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Give co-operatives a go

By Harry Throssell - posted Thursday, 7 May 2009

A vivid portrayal of economic division in a nutshell was seen in the Gulf of Aden when three marksmen with state of the art weapons from arguably the world’s richest country, United States, shot dead three men from Somalia, arguably the world’s poorest.

Enthusiastic capitalism has not prevented the world economy going into a tailspin. It has made some people wealthy beyond the dreams of avarice but has never prevented world-wide pockets of extreme poverty. A report on SBS Television’s Cutting Edge program on April 28, 2009, “The Growing Anger of Hunger”, finished with the line “By the end of 2008 the number of undernourished people on the planet had risen to 963 million”.

In the United Nations Human Development Index USA is in the High Human Development bracket with average annual wealth per person of US$44,000 and life expectancy of 78 years. Somalia is not listed at all, having been without an effective government since 1991, but a recent estimate shows average annual wealth of US$600 per person. Ethiopia, also in the Horn of Africa, has per head income of US$700 and life expectancy of 52 years, close neighbour Eritrea average wealth of US$519 and life expectancy of 57 years. Both are listed in the UN’s poorest category, Low Human Development, where all 22 countries except Timor Leste are in Africa.


One commodity of which there is no shortage in both Somalia and USA is guns, a huge economic asset for the countries manufacturing them, notably USA, Russia, United Kingdom, Germany and China.

Milton Friedman

At the beginning of the current world economic crisis, when the mind-blowing excesses of corporate executives came to light, an American company man told a television camera “government should keep out of running the economy and leave it to private business”. Pure Friedmanism, Milton Friedman being the Chicago University School of Economics guru who died two years ago.

In her award-winning book The Shock Doctrine Naomi Klein spells out the human disasters around the world emanating from Friedman’s extreme capitalism, in which the trick is to take advantage of times when government control is reduced and can be manipulated to allow private companies to monopolise economic resources. One element in this, Klein argues, is “the use of public disorientation following massive collective shocks - wars, terrorist attacks, natural disasters - to push through unpopular economic measures”. At the most chaotic juncture in Iraq’s civil war, for example, “a new law is unveiled that would allow Shell and BP to claim the country’s vast oil reserves … [and] the Bush Administration quietly out-sources the running of the War on Terror to [private companies] Halliburton and Blackwater”.

After a powerful tsunami devastates the coasts of South-East Asia “the pristine beaches are auctioned off to tourist resorts. New Orleans residents, still scattered by Hurricane Katrina, discover that their public housing, hospitals and schools will never be reopened”.

Klein also spells out how hopes for poverty-stricken South Africa engendered by the African National Congress election victory of 1994 fell by the wayside when party president Thabo Mbeki adopted Chicago School philosophy and concentrated on business profits but ignored the needs of the general population. Mbeki has now been voted out.

Former British Prime Minister Margaret Thatcher shared admiration for Friedman’s extreme laissez faire advocacy as did her close friend Chilean dictator Augusto Pinochet, widely believed responsible for the “disappearance” of political foes.


Many supporters of the free market system claim to believe in competition but actually prefer monopoly. If a man wants to open a new shoe shop and has the choice of moving into a town already with four shoe shops or a town with none, he would be unusual if he chose the first. He would want to avoid competition. In Australia, Wesfarmers is a conglomerate of many retail and wholesale businesses - Coles, Target, Kmart, Bunnings, Officeworks, to name a few - which reduces competition in the marketplace.

It’s time to give co-operatives a go.

In the recent shock at the failures of the free market the surprise is the lack of attention paid to the alternative business model, the co-operative. In this system the conventional upstairs-downstairs system of masters and servants is changed to a “horizontal” system in which owners, managers and workers all take responsibility for the eventual outcome.

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About the Author

Harry Throssell originally trained in social work in UK, taught at the University of Queensland for a decade in the 1960s and 70s, and since then has worked as a journalist. His blog Journospeak, can be found here.

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