Prof. Stiglitz, who is currently on the faculty at Columbia University and has also served on the Council of Economic Advisors to President Bill Clinton and as Chief Economist at the World Bank, has long denounced the growing divide between the rich and poor, a phenomenon exacerbated by the financial and economic crises.
The Nobel Prize laureate was a keynote speaker at the International Summit of Cooperatives in Quebec, an initiative of the International Co-operative Alliance and Desjardins Group.
The three-day conference, from October 11 to 13, which brings together over 3,000 delegates from across the world to discuss the future of the co-operative economy, this year focused on “the power to act” of cooperatives. This edition demonstrated that cooperatives have been gaining popularity as a different kind of development model, which account for more than 2.6 million businesses, 1.3 billion members and close to 15% of the world's economy.
For example, cooperatives affiliated to CICOPA, the International Organisation of Industrial and Service Cooperatives, contribute to a decent and dignified life and to the social and economic integration of refugees and migrants in various parts of the world.
They are also used as a tool by migrants and refugees themselves for developing entrepreneurship initiatives together with other members from the community, thus increasing autonomy, solidarity and human development while at the same time contributing to a sustainable economy both globally and locally. This is why cooperatives business operates to serve the needs of the members who own and control it, without gender, social, racial, political or religious discrimination, while most ordinary businesses operate to maximise the return to financial investors.
We should learn from co-ops. If we do, we can reshape our economy, reshape globalisation and who we and our children are. These alternatives make a very big difference. I believe we can construct a world where the economy performs better for all, based on solidarity.
Ordinarily, as Adam Smith explained, selfishness leads markets to produce whatever people want; to get rich, you have to sell what the public is eager to buy. Mr. Stiglitz, in contrast, believes that cooperatives may play a crucial role to construct an economy that performs better for all, based on solidarity. Even in some advanced industrial countries, millions of households are faced with the threat of losing their homes, their jobs, and access to healthcare. And that worst of all, executives are still being paid enormous sums of money based on the short term performance of their companies while their long-term health may be on shakier ground. “An economy that doesn’t serve the interests of most of its citizens is a failed economy" Stiglitz warned.
Who is to blame for this? For Mr. Stiglitz, the answer to this question is clear. Inequality has been a choice, not an unexpected, unfortunate economic outcome. “In the United States, the steps that we have taken have resulted not only in greater inequality, where the income share of the richest 1% equals that of the bottom 90%, but also in slower growth, more instability and, overall, a worsening in the economic performance. Inequality also manifested itself as a lack of access to health services, opportunities and justice”.
Growing inequality is a result of how we have structured the market economy – in particular how we have restructured it in the last third of a century. Inequality has been a choice.
How cooperatives fight inequality? Professor Stiglitz strongly thinks that mutual businesses with their focus on the economic and social development of their members, and their strong democratic principles, may not only reverse the trend of growing inequality but also offer an attractive solution to the main social and economic issues of our times.
Cover Photo: Alex Wong/Getty Images