Question

In: Economics

a. ) Why do you think that by comparing cooperative companies and capitalist companies, this alternative...

a. ) Why do you think that by comparing cooperative companies and capitalist companies, this alternative structure may be ideal for both workers and society?

b. ) If so, please explain whether the reason is more common?

Solutions

Expert Solution

A. philosophy of cooperative society is to serve the common man and to liberate him from the oppression of the economically strong people and organizations

Mutual assistance and service are the objectives as distinguished from the aim of the other forms of organization, which is primarily making of profit.

It aims at encouraging self-help on the part of economically weaker sections of the society by looking after a truly cooperative society is the elimination of profit and provision of goods and services to members at cost

As a form of organization, it is an enterprise ordinarily set up by “economically weak” individuals to further their common economic and social interests to eradicate capitalist exploitation, to eliminate middlemen, and to bring the consumer and producer together.

The cooperative movement is commenced among the poor deprived labors and low-middle class people of the society in the post-industrial revolution.

It first begins in 1844 in Britain by 28 weavers. Later this organization revealed at different nations at different times.

Cooperative societies and organizations have several main objectives.

Such organizations are considered to be jointly controlled by those working at the organization and those receiving services from the organization. So, in essence, there are high levels of cooperation between these two parties of people.

Cooperative societies originally came about to unite business owners with their staff members. They led to the practice of private companies being ‘split’ into shares, which were given to employees at various levels of the company.

Merits or Advantages of Cooperative Society

  1. Easy Formation

It is very easy to form a cooperative society as compared to a joint-stock company. The simple requirement is ten or more members have to make written application to the Registrar with four copies of Bye-laws.

  1. Open Membership

Cooperative societies work on the principle of open membership; therefore, many persons can become members. The membership is not restricted to a few persons only.

  1. Democratic Management

All the members of the society are jointly known as the general body, whereas the members who manage the cooperative society are jointly known as the managing committee.

They democratically manage a cooperative society. “One member one vote” is the rule, and thus members can have a voice in management.

  1. Limited Liability

The liability of members remains limited to the extent of capital contributed by them. He is not personally liable to pay the liability of a cooperative society. Generally, his liability is limited up to the face value of shares.

  1. Stability & Continuity

The cooperative society has perpetual succession because it is not affected due to death, insolvency, or lunacy of any member. As it is a voluntary association the old members may go, new members may come, but the life of society is not affected.

  1. Low Prices

A cooperative society can make goods and services available at reasonable cost as the profit margin of the society is very less other reason for a low price at a cooperative society is that it eliminates the middleman from a chain of distribution i.e., goods are directly purchased from the manufacturers or producers and sold to the customers.

  1. Mutual Help

The basic aim of the cooperative society is mutual help. Some of the members realizing this principle may offer their services on an honorary basis; this brings a reduction in management expenses.

  1. Social Advantage

A cooperative society discourages monopoly, brings a better distribution of wealth, works on the principle of service, and controls exploitation.

It also uses its surplus profit for social advantages by way of establishing charitable hospitals, schools, etc. So it increases social welfare.

  1. Mobilization of Savings

A cooperative society is a thrift institution. It provides an effective means of pooling together the resources of the weaker sections of the society


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