A cooperative is an organization formed by volunteer members to meet specific needs. Note that a cooperative can be a non-profit or profit-oriented organization. In addition, there are several types of cooperatives such as agricultural cooperative, consumer cooperative, worker cooperative, and cooperative banks and credit unions, among others. Nonetheless, when compared to traditional forms of capitalistic organizations, cooperatives can offer better and sustainable benefits or advantages because of the degree of democracy within the leadership that allows members to participate fully and effectively.
One of the benefits or advantages of cooperative over traditional forms of capitalistic organization is that members can be more active and focused toward achieving organizational goals and objectives. This is because these members are also owners of a particular cooperative. Note that this is especially true in producer cooperatives such as an agricultural or farmer cooperative and industrial cooperative (Ros, 24). There are many instances in which these producer cooperatives have proven more useful than traditional capitalistic business organizations. For example, workers in a factory can form an industrial cooperative to save a dying manufacturing business. They would pool all their resources to purchase the manufacturing business from their employer. The primary goal of undertaking such purchase is for the workers to retain their jobs and livelihood. Upon purchasing thereby, they would lay down their own management practices in an attempt to revitalize business operation. Of course, the success of this newly minted cooperative manufacturing organization will be dependent on several factors to include market and economic conditions. Nonetheless, from this illustration, a cooperative has an advantage over traditional forms of capitalistic organization as far as will and intent are concerned. Simply put, members of a cooperative are more predisposed to become productive and efficient because they are directly affected by the risks and benefits involved in their participation and overall membership.
Another advantage of cooperative is democracy. Note that the entire cooperative movement is a manifestation of the greater democratic movement. Cooperatives emerged during the early nineteenth century as a radical movement aimed at promoting a more liberal approach to capitalism. The principles of cooperatives revolve around democracy, equality among members, and common ownership of property (Kaswan, 2-3). There are many specific benefits of instilling democracy within an organization. Unlike traditional capitalistic organizations in which leadership is centered on a few people, a democratic organization such as a cooperative organization allows the participation of all involved individuals or members with regard to making decisions and guiding the entire leadership. This means that the concerns of all members are being addressed. Thereby, the goal of leadership in a cooperative is to promote and protect the welfare of all members. In a traditional capitalistic organization on the other hand, the goal of leadership primarily caters to the interest of owners or shareholders. This organization is concerned more with earning profits for the few members and such ultimate goal may include setting aside the interest of other stakeholders such as the employees. Of course, it is also important to remember that traditional capitalistic organizations can also adopt democracy. This depends on the leadership style of the owners.
Strength in numbers is also an advantage of democracy. As mentioned in the earlier example, workers can pool their resources together in an attempt to salvage a dying business by purchasing it from their employers. This example illustrates that the workers have more resources than their employers. Another example is in agricultural or farmer cooperative. In this type of cooperative, farm owners pool their resources together to purchase farming equipment and other required agricultural supply such as fertilizers and pesticides (Ross, 24). A single farm owner or a few farmers might not be able to purchase such due to the limitations in their resources. Nonetheless, these examples illustrate not only the advantage of cooperative over a traditional capitalistic organization. These examples demonstrate that one of the purposes of a cooperative is to group together people who share the same interest and who are willing to contribute their resources or any other input to achieve common goals and objectives. Moreover, these examples also illustrate that a cooperative can have better purchasing power depending on the number and financial capability of its members.
There are several real world examples of successful cooperatives that have demonstrated the advantages such as willingness or strong dedication of member-owners, the promotion of democracy and its importance in decision-making, and the access to larger resources. In their book, authors, T. M. Thomas Isaac, Richard W. Franke, Pyaralal Raghavan (22-86) discuss the true-to-life story of workers in India who formed an industrial cooperative involved in manufacturing tobacco products. These workers have been referred to as beedi workers. Accordingly, for several decades, beedi workers were among the most exploited and abused workforce in India. Despite having livelihoods due to their employment at big tobacco companies, their lives remained impoverished. Privileged people also treated them with content and the label “beedi” was also used as a derogatory term. However, beginning 1969, thousands of beedi workers in Kerala, India—a state in the southwestern part of the company—grouped together to form an organization in which all members have become owners. A cooperative emerged nonetheless. Authors Isaac, Franke, Raghavan said that this particular cooperative has been composed of individuals who are not only determined but are also highly skilled. Nonetheless, in capitalizing on these positive attributes, the cooperative managed to become successful. It has successfully competed head-to-head with established tobacco companies that have been owned by so-called tobacco barons and magnates. To a certain extent, this cooperative of beedi workers has been more successful than other tobacco companies. The cooperative offers a more competitive wage for beedi workers, thus attracting more workers. The process it has employed in its operation is more efficient, thus allowing it to become profitable while also contributing to the local economy. In their analysis, the author mentioned that the cooperative has employed positive features such as work-elected management, shop floor democracy, and a progress route for improving the lives of member-owners.
Nonetheless, the discussion above illustrates why cooperatives are better and more sustainable than traditional forms of capitalistic organization. In summary, a particular cooperative allows members to become fully engaged in the organization, promotes democracy for leadership and decision-making, and takes advantage of the resources of members. These advantages speak of the fact that a cooperative has members who are fully committed to the organization. They also know how they want to be lead or managed. Furthermore, these members have the necessary resources that they are willing to use and share to benefit everyone. A cooperative is unconventional when compared to a traditional capitalistic organization. However, when done correctly, a cooperative can have more advantages.
Isaac, T. M. Thomas, Richard W. Franke, and Pyaralal Raghavan. Democracy at Work in an Indian Industrial Cooperative: The Story of Kerala Dinesh Beedi. Cornell University Press, 1998
Kaswan, Mark J. Happiness, Democracy, and the Cooperative Movement: The Radical Utilitarianism of William Thompson. SUNY Press, 2014
Ros, Agustin J. Profits For All? The Costs and Benefits of Employee Ownership. Nova Science Publishers, Inc., 2001