In a few weeks the political campaign will begin and, without a doubt, a central issue will be the generation of employment in the country. As is often the case, many politicians will turn their attention to the cooperative sector, given its 70-year track record of success.
By Gustavo Fernández Quesada
However, little is understood about the nature and trajectory of the model, which is why the hackneyed phrase: “we propose to form cooperatives”, thus in the plural, as if the word alone, in all its doctrinaire nobility, would generate the magic of introducing hundreds or thousands of jobs.
What is striking, and what few people understand (even within the sector itself), is that the cooperatives that have really moved the employment needle in Costa Rica stopped being born 20 years ago. In fact, in the last five years around 200 cooperatives have been formed which, although they may be excellent ventures, fail to significantly affect employability indicators, as the Costa Rican state requires in the current crisis.
What is happening?
There are several key concepts: history, the cooperative act, and supply and demand.
Let us start with the cooperative act. As a general rule, every member of a cooperative is in turn the owner of the enterprise. However, their relationship with the enterprise varies according to how the “cooperative act” is expressed, so that, in summary and in the main, they can be workers, suppliers of raw materials or consumers/users of products and services.
The difficult economic situation in which we live has led thousands of people to form their cooperatives in order to work in them or to provide a product that requires processing, such as fruit, vegetables, textiles, etc., so that the cooperative buys and markets them. In other words, here the cooperative act is crystallised at the level of SUPPLY, i.e., what the person “sells” to his or her cooperative, be it his or her labour force or a product or service.
The main Achilles’ heel of these enterprises, which are those that are born at a rate of around 30 per year, is the MARKET, which, being in recession (especially now because of the pandemic), prevents them from taking off. Therefore, the mortality rate of these groups is very high, generating great frustration and hopelessness, to the detriment of the model.
On the other hand, there are cooperatives whose members are grouped according to the logic of DEMAND, to cover a specific need to receive a good or service at a better price and quality. These cooperatives are born with a comparative advantage: their members are themselves the MARKET and this is what allows them to survive over time.
In short, worker-members and supplier-members materialise the cooperative act from their SUPPLY, while user-members do so from their DEMAND for a good or service. Let’s take a look at the latter in the historical display.
50 years of history
Nearly 50 years ago, the inhabitants of the northern zone and the Chorotega and Los Santos regions did not have electricity service, as ICE did not yet have that reach. They therefore organised themselves into rural electrification cooperatives and created four companies that today are real motors of community development.
The same happened with the national financial system, which had not expanded sufficiently to rural areas. It was then that the inhabitants created savings and credit cooperatives that are now a bastion of the Costa Rican economy and worthy competitors to commercial, public and private banks.
There are currently more than 50 of them and they were born thanks to the citizens’ DEMAND for a timely and urgent service. Today they bring together 90% of the cooperative members in the country and are the ones that generate the most employment in the sector, thanks to their good business and social management.
It is logical that the electrification cooperatives ceased to be formed, as ICE did a good job of covering them. Similarly, for various reasons, savings and credit cooperatives ceased to exist two decades ago.
What is certain is that cooperativism is the GREAT thing that it is, thanks in large measure to cooperatives where the cooperative act is marked by the level of DEMAND, not necessarily by SUPPLY, without detracting from this area which is undoubtedly important and has examples of great value.
I am never suggesting that worker or supplier cooperatives should cease to exist, what I am saying is that, given the historical experience and the reality of the country and the world, it will not be with them that jobs will be MASSIFIED, as Costa Ricans yearn for.
(There might be the option, however, of doing so with highly collectivised self-managed cooperatives, if one looks at the digital economy or even at the issue of self-created housing, but these are very embryonic experiences, with no reference in the country).
Consequently, if a government wants to promote cooperativism as a state policy, the first thing it should do is to look at national history and realise the factors that have boosted the enormous success of cooperatives, in short: the integration of people around common interests and needs.
What is to be done?
I stress: the science lies in organising civil society in the light of its fundamental needs. Citizens must be made to understand that there is strength in numbers and that it is better to buy products and services from their own companies than from transnational corporations, for example.
So let us form cooperative supermarkets, cooperative medical centres, cooperative pharmacies, cooperative hotels, cooperative condominiums, cooperative schools, but let them be born with the DEMAND, that is to say the MARKET, resolved, because the users and consumers are the ones who govern the business. The electrification and savings and credit sectors have already shown that this works in Costa Rica.
In this way, as a powerful indirect effect, thousands of jobs will be opened and the needle of our vilified economy will move. Cooperativism has the solution, but it must be guided by strategy, intelligence and passion.
Gustavo Fernández Quesada: Former Executive Director of INFOCOOP, Costa Rica.