In an interview with Carlo Borzaga, a speaker at the upcoming International Summit of Cooperatives, the President of the European Research Institute on Cooperative and Social Enterprises (Euricse) spoke about the future of co-operatives . . .
You recently said that there is a disconnection between the importance co-operatives play in the global economy and the attention they're given by social sciences. How do you explain this contradiction?
There are two main reasons for this contradiction. The first is the lack of official, sufficiently complete and up-to-date statistics on business entity types, which makes it difficult to know the actual spread of cooperatives in the various countries. This lack is due to the fact that national and international statistics institutes hardly ever collect economic information by type of enterprise, preferring to aggregate data by business sector. This forces researchers to work with limited, often incomplete data from sources that are not always entirely reliable.
The second reason is that social scientists in general, and economists in particular, have always studied and interpreted the cooperative model according to hypotheses relating to the objectives of the entrepreneurial activity or to the behaviour of the various economic agents (workers, consumers, producers) which are not suited to the typical features of the cooperative. They do not, for example, take into account the fact that cooperatives are first and foremost enterprises of people who have set them up in order to solve a collective problem together through the manufacture of goods or the provision of a service, and not to make a profit on the invested capital.
As a result, cooperatives do not always need a large amount of capital to set up and to develop, and when they do, they are often able to get it through the progressive accumulation of income. Moreover, people belonging to a cooperative are there not only and not always to maximize the economic returns, but for many other reasons, often of an intrinsic nature, which may include sharing a project whose realization may also benefit other members of the community.
By interpreting the relationships between the members of a cooperative as being essentially of a contractual kind, rather than associative, economic and social sciences have contributed to creating an idea of cooperatives that is significantly far from the real functioning of these enterprises, coming to the mistaken conclusion that they are necessarily less competitive than capitalist enterprises and are therefore destined to disappear.
What are the solutions? Which solution should emerge from the 2012 Summit in this regard?
Research activity has to be stepped up in order to rectify this contradiction. We need to have more data and data that is more reliable and which can be compared at the international level. Universities and research centres need to be more involved in both theoretical and empirical analysis in order to improve understanding and to get a more appropriate interpretation of cooperatives. In particular, we need to apply the new theories on the behaviour of economic agents developed by experimental economy and behavioural economics more than has been done up to now.
We must not restrict ourselves to assessing the performance of cooperatives using inappropriate indicators, such as all those that use profit to assess an enterprise's profitability, but rather to make an effort to identify indicators that are more suited to the nature of such enterprises. And empirical comparative research is also needed, especially to verify how cooperatives have managed and are still managing to make an original contribution to solving both economic and social problems and to transfer managerial know-how between countries.
We need stronger, more networked research centres working on cooperation and social enterprises to achieve this. I expect the Summit to put forward a firm message to statistics institutes to ensure that their surveys also collect information on the forms of business entities every time this may be of use in understanding whether being a cooperative or a corporate enterprise can lead to a better explanation of the phenomena under review. I also expect strong encouragement for researchers and research centres, whether or not these are linked to universities, to continue their work: they would feel less alone in environments where often their colleagues in the same discipline, who think they can solve the world's problems just by preaching the virtues of the free market, do not even know what a cooperative is.
Looking forwards, what role do you think co-operative should play in the future, especially from an economic and social point of view? Will they be called on to play a greater role?
Although it is hard to predict how the various economic systems will ride out the current crisis and how this will change their characteristics, it can certainly be said that cooperatives will play a greater role in the future than in the recent past, and perhaps even greater than the role they did in the early 20th century. Over the next few years, economic and employment growth can no longer be guaranteed, as in the recent past, whether by debt-funded private demand, by public spending—now conditioned by high national debt—or by further expansion of the manufacturing sector.
Growth will most likely be guaranteed chiefly by the production of services for people and families and services of general interest, characterized by low profit margins and therefore of little interest to conventional businesses. Many of these services, furthermore, have characteristics that make it difficult to produce them under typical market conditions because their production requires high levels of trust between the consumers and the producers, and the direct involvement of the former in their production. Their production requires less investment in equipment and thus more contained amounts of capital.
In a similar context, cooperatives have an unquestionable edge over conventional businesses and public authorities. This is because businesses that are centred around people and their direct involvement in a shared objective, and which do not therefore pursue profit objectives except to the extent that is necessary to make essential investments, are better placed than both conventional businesses and public authorities to direct production towards people's genuine needs, to contain production costs, to develop relationships of trust and to innovate products and production methods from below.
This is what cooperatives have done since their inception and what they will still be called upon to do in the near future. On one condition, however: that public policies recognize the potential of these enterprises and that regulation of cooperatives and their various markets is appropriate to their specific nature and does not restrict their development or impose pointless operating costs devised to protect against the undesirable behaviour of conventional businesses.
At the end of the Summit, a common Declaration will be presented to the participants. What key element do you think this declaration should contain?
I believe there are two messages that should be included in the declaration. First of all, policy makers should be strongly requested to recognize the importance and the potential of cooperative enterprises and therefore to regulate both the cooperatives and the markets in which they operate in such a way as to encourage them and not to hamper their development. The second message, aimed at policy makers and the cooperative movement itself, is to invest more in research and training, encouraging the setting up of research centres and training courses both within and outside of universities.