarantee that the absolutist form will continue with their promised ideology unless there is a balance created with the power they have in their hands.What has happened to India today is a living shame for the politicians like Manmohan Singh and Sonia Gandhi who have let in open economy at the first place,without any plans for entrances of the intrinsic value or without thinking about what would happen in future to this country.Its really shameful that we had such a person as a Prime Minister in our country,who was nothing but a slave operated by the exploitative World Bank.Not that Narendra Modi is promising in any way,either.Gandhian socialism does not even exist and it is never possible in any real form.What Mr.Modi has got to do is infuse greater doses of foreign exchanges in the economy and literally sell this country.From an economic perspective (even excluding the political viewpoint),this is very unacceptable.In 1947,$ 1 =  1. Currently,in 2014, $ 1 = 61.35 
At such times,when inflation and fiscal deficit are so evident and there are chances of an economic collapse in the near future,cooperatives are a truly helpful solution for the workers and other less prosperous sections of the society.

Data Credit : Wikipedia
Disclaimer - The Photographs used do not belong to me.





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