Agreements about Purchases as a Consumer and as a Cooperative

Cooperatives are everywhere.  They specialize in commercial sales and marketing for farm supplies, biofuels, groceries, and arts and crafts; social and public services, such as healthcare, childcare, housing, transport, and education; financial services, like credit unions, farm credit, mutual insurance, and cooperative finance; and utilities, such as rural electric, telephone, and water.  Just to name a few.

The United Nations defines a cooperative as an independent, voluntary group of people who come together to satisfy their shared economic, social, and cultural needs and aspirations.  They typically do this through a jointly owned and democratically controlled enterprise.[1]

One historian suggests some weavers started the first cooperative in Scotland in 1769.[2]  240 plus years later, the cooperative movement is huge. The International Co-operative Alliance has 240 member organizations in 90 countries, representing 800 million individuals.[3]   In Europe, there are 58,000 cooperatives with 13.8 million members.  In the USA, 14 federations represent 40,000 cooperatives with 75 million individual members.  Americans hold 350 million memberships in cooperatives.  These cooperatives have over $3 trillion in assets, bring in nearly $654 billion in revenue, and provide two million jobs with $75 billion in wages and benefits paid.[4]

Cooperatives add the power of the development-verb level of relationships to the individual’s experience of the things-noun level purchasing transaction (see Figure 26).  When acting on his own, the individual requests a relatively small volume in the transaction with the supplier.  Basic supply-demand economics suggests that the supplier will tend to charge a higher price for lower demand, in order to cover production costs.  When purchasing together with other individuals, the volume requested in the transaction with the supplier increases.  Economic power comes from changing where the supply and demand curves meet to determine the price paid – by increasing the quantity demanded, by aggregating many individual buyers, the cooperative moves down the demand curve, looking for suppliers who will offer a slightly lower unit price for the guarantee of a much higher volume of units.  The buyer gets a lower price, and the supplier increases profits by greater economies of scale.

This increase in purchasing power through aggregation of individuals has a double impact.  The cooperative brings a development-verb level to the relationships among individuals, inviting them to act both individually and as a group and to enjoy the benefits of both positions.  The individuals act together through shared ownership and increased demand and on their own through individual choice.  This individual and group impact increases the choices and power of individuals.  Shared ownership brings the individual into the decision making process about what the cooperative does.  Within the cooperative, individuals have greater bargaining power, increasing the choices they can make for themselves individually.

This innovation shifts from thinking that one has power as either an individual or as a group to having power as both an individual and as a group.  In addition to the economic power I just described, social power comes through democratic participation and community-relationship development.  In a study of Latin American cooperatives, Professor Albert O. Hirschman, an economist at the Institute for Advanced Study, described the social impact of cooperatives, “For many groups, the fact of joining forces, be it even for a modest purpose, such as setting up a cooperative consumer store, has a great deal of symbolic value.  It is an act of self-affirmation that fills people with pride and may even be felt as a beginning of liberation, particularly by long-suffering and long-oppressed groups.”

[2] History professor Brett Fairbairn places the first cooperative in Scotland in 1769 with the forming of Fenwick Weavers Society (, see (Carrell, 2007; Fairbairn, 1994).

[3] These are the co-operative principles, as described by the International Co-operative Alliance.  The United Nations documents 800 million people globally belonging to cooperatives. The UN named 2012 the International Year of Cooperatives.

[4] The National Cooperative Business Association conducted research with the University of Wisconsin Center for Cooperatives, which was funded by the US Dept of Agriculture to assess the economic impact of cooperatives.


One thought on “Agreements about Purchases as a Consumer and as a Cooperative

  1. Pingback: What Do We Agree to in Our Money System — Complementary Currencies « Jim Ritchie-Dunham

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