How are co-operatives different?
It can be easier to understand co-operatives by comparing them to other types of business. There are three main types of business organisations: private, public and co-operative. Private businesses are owned by individual people or companies. Public enterprises are owned by the state, the council, or any other public body. A co-operative society is owned by its members, who provide the capital necessary to start up and develop the business.
These three types of business organisations have many things in common but they differ in their most important aspect, their purpose.
- The main purpose of a private business organisation is to make money (for those who have invested money in the company).
- The purpose of a public enterprise is to offer services to the public (e.g. transport, electricity, water, telephone etc.)
- The purpose of a co-operative society is to serve the needs of the members, (e.g. farm inputs, loans, advice, information etc.) Members benefit by having better goods or services provided. A co-operative may still make money, but that is not the primary purpose.
In most private businesses each investor (shareholder) has control over the firm only to the extent to which he has invested capital in it, that is, one vote per share of stock. If someone has lots of shares, they will have lots of votes, making them more powerful when decisions are made. In public enterprises people working on behalf of the owners (government, councils etc.) make the decisions. Co-operatives are controlled by their members, who all have an equal vote on decisions being made, and are able to elect a board of representatives to run the society.