business consumerism corporate responsibility economics

What are the co-operatives anyway?

You may have noticed that in our run-down of ethical supermarkets and ethical banks, the Co-op came top in both. But what is a co-operative anyway?

The International Co-operative Alliance defines a co-op 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.” The co-operative movement began in the early 19th centry, inspired by a utopian named Robert Owen, who opened the first co-operative store to serve the workers at his cotton factory.

A group called the Rochdale Pioneers took this philosophy on board in 1844 in founding a food shop that was co-owned by its own customers. The movement grew over the next century, and by 1950 they were quite a force, with 90% of self-service groceries running on co-operative principles. It has declined since then, but some of the original companies live on, including the aforementioned bank and supermarkets, a holiday company, phone provider, and several others. Other, smaller co-operatives start up all the time, as local initiatives, village shops and the like.

With big businesses struggling, and the government failing to hold them accountable, it may be time for a co-operative comeback. Tom Hodgkinson, a man dedicated to “working out how to escape from capitalism and live like a king into the bargain” sings their praises  in his latest Ecologist column.

“Any company whose shares are publicly available and tradable commodities is always necessarily going to put the interests of it shareholders… before quality of product, staff welfare, customer service or pleasure and fun in the workplace.” Businesses run on the co-operative model are very different.

Co-operatives are inherently more ethical as a system of business, because the people who are most often exploited to increase profits for corporations are decision-makers in the co-op model.

For example, a credit card company may choose to improve its bottom line by overcharging customers, changing their rates unexpectedly, introducing annual fees, or hiring too few staff to man telephone helplines. A co-op can’t put the squeeze on its customers that way, because the customers own it.

Likewise a clothing company can exploit its workers by paying low wages, making them work long hours, and cutting sick pay or holiday. In a co-op, the workers are partners in the company and get a vote.

Co-operatives are businesses that you can participate in. They can be held accountable. They can make ethical decisions even when they might lower profits – something a corporation cannot countenance. If they were to do that, their shares would plummet as shareholders walked away. Shareholders are only looking for one thing – a profit on their investment. A company can commit horrific atrocities with impunity, as long as it delivers a dividend.

“We all need to disengage from any dealings with shareholder-owned companies and switch to co-ops” concludes Hodgkinson. And we don’t need to stop at supermarkets and banks either, he suggests: ” can we imagine petrol co-ops, car co-ops, train co-ops?”

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  1. I’d say that building societies are also co-ops (although not “the” Co-op). I like to point out that: (1) every one of the building societies that demutualised in the 80s and 90s has either been taken over by a conventional bank or been nationalised, and (2) while the current economic crisis is destroying banks and sucking up barely-conceivable amounts of public funds, building societies are having no such problems!

  2. Yes, and those that voted for the windfall payment in the wave of de-mutualizing demonstrate our current economic problem rather well – short term gain over long term profitability.

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