Finding the middlep path : the political economy of cooperation in rural India

Soviet-style socialism has failed; but in Russia, China and India the transition to capitalism has proven hazardous. Elsewhere, capitalism itself appears to be in crisis, often failing to meet the fundamental needs of workers, small farmers, and even the middle classes. Clearly, the world needs enterprises that are both economically efficient and socially responsive.

In India, some farmers have poineered a middle path, neither socialist nor capitalist. They have built efficient, large-scale cooperatives for processing and marketing farm products. Without special subsidies, these co-ops have competed successfully against private and state enterprises. Moreover, they are responsive to the interests of their members, who are mainly small farmers.

What makes these cooperatives successful? The best ones are concentrated in certain regions, where they perform well, in part, due to

favorable social and economic conditions. However, many cooperatives in similar regions are not so fortunate: They are stagnant or moribund due to lack of active participation and control by their members. This situation results from policies of bureaucratic paternalism and state management enforced by regional governments. Under such policies, the so-called cooperatives are really state enterprises, mostly mired in waste and corruption.

This book, a collaboration between Indian and Western researchers, is the first using a comparative framework to explain the striking regional differences in performance by cooperatives in rural India. Demonstrating how institutional performance can be evaluated in developing countries, this analysis points toward general principles of organizational effectiveness, revealing the potentials and limitations of cooperatives as instruments of rural development.