Capitalism and Cooperation : A Few Issues on Cooperative Institutions in a Developing Economy

Cooperatives as organizational 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. We discuss some basic concepts while comparing different types of economic organization, and illustrate them 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