Five Good Reasons for Co-operatives

A Communication from the International Co-operative Alliance

(see also Statement of Cooperative Identity)

Contents

Co-operatives are Community Enterprises

Co-operatives keep economic benefit within a community. Profit is not siphoned off by outside interests, because the co-operative’s members are its owners, and the co-operative exists to fill a need in a community that is not being met by other businesses. Different types of co-operatives do this in differing ways. For instance:

Co-operatives Promote Democracy

Co-operative members own their business. They provide share capital, elect a board of directors, and receive the benefits of ownership through better services and patronage refunds based on use.

Co-operatives bring people outside the mainstream into a nation’s economic and political life.

Co-operatives teach people how to resolve problems democratically. Many individuals who received their education in democracy from co-operatives have gone on to become political leaders in their nations.

In emerging democracies, co-operatives help throw off the shackles of a non-market economy. Their members develop the skills of entrepreneurship and learn market values.

Co-operatives Build Open Markets

As more and more governments divest state-owned enterprises, there is a danger that these monopolies may be moved in tact into private hands. Co-operatives help avoid this pitfall by ensuring wide participation by the users of the former state service. Co-operatives spread economic power and encourage competition. They provide market leverage to small producers victimised by powerful cartels or sole-source companies. They undercut middlemen and moneylenders, whose charges are often exorbitant. By ploughing profits back into the business, co-operatives can operate on narrower margins. Thus they help drive down unfair prices, and set a competitive range of goods and services.

Co-operatives Raise Human Dignity

Co-operatives help people escape poverty and achieve dreams, such as owning a home or giving their children an education. Since educated decision-making is essential to a co-operative’s success, co-operatives also tech new skills, from adult literacy to business operations. Co-operatives empower individuals by giving them the chance to participate in decisions, which have an impact on them. Armed with the ability to effect change, members find solutions to social and economic needs. Co-operatives provide an organised way for low-income people to relate to sometimes distant governments and economic power structures.

Co-operatives are Systems for Development

Co-operatives draw community businesses into regional and national networks. Local co-operatives benefit from larger business volume, operating efficiencies and professional management. The economic pyramid enables farmers to purchase supplies at volume discounts, and receive profits from value added processing and consumer sales. Credit unions pool their resources, and are able to transfer surplus savings to credit unions in low-income areas. Electric co-operatives join together to buy power at a lower cost. They become an engine for development, spurring the growth of enterprises not possible without reliable energy. Co-operative insurance companies are tied into a worldwide reinsurance network to protect against catastrophic losses. They pool groups of individuals not served by commercial companies to guard against personal and business risks.

Make co-operation and the co-operative economy
work for you and your community

Further Information

This article was published in Co-op Horizons Magazine, Issue No 5, September 1995

To find out more about the Co-operative and Social Economy movement go to the Caledonia Links page where you will find links to all the apex organisations websites.