Cooperative production and accelerated development: A review of potential and constraints

Abstract

Producer cooperatives or, more generally, firms with extensive worker participation are only marginal to most economies. There is, nevertheless, considerable interest in the potential for greater productivity of such firms, and in their distributional implications. A number of examples suggest that, under the right conditions, cooperatives can make a useful contribution to regional development. This paper discusses three such cases: (i) the Mondragon Group in Spain and the Dairy and Sugar Cooperatives of Gujerat and Maharashtra, India. It considers the case for interventions along cooperative lines to assist in the rationalization of industries. Tentative conclusions are: (i) cooperative or participatory production appears to be easier to organize and sustain in less overwhelming, hierarchical societies; (ii) not all productive activities benefit equally from cooperative organization; (iii) industrial producer cooperatives are probably most suited to regions of limited labor mobility; (iv) cooperatives probably require quite broad-based participatory processes, which requires an incentive structure that links rewards to performance; (v) public role should be limited; and (vi) widespread employee shareholding is useful.