The cooperative movement began in earnest in Britain in the 19th century in response to the industrial revolution and the economic transformations that were threatening the livelihoods of many workers.
There were earlier efforts by workers to form cooperatives, of course. The Shore Porters Society, for example, claims to be one of the world’s first cooperatives, being established in Aberdeen, Scotland, in 1498. It was a removal, haulage and storage company, originating as a group of porters working in Aberdeen Harbor.
The Fenwick Weavers’ Society was a professional association created in the Scottish village of Fenwick, East Ayrshire in 1761. The original purpose of the society was to foster high standards in the weaving craft, but activities later expanded to include collective purchasing of bulk food items and books. In 1769 members formed a consumer cooperative and manhandled a sack of oatmeal into John Walker’s whitewashed front room and began selling the contents at a discount.
In the decades that followed more Scottish cooperatives formed, including Lennoxtown Friendly Victualling Society, founded in 1812. The focus of the Lennoxtown group was operation of the busy Lennox Mill, where tenants of the Woodhead estate brought their corn to be ground. Another significant event of the group was the establishment of the calico printing works at Lennoxmill on a site adjacent to the corn mill. The printing of calico and other cotton cloth was soon established as a major industry in the area.
Cooperative banks, or credit unions, were invented in Germany in the mid-19th century. In Britain the friendly society, building society, and mutual savings bank were earlier forms of similar institutions. In Russia the traditional village co-operative (obshchina or mir), operated from pre-serfdom times until the 20th century.
By 1830 several hundred co-operatives had been formed. Some were initially successful, but most had failed by 1840. It was not until 1844 when a cooperative society established the “Rochdale Principles”, on which they ran their co-op, that the basis for development and growth of the modern cooperative movement was established.
In 1844 a group of 28 artisans working in the cotton mills in the town of Rochdale, in the north of England, established the first modern cooperative business, the Rochdale Equitable Pioneers Society. Primarily weavers, they faced miserable working conditions and low wages and could not afford the high prices of food and household goods. They decided that by pooling their scarce resources and working together they could access basic goods at a lower price. Initially, there were only four items for sale: flour, oatmeal, sugar, and butter.
The Pioneers decided it was time shoppers were treated with honesty, openness, and respect, that they should be able to share in the profits that their custom contributed to and that they should have a democratic right to have a say in the business. Every customer of the shop became a member and so had a true stake in the business. With lessons from prior failed attempts at co-operation in mind, they designed the Rochdale Principles, and over a period of four months they struggled to pool one pound sterling per person for a total of 28 pounds of capital. On December 21, 1844, they opened their store for only two nights a week. Within three months they expanded their selection to include tea and tobacco and the business had grown so much that it was open five days a week. They were soon known for providing high quality, unadulterated goods.
The original Rochdale Principles defining cooperative organizations were:
1. Democratic control (one member, one vote)
2. Open membership
3. Limited interest on capital
4. Distribution of surplus in proportion to a member’s contribution to the society
5. Cash trading only (no use of credit)
6. Providing for the education of members in cooperative principles
7. Political and religious neutrality
These have evolved somewhat over time and the International Co-operative Alliance (ICA), the official governing body of cooperatives, now considers the first four of the Rochdale principles central to the governance of member organizations with the last three deemed important but not vital. The fact of the matter is that many cooperatives have very clear political or religious agendas. Most also use credit as a means of sale. The latter is critical in contemporary market economies and is often the preferred means of payment. Also, a plethora of cooperatives invest little in the domain of education.
Many consider Robert Owen (1771–1858) the father of the cooperative movement. A Welshman who made his fortune in the cotton trade, Owen believed in putting his workers in a good environment with access to education for themselves and their children. These ideas were put into effect successfully in the cotton mills of New Lanark, Scotland when a co-operative store was opened. Spurred on by the success of this, Owen had the idea of forming “villages of co-operation” where workers would drag themselves out of poverty by growing their own food, making their own clothes and ultimately becoming self-governing. He tried to form such communities in Orbiston in Scotland and in New Harmony, Indiana in the United States of America, but both communities ultimately failed.
Alice Acland, the editor of the “Women›s Corner” in the publication Co-operative News, and Mary Lawrenson, a teacher, recognized the need for a separate women’s organization within the Cooperative Movement and began organizing a “Woman’s League for the Spread of Co-operation” in 1883. This League formally met for the first time during the 1883 Co-operative Congress in Edinburgh as a group of 50 women who established Acland as their organizing secretary. By 1884 it had six different branches with 195 members, and the League was renamed the Women’s Cooperative Guild.
Co-operatives in the U.S. have a long history, including an early factory in the 1790s. By the 1860s Brigham Young had started applying co-operative ideas in Utah and by the 1880s the Knights of Labor and the Grange both promoted member-owned organizations. Energy co-operatives were founded in the U.S. during the Depression and the New Deal. Diverse kinds of co-operatives were founded and have continued to perform successfully in different areas: in agriculture, wholesale purchasing, telephones, and in consumer-food buying.
Current Co-op Activities
Co-operative enterprises are now widespread, with one of the largest and most successful examples being the industrial Mondragón Cooperative Corporation in the Basque country of Spain. Mondragon Co-op was founded under the oppressive conditions of Fascist Franco Spain after community-based democracy-building activities of a priest, Jose Maria Arizmendiarrieta. They have become an extremely diverse network of co-operative enterprises and have a multinational concern. Co-operatives were also successful in Yugoslavia under Tito where workers’ councils gained a significant role in management. In many European countries cooperative institutions have a predominant market share in the retail banking and insurance businesses.
In the UK co-operatives formed the Co-operative Party in the early 20th century to represent members of co-ops in Parliament. The Co-operative Party now has a permanent electoral pact with the Labor Party, and some Labor MPs are Co-operative Party members. UK co-operatives retain a significant market share in food retail, insurance, banking, funeral services, and the travel industry in many parts of the country. Co-operative banks have become very successful throughout Europe, and were able to respond more effectively than most corporate banks during the 2008 mortgage-securities crisis.
Renewable Energy co-operatives in Europe became important in the early development of wind power in Denmark beginning in the 1970s. Germany followed in the early 1990s, first on a larger scale with wind co-ops, then with a citizen’s movement which challenged the reliance on nuclear power, successfully creating a successful co-op enterprise by 1999. A citizen’s group began operating wind turbines and involving broad community ownership in the U.K. by 1995. Deregulation of the electricity markets allowed energy co-operative social entrepreneurs to begin to create alternatives to the monopolies in various countries. In France, where an enormous percentage of the power is generated by nuclear sources, this occurred after 2000. In Spain, wind power was developed by corporate-led efforts, and it took longer for a renewable energy-focused social enterprise to get established.
Similar renewable energy co-ops around Europe have organized in a network.
Asian societies have adapted the co-operative model, including some of the most successful in the world such as the Citizens Coalition for Economic Justice in South Korea, the Seikatsu Club Consumer Co-operative in Japan, and the Self-Employed Women’s Association in India. Other noteworthy efforts include agricultural co-ops in Thailand and a sugar workers co-operative in the Philippines.
Electrical co-operatives became an important economic strategy for U.S. rural areas beginning in the 1930s and continue to operate successfully through events such as Hurricane Sandy in 2012. Agricultural co-operatives in the U.S. have had some mainstream success, including Welch’s, Ocean Spray, and Land O›Lakes. In the United States a co-operative association was founded by 1920. Currently there are over 29,000 co-operatives employing 2 million people with over $652 billion in annual revenue.
In the late 1960s and 1970s, the “new wave” of consumer co-ops began. Born out of the ideas and philosophies of the 1960s counterculture, these stores were opened by young and idealistic members. They set up co-ops to fit their beliefs in equality, not to follow their co-op predecessors. Most of the new co-ops sold only whole, unrefined, and bulk foods. Their operating practices were diverse and experimental. Some stores had limited store hours, others were open seven days a week. Some were run by volunteers, others by fully paid staff. Some had various forms of worker self-management, others had more traditional management structures. Some paid year-end patronage refunds, others gave members a discount at the cash register.
These co-ops were pioneers in what came to be known as the natural foods industry. But not all were successful. Some failed because of their experimental structures and operating systems. Most were unable to escape the same problems that had troubled older, earlier co-ops—insufficient capital, inadequate membership support, an inability to improve operations as the natural foods industry developed, a stronger commitment to idealism than to economic success, the lack of adequate support from their wholesalers, and resistance to consolidation. But the “new wave” co-ops that survived are strong and well established. The consumer co-op movement in the United States has had mixed success—especially in contrast to consumer co-ops in Europe and Asia. But each wave of cooperative growth produces renewed enthusiasm for a time-tested idea and innovations that prove successful in the consumer marketplace.
Types of Co-ops
Such a cooperative is owned and controlled by the workers through the standard one member, one vote platform. Many such cooperatives are run, on a day-to-day basis, by managers and a board of directors. But worker-owners have the ultimate say as to how the firm is managed over the long term and they are characterized by a much less hierarchical system of management than the standard narrowly owned firm. Workers’ cooperatives are configured to meet the interest of workers first, as opposed to maximizing profits or share values in the short run. Maintaining and growing employment is often a binding constraint of a workers’ cooperative. Profits or surplus can be disbursed across members, based on memberships or hours worked, or invested to grow the firm or to make it more competitive. Like traditional firms, workers’ cooperatives must be concerned with their production costs if they are to survive and flourish in the marketplace. Workers’ cooperatives are found largely in the processing and service sectors, although manufacturing is not unimportant.
This is the most important type of cooperative in terms of membership. Consumer cooperatives are sometimes referred to as retail cooperatives. Such cooperatives are quite important in the retailing of food and clothing. Members own the cooperatives and control them through the one member, one vote principle. However, day–day management can and often does take place as it would in traditional firms, and management can be quite hierarchical in structure, especially when the cooperative is large. In addition, management–labor relations are often similar to those in the traditional firm.
In theory, a key distinguishing feature of consumer cooperatives is that they should be configured to best meet the preferences of their member-owners in terms of product type, quality, and price. Moreover, the objective of the cooperative is not to maximize the difference between unit cost and price, but rather to charge the lowest price possible, given quality and the investment requirements of the cooperative. But consumer cooperatives typically charge the market price for their product. Any surplus accrued is supposed to be directed toward investment purposes, disbursed amongst members, or invested in socially beneficial projects as decided upon by members (typically by management). It is important to reiterate that a key difference between a traditional retailer and the cooperative is the overriding importance of the member-owner and the fact that in a cooperative ownership is weighted on the basis of the individual. Thus, no one individual can have a greater ownership or membership share than another.
Additionally, consumer cooperatives, especially the smaller ones, have been established in localities and product lines where private retailers have deemed it too risky and unprofitable. When consumer cooperatives have better information on preferences and markets, given asymmetric information, they can survive and even prosper in domains where the traditional retailer cannot.
A credit union is a type of consumer cooperative that specializes in the money market and it is, along with the food and clothing retail cooperative, among the largest in terms of membership. A credit union is owned and controlled on the basis of one person, one vote, and is typically locally owned. But the credit union is managed on a day-to-day basis by an elected board and professional managers. In additional, management–labor relations can and often do map that of the traditional financial institution. Credit unions initially developed to provide financial resources to individuals and firms that found it difficult to secure these in the traditional financial sector. Credit unions have evolved into financial institutions that cater to the needs of individuals across all income levels and firms of different sizes. This allows credit unions to spread the risk of their financial portfolios.
In addition, contemporary local credit unions are often part of regional and national credit union networks, allowing them and their members to take advantage of economies of scale and scope as can traditional financial institutions. A key distinguishing feature of a credit union is the capacity of members to determine the direction of their local credit union’s financial impact. Profits or surplus income can be disbursed to members, invested in the firm, or in social projects. Moreover, the credit union has the capacity to exploit local knowledge (asymmetric information) so as to serve individuals and firms and their particular needs which traditional financial institutions find too risky. But just like traditional financial institutions, credit unions must be carefully managed — otherwise a sufficient number of bad loans can force a credit union into bankruptcy.
Supply and purchasing cooperative
This type of cooperative is quite important in agriculture where farmers establish a cooperative to obtain goods and services required for their business or for personal use at lower prices than would be possible if they were to go it alone. Thus farmers can take advantage of economies of scale and scope that are afforded to larger corporate farms. But the management of such a cooperative can mimic that of the traditional firm.
This type of cooperative aligns the interests of producers with regard to marketing output to retailers or wholesalers. A marketing cooperative can also store, process, and package output prior sale. This allows farmers, for example, to take advantage of economies of scale and scope in storage and production, increasing their net income over what it might otherwise be. It also serves to increase the bargaining and marketing power of farmers. In addition, a marketing cooperative can help stabilize farmers’ income through its inventory capacity, providing farmers with a relatively stable income as marketing prices fluctuate. As with other cooperatives, a marketing cooperative must pay attention to efficiency considerations as well as maintaining the flexibility to vary the prices paid and surplus (and loses) disbursed to member farmers as markets restructure over time. Otherwise, it risks bankruptcy.
New generation cooperative
This type of cooperative is also referred to as a value-added or new wave cooperative, although cooperatives of old typically added value to their output. The express purpose of this cooperative is to transform raw material inputs into processed output, such as cranberries into juice or wheat into flour. Typically found in agriculture, farmers are owner-members who supply the raw material for processing, hoping to reap additional net income from value-added activities. Like traditional cooperatives, the new generation cooperative is owner/member-controlled. But unlike most traditional cooperatives, the new wave cooperative’s membership is restricted to those with the means and the willingness to provide substantial equity capital. This provides the cooperative with the necessary finances to build a competitive value-added enterprise and provide those with an equity stake in the cooperative with shares (typically) in proportion to the equity supplied. The farmer is obliged and has the right to supply the cooperative on the basis of share value. And shares can be sold at market value, which can be greater or less than the purchase or equity price, when the farmer or other supplier wishes to dissociate himself or herself from the cooperative.
This cooperative has two or more groups of members that may include workers, consumers, producers, investors, community, and/or government. Such a cooperative has the potential of aggregating the interests of different individuals and groups of individuals within one cooperative thereby making them all stakeholders of a particular cooperative. For example, a consumer cooperative, by providing a membership and ownership stake to workers, transforms a traditional consumer cooperative to one where workers’ interests gain significant representation. The consumer cooperative develops characteristics of a workers’ cooperative. This can have significant efficiency benefits to the cooperative. Any cooperative that brings in government, community, or private sector representation strengthens the stakeholder and knowledge base of the cooperative as well as spreading risks without the core cooperative members losing control.
This is a particular type of multi-stakeholder cooperative that brings together providers and users of social services such as day care, health services, housing, and job training. It provides services that private sector firms will not or cannot provide. Such cooperatives often survive on the basis of subsidies, donations, and voluntary labor. But very often providers of these services that are not co-ops survive on the basis of government support as well.
National cooperatives: Kibbutzim and Mondragon
Two important examples of national cooperative movements are the Kibbutzim of Israel (first established in 1910) and the Mondragon Cooperative Association founded in the Basque country of Spain in the 1950s. The Kibbutz Movement of Israel is the largest cooperative grouping in the world. By the end of the twentieth century there were 270 of these collective settlements with a population of 120,000. These settlements are community owned and run and represent a mélange of worker, consumer, producer, and financial cooperatives. Initially largely agricultural in orientation, manufacturing, and tourism now play a significant role in the Kibbutz economy as Kibbutzim adjust to increasing competitive pressures. Most cooperative settlements are small (they vary from about 50 to over 2,000 nenbers), but there is significant cooperation amongst these.
The Mondragon Cooperative Association of Spain is comprised of over 160 companies operating in manufacturing, distribution, and finance. Member companies employed almost 80,000 people and the Modragon group of companies was the seventh largest in Spain in 2006. But at least 20% of Modragon’s employees are nonmembers. The Kibbutz movement also now employs a large number of nonmembers. For the Kibbutzim, this has been to a large extent fueled by severe labor shortages – the inability to attract an adequate supply of labor to meet ongoing demand. Both of these long-standing cooperative movements thus employ many individuals to whom the principles of the cooperative movement do not necessarily apply. Both these movements have had to adjust to ever-changing and increasing market pressure, but are meeting with much success.
Economics and cooperatives
Contemporary economic theory pays little heed to the cooperative, especially worker and consumer cooperatives. Supply and marketing cooperatives are treated as contributors to monopolistic pricing, therefore contributing to economic inefficiency (allocative inefficiency) and the misallocation of resources. At best, cooperatives as an organizational type are looked upon as a possible solution to economic dilemmas faced by the economically marginalized members of society. The cooperative is not regarded as a source of economic efficiency and possible contributor to material welfare. This is a product of the behavioral assumptions embedded in the theory.
Although cooperatives are not dominant, their quantitative importance in most countries in both marginal and mainstream sectors and their profitability and relatively high levels of productivity compared to their privately owned counterparts suggest that cooperative economic organizations must be doing something right to have maintained a significant presence in an increasingly competitive global economy. On the other hand, it is important to understand why cooperatives are not dominant if they are economically efficient.
Theory and workers’ cooperatives
How does one explain the economic success of workers’ cooperatives? Conventional theory assumes that no such success is possible given that cooperatives are not obliged to invest profits (focusing on employment and workers’ income) and are too egalitarian to generate economically efficient incentives or to engage the employment of superior management. But there exists a cooperative advantage in the workers’ cooperative that lies in its capacity to increase the quantity and quality of effort inputs into the “production process,” thereby producing higher levels and a superior quality of output.
In the cooperative, worker-owners and owner managers have the incentive to work harder and smarter – a possibility assumed in the traditional modeling of the firm. Conventional theory assumes that the manner in which a firm is organized does not impact the extent of its efficiency. Moreover, where workers’ cooperatives focus on improving benefits and working conditions whilst maintaining and even growing employment they are incentivized into adopting and developing technologies that make them competitive. Workers’ cooperatives can, therefore, be more costly to operate than traditional firms, especially low-wage traditional firms, but they can also be much more productive, such that their unit costs and profits can be the same as that of the traditional firm.
The cooperative productivity advantage countervails the increased costs of operating the cooperative. Thus in the worker’s cooperatives workers would be much better off without the benefits causing their firm to become uncompetitive. Workers’ cooperatives can yield competitive outcomes without driving noncooperative traditional firms out of the market. Such workers’ cooperatives can function and prosper in mainstream economic sectors, even in highly competitive environments. Moreover, when workers are also owners, there is much less incentive for workers to quit. Reducing quit rates and thus turnover rates increases labor productivity and reduces production costs by maintaining the most productive workers and reducing average training costs. Overall, workers’ cooperatives can generate higher levels of material welfare than the traditional firm.
Lower wage and higher turnover traditional firms need not be more competitive than cooperative firms and the more productive cooperative firms need not have the capacity to drive out the less productive traditional firms. Given the superior incentive system of the workers’ cooperative there is no good theoretical reason to presume that workers’ cooperatives cannot be both competitive on the margin and prosperous. On the other hand, this does not imply that workers’ cooperatives can be expected to dominate the economy.
Cooperatives, history and theories of.
The workers’ cooperative represents only one “extreme” alternative to hierarchical organizational types. Privately owned participatory firms (which allows for some workers’ ownership of firm assets and effective voice) represent another alternative; one where workers need not risk their capital nor bear the risks entailed in ownership. Also, they need not invest the time and effort that might be required at the management and corporate decision-making levels in a workers’ cooperative. This firm type overlaps with the multi-stakeholder cooperative. Given the possibility and option of a privately owned participatory firm, many workers might choose the latter. Moreover, workers might choose traditional hierarchical firms given the risks and effort required to establish and maintain a workers’ cooperative. Also, establishing workers’ cooperatives can be problematic if financing is difficult to come by given that financiers have limited say on corporate governance in traditional cooperatives. This constraint can be obviated in multi-stakeholder cooperatives.
In addition, establishing workers’ cooperatives suffers from coordination problems – it is difficult and costly to coordinate the efforts of individuals to establish a cooperative. This issue is somewhat mitigated by regional and national cooperative federations. Finally, misinformation about the design and operation of workers’ cooperatives can negatively affect preferences for cooperatives. For these reasons, workers’ cooperatives are often established in the wake of crises wherein the traditional firm is on the verge of closure. In the absence of a workers’ cooperative, then, unemployment, the breakdown of social networks and less preferred jobs becomes the default. Such cooperatives can succeed if the new incentive environment increases productivity and encourages technological change wherein the traditional firm was economically inefficient and resistant to improved technology. Cooperatives can also survive on the basis of low wages, where worker-owners willingly sacrifice material benefits so as to remain competitive and thereby secure their employment. Competing on this basis in the short run provides such a cooperative with the capacity to search for efficiencies in production that will allow it to compete on the basis of higher wages and improved working conditions in the longer term. Such a capacity does not typically exist in the traditional hierarchical firm given mistrust, asymmetric information, and different preferences between workers, owners, and managers.
Establishing consumer cooperatives and other types of nonworkers’ cooperatives faces some of the same constraints as do workers’ cooperatives, although not those related to the risks and time that workers must absorb to establish and operate a workers’ cooperative. Consumer cooperatives, however, have met with considerable success. But they need not be organized in terms of nonhierarchical forms of management and can remain competitive on the basis of low wages and poor working conditions, matching the immediate labor costs of their noncooperative counterparts. In this case consumer cooperatives need not generate superior material welfare outcomes for its workforce, although they should generate material welfare gains to co-op members in terms of price and quality and product type. However, through multi-stakeholder organizational setups, consumer cooperatives can overlap with more democratic and less hierarchical working environments, yielding both pecuniary and nonpecuniary benefits to their workforce.
The cooperative advantage of consumer cooperatives lies in its capacity to better meet the preferences of their members than privately owned concerns, thus enhancing members’ welfare. For example, the cooperative might be better able to supply member consumers with the right product mix and quality and, in relatively noncompetitive markets where consumers have little bargaining power; provide preferred bundles of goods and services at lower prices; it might be able to overcome information asymmetries in the credit market providing loans to individuals unable to secure such loans from private banks; and it might be able to secure higher prices for members of marketing cooperatives by improving their bargaining power relative to purchasing conglomerates with well established bargaining power.
Even when consumer cooperatives can do no better than privately owned concerns in terms of commodity supply and price, they can enhance members’ welfare if the cooperative generates a sense of belonging or community (social cohesion) amongst members. Such social cohesion and sense of identity with the co-op provides the cooperative with the “protection” from market forces allowing it to charge higher prices and supply lower quality products. Member owners might be willing to pay higher prices, up to a point, simply because a product is sold by their cooperative. But such behavior would undermine the economic and social viability of the cooperative. Nevertheless, there is nothing intrinsic in the cooperative organizational type that implies that this must be the case. Cooperatives can produce and supply quality goods and services at competitive prices. Also, the extent of social cohesion can diminish when consumer cooperatives increase in membership. Each member has less power and voice and more difficulty in having an affect on the decision-making process and outcomes. Less social cohesion and related sense of belonging can undermine the membership base of the cooperative. And the cooperative’s success then becomes a function of its capacity to compete with traditional producers and suppliers.
There exist no precise estimates on the importance of cooperatives in the new millennium. But the United Nations guesstimates that the “cooperative movement” had over 800 million members at the beginning of the new millennium and provided for about 100 million jobs. In addition, over the last 150 years cooperatives have spread to over 100 countries. Cooperatives are of importance in both developed and less developed economies. Moreover, cooperatives are of significance in both the more free market-oriented economies, such as Canada, the United Kingdom, and the United States, and the more statist market economies of Continental Europe.
About half of the world’s agricultural output is marketed by cooperatives, which speaks to the significance of marketing cooperatives. Overall, it is in the agricultural sector that cooperatives of various types remain dominant. In the financial sector, credit unions encompass about 120 million members in 87 countries. Especially in poor countries, cooperatives provide important micro-credit services. Consumer cooperatives continue to play an important role worldwide, with their importance varying across countries. Health care cooperatives service about 100 million people in over 50 countries. Electricity provisioning cooperatives have also become important. For example, in the United States, such cooperatives service over 30 million people. Least important in terms of quantitative significance are workers’ cooperatives. Only a small percentage of the jobs of the 100 million individuals employed by cooperatives are controlled by the workers themselves. Thus, consumer, producer, or financial cooperatives need not be managed in a manner that benefits employees where the latter’s (nonmembers’) interest conflicts with that of cooperative member-owners.
Survey evidence strongly supports the view that cooperatives serve to reduce poverty amongst cooperative members as well as amongst nonmembers and the same can be said with regard to reducing gender inequality. The evidence also suggests that cooperatives can provide a means of generating income and wealth well above any particular measures of poverty.
Overall, the cooperative solution can produce higher socioeconomic welfare levels for members whilst also overcoming significant market failures. In other words, cooperatives and cooperative type organizations can have large positive effects on the economy while at the same time generating significant improvements to the social and spiritual well-being of members. The nonmaterial and economic benefits are dialectically and positively related. This reality is marginalized in much of the conventional literature. To some extent, whether cooperative solutions are adopted depends upon the preferences of individuals given that cooperatives can be competitive even in extremely competitive environments. Not all workers prefer pure cooperatives. Not all consumers choose consumer cooperatives. Nevertheless, preferences for cooperatives need not be met as a consequence of the dearth of financial resources and organizational capacity. These constraints can be overcome through cooperative networks, credit unions, multi-stakeholder cooperatives, and facilitating legal environments. Market forces, no matter how powerful, do not require and cannot force noncooperative solutions to socioeconomic problems. Competitive markets and cooperative organizational forms are all quite compatible. Everything else being equal, the case can be made that a world without cooperatives is, at a minimum, one that is poorer.
Cooperatives have been forced to engage in dramatic changes in terms of organization, production, and markets over historical time. Much success has been achieved as is exemplified by the overall global importance of this democratic organizational type. New forms of cooperatives have been developed where the core value is democratic governance by member-owners; where ownership still adheres to the one person, one vote protocol. But cooperative values as articulated in the Rochdale Principles can become less salient as the cooperative grows and the voice of each individual member becomes less effective. Local control becomes critical to maintaining effective voice and social cohesion within the cooperative. Also, democratic governance excludes employees in most cooperatives. A significant iteration of the cooperative is the democratic privately owned firm.
Another is the multi-stakeholder cooperative, which strengthens any particular type of cooperative by providing effective voice to individuals and groups who contribute or who can potentially contribute substantively to the cooperative viability and prosperity. One vital lesson gleaned from the history of cooperatives is that democratic governance within the firm can contribute significantly to socioeconomic well-being.