29th January 2011
Voluntary cooperatives are an integral part of the free society
I came across an interesting blog post (“Capitialism” is NOT a synonym of “Free Enterprise”) in which the questions of cooperatives has come up.
I've not, so far, paid much attention to the specific form of business organisation in the free society because I believe that citizens should be free or organise anyway they want to, so long as they are transparent and accountable, and compliant with the basic regulatory requirements of integrity and safety.
Thus, people should be free to organise themselves as sole owners, partners, corporations, or cooperatives.
Indeed, there are many good reasons why cooperatives are predominantly found in the agriculture sector – because small farmers benefit from the management expertise of the central processing and organising entity. Only where a cooperative is based on a coercive model (as with USSR) does it become part of the socialist model.
Therefore VOLUNTARY cooperatives are just another part of the free enterprise system, or capitalism. I don't see any fundamental issue here.
The ONLY problem with cooperatives arises when these are OWNED by government. That sounds like a contradiction in terms, for after all, individual members are shareholders, but I know of a large number of psuedo-cooperatives in India where the Government basically funds the entire effort as a subsidy and manages it (very badly) as well. Given the absence of genuine cooperation, these entities function like the usual loss-making public sector undertakings, and have wasted thousands of crores of rupees.
There are many highly successful cooperatives in the world, including in India. We should not forget that India's most successful cooperative, Kaira District Cooperative Milk Producers’ Union Limited, was one of the pet personal projects of one of India's greatest leaders – Sardar Patel – (not in his governmental role!), and the work of Verghese Kurian is not to be seen as that of a bureaucrat, although NDDB did soon take on the characteristics of bureaucracy and led to immense wastage of public funds (through its interaction with "public sector" cooperatives). If you have seen Manthan, you'll realise how Amul was a PURELY PRIVATE effort.
Privately owned and managed cooperatives are definitely part of the free enterprise capitalism!