Co-operatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

The 4th Principle of Autonomy and Independence was first introduced as a specific Principle of co-operative enterprise when the Co-operative Principles were reformulated in 1995. It primarily focuses on the relationship of co-operatives with national governments and international governmental organisations, although it also has implications for the relationship between co-operatives and other commercial entities, such as a commercial lender providing capital to a co-operative and suppliers and others in a dominant position in the value chain.

Prior to 1995 the ideal of co-operatives being autonomous and independent organisations democratically controlled by their members was an implicit aspect of the co-operative identity, rather than explicitly stated. The 4th Principle and the Alliance's definition of a co-operative now clearly state that autonomy and independence is a key characteristic of a co-operative.

The integrity of a co-operative as an autonomous and independent organisation rests on the co-operative values of self-help, self-responsibility and democracy that have been central to co-operative identity since the emergence of sustainable co-operative enterprises in the 19th century.

Early co-operators in many countries explored ideas that would lead to a just and fairer society, often in heated debates. They sought to lift and keep people from the grinding poverty prevalent at the time. These early co-operators concluded that it was no use waiting for governments or those in possession of wealth and power to bring about fundamental change in the circumstances of those living in poverty, but that change to a fairer economic world could only be achieved by working together and by applying the values of self-help and self-responsibility in co-operation with others.

The successes of early co-operators1 was achieved without any legislative support or financial assistance from government. However, like these early pioneers, co-operatives in all parts of the world are still very much affected by their relationship with the state. Governments determine the legislative framework within which co-operatives operate. In their taxation, economic and social policies, governments may be helpful or harmful in how they relate to co-operatives. For that reason, all co-operatives must be vigilant in developing open, clear and where possible, constructive relationships with governments. Since the liberalisation of global markets for finance and trade by the largest developed economies in the 1980s, wealth and income inequality has grown in most countries and with it the threat of social and democratic instability. The search for a more humane society in which wealth is more equitably shared and how to achieve it remains an acute global challenge today.

The prevalence of economic doctrine that recognises investor-owned businesses as the dominant model of enterprise presents challenges to existing and new co-operatives which, though presenting an alternative and more sustainable economic model, have to live within the legal, financial, tax and regulatory frameworks designed to protect and support the dominant economic model. These frameworks create constraints that present new challenges to the autonomy and independence of co-operatives.

The rapid acceleration of globalisation since the 1980s has also resulted in the concentration of financial power in the hands of a small privileged group of very wealthy individuals, sovereign wealth funds, and investor-owned banks and other financial institutions. That power, together with that of new global enterprises which are also suppliers to or customers of co-operatives, presents new threats to the autonomy and independence of co-operatives. A co-operative enterprise that is largely dependent on trading with one investor-owned private sector commercial business creates a significant risk to its autonomy and independence.

The dominance of the investor-owned model of enterprise is shown by the fact that it is often the only economic theory taught in university economics departments and business schools, co-operatives being mentioned only in passing and rarely treated in economic textbooks. Despite this, there is a growing awareness among governments and international inter-governmental organisations, like the United Nations (UN), the International Labour Organization (ILO) and the UN Food and Agriculture Organization (FAO), of the potential of co-operatives to improve living standards of the poor and address the growing crisis of inequality. Moreover, in many countries the role of co-operatives has been shown to improve the market by creating fairer competition for customers.

The 2001 UN General Assembly Resolution 56/114 on Co-operatives in Social Development and the UN's draft Guidelines on Creating a Supportive Environment for the Development of Co-operatives2 together with the 2002 ILO Recommendation 193 on the Promotion of Co-operatives3 shine a light on the growing awareness of the importance of co-operatives in tackling poverty and inequality. The importance of co-operatives as delivery vehicles for achieving its 'Sustainable Development Goals' is also recognised by the UN.

The UN and the ILO stress that the specific nature of co-operatives - including their autonomy and independence as democratic organisations controlled by their members - should be recognised and respected and that a fair, level playing field needs to be created for co-operatives in national and international law, finance, tax and regulatory regimes. Independence from government and the importance of creating a level playing field for co-operatives does not exclude governments from recognising the value of co-operatives and supporting their development. This can be done by legislation and policies that promote the development of co-operatives while preserving their independence and autonomy. Co-operatives are inherently useful to governments wishing to develop their national economies in ways that are economically, socially and environmentally sustainable.