PROMOTING COOPERATIVE DEVELOPMENT
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Manuel Mariño

3 February 2020

Relations between cooperatives and the State

In this short article, I want to touch on one of the most critical issues that exist within the cooperative movement which is the relationship between cooperatives and the State. For many years in many countries of America, Africa, Asia and even Europe (Eastern Europe) the State has controlled or tried to control cooperatives, mainly through cooperative integration organizations, either through political advocacy or other forms of manipulation of the sector. Unfortunately, this trend is still latent in many countries, where the State, with the argument of wanting to promote the development of cooperativism, intends to control it.

The fourth cooperative principle that speaks of autonomy and independence is very clear about it. It is obvious that cooperatives must have a good relationship with the State, regardless of the political parties that hold power, as long as this relationship does not imply violating this principle.

The relationship between the State and cooperatives has to do with both subjective and objective factors. These two important actors exist within a cultural, political and socio-economic context within which they have different roles and obligations. Therefore, they also have different and partly conflicting expectations (as well as perspectives) of this relationship regarding their character and purpose, as well as regarding their roles.

The structure of the State, being of a higher level than the cooperative structure, determines, through cooperative legislation or other laws, the rules and limits of cooperative action. Generally, what cooperatives have the right to expect from the State is that it creates the necessary preconditions for the development of cooperative organizations and allows cooperatives to serve the interests of their members. In general terms, it can be expressed that it is a matter of "self-help" that is needed.

The influence of the State in the role of cooperatives

The State defines and decides what are legally recognized cooperatives, and may, in certain cases, redefine the cooperative concept in a way that serves as an instrument of State development. This power to influence cooperatives and how they operate, through legislation, is the most important expression of state power.

Through legislation and several other measures of direct influence on cooperatives and how they operate, the State can shape the character, role, and orientation of cooperatives.

The State not only has the power - through its power to legislate, supervise, control and intervene directly in the work of cooperatives - to directly influence the internal factors of cooperatives and their economic and social viability or their role, It also affects the environment in which the cooperatives operate, making the development of cooperative methods and techniques more or less favorable, for example by raising the level of education and knowledge, which is generally considered one of the biggest obstacles to the growth and development of cooperatives in developing countries.

However, the interference of any external agent, including the State, in cooperative development causes complications, leading in most cases to the loss of the operational autonomy of cooperatives.

In this context, it is important to mention that the role of cooperative legislation in cooperative development must be to provide a context that makes possible and facilitates the development of people’s capacities to achieve the desired change.

In conclusion

The State usually plays a fundamental role in cooperative development, and the relationship between the State and cooperatives is one of the most important external factors in the development of cooperatives. This is the reason why the international cooperative movement through the International Cooperative Alliance (ICA) has been, practically since the beginning of its existence, concerned with the problems related to this relationship.

Already at the ICA Congress in Budapest in 1904 it was said that the interaction between cooperatives and the State should be increased and intensified, with collaboration agreements in the business and public services area, complementing each one ‘with the government doing the functions that only the government can perform, and cooperatives doing what cooperatives know best to do’.

Cooperatives must be autonomous, and governments must learn that they cannot do everything, but they do have to encourage citizens to take responsibility for executing several of the economic functions.

Similarly, the International Labour Organization (ILO), in its Recommendation 193 on the promotion of cooperatives, states that the government’s role should:
a) Promote the important role that cooperatives play in transforming what are often marginal subsistence activities into a work covered by legislation and fully integrated into the mainstream of economic life;
b) Establish an institutional framework that allows the registration of cooperatives as quickly, easily, economically and effectively as possible;
c) Facilitate the integration of cooperatives in cooperative structures that respond to the needs of the members;
d) Encourage the development of cooperatives as autonomous and self-managed companies, especially in areas where cooperatives have to play an important role or where they offer services that would not otherwise exist.

Also, the Secretary-General of the United Nations in his report to the United Nations Economic and Social Council on “The national experience in the promotion of the cooperative movement” (1987) states that: ‘It is widely accepted that governments should extend their support to cooperatives as long as this does not compromise the autonomy and freedom of action of these organizations’.

NOTE: The views and opinions expressed in these articles are those of the author only and do not necessarily reflect the views of PromoCoop and its partners.

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