Rethinking Cooperatives in the 21st Century (1)

During the New Order era in Indonesia, the Village Unit Cooperatives, known as KUDs, were initially set up with good intentions—to distribute subsidised fertiliser, provide cheap credit, and support farmers at the grassroots level. However, over time, many of these cooperatives became little more than political tools imposed by the central government. Local officials or military officers were often appointed as leaders, sidelining genuine farmer participation. The democratic spirit of co‑ownership evaporated. After the fall of Suharto’s regime in 1998, around 80 percent of the 7,500 KUDs collapsed, having been propped up by subsidies and riddled with structural corruption.

I recall one particular district in Central Java where the cooperative office was once a grand edifice with fancy signage and even vehicles parked out front—symbols of power, not grassroots solidarity. Yet, inside, the building sat empty most of the year. Officials only appeared when there was a government-mandated fertilizer distribution or an annual harvest event. Once those were over, the cooperative faded into obscurity. It became clear that without genuine member ownership or professional governance, the KUDs were destined to fail—collapsing not because cooperatives are flawed in theory, but because they were hijacked in practice.

This story from the New Order era serves as a cautionary tale: when cooperatives are built from the top down, treated as political projects rather than member‑driven organisations, they lose their soul. They end up as hollow shells—institutions that exist on paper but fail to serve the people they were meant to empower.

A cooperative is more than just a business model; it is a social and economic movement rooted in the values of solidarity, equality, and mutual aid. At its core, a cooperative is an organisation collectively owned by its members—who may be workers, consumers, producers, or residents—and it operates under democratic principles. This means each member has an equal say in decision-making processes, regardless of their capital contribution, ensuring that power and control remain truly in the hands of the people it serves.

What sets cooperatives apart from conventional enterprises is their fundamental purpose. While traditional corporations often chase profit maximisation to satisfy external shareholders, cooperatives are driven by the collective interests of their members. Any surplus or profit generated is not hoarded by a select few but is typically reinvested back into the business, distributed fairly among members, or used for community development. In this way, cooperatives aim to create long-term, sustainable value for their stakeholders, not short-term gains for investors.

Furthermore, cooperatives are often deeply embedded in their local communities. They support local economies, encourage ethical business practices, and promote social inclusion. In an age where corporate giants dominate the marketplace and wealth inequality continues to rise, cooperatives offer a refreshing alternative—an economy that prioritises people over profit, values over volume, and purpose over power.

Scientifically, a co-operative is defined as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. This definition, formalised by the International Co-operative Alliance (ICA), reflects a precise economic structure: one that operates not for profit maximisation but for the benefit of its members. In contrast to conventional businesses that prioritise shareholder returns, co-operatives redistribute surplus to their members, reinvest in the community, and function on the principle of “one member, one vote,” regardless of capital contribution.

Philosophically, a co-operative represents more than just an organisational model—it is an expression of a worldview rooted in solidarity, mutual aid, and human dignity. It challenges the premise that competition is the only path to efficiency, and instead promotes collaboration as a more ethical and sustainable mode of human interaction. It embraces the belief that people are not merely consumers or labour units, but individuals capable of self-governance, shared ownership, and collective decision-making. In essence, the co-operative model is a quiet rebellion against economic alienation and a hopeful experiment in democratic economics.

From a philosophical perspective, the original purpose of the co-operative was not merely to provide goods or services, but to create a fairer and more humane economic system. When co-operatives first emerged, particularly in early 19th-century Britain, they were envisioned as instruments of social reform—a peaceful alternative to both cutthroat capitalism and the radical revolutions of the time. The founding members believed that people, especially workers, should not be at the mercy of market forces or the whims of wealthy elites. Instead, they should have control over their own livelihoods.

The goal was to build a system rooted in mutual aid, where individuals supported one another not out of charity, but out of shared interest and democratic equality. Co-operatives aimed to restore dignity to labour, ensure fair prices, and eliminate exploitation by middlemen and profiteers. They represented a philosophy that combined practical needs with moral values—economic activity guided by justice, community, and participation. In short, co-operatives were meant to empower ordinary people to become active agents in shaping their economic destiny, rather than passive victims of it.

During the early to mid-19th century, society was undergoing rapid and often brutal transformation due to the Industrial Revolution. Politically, power remained concentrated in the hands of a wealthy elite, with little to no representation for the working class. Parliamentary reforms were slow, and workers had virtually no voice in decisions that affected their livelihoods. Economically, the new factory system generated immense wealth—but only for the owners. Labourers, including women and children, endured long hours in hazardous conditions for meagre wages, and poverty became a widespread feature of urban life.

Socially, the class divide widened dramatically. The traditional bonds of village life eroded as people moved into overcrowded cities, losing community support systems in the process. Many families faced hunger, debt, and displacement. In response, mutual aid societies and early trade unions began to emerge, but they often lacked structure or legal support.

Culturally, there was a growing belief—especially among progressive thinkers—that society could and should be reorganised on more just and humane principles. Influenced by Enlightenment ideals and Christian ethics, figures like Robert Owen advocated for collective ownership, cooperation over competition, and education as a means of social upliftment. The harsh realities of industrial capitalism, paired with the moral and intellectual currents of the time, created fertile ground for the cooperative idea to take root. It was not merely an economic model—it was a cultural and political rebellion against exclusion, exploitation, and inequality.

The idea of co-operation emerged most vividly in early 19th-century Britain, particularly in industrial towns such as Rochdale, Manchester, and Glasgow—places that were deeply affected by the disruptive forces of the Industrial Revolution. It was here that the working class, facing exploitative labour conditions, inadequate housing, and soaring food prices, began to experiment with collective solutions to their daily hardships. The term “co-operative” was derived from the Latin root cooperari, meaning “to work together,” and it embodied the idea of people uniting voluntarily to meet their shared needs through a democratically controlled enterprise.

The most influential expression of this idea appeared in 1844 with the establishment of the Rochdale Society of Equitable Pioneers. These 28 working men, mostly weavers, opened a modest shop selling butter, flour, sugar, and oats—not to maximise profit, but to ensure fairness and quality for members. They referred to themselves as a “co-operative society” because they co-owned the business, shared any surplus earnings equitably, and made decisions collectively. The label "co-operative" therefore was not simply a name; it described a philosophy of mutual benefit, trust, and democratic governance.

In time, this term came to define a global movement that rejected competition and selfish profit in favour of solidarity, fairness, and long-term sustainability. It represented a fundamental shift—from “every man for himself” to “all for each other.”

There is indeed a notable difference between the early definition of co-operatives and how they are defined in the modern era, although the core ideals remain largely intact.

In the early days—particularly in the 19th century—the co-operative was seen primarily as a moral and social mission. It was a response to the injustices of industrial capitalism. Co-operatives were small, community-based efforts led by workers and reformers who sought to challenge exploitation and restore dignity to labour. The emphasis was not on efficiency or scaling, but on fairness, mutual aid, and democratic control. Early co-operatives often viewed themselves as part of a broader movement for social transformation.

In contrast, the modern definition—particularly as standardised by the International Co-operative Alliance (ICA)—has become more structured and globally applicable. Today’s co-operatives are defined as autonomous associations of people united voluntarily to meet common economic, social, and cultural needs through a jointly owned and democratically controlled enterprise. The focus now includes professional governance, financial sustainability, legal recognition, and even international collaboration. Many modern co-operatives compete in complex markets, sometimes resembling traditional enterprises in size and operation, though still committed to member benefit and democratic principles.

The spirit of cooperation remains, but the form has matured. The early co-operative was a grassroots rebellion; the modern co-operative is a sophisticated alternative.

The general concept of a co-operative is rooted in the principle of people coming together voluntarily to meet their shared needs through a jointly owned and democratically managed organisation. A co-operative is not driven by profit for external investors, but by the desire to serve its members. Whether it is about buying groceries, managing housing, gaining access to credit, or producing goods, the co-operative structure prioritises fairness, equality, and collective benefit. At its heart lies the ideal that economic power can—and should—be shared.

The older or traditional concept of a co-operative was deeply philosophical and community-oriented. It emerged as a form of resistance to the harshness of industrial capitalism in the 19th century. It was modest in scale, often informal, and guided by values of solidarity and social justice. Early co-operatives functioned as a moral alternative to profit-driven enterprises, focusing on empowering the working class, protecting the vulnerable, and redistributing wealth fairly.

In contrast, the modern concept of co-operatives, while still grounded in the same ethical foundations, has become more structured, professional, and legally integrated. Modern co-operatives are often large-scale, strategically managed, and operate across sectors—from agriculture and finance to housing and energy. They comply with regulations, adopt technology, and participate in competitive markets. However, they remain loyal to their core principles: democratic control, member participation, and equitable distribution of benefits. In a way, the modern co-operative is the matured version of the idealistic co-operative—still people-powered, but also business-savvy.

Cooperatives remain profoundly relevant in today’s world because they offer a human-centred alternative to profit-driven capitalism. In an age where inequality is widening, job insecurity is rising, and communities are becoming increasingly fragmented, cooperatives reintroduce the idea that economic activity can be both productive and principled. They give ordinary people ownership, a voice in decision-making, and a share in the wealth they help to create. Unlike corporations that often answer only to distant shareholders, cooperatives are rooted in local realities and serve those who are directly involved.

Moreover, with growing concerns about climate change, ethical production, and sustainable development, cooperatives are uniquely positioned to lead the way. Their emphasis on collective benefit over individual gain means they are more likely to prioritise environmental and social responsibility. From community-owned renewable energy projects to food co-ops promoting local, organic farming, cooperatives are proving that it is possible to do business without exploiting people or the planet.

In a time when trust in large institutions is eroding and people are searching for meaning beyond material wealth, cooperatives offer more than just a business model—they represent a philosophy of fairness, democracy, and resilience. They remind us that the economy should serve people, not the other way around.

[Part 2]

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