Debates on Co-operatives

Why are co-operatives more resilient in times of crisis?


The global financial and economic crisis has made the role and relevance of co-operatives increasingly apparent. Today, they represent the form of business model that has proven to be most resilient during the financial and economic crisis and the resulting recession when investor-owned banks had to bailed out by governments (Birchall and Hammond Kettilson 2009). Historical evidence shows that co-operatives not only survive times of crises better than investor-owned firms but also initially emerge during crisis times as a response to address those crisis effects. For example, the emergence of consumer and housing co-operatives during the Industrial Revolution in Britain and its simultaneous decline in living standards for the British working class were strongly associated with a search for problem-solving alternatives to markets. Also, in the 1860s, F. Raiffaisen first provided emergency food aid and later credit in response to rural poverty. Moreover, during the 1930s Great Depression in the US cooperative banks were set up and agricultural co-operatives began to form. Moreover, today’s largest co-operative group, the Mondragon Corporation, was founded in Basque Spain in response to citizens’ painful consequences of the aftermath of the Spanish Civil War. In recent years the promotion and revival of co-operatives in developing countries has become an important strategy to reduce inequality and poverty and reach the Millennium Development Goals (Develtere et al. 2008, Wanyama et al. 2009).

 

In sum, there is evidence that since the emergence of co-operatives in the eighteenth century, they represented a form of member-owned business that people turned to when markets and the state failed to provide economic benefits.

 

 

 

 

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