Capitalism and cooperation: cooperative institutions in a developing economy

Abstract

Cooperatives as organisational arrangements of collective economic activity can break up interlocked capital, labour and output markets in rural areas and alleviate poverty. The recent parallel law on cooperatives provides an opportunity to take a fresh look at this issue. Some basic concepts are discussed while comparing different types of economic organisation, with a few empirical examples to bring out the conditions under which cooperative arrangements can generate economic surplus and alleviate poverty. An interesting feature of the simple cooperatives we discuss is that perhaps they benefit only the poor and not those who are better off and have access to mainstream credit and markets.