Cooperatives: building blocks of democracy

Swiss retail giants Migros and Coop are both cooperatives RDB

The United Nations has declared 2012 the International Year of Cooperatives, recognising an alternative economic model combining productivity and social responsibility.

Cooperatives first appeared in the mid-19th century in Britain, spurred by tensions born of the industrial revolution. Today they comprise more than one billion members around the world and employ more than 100 million people.

In recent years, their turnover has exceeded €1,000 billion (SFr1,214 billion) in sectors as varied as industry, trade, agriculture, banking and insurance. Their activities range from cocoa fields in the developing world to football teams like FC Barcelona, snake hunters in India and parmesan cheese producers in Italy.

In Switzerland there are more than 9,600 cooperatives. Just to give one example, over half the population is a member either of the Coop or Migros, supermarket cooperatives which between them control more than 50 per cent of the retail market in the country. Then there is the Raiffeisen Bank – with its 1.7 million members – the Mobiliar insurance company and the Fenaco agricultural group..

Spotlight on cooperatives

So cooperatives mean business. But what kind of organisations are they exactly? Emmanuel Kamdem, an expert on cooperatives with the International Labour Organization (ILO) gives this definition: “When people unite to create wealth on a democratic basis, and when that wealth is redistributed in an equitable manner, we are talking about a cooperative.”

Cooperatives are therefore not just an economic phenomenon but a philosophy; a particular entrepreneurial model based on values like democracy, equality, solidarity and reciprocity.

“It is a model which brings market logic together with social inclusion, making solidarity the focus of concern. Certainly, generation of economic utility remains a necessity in order to guarantee the social and economic advancement of the membership, but the goal is not just maximisation of profits,” said Kamdem.

While lack of capital and division of power can be major obstacles to the development of these enterprises, their potential is far from fully exploited, Emmanuel Kamdem finds.

“The UN’s objective in 2012 is to promote the growth and development of a model which in recent years has been attracting more and more interest from economists and entrepreneurs,” he said.

In fact the campaign will also focus on the members of cooperatives themselves, who too often have forgotten the founding principles of these communities.

“When cooperatives get too big, they tend to forget the role of training and education that is part of their responsibility, and the members are not always aware of their rights and duties. This is a gap that needs to be filled,” noted Kamdem.

Small producers with clout

While the more economically profitable cooperatives are concentrated in industrialised countries like France, the United States, Germany, the Netherlands and Italy, in the last 50 years the model has experienced its greatest expansion in the developing world.

“The association of small producers is a basic instrument of democratisation and gives poorer populations more power to participate in shaping their future,” explained Hans-Peter Egler, of the Economic Cooperation and Development Division at the Swiss State Secretariat for Economic Affairs (Seco).

“Often enough, single individuals do not have the means to make themselves heard. For this reason, cooperatives have an important role in giving a voice to small producers, allowing them to protect themselves against the competition of the multinationals.”

For Egler, the most eloquent example is perhaps that of “fair trade”, where as much as 75 per cent of the production comes from cooperatives, and whose turnover in Switzerland reached SFr316 million ($331 million) in 2010.

“Products like coffee, cocoa and cotton are cultivated exclusively in small agricultural cooperatives where the peasants are able to pursue long-term training, to learn to safeguard their own interests, and to pass on their knowledge to other members of the community.

“And then, ironically enough, these products are resold in Switzerland by the largest cooperatives, Coop and Migros – and the circle is complete.”

Social capitalism

According to the ILO, cooperatives around the world provide 20 per cent more jobs than the multinationals, and in countries like Switzerland they are the principal employer in the private sector.

“Cooperatives have done better at weathering the financial crisis of 2008-2009 than other banking institutions,” emphasised ILO expert Emmanuel Kamdem.

“This is because their members are both customers and owners, and they thus have more control. Not to mention that they have equal voting rights, independently of the amount of capital they hold, and their room for manoeuvre is accordingly greater.”

Against the background of this recent crisis, which is subjecting the countries of the eurozone to a severe test, Emmanuel Kamdem regards as “inevitable” a return to the cooperative model – more democratic, centred on the real economy and above all, flexible enough to adapt to the needs of industrialised countries as well as developing ones.

Cooperatives

The United Nations has declared 2012 the International Year of Cooperatives (IYC) as a recognition of the fundamental role this sector plays in the promotion of socio-economic development of hundreds of millions of people throughout the world, especially during periods of economic crisis.

A cooperative is an association of persons who join together to reach a common economic, social or cultural goal and to satisfy their own aspirations through the creation of a collectively-owned, democratically-run business.

All members of a cooperative have an equal right to vote (one member, one vote).

Cooperatives are based on values of self-sufficiency, responsibility, democracy, equality, fairness and solidarity.

Around the world there are more than one billion members of cooperatives which give work to about 100 million people.

In recent years, their turnover has reached €1,000 billion, ensuring the livelihood of three billion people.

In Switzerland there are more than 9,600 cooperatives, of which about 500 have turnover exceeding SFr1 billion.

Among the best-known are the retail giants Coop and Migros, Raiffeisen bank, Reka (the Swiss Travel Fund), Swisslos lottery, the Mobiliar insurance company and the car-sharing cooperative Mobility.

Did you know?

Champagne is produced almost exclusively by cooperatives;

80% of Spain’s olive oil is produced by cooperatives;

75% of fair trade products are made by cooperatives of small producers;

About 90% of parmesan cheese in Italy is produced by people belonging to cooperatives.

Translated from Italian by Terence MacNamee