Co-operatives show the way to success

Co-operatives show the way to success

Co-operatives all over the world provide employment to as many as 100 million people.

The year 2012 is being celebrated as the UN International Year of Co-operatives (IYC). This celebration of the world co-operative movement was actually long overdue as quietly, unassumingly co-operatives have been going from strength to strength in many countries. In Norway nearly 42 per cent of citizens are members of at least one co-operative. In Canada this number is 25 per cent.

In the world, as many as many 1 billion people are members of at least one co-operative. Co-operatives all over the world provide employment to as many as 100 million people.

This is 20 per cent more than the employment provided by all multinational companies.
While these facts and figures have been well-known for a long time, what has provided a new thrust to the cooperative movement is the people’s growing trust in cooperatives in times of accentuating economic crisis.

In Spain, for example, during the recent crisis co-operative enterprises have been found to be more capable of avoiding the possibilities of collapse. What is more, when one important co-operative collapsed, other co-operatives came forward to help so that all the workers and officials of the failed enterprise could be absorbed.

Earlier during the economic crisis in Argentina about 200 failed industrial factories were revived by newly formed co-operatives of workers and officials. Similarly 69 collapsing factories were revived in Brazil and 30 factories got a new lease of life in Uruguay due to the efforts of workers organised in co-operatives. A few such examples have also been reported from India. However one limitation of such revival efforts has been that by and large these have been confined to relatively smaller units.

Important strength

This resilience and mutual help of co-operatives has re-emphasised the importance of some important strengths of co-operatives. These often operate on the principle of ‘one member, one vote’ and hence are inherently a more democratic form of economic organisation. Secondly, co-operatives often have close ties to local communities and plough back at least a part of their economic gains into community welfare activities. For example several farmers’ co-operatives are known to contribute a part of their profits for the welfare of the villages from which they draw their members.

However, some limitations of the co-operative model also become apparent when the model is implemented in conditions of high inequalities.

In India in villages where socio-economic inequalities are high the upper sections dominate the co-operatives and often try to run it like their fiefs. So the interests of weaker sections are often sacrificed and co-operatives tend to perpetuate or even accentuate inequalities in such cases.

This has been pointed out in the context of the political powerfully sugar co-operatives in Maharashtra. Actually here the interests of weaker sections will be better served if the limited water supply of semi-arid areas is not concentrated on water-intensive sugarcane farming. Then they will be able to get some water for their subsistence farming of millets or other crops requiring less water.

But the politically powerful co-operatives dominated by the bigger farmers try to corner the scarce water supply for water-intensive sugarcane crop. Similarly although milk co-operatives in India have been praised for several achievements, at the same time some studies have revealed that marginal farmers and landless families could not get the expected benefits.

A related problem is that politically connected powerful persons who gain dominance over co-operatives also indulge in corrupt practices, apart from denying credit and other facilities to weakest sections. In Varanasi, a leading centre of handloom silk weaving, several weavers have got so fed up with the corruption in co-operatives and the dominance of vested interests in them that they've started saying that they’ll be better served if these co-operatives started for their welfare are scrapped and a new beginning is made.

Problems also arise when co-operative members have a narrow vision of only economic gain and don't look at wider issues of social relevance  and environment protection. In the case of some forest labour co-operatives for instance, the short-term economic results were good but the spread of the co-operatives led to local villagers acquiring a strong vested interest in felling trees! This ultimately proved to be counter-productive for the long-term welfare of these villages.

So while there is certainly a strong case for providing a bigger space to co-operatives in the economy, this has to be accompanied by some precautions so that past mistakes can be avoided. Many countries particularly those in Latin America are experimenting with a bigger role of co-operatives in their economies.

These experiences should be shared so that co-operatives can steadily occupy a bigger space in world economy while avoiding the problems which have damaged their potential in the past. Co-operatives provide a lot more scope for the flowering of human creativity. Above all, their success re-affirms the faith in mutual co-operation of human beings, and this by itself is an achievement.

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