On March 30, the presentation of my latest book, 55 years of cooperative banking, took place in the Sant Pau hospital auditorium. Caja de Ingenieros, a history of the future. Written in collaboration with Yolanda Blasco, the book portrays the development of a financial entity with procedures and objectives substantially different from traditional banking. As a general conclusion, an idea: credit unions contribute to financial and economic stability.
In corporations there is a conflict between the producer and the consumer to maximize their surpluses, and it is from the correlation of forces where the managers guide the company with the ultimate goal of maximizing profits. It often happens that, in order to satisfy the shareholder, the propensity to fall into praxis of doubtful suitability is high, and the road to financial crises begins precisely there. Remember the triggers of the Great Recession or the failures of Silicon Valley Bank or Credit Suisse. Some practices that have normally cost the taxpayer a lot.
Cooperatives are not companies designed to maximize profit. They are created to meet the needs of their members. This is at the root of the conceptual differences between the social economy and the capitalist one. The partner shares the double condition of owner and client, for this reason there is no conflict between producer and consumer, and since there are no shareholders, the management is not aimed at revaluing the share, but focuses on providing service to the partner and on reconcile it with the common good. Orients management towards prudence and avoids speculative practices. That's why they didn't have to be bailed out during the Great Recession. This conception is a source of competitive advantage in a globalized environment for small entities in relative terms, and it is necessary for the regulator to understand the idiosyncrasies of their operation and the positive externalities they generate.
Credit cooperatives operate in an inverse dynamic to traditional banking; the product portfolio and the management of assets and liabilities are oriented towards commercial precepts of support and advice. The sense of community favors sustained growth; For this reason, they are totally or partially detached from the economic cycle and are a source of financial stability for the system as a whole.
Aristotle, in the Nicomachean Ethics, stated that when money has a reproductive purpose in itself, it is unnatural and money-making; instead, he maintained that when it serves the needs of the community it is positive. Aristotle placed oikonomia (origin of the concept of economy) as the study of the administration of the family unit or property, as opposed to chrēmatistiké as a discipline that seeks to increase wealth. Cooperatives work on oikonomia above chrēmatistiké, which is why they are so necessary.
