Could co-operatives replace private business to create a stronger economy?

Contrary to some perceptions, co-operative businesses are flourishing more than ever in the UK. Following a research project into the potential of the co-operative model, Rob Harrison proposes why it could offer an alternative to capitalism

It’s one thing to point out the flaws in our current economic system, but another entirely to propose a practical working alternative. A failure to offer clear suggestions was one of the main criticisms levelled at the wave of Occupy protests that swept the world in 2011.

More often than not, co-ops tend to perform better than other companies on social and environmental issues. Perhaps, if co-ops replaced all private businesses, the crazy ‘race to the bottom’ (when companies compete to cut wages or emissions controls the fastest in order to sell cheaper products) of unregulated international competition would somehow melt away? It’s an intriguing idea, and one that Ethical Consumer magazine explored through an essay prize, conference, online discussion, and book published with New Internationalist called People Over Capital, which gives 16 different viewpoints on this practical question.

The project found that co-ops are in fact already thriving. With the recent troubles at the Co-operative Bank liberally spread across the press, you might be forgiven for thinking that the co-operative movement is in retreat or disarray, but the reality is the opposite. In 2012, the number of co-ops in the UK increased to more than 6,000 and their turnover grew to £36bn.

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Co-ops are very much an international movement as well. There are more than 800 million members of co-operatives in the world. Between them, they employ over 100 million people. This is 20% more than multinational businesses. The largest 300 co-ops in the world have a combined annual turnover of $1.1tn. In Finland, the co-operative sector is said to account for 21% of GDP, in Switzerland 16% and in Sweden 13%. Meanwhile, three-quarters of all fair trade goods are produced by co-operatives in developing countries.

With the recent troubles at the Co-operative Bank, you might be forgiven for thinking that the movement is in retreat or disarray, but the reality is the opposite

The Ethical Consumer research project also found that the principle of co-operation dominates the production of computer software. Open source software, which is created outside of the capitalist idea of competition and financial incentives, now accounts for 80% of the software on computer servers worldwide. This includes: the Android mobile operating system, which powers more smartphones than Apple’s iOS software; the majority of web browsers, including Firefox, Safari and Chrome; and the majority of content management systems such as WordPress, Drupal and Joomla. Open source is a movement distinct from the formal co-operative movement, but has a lot to teach us about what a more diverse and complex co-operative alternative to capitalism might look like.

As part of the project, people were also asked to propose and vote on the one thing they believed would make co-operation the dominant business model. The top three answers were: formal teaching about co-operatives across all educational institutions; adding a principle about environmental sustainability to the seven International Co-operative Principles – guidelines by which co-operatives put their values into practice; and co-ordinated networking of co-operatives in specific industries to help them compete with other businesses.

One contributor raised the idea that “co-operation is more than another economic system or a business model. It is a profound and revelatory concept that offers a holistic approach and practical route to achieving fundamental social, economic and political objectives.” Others looked at human fulfilment: under capitalism, the focus on individualism and material wealth has been widely attributed as a cause of falling levels of happiness in advanced western economies. If wellbeing is inextricably linked to our relationships with others, then co-operatives may be providing something more than just another economic system.

People Over Capital: The Co-operative Alternative to Capitalism, edited by Rob Harrison, is available now, published by New Internationalist