Cooperatives: A possible way out for the current global economic distress

(Mr. Sibadittya Baidya who recently completed his summer internship at ICA-AP).

Population explosion, economic distress, poverty, and inequality are some of the biggest concerns of the 21st century. Many discussions have taken place in international and national public forums and policy arenas, to address these concerns. The SDGs focus on these concerns especially through SDG 1 (No Poverty), SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reduced Inequalities). Much of the economic distress and inequality can be traced to the ‘trickle-down’ economic growth models implemented across the world. The trickle-down theory which promotes targeted tax cuts to corporations, capital gains, and savings taxes, has been debunked by several development economists. The starkest evidence of its failure is the gross concentration of wealth in the hands of a few, while millions live below the poverty line. In January 2019, a renowned international non-profit, Oxfam, released a scathing report stating that “the 26 richest billionaires own as many assets as the 3.8 billion people who make up the poorest half of the planet’s population.”

Instead of following this top-down approach, if countries start focusing on and implementing a bottom-up approach of creating income and employment, it will create a more effective ripple effect. People-centred business models like cooperatives can be a boon in this regard. Unlike corporates, cooperatives not only think about maximizing the monetary value of shareholders, but also take into account the social wellbeing of the members and the local communities. Unlike non-profit organizations, they do not depend on external funds only, making them self-sustaining.  

I was especially inspired by a case study from South Korea that started off small, and quickly became a large-scale model helping many of its citizens. Sungmisan is a small neighborhood of 700 families near Seoul, where the community established a cooperative school. The positive result of the school inspired the whole community to lead life through cooperatives. The entire community adopted the cooperative model, establishing a cooperative village café, a cooperative restaurant, a shared kitchen, a co-housing building, consumer cooperatives, etc. The story of the village inspired a lot of people in South Korea and provided a live example of how we can live in a collaborative manner. Cooperatives have the potential to be at the forefront of development in the current work scenario. If all stakeholders can work together towards creating a conducive environment and enabling policies for cooperatives and collectives, the idea can surely propel and help the world to be a better place for coming generations.

The Sungmisan cooperative in Korea. Image credit: Shareable.net