The Corporation
Much of the world’s business is conducted under the concept of “the corporation.” A corporation is a legal entity that buys goods and services, sells good and services, hires employees, owns assets, takes on debt, and distributes profits to the shareholders.
The shareholders are the owners of the corporation. They have invested in the corporation with the intent of receiving future profits. The shareholders can be individuals, individuals pooling their investments as a mutual fund, other corporations, and government.
In bigger corporations, the shareholders usually do not take a big role in management of the business. Rather they hire a manager, often called a “chief executive officer.” Once a year, the shareholders decide whether to retain or release this manager.
In smaller corporations, the shareholders are often the managers of the business. Sometimes such a business has just one shareholder.
Some corporations are operating businesses, with a publicly known name and functions.
Other corporations are mostly owning shares in other corporations. Holding companies, shell companies, and off-shore companies are terms used to describe these businesses. Their primary purpose is to shuffle money to minimize paying taxes. Another purpose is to obscure the actual owners. Sometimes the web of ownership is quite convoluted — and difficult to find the true owners.
The Co-operative
My first experience with a co-operative was the Alberta Wheat Pool. My father was our community’s local Pool delegate for about a decade. Once a year, he went to a convention in Calgary to vote on matters for this farmer-owned co-operative.
The Alberta Wheat Pool was formed in the 1920s. Prairie farmers were frustrated at how the few grain companies and fewer railroads could monopolize the product of 100,000 independent farmers. By coming together, the farmers formed a big enough block to give them serious bargaining power.
In essence, the Wheat Pool broke the monopoly of profits in the grain industry. Many farmers were able to rise above a destitution income.
Co-operatives provide a more organic, altruistic approach to business. Co-operatives give the impression of being motivated by service to their membership and not so much about profit.
However, co-operatives still need to think like a business. They compete directly with the corporations. If the co-operatives’ prices are too high or employees are paid too much or not managed well, the co-operative can fail. It seems the goodwill of co-operative ownership is not much of an advantage in the world of business as evidenced by the world having many more corporations than co-operatives. The profit motive is still a strong motivator for business success.
As much as we may desire more co-operatives, it seems difficult to start, sustain, and advance this business model. Something else is needed. Something beyond our current understanding of co-operatives.
Published on Medium 2024
