Time to think cooperative

Cooperative banks are still not allowed in the Banking Act even though some of the world’s biggest financial institutions are cooperatives. Photo: Hannah McKay/Reuters

Cooperative banks are still not allowed in the Banking Act even though some of the world’s biggest financial institutions are cooperatives. Photo: Hannah McKay/Reuters

Kudos to Malta. The country is experiencing above average economic growth and is creating wealth. Investment is steady, tourism is booming and most economic sectors are doing well. It is a time when the country can afford to invest more in infrastructure, education and social welfare.

A better economy creates better opportunities. But to whom? And to what extent is the wealth generated reaching everyone? Is everyone drinking from the same, common, proverbial pool of wealth or is wealth being poured from the top and becomes a trickle if it reaches the bottom?

We are now talking about making work pay, about a better quality of life, about building a more just society. However, there is a real and present danger: if we do not shift our way of thinking and think outside the box, inequalities will get worse and fighting it will look like Don Quixote having nightmares with his windmills.

If we are to achieve a better and just society, we need to think more about tapping potentially powerful resources, coming from, and for, the average person in the street. Generally, the average person’s resources are still being hired, rather than pooled. It’s everyone to his/her own devices and winner takes all. Individuality may be highly profitable for some but is a long-term frailty for the rest. Our businesses just focus on a narrow, short-term, financial bottom line and little else. And we think that all is well.

From a social perspective, talking just about the economy without the social aspect is like wearing virtual reality headsets while insulating ourselves from the reality beyond.

Malta needs to veer towards a more cooperative economy, an economy where individual resources are pooled and where people become the direct recipients of the wealth, financial or social, they generate together. Our economy needs to shift its emphasis from money to people. It is the only way to achieve long-term social justice. We are a long way off. Almost 17 per cent of the world’s population are members of a cooperative; in Malta, the average is about 0.8 per cent. In Finland, the cooperative sector amounts to 21 per cent of GDP. In Malta, it is below five per cent.

We need a sustainable economy based on cooperation. One fantastic aspect of the cooperative model of business is that it can lend itself to virtually any sector of the economy: from finance to housing; from services to manufacture; from food to the creative industries; from social enterprises to renewable energy.

Our economy needs to shift its emphasis from money to people

In such instances, workers do not just generate wealth but become protagonists in the wealth they share; families can invest collectively in businesses they themselves participate in and derive direct returns based on their patronage; through social cooperatives, vulnerable persons will become the direct beneficiaries of the success of the enterprise.

“At a time when income inequality is rising around the world, it is good to remember that solutions for inequality exist. The cooperative model is foremost among these”, the International Cooperative Alliance said on the occasion of International Cooperative Day 2017.

How can we become a cooperative economy? First of all, we must learn to work in cooperatives. Cooperatives and cooperation need to be taught, from early schooling to post-graduate education. We do not just need to become more enterprising; we need to learn to become more enterprising together. We need to become more innovative in our approaches and look at alternative options. Both national and local governments need to look at opportunities that can exploit cooperation.

Rather than just farming out to private investors, a cooperative model of managing resources can really be socially engaging. Can we imagine the benefits of having a large car park being run cooperatively and sustained through the investment of locals, rather than relinquishing it into the hands of a single investor? With a cooperative, the profits go back to the patrons using the car park; as things stand, private individuals take all.

Can we imagine cooperative investment in homes for the elderly, which, rather than being run as private businesses, are sustained by the elderly themselves and their families?

Can we imagine financial and credit institutions being run on cooperative principles, where the member is the direct recipient of the success and wealth being generated?

The government and its institutions have an obligation to learn more and think more on these lines. They need to realise the benefits of encouraging networked cooperation that gives the local and the small the power of the big. This does not mean the government has to neglect other forms of business. Rather, it needs to become aware of the potential of the sustainability and proven resilience of such a model of business engaging on a level playing field with the rest.

Cooperatives themselves need to work together to ensure that sustainability and social justice are their guiding light in their day-to-day business, where the huge potential of the seven cooperative principles can really be harnessed. They need to work and network more together to generate activity and benefits for their members and their families. There has to be more training and awareness into adopting best practices.

Existent cooperatives need to be a shining example of the cooperative potential.

Cooperatives need a level playing field. As laws were enacted by successive governments without prior awareness of the benefits of the cooperative business model, many of our laws effectively discriminate with cooperative enterprises. For example, cooperative banks are still not allowed in the Banking Act when some of the world’s biggest financial institutions are cooperatives.

This is also true with fiscal incentives that do not take into consideration the cooperative model’s different tax regime, effectively barring cooperatives from most financial incentives available for business. The list goes on.

We urgently need to finalise legislation that caters for social enterprises, fair laws wherein cooperative enterprises are on the same level playing field as other social enterprises. Most organisations active in the social economy are desperate to operate within a legislative framework that can effectively help their work through socially-responsible business.

There is also an urgent need to revisit the Cooperative Societies Act to bring it in line with 21st century realities. The law has to make it easier to establish cooperatives, especially by decreasing the minimum number of people required to set up a cooperative from five to three.

A lot needs to be done but the big change has to be a change in perspective. The Malta Cooperative Federation is actively partnering with all stakeholders in idea generation and cooperative awareness. Success depends on the extent of cooperation between stakeholders.

We really need to look at ways to adopt cooperative government and governance. We need to think different. As Albert Einstein once said: “We cannot solve our problems with the same thinking we used when we created them.”

It’s time to think cooperative.

John Mallia is president of the Malta Cooperative Federation.

Comments not loading? We recommend using Google Chrome or Mozilla Firefox with javascript turned on.
Comments powered by Disqus