I.  The Problem: the System is Broken

The current global economic system has grown into something which does not serve people; it serves capital.  In the last thirty years, the neoliberal model of economics has been unleashed with a fury.

Inequality is growing by leaps and bounds around the world, in some places to levels not seen since the Great Depression. The 1% get increasingly rich, while many working people face growing challenges and threats, including lack of access to a living wage, lack of access to adequate health care, lack of community, illiteracy and inadequate education, ignorance, apathy, social insecurity, physical deprivation, mounting student debt, racism, sexism, small farmers not getting a fair price for their products, homelessness, and elitist bias in the media.

More and more people around the world are becoming critical of this global corporatist model, from peace activists, to environmentalists, and most directly those who have raised their voices against corporate globalization, from Occupy Wall Street, to Idle No More. The chants of these courageous groups --, "Another World is Possible", “We Are the 99%”, and indeed “Idle No More!” -- ring out across the globe, early sounds of a search for something beyond resistance, for fresh alternatives. Even some conventional economic thinkers are pointing to what is wrong.  For example, business reporter Eric Reguly stated recently that, “Paul Polman, the CEO of Unilever, thinks American-style capitalism is broken…”[2]

Our economy is run to serve the needs of capital and not of people. So we should not be surprised with the result:  the needs of capital are met, the needs of people are a distant second.   The financial crisis in 2008 has made these inequalities worse, and these tensions all the more real as banks received billions in taxpayers’ funds while foreclosures resulted in hundreds of thousands of people losing their homes.

II. The Co-operative Solution[3]

People are searching for a better way. We are looking for a fair, equitable and human way to organize ourselves to use and distribute the limited resources of this planet for the benefit of us all as opposed to the few.  There is a way to do this.  We can make the next big leap and create a system of economic democracy.

The capitalist economic system does not typically teach this economic system in the high schools, business schools or universities.

The Statement of the Co-operative Identity was written as the result of a consultation process, starting in the 1840s and then revised every few decades, as coordinated by the International Co-operative Alliance (“ICA”). 

Imagine what a different world it would be if all businesses were formed using these principles and values!

In 1911, George Keen General Secretary of the Co-operative Union of Canada, wrote in The Canadian Co-operator:

The formal co-operative movement as we know it today started in the 1840’s at the height of the industrial revolution in northern England.  Co-operatives have been at this for a long time, and some have had great success.  Overall there are approximately one billion people who are members of co-operatives.  

The Canadian Co-operative Association provides the following facts and figures about the co-op movement.

• “  There are approximately 9,000 co-operatives and credit unions in Canada, providing products and services to 18 million members.
• Co-operatives exist in virtually every sector of the economy, from agriculture, retail and financial services to housing, child care, funeral services and renewable energy.
• Co-operatives have more than $370 billion in assets, owned by their members and the communities they serve.
• Co-operatives employ 150,000 people and are led by 100,000 volunteer directors and committee members
• Canada has the highest per-capita credit union membership in the world: 33 per cent of Canadians are a member of at least one credit union.
• There are at least 2,000 communities with at least one credit union or caisse populaire and more than 1,100 communities in which a financial co-operative is the only financial services provider.
• The survival rate of co-ops is higher than that of traditional businesses. A 2008 study in Quebec found that 62 per cent of new co-ops are still operating after five years, compared with 35 per cent for other new businesses. After 10 years, the figures are 44 per cent and 20 per cent respectively.
• Co-operatives, credit unions and caisses populaires give millions of dollars back to their communities in the form of sponsorships and donations.”[6]

The consumer co-ops, credit unions and many of the large agricultural co-ops have successfully addressed their members’ issues of inequality & lack of access to markets, credit, etc. They have built success, found a way to meet their members’ needs and as such, they are no longer as focused on social change as they were in the time of their founders.  

They are contributing to co-operative associations and to education programs on co-operatives.[7]  Further, if members are unhappy with the direction of the co-op, they can get involved in the co-op’s democratic process and even run for the Board of Directors. 

 The established co-ops, although no longer generally on the vanguard of social change (with some notable exceptions such as Vancity), are quiet achievers which are doing what they set out to do. 

III. Co-operatives as Social Enterprise which Empowers

Jacques Defourny and Marthe Nyssens have stated that “what is striking is the diversity of terms which have been used since the early 1980’s to describe entrepreneurial behaviours with social aims which mainly developed within the non-profit sector,”^[8] Similarly, there is a diversity of definitions of social enterprise, some of which include co-operatives, some of which appear to exclude co-operatives, and some of which include some but not all co-ops. 

See the Addendum to this paper with some of these definitions.

If the objective is both to have people in need carry out commercial activity that can provide them with the means to achieve social / economic change for themselves, and also to empower these intended beneficiaries, then the co-operative is, in our opinion, the best model that can do it.  The co-operative model is about helping people in need to help each other to meet their socio-economic needs.  Appropriate supports (appropriate technical assistance and capital) are needed for this be possible.  

Whereas it is less obvious with some of the very established co-operatives that they are a mechanism for social change, yet it is the case - by their very democratic nature, and by the fact that they share their profits on the basis of patronage and not of share ownership.

Further, it is obvious in the newer and emerging co-operative sectors that they are, in fact, social enterprise: be it worker co-operatives, elder care co-ops, health care co-ops, renewable energy co-ops, funeral co-ops, or other emerging models.   The co-op model is endlessly adaptable. 

The fact that the co-op is owned and controlled on a one member-one vote basis is one of its most significant features.  This makes the beneficiaries simultaneously the creators of their own destiny. 

With regard to worker co-ops in particular, San Francisco’s Tim Huet states this in his Manifesto “There Is No More Important Social Change Work You Can Do Than Cooperative Development”: 

Here is how the movement was described by Roberto Rodriguez, then President of the ICA, in 1999.  (Rodriguez later went on to serve as a cabinet minister in the Brazilian government under President Lula.)  

IV. Where to Next?

Many of us in the co-operative movement believe that the social enterprise movement and the co-op movement, at least in most of North America, have been acting independently of each other.  

Due to common values and objectives, it is only logical that the social enterprise and co-operative movements work more closely together in Canada. 

Nancy Neamtan, CEO of the Chantier de l’économie sociale in Québec, has stated, “For us, it is clear that coops are one of the best models of 'social’ Enterprise.  And an integral part of the social and solidarity economy here and across the world.” 

We challenge the social enterprise movement and the co-operative movement to get to know each other, to learn from each other and to work more closely together.

ADDENDUM, provided by Marty Donkervoort, Winnipeg, MB

Here are some definitions from three different sources, ENP in Canada, EMES in Europe and a London group in UK. All focus on mission and purpose rather than corporate structure.

The working definition of a social enterprise as developed by EMES research includes the following parameters:

A continuous activity producing goods and or selling services; a high degree of autonomy; a significant level of economic risk; a minimum amount of paid work; an explicit aim to benefit the community, an initiative launched by a group of citizens; a decision-making power not based on capital ownership; a participatory nature, which involves the persons affected by the activity; and limited profit distribution.

ENP Canada

Businesses that sell goods or provide services in the market for the purpose of creating a blended return on investment, both financial and social. Their profits are returned to the business or to a social purpose, rather than maximizing profits to shareholders.

Social Enterprise London Definition

A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners.

Common elements of social enterprise definitions

•  A continuous activity producing goods and or selling services Social objectives are the main reason for the business (benefit to the community)
• Profits/surpluses are for the benefit of the enterprise or its sponsoring non profit organization, not for shareholders
•  Pursue blended return on investment between financial and social and or environmental
•  Decision making power not based on capital ownership  

There are four major reasons social enterprise is gaining in popularity in recent years: 

• The understanding that there are some needs the market will never meet on its own;
• The opportunity to advance mission-related goals;
•  Diminished and changing nature of government funding;
•  The promise of social enterprise as a vehicle for social innovation.

Legal Structure

Social Enterprises can be incorporated as non-share capital corporations (not-for-profit), share capital corporation (for profit) or Co-operative (either for or not for profit).