Capitalism Replaced by Co-operatives Globally

Capitalism Replaced by Co-operatives Globally

In this article, Cooperative Business NZ CEO Craig Presland writes that while corporate capitalism has generated massive wealth for some, it has devastated parts of the planet and failed to improve human well-being at scale. 

He sets out the harsh reality of the present and explains how the sustainable co-operative business model provides hope for the future.

  • Species are going extinct at a rate 1,000 times faster than that of the natural rate over the previous 65 million years (SOURCE: Center for Health and the Global Environment at Harvard Medical School).
  • Since 2000, 6 million hectares of primary forest have been lost each year, that’s about half the size of NZ’s North Island.
  • In many western countries, including the UK, young people are, for the first time, set to earn less during their lifetime than their parents.
  • In the UK, more than half of company equity is now overseas-owned, with only just over 12% owned by individuals. In many cases, overseas-based fund managers have gained control driven in their quest to drive investor returns.
  • Even in the USA, 15% of the population now lives below the poverty line. For children under the age of 18, that number increases to 20%.

The world’s population is expected to reach 10 billion by 2050 (currently 7.7 billion) – how do we expect to feed that many people while we exhaust our remaining resources?

Human activities are behind the global extinction crisis. Commercial agriculture, timber extraction, and infrastructure development are causing habitat loss and our reliance on fossil fuels is a major contributor to climate change. Publicly-listed organisations are responding to consumer demand and pressures to produce sufficient financial returns each year while exploiting the world’s resources in ever more creative ways.

Corporate capitalism is committed to the relentless pursuit of growth, even if it ravages the planet and threatens human health. Fund managers at global financial institutions now own the majority of the public stock exchange in most western economies, including over 70% in the USA. These absent owners have no stake in the communities in which the companies operate. Furthermore, management-controlled equity is concentrated in the hands of a select few: the CEO and other senior executives.

The world urgently needs forms of social re-organisation that prioritise caring for the environment and putting people at the centre of the economy. We need to build a new system: one that will balance economic growth with sustainability and human flourishing. Here co-operatives can, and will, thrive even further as the member-owned business model looks set to dominate.

Co-operatives can help build a better world

Ownership matters. Distributed ownership and governance, with the co-operative business model at the forefront, is now becoming more and more important to global economies. Profits distributed to members equitably each year while being retained locally. Investment back into local communities. Responsible manufacturing and production practices. Economic, environmental and social sustainability.

There can be no doubt that the new economy mission becomes more achievable if the power to determine the direction and strategy of business is in the hands of those with a genuine interest in addressing today’s challenges and who live within the communities directly being affected.

Thankfully, worker-owned co-operatives are becoming part of the solution. These are going to great lengths to define who owns what, rights and responsibilities etc while aligning interests and creating a culture of hard work and camaraderie. Worker co-ops incentivise people with ownership stakes and/or performance-related rewards while participating in management decisions through their voting rights. While not so prevalent in NZ, they are growing rapidly across western economies including the USA and Canada.

Similarly, supplier-owned and customer-owned co-operatives, of which there are over 200 in NZ, distribute returns to suppliers and customers equitably each year based on the volume of supply or the amount of business transacted over the 12 months (Rochdale Principle No. 3).

Members are committed over the long term, in particular suppliers of agricultural produce who may be farming land that has been handed down for generations, while they have “skin in the game” through their invested capital. Conversely, investor-owned organisations, including those publicly listed, may come and go just as investors do.

Since the beginning of the global co-op movement in Rochdale, England in 1844, co-operatives have transcended wars, economic crises, different political regimes and natural disasters. In all these years they have demonstrated that, in the midst of many different circumstances, they always best serve people and their communities.

In 2012, the United Nations recognised that co-operatives can help build a better world by generating jobs along with fair and reasonable work conditions, producing goods and services on a sustainable basis, distributing wealth equitably and improving people’s quality of life. Traditionally they do this with their own resources and tools as they seek to self-manage autonomously and independently (Rochdale Principle No. 4).

Clearly, the current economic model will not solve the inequalities that it has created while governments alone cannot provide all the answers. So co-operatives remain a genuine and effective tool for achieving true sustainability.

Take Ontario, Canada for example, where large corporates from decades ago have been and gone while the more recent emergence of co-operatives is now turning things around economically, environmentally and socially.