Introduction to Cooperative Enterprises

by Paul J. Dejillas

Professor of Anthropology


A cooperative (also co-operative or co-op) is defined in the ICA's Statement on the Co-operative Identity as "an autonomous association of persons united voluntarily to meet their common economicsocial, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise." They "are based on the values of self-helpself-responsibilitydemocracyequalityequity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honestyopennesssocial responsibility and caring for others"  (


Cooperative enterprises differ from capitalist enterprises in many respects. Capitalist enterprises are owned by those who own shares in the firm. They have as their objective function the maximization of profit and profit is distributed proportionally in the form of dividends only to the shareholders---common or preferred---the rightful owners of the company. Capitalist enterprises are managed either by the owners themselves, or their authorized representatives, who act primarily for the interest of the owners. In capitalist enterprises, power is embedded in the shares of common stock, which entitles holders a voting share.


Cooperative economics and cooperatives are the exact opposites to capitalism. Cooperative enterprises are people combining their resources together voluntarily (money, time, energy, land, or technology) to achieve economic objectives which they could not have otherwise attained efficiently and effectively if working alone. They are owned by the employees, not as individuals but as a group. Their ultimate objective is to serve the needs of its members; thus, they undertake multiple types of services that essentially relate food, housing, clothing, health care, water, and other basic necessities in daily life. Cooperative enterprises seek to maximize the welfare of their members. The profit-maximizing objective of capitalist enterprises is also present in cooperative enterprises, but profits are shared proportionally by the members, who may also be employees, of the cooperative also in the form of dividends. In cooperative enterprises, the members, who are also the rightful owners, participate in the planning, decision-making, and management of the coop. However, most cooperatives are governed on a strict "one member, one vote" basis, to avoid the concentration of control in an elite.


What are the Different Types of Cooperatives?


Cooperatives can take a variety of other forms based on the conditions reflective of the unique local characteristics of the area (Cawley et al., 1999; Jodahl, 2003; Phillips, 2004; Brennan and Luloff, 2005). In the rural areas, agricultural and livestock ventures are very common. Fishing, forestry, and other natural resource-based economic activities may be also present. In other areas, cooperative undertakings may revolve around tourism, arts and culture, and manufacturing. In both rural and non-rural as well as agricultural and non-agricultural areas, consumer cooperatives focusing on retail distribution are very common.


Are Cooperatives Possible in a Highly Capitalist-Infested Environment?


Is this possible in an environment or society where capitalism and globalization has already dominated not only the economic, but also the political and cultural systems? The infrastructure that capitalism and globalization built is unstoppable and huge. They have changed the world that we cannot do anything about it.

These are beginning to be excuses to go along with the system and not to challenge it. Other people who are revolutionary and radical in their perspective maintain that we can create reality, we can create the kind of society that we want. Capitalism and globalization happen because they were created and sustained by the majority’s acquiescence and their willingness to go along.


People who want to change and transform today’s reality think of alternatives. Capitalism is an ideology, a paradigm, or a philosophy loaded with concepts, principles, theories, beliefs, and values. That’s why alternative thinkers come up with alternative concepts, theories and principles of development. Globalization is a process, model, framework, program, or guideline that translates the philosophy (abstract) of capitalism into action and reality. That’s why those opposed to globalization come up with alternative process or framework for development like cooperatives and sustainable development. Globalization on the one hand and cooperatives and sustainable development on the other are diametrically opposed to each other. They criticize and attack one another. Globalization undermines the later, the reason why the latter are a failure and cannot succeed. One Russian economist professor, now Professor of Economics in Cornell University, has this to say ( “If you go to a bank and ask for a loan to start a co-op, they will throw you out. Co-ops in the West are a bit like sea water fish in a freshwater pond.”


This is the main reason why cooperatives also include provisions for financial services in the form of credit unions, micro-finance, or micro-insurance. Credit unions and savings and mortgage cooperatives, on the other hand, provide assistance in financing house construction and ownership.


Cooperatives and Sustainable Development could be seeds of a new emerging or alternative society. If allowed to blossom and nurtured daily by the farmers, it can give birth to a reality that will make capitalism and globalization empty shells of the past inhabitants. Our task is to let the people know of and be inspired by these alternative paradigms. If you have more and more people, more and more communities, villages, provinces, and societies propagating and establishing translating the theories of these alternative paradigms and programs, establishing cooperatives within the perspective of sustainable development, then, eventually we can claim more and more spaces that are now controlled by capitalism and globalization, managed by multinational corporations and giant financial institutions, and sustained by the syndicated mass media and educational institutions.


It is hard to inspire people to introduce radical changes on a system which provide for their daily sustenance of food, shelter, clothing, education, and other basic necessities in life. In most instances, we are asking the people to make a leap of faith. But if we can make actual living examples, success stories of cooperatives and sustainable development, then, people can see and be motivated to put their resources and energies into it. “In Mondragon, you have cooperatives developed from the Rochdale principles, characterized by democratic management.” Thus, we have a progressive transition from theory to praxis, from critical reflection to action, from capitalism to cooperativism to economic as well as political and social democracy, from globalization to sustainable development, and, as one Russian economist say, “from neo-classical economics to a critical, history-based and human-oriented study going beyond the confines of economics.”