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Explain the difference between consumer cooperatives and other forms of business.

What is a Consumer Cooperative?

Cooperatives are member-owned, member-governed businesses that operate for the benefit of their members according to common principles agreed upon by the international cooperative community. In cooperatives, members pool resources to bring about economic results that are unobtainable by one person alone. In short a cooperative is a business voluntarily owned by the people who use it, and operated for the benefit of its members.

All cooperatives contain the following elements:

1. cooperatives are owned and governed by their primary users (the member-owners).

2. cooperatives are democratically governed (one-member, one-vote).

3. cooperatives are businesses, not clubs or associations.

4. cooperatives adhere to internationally recognized principles.

There are many types of consumer cooperatives: health care, insurance, and housing cooperatives as well as credit unions, agricultural and utility cooperatives.

Consumer cooperatives are very different from privately owned “discount clubs”, which charge annual fees in exchange for a discount on purchases. The “club” is not owned or governed by the “members” and the profits of the business go to the investors, not to members. In a cooperative the members own the business and share the profits.

The major difference between consumer cooperatives and other forms of business is that the purpose of a consumer cooperative association is to provide quality goods and services at the lowest cost to the consumer/owners rather than to sell goods and services at the highest price above cost that the consumer is willing to pay. The difference is that where a for-profit enterprise will treat the difference between cost (including labor, etc.) and selling price as financial gain for investors, the consumer owned enterprise may retain this to accumulate capital in common ownership, distribute it to meet the consumer’s social objectives, or refund this sum to the consumer/owner as an over-payment.

The specific goals of a cooperative are determined by its members, but all cooperatives adhere to the principles of cooperation that are based on practices of the first successful consumer cooperative in Rockdale, England (founded in 1844).

Ex. 15 a) Look through the text below and say what principles of cooperatives are described in it.

b) Reread the text more carefully and:

1. give the definition of a cooperative

2. explain what the principle of member economic participation means

3. say what values cooperatives are based on.