The Significance of Cooperatives for Social Justice

Throughout the world today, societies are being torn apart due to the fact that various social groups and classes are not getting their due respect from other forces in society. Many societies are lacking social justice which could be seen as equal opportunity treatment of all persons in society. Various institutions have the responsibility to ensure this happens. Yet social justice is absent in many instances.

Cooperatives are based on principles and values that speak directly to the issue of social justice. Most traditional cooperatives follow the seven principles of cooperative identity, promoted by the International Cooperative Alliance (ICA), an Apex organization for cooperatives around the world. These principles call for the practice of democracy, equality, equity and solidarity. Cooperatives also embrace the ethical values of honesty, openness, social responsibility and caring for others.

With these principles and values at the core of cooperative operations, the poor, excluded and marginalized sectors of society are usually served well by cooperatives. The financial sector is one area where this has shown well. Financial cooperatives are some of the largest providers of micro-finance services to the poor. It is estimated that globally, financial cooperatives reach 78 million clients living below a poverty line of $2 per day. Financial cooperatives thus play a central role in the achievement of an inclusive financial sector that encompasses the poor.

Through their commitment to servicing the poor and under-served, financial cooperatives are helping to lessen the burden of poverty. Financial cooperatives, by providing savings products, help to reduce members’ vulnerabilities to shocks such as medical emergencies.

Cooperatives have also been instrumental in promoting inclusive development in rural areas, helping to both strengthen and diversify rural economies. Financial cooperatives provide access to credit for members who might not typically have access to the larger savings and commercial banks. This is significant in markets where financial providers are absent owing to poor revenue prospects, high risks, or high transaction costs. This access to financial services often supports the formation of small and micro businesses.

Cooperatives have also been able to strengthen agricultural production and improve access of poor farmers, especially through engaging in fair trade arrangements. Small farmers who struggle to create and sustain businesses of their own are able to increase farm revenues, lower marketing and information-gathering costs, as well as enter into high-value supply chains that they would not be able to do on their own.

While the need for more research cannot be denied, that which exists supports the idea that, if given the right supportive environment, cooperatives could help in profound ways to achieve social justice, where it is lacking. Empowering cooperatives to leverage their capacity to contribute to social justice requires a sound policy and legislative framework.

The International Year of Cooperatives 2012, declared by the United Nations General Assembly, is one means to raising awareness. By raising awareness of cooperatives – what they are and what they do – the IYC will empower cooperatives to promote their social justice values and encourage governments to create supportive policy and legislative frameworks, where needed.

Even with this support, the challenge of effective implementation of the cooperative principles and values cannot be ignored. The sound governance of cooperatives depends upon a well-informed and active membership base, dedicated to cooperative values and principles. To sustain the drive of cooperatives for social justice, a strong membership base, bound by the democratic one-member-one-vote principle, is essential to addressing weak or unethical management, capture by local politicians, or other conflicts of interests which could divert cooperatives from addressing social justice issues.