In 1844, a group of cotton weavers in the town of Rochdale, England were faced with a trifecta of suffering – their working conditions were so poor, they were not earning enough, and they couldn’t afford food to feed their families. Perhaps forced by how desperate their situation was, they realized that if they pool their meager resources and work together, they could access basic necessities at a much lower price. And so, they did just that.
According to the International Co-operative Alliance (ICA), this realization of the Rochdale pioneers gave birth to the cooperative concept as we know of today. The initial group of cotton weavers decided to open a small store that was initially stocked with only four of the barest necessities– oatmeal, sugar, butter and flour. They opened up the initiative to their community. Their customers became members of their group. Each member had a stake in the business. Each member helped build and strengthen it. In turn, everyone benefitted from the profits.
A cooperative is defined as
an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise.”
This definition makes clear that the purpose of a cooperative is not in making money, as opposed to the usual capitalist-type of businesses. The entire point of the cooperative is to provide benefit to and realize their members’ aspirations. The cooperative was born out of a sense of community and providing a helping hand to each other. Earning and making profits from this sense of cooperation are simply secondary.
And these are what make cooperatives relevant in this day and age. Nearly 200 years after its inception by the Rochdale pioneers, we are at an age where we need to go back to the roots of the cooperative movement and harness it.
You may ask, why?
Here are five important reasons:
1. Cooperatives provide massive opportunities for stable employment.
In a world of economic uncertainty, cooperatives stand as beacons of hope. Statistics from the U.S. Overseas Development Council indicate that there are 800 million people the world over who are members of cooperatives. In addition, figures from the ICA show that there are 250 million who are employed by it. What is vital to point out here is that cooperatives do not only provide employment but their very nature makes them resilient to economic instability. This ensures that cooperatives remain as highly stable job providers.
The ICA notes that “considering the worsening situation of employment in the world, especially for the youth, governments can ill-afford to look aside when the cooperative movement can offer a significant part of the solution.”
2. Cooperatives are global economic forces.
Former United Nations Secretary General Kofi Annan once said, “Founded on the principles of private initiative, entrepreneurship and self-employment, underpinned by the values of democracy, equality and solidarity, the cooperative movement can help pave the way to a more just and inclusive economic order.”
And how can cooperatives achieve this? Again referring to the report of the U.S. Overseas Development Council, cooperatives have the power to greatly reduce transaction costs; increase efficiencies along the value chains; improve the quality and value added of products; increase access to capital due to its financial arrangements and resources; and provide substantial bargaining power due to collective action.
All these mean that the impact of cooperatives on the economy is very strong. It has been reported that in the U.S., 80 percent of dairy production are controlled by cooperatives; in Canada, 70 percent of financial transactions are through Quebec’s Desjardin credit cooperatives; and in the Spain’s Basque region, Mondragon worker cooperatives undertake industrial production. These are just three examples of how cooperatives work. Cooperatives exist in almost every country around the world, in different communities. In fact, 300 of the largest cooperatives have earned a combined turnover of USD 2.5 trillion in 2016 as reported by the World Cooperative Monitor.
3. Cooperatives underscore sustainability.
The very nature of cooperatives, being owned and run by members and being invested in their communities, ensure sustainability. This is echoed by environmentalist Philippe Cousteau who said in the International Cooperative Alliance’s General Assembly in Cancun, Mexico in 2011: “Investing in communities, investing in people, there is nothing more sustainable than that.”
Cooperatives around the world are rooted in the triple bottom lines of sustainability: people, planet and profit. This means that they take care of the well-being of people and workers and thus ensure proper wages and living conditions. They are conscious of their impact to their communities and the environment. And these first two concepts of people and environment are more important than profits. In a survey done by the International Labour Organization, it was also found that cooperatives contributed significantly to the following MDGs: developing a global partnership for development; ensuring environmental sustainability; and promoting gender equality and empowering women.
4. Cooperatives ensure food security.
The role of agricultural cooperatives is perhaps one of the most significant. Rodrigo Gouveia of the ICA in an interview noted that perhaps the most important strength of cooperatives is providing scale to small and marginalized farmers through market access, information, technology and finance. This type of support provided by cooperatives redounds to a stronger food system and in turn, food security.
5. Cooperatives “give people a voice”.
Cooperatives, by their very nature, is a model for participation and inclusion of all stakeholders. It gives people a voice in policy-making and decision-making, with equal voting rights. It can even be argued that cooperatives are democratic models. At the same time, the ICA also notes that on a certain level, cooperatives breed empowerment as it builds “the intellectual and professional capacities of their workers/members, and of the communities where they operate.”
This particular article barely scratches the surface of what makes cooperatives important at this time of both political and economic uncertainty. However it does give some food for thought.
Would you consider setting up a cooperative? Have you ever been involved with one? We’d love to hear your stories, so leave a comment below and help educate others on this sustainable business model!