Cooperatives and Socialism

A View from Cuba

Kenneth A. Loparo

• Publisher: Palgrave Macmillan
• Year: 2012
• ISBN:
  9781137277756
• Topic: Economics
• Subtopic: Economic Policy
• Index: Economics

This book demonstrates that the cooperative model is based on principles essential to building a more just and democratic society. It is argued that this is the best economic reform alternative to neoliberal capitalism and authoritarian socialism in Cuba, and that this model can also radically transform other economies around the world.

Part I

What is a Cooperative?

1

An Introduction to Cooperatives

Jesús Cruz Reyes and Camila Piñeiro Harnecker

According to the International Co-operative Alliance (ICA),¹ more than eight hundred million people in the world today are organized into cooperatives spanning a diverse array of economic activities.² To list just a few examples, one out of every three working-age Canadians is a member of at least one cooperative, and that is also the case with one out of three in France, one out of four in Argentina, one out of five in Germany, one out of five in India, one out of ten in Costa Rica, and one out of ten in Colombia.

Regarding the economic importance of cooperatives, according to the ICA (2010), in Western Europe the immense majority of agricultural producers are organized into cooperatives, controlling more than half the market for agricultural products. In fact, cooperatives in Finland produce 96 percent of dairy products, 50 percent of eggs, and 34 percent of forestry products. In France, they control more than 40 percent of agricultural and nonagricultural food production. In Uruguay, cooperatives produce 90 percent of milk and 30 percent of wheat. Twenty-two percent of New Zealand’s gross domestic product (GDP) was generated by cooperatives in 2007. And in 2009, cooperatives accounted for 5.7 percent of Brazil’s total GDP (37.2 percent of its agricultural GDP) and close to 5 percent of Colombia’s GDP.

However, these figures should be taken with a grain of salt because a considerable number of enterprises that identify themselves as “cooperatives” do not actually practice the principles of cooperativism. Some stray from that ideal due to internal and external factors. Others only call themselves cooperatives to obtain access to benefits granted by state policies that promote these forms of associative enterprises. In addition, a large number of cooperatives throughout the world are formed for the purpose of product distribution – rather than production – and financial services (i.e., credit unions), and some are possibly too big to practice democratic management.

Even so, the role of cooperatives in the world is significant, and their activities benefit some three billion people, about half the world’s population, according to 1994 United Nations (UN) estimates (ICA, 2010). The impact has been so great that the UN declared 2012 as the “International Year of Cooperatives.”³ Beneficiaries are not just low-income people; they also include people from middle- and high-income groups who choose to consume conscientiously and responsibly, and/or to produce in relationships of association and cooperation instead of subordination and competition.

The cooperatives that have achieved the most success and sustainability have joined second- and third-degree cooperatives. One of the best-known is the National League of Cooperatives in northern Italy (founded in 1886), which united the largest number of cooperatives in its time, most of them in industrial or artisan manufacturing. Currently, the Mondragón Corporation is the largest cooperative group in the world, the number one business group in the Basque Country, and the seventh largest in Spain. Mondragón is made up of more than a hundred cooperatives that operate mostly in finance, industry, distribution, and knowledge.

Venezuela became one of the countries with the most cooperatives in the world – an estimated thirty thousand to seventy thousand – after the Hugo Chávez government established policies for their promotion. However, few have become firmly consolidated. In addition to factors such as inadequate support from the state, they have remained isolated, failing to benefit from the advantages of cooperation. In fact, the most outstanding case in that country is the Central Cooperative for Social Services of the state of Lara (Central Cooperativa de Servicios Sociales de Lara, CECOSESOLA), which was created in 1967 and unites some 80 consumer and production cooperatives, taking advantage of the benefits of integration.

In Cuba, three types of cooperatives exist today, all of them in agriculture, for a total of approximately 6,300 in 2009, according to figures from the National Office of Statistics (Oficina Nacional de Estadísticas, ONE). However, a significant number of them do not actually operate as cooperatives because they do not have the necessary autonomy to make basic decisions on issues such as the supply of their inputs and the distribution of their products – and cooperative education has been scarce.

Today in Cuba and in other countries, efforts are underway to find alternatives to state and private capitalist enterprises, alternatives that are more participatory, more solidarity-based, more just, and, in short, more effective (achieving simultaneously efficacy and efficiency) for the socioeconomic development of their people. This does not mean that cooperatives are the only choice, or that they should replace other enterprise forms; they are simply one more option, with advantages and limitations. Cooperatives are the most widespread enterprise alternative in the world – not the only one – and have proven their effectiveness and sustainability, although that is not always the case, of course.

This chapter is focused on explaining what cooperatives are, with an emphasis on production cooperatives. It begins with an outline of the conditions that led to the emergence of the first cooperatives, and that continue to motivate and bring about their creation. Exploitation, marginalization, and alienation inherent to the capitalist system originate and aggravate problems that affect everyone and that can only be solved through collective action. Cooperatives are one of the tools for that.

The functioning of this type of associative business is described by analyzing the organizational principles that should be implemented in every genuine cooperative. The specific characteristics of cooperatives are made more evident when compared with capitalist businesses. In concluding, the chapter indicates the potential advantages of cooperatives over other types of organizations.

What is a cooperative?

A cooperative is a group or association of natural and legal persons (including other cooperatives, for cooperatives of a higher tier, which are discussed below) who have joined together voluntarily to fulfill common economic, social, and/or cultural needs and aspirations by means of a jointly owned, democratically controlled, autonomous, and open enterprise. In fact, a cooperative’s means of production may be legally owned by external entities – including some of its members – who decide to lease it to the cooperative. Therefore, what is important is not the legal owner of the means of production (assuming this owner is willing to lease under reasonable, stable terms), but the fact that the members have these resources at their disposition and are able to manage them democratically with a common goal.

A cooperative is simultaneously an association and an enterprise, a business. However, it is an enterprise in which the associative and social dimension guides its operation. Also, a production cooperative is an enterprise in which each worker has the same decision-making power; that is, it is independent of how much he or she has contributed to the cooperative’s capital. This is an enterprise of persons, not capital.

Cooperatives as actors in a “solidarity” or “social” economy

Cooperatives are said to form part of the “third sector” because they are neither state- nor privately owned; they are collectives. As mentioned previously, what is important is not the legal ownership of the means of production, but the fact that cooperatives are democratically managed by a collective, not by representatives of the state or private individuals or institutions.

However, that collective management should not respond only to the interests of the cooperative’s members: cooperatives are expected to be committed to the local development of the communities where they are located, or where their members live. That is, cooperatives should be democratically managed by their collectives, but in a socially responsible way, responding to social interests. In fact, they are also considered to be part of what is known as a “solidarity economy” or “social economy.”

Cooperatives as a form of “self-management”

Cooperatives are part of a larger group of self-managed organizational forms, which may be identified by the fact that the workers themselves democratically manage their enterprise. Self-management means to take it upon ourselves to solve problems to meet our needs with our own labor, creativity, and effort, managing our resources democratically and in the interest of all. Self-managed organizations are not limited to the economic sphere; they also exist in the public sphere, in local governments, and in political organizations.

That is, cooperatives emerge when a group of people unite to solve a common problem, choosing to provide a solution to their problem through collective instead of individual efforts. They recognize the advantages of cooperative work, and the superiority of relations of cooperation that are established when the management of an enterprise is truly democratic.

Different types of cooperatives

The most relevant criterion for classifying a cooperative is the activity of its members. That activity may be the production of goods and services or the consumption of goods and services; some cooperatives are mixed, and are involved in both types of activities. Cooperatives may produce any good or offer any type of service, and in turn may consume any type of good or contract any type of service.

According to the activity carried out by their members, cooperatives may be classified as

•cooperatives for the production of goods and services. These are groups of natural or legal persons that unite to jointly produce goods (agricultural, industrial, etc.) and services (food, repair, transportation services, etc.).

When most of the workers are members – that is, only a minority are hired workers – the organizations are also known as “workers’ cooperatives” or “associated labor cooperatives” to emphasize that they are based on the collective work of a group of persons who also own the enterprise.

•Cooperatives for the consumption of goods and services. These are groups of natural or legal persons that unite to jointly obtain goods of any type (generally consumption goods, but also intermediary goods or production inputs, for those comprised of cooperatives or other enterprises) as well as services of any type (the most common being savings and loans).

These enable members to enjoy the benefits of wholesale buying and obtaining goods and services at lower prices. Consumer cooperatives also make it possible for their members to acquire goods and services of assured quality and with the specifics (technical, ethical, etc.) that they desire. Workers in consumption cooperatives are not necessarily members.

•Mixed cooperatives. These are groups of persons or cooperatives that unite to jointly produce certain goods and services and, at the same time, to jointly acquire certain goods and services.

Cooperatives also may be classified according to their level of integration. Groups of people, or of legal entities that are not cooperatives, are considered as “first tier” or “primary” cooperatives. Cooperatives formed by a group of cooperatives are “second tier” cooperatives, or “groups” or “unions.” In their turn, cooperatives formed by second-degree cooperatives are “third tier” cooperatives, also known as “federations” or “confederations.”

More recently, “multi-stakeholder” or “multi-participant” cooperatives have been created, where more than one type or category of members (workers, consumers, and providers of capital or inputs, and even representatives of social interests) can participate in decision making. These are basically forms of comanagement among these different groups that share common interests and are willing to work together to achieve common goals. The most known cases are “solidarity cooperatives” in Canada and “social cooperatives” in Italy.

The origin of cooperatives

The essence of cooperatives – organizations in which work is done collectively and without bosses – has existed since the origin of human beings. As Engels explained, the human species emerged, basically, as a product of labor.⁴ What...

Table of contents

• Cover
• Title
• Introduction
• Part I  What is a Cooperative?
• Part II  Cooperatives and Socialist Thinkers
• Part III  Cooperatives in Other Countries
• Part IV  Cooperatives and Cubas Path to Socialism
• Index