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Fr. Coopérative

Association, civil society, people

“Cooperative” is a polysemous term, a noun or an adjective that can be used in various local or global contexts, formally or informally. A most general context for cooperation among international players was established with the League of Nations in 1917 and the UN in 1945, as both a product of idealist assumptions and motives and a Hobbesian project in endorsing the sovereignty of members. Both the League and the UN as distinct types of international institutions reflect the emphasis that idealists place on international institutions as a mechanism for coping with the problem of war and social injustice; and also the possibility of international cooperation as a mechanism of global problem solving. To an idealist, international law enforcement would be a positive component of a larger institutional framework that would feature integration and cooperation. Peace and security, along with other international interests, would be served through a cooperative institutional apparatus, instead of state conflict and competition. International law enforcement would become the alternative to war within such a system.

Recently, “cooperative global governance” has been used as an all-embracing concept, relating to possible agreements to face and manage issues and share responses not only in avoiding threats such as widespread or local armed conflicts, environmental disasters or deadly epidemics, but also in advancing towards increased material and non-material wealth in the general interest of the world’s population or specific alliances.

As a noun, a cooperative is an organization run by a group of people whose aim is to give benefits to its members, rather than to make a profit. In the EU context, “Companies or firms” means companies or firms constituted under civil or commercial law, including co-operative societies, and other legal persons governed by public or private law, save for those which are non-profit-making (Treaty of Rome, Art. 58). However, “cooperatives can create jobs and encourage sustainable and solidarity-based growth without seeking for net profit to be distributed to the members …”, so that cooperatives are often considered part of the “social economy” along with other forms of people-based enterprises such as mutual societies, associations and foundations (EU Commission, 2004, 15). The European Cooperative Society (SCE) was created in 2003, as an optional legal form whose aim is to facilitate cooperatives' cross-border and transnational activities. The SCE is required to unite residents from more than one EU country, and its members cannot all be based in one country.

Historically and conceptually, cooperatives as part of the third sector are rooted in different traditions, which go back at least to the 19th century. The divergence between cooperatives and associations as twin components of the so-called “third sector” widened in the 20th century, when many cooperatives specialized in specific fields. While associations were generally oriented to non-market activities, such as scientific research, advocacy, consumer rights, cooperation to international development, human rights or the protection of the environment, cooperatives are particularly active among savers or producers to meet their members' needs, and in such industries as building, fishing, education, agricultural marketing and supply, consumer goods, housing, credit and savings, etc. When granted a legal status, they can be considered as instrument of “social engineering” in inducing or accelerating the process of development, creating alternative jobs and reducing social exclusion. The potential of cooperatives for promoting development has long been researched and is borne out by practical experience internationally.

Starting in the middle of the 19th century and, drawing inspiration from Raiffeisen and Schulze-Delitzsch in Germany, thrift and credit societies are spread throughout the EU. The strength of these cooperatives consists in their being able to achieve the economies of scale, obtain extensive information about borrowers, execute stringent supervision through joint liability and reduce transaction costs for the benefit of borrowers. These classical Raiffeisen practices, valid in rather closed rural communities, have over time been modified to suit modern conditions. From small beginnings, some have grown into big banking organisations and operate in the international money market, or command a major market share in other sectors (dairy produce in Denmark, agriculture in Japan, dairy and oilseed production in India, insurance and transport services in Singapore, etc.). Cooperatives hold substantial market shares in European industries (EC 2017):

-          Agriculture: 83% in the Netherlands, 79% in Finland, 55% in Italy and 50% in France;

-          Forestry: 60% in Sweden and 31% in Finland;

-          banking: 50% in France, 37% in Cyprus, 35% in Finland, 31% in Austria and 21% in Germany;

-          retail: 36% in Finland and 20% in Sweden;

-          pharmaceutical and health care: 21% in Spain and 18% in Belgium.

Consumer cooperative societies are spread throughout EEC countries. Deriving their inspiration from the Rochdale Pioneers who in 1844 set up a shop near Manchester to supply their own requirements and to escape from the exploitation of private merchants, the consumer cooperative movement has now developed into a powerful retailing system in several national economies. Rochdale practices have been analysed and refined into principles which have been revised twice (ICA 1976). An essential element of these principles is the democratic governing of cooperative organizations, implying that each cooperative society is an autonomous organisation with its own centre of decision-making, rules by its owners.

The aims and activities of cooperatives have gradually been associated with the concept of social economy as it was revitalised at the end of the 1970s in France and subsequently in various countries like Belgium, Spain, Italy, Sweden and in an increasing number of other European and non-European countries (Canada, Argentina, South Korea, etc.). A current definition of cooperative systems would follow the following models (Borzaga & Spears 2004):

-          the sociological model, characterizing co-operatives open to the community interest,

-          the mutualistic model, characterizing co-operatives claiming members’ interests,

-          an intermediate model combining both the members’ and the community’s interests

-          the quasi-public co-operative model, which developed in both former socialist and communist countries.

Another classification suggested by Defourny and Pestoff (2008) depends of the aims expressed in their various constitutions or statutes:

- philanthropy (charities, the community sector, etc.), which is particularly influential in the United Kingdom and Ireland;

- civic commitment to the entire community, aiming to foster equality and democracy, prevalent in Scandinavian countries;

- the principle of “subsidiarity”, a term related to religious hierarchies, to be found in such countries as Germany, Belgium, Ireland and the Netherlands;

- the voluntary sector, either focused on civic participation and democracy as in Scandinavia, or on a religious inspiration (as in Italy, Belgium, France, etc.);

- family ties, in Mediterranean regions.

To this could be added the quasi-public or fully public model, as in socialist regimes. This system was ruled by the socialist theory of property, which considered that cooperatives were a special form of collective property and a transitional form whereby private property was to be transformed into socialist property, i.e. state property. As instruments conceived through the promotion of both a socialist conscience and a socialist education, they became an integral part of the political system and planned economic system, which implied centrally made plans, educated members in the communist way of life and fulfilled social functions (Münkner, 1998).

International communication also requires terminological instruments such as established by the International Standardization Organization (ISO), which is nongovernmental but has a membership of 164 national standards bodies which bring together experts, share knowledge and standards, support innovation and provide solutions to global challenges.

With regard to transition countries, the concept of “social economy” seems to be more suited to designating the array of alternative organizational forms (among which co-operatives are here especially explored), which have so far developed. Generally, situations in advanced and transition economies are extremely different. Contributors to the International Seminar “From Co-operative to Social Enterprise” held in Trento in December 2003 concluded that the transformation and expansion of cooperatives are two connected phenomena, and that the capacity of co-operatives to assume a number of forms consistent with the socioeconomic environment in which they are situated deserves special attention, as well as co-operative identity and the organisational and legal frameworks so far developed as a result of co-operative evolution.

While a number of countries provide specific legal frameworks designed to incorporate the altruistic goals increasingly pursued (France, Italy for instance), other examples (United Kingdom, Belgium, Denmark) are shown that multi-stakeholder organisations can develop also without a specific legislation. Different political, cultural and socio-economic circumstances at the national level explain the introduction of more flexible legal frameworks (United Kingdom with the CIC) or the adaptation of existing statutes to encourage the entrepreneurial dynamics that are part of a social project (France with the SCIC and Italy with social co-operatives). In advanced economies, the alternative concept of “social enterprise” is used when referring to entrepreneurial entities (co-operatives, associations, etc.) explicitly pursuing a social goal (Defourny 2001). Emphasis is put on the evolution process, of which social enterprises represent the end result.

The early 21rst century has witnessed a new interest in co-operative organizations as a consequence of their transformation and expansion in new fields of activity (Brezaga & Spear 2004), providing evidence that the co-operative movement is revitalizing the communitarian tradition. In advanced economies, the cooperative movement is associated today with new realities such as multi-stakeholder governance and the pursuit of an explicit social aim, which have sometimes been incorporated into the new co-operative forms (social co-operatives and SCIC for instance) and supported by legal frameworks (CIC in United Kingdom). Moreover, the entrance of a number of different stakeholders in the property structure has given strength to a new partnership logic, which is a precondition for success. The more or less strictness of the legal prescriptions concerning the multistakeholder character - the SCIC law, unlike the Italian law on social cooperatives prescribes the existence of a minimum of three member categories, of which workers and users are obligatory - while guaranteeing the opening of the property structure to different stakeholder categories, influences the number of new enterprises set up.

Research carried out in the field of cooperative legislation has demonstrated that excessively restrictive legislation has been a frequent cause of the failure of cooperatives (ILO 1992). The provisions of cooperative laws in many developing countries have impeded the sound development of cooperatives and crippled their potential. One explanation may be that the cooperative legislation is differently understood and dealt with in developed and developing countries. Saxena had noted in 1986 that the cooperative movement had fallen short of its ideals, citing as an example women's unequal access to power and decision-making although, according to the Hunger Project, in Africa women contribute 70 % to growing food, 50 % to storage, 100 % to its grinding and processing, 90% to fetching water and 100 % each to child care, cooking and cleaning). In 2000, he pursued, the primary problems of the Movement were still retaining its identity and uniqueness; excessive dependence on the government leading to political patronage in developing countries, which remained serious obstacles to the growth of the movement, and the quality of leadership.

The number and growth of cooperatives in the category of INGOs has been quantified and classified since 1908 by the Union of International Associations (UIA) in its Yearbook of International Organizations, and descriptions can be found in publications of the Comparative Nonprofit Sector Project led by the Johns Hopkins University since the early 1990s, the Global Yearbook of Civil Society of the London School of Economics and many other research centres. The social economy, understood as encompassing cooperatives, mutuals and the non-profit sector, has been studied by the International Centre of Research and Information on the Public, Social and Cooperative Economy (CIRIEC, 2007), which estimates that the EU has some 246,000 cooperative enterprises with some 144 million citizen members, employing some 4.8 million persons. Nearly 120 million Europeans are covered by a health mutual and the mutuals hold a significant share of the life insurance and non-life insurance markets. Mutual societies represent 25% of the European insurance market and 70% of the total number of insurance companies in Europe. From a legal comparative view, analyses of the forms of organizations in which private property is set aside for public benefit, such as foundations and charities, can be found in the International Encyclopedia of Comparative Law.