The Twilight of Giants: The Peculiar Case of Cooperativism in Iceland

The contrast with its neighbors is sharp. While in Nordic peers like Denmark or Norway the cooperative model flourishes as a sustainable alternative, in Iceland the movement seems trapped in history books. How did one of Europe’s most collectivist economies transform into a system centered on deregulation and the private sector?

A State Within a State

To understand modern Iceland, one must talk about the Samband (Samband íslenskra samvinnufélaga). Founded in 1902, this Federation of Cooperative Societies was born as an act of defiance. At the time, Iceland was a poor colony under Danish rule, and trade was controlled by foreign monopolies that stifled local producers.

The Samband was the sovereign response. What began as a support network for farmers grew into the country’s largest commercial organization. At its peak in the 1960s and 70s, the Samband was a "State within a State." It operated shipping lines, factories, insurance companies, its own bank, and the island's most extensive food distribution network. It was the force that industrialized the country and guided it toward independence, ensuring that profits remained in the hands of the community.

The Collapse and the Trauma of the 90s

However, the giant had feet of clay. The 1990s brought a perfect storm: inefficient bureaucratic management, rising debt, and a radical shift in political mentality toward neoliberalism. The cooperative model began to be seen as a slow anachronism compared to the perceived agility of joint-stock companies.

The bankruptcy of the Samband was a cultural trauma. The mass privatization that followed erased historic names and left a scar on the collective psyche. The word "cooperative" became synonymous with mismanagement. Today, while cooperatives in other countries are numbered in the thousands, barely 30 registered entities survive in Iceland.

A Modern Mutation

Despite the decline, the model has successfully mutated. The most visible example is Mjólkursamsalan (MS). This dairy cooperative, owned by farmers, controls the sector and has turned Skyr into a global phenomenon. They have proven that a cooperative structure can be competitive in international markets if it modernizes.

On the other hand, the housing crisis in Reykjavík is forcing people to look backward. Housing cooperatives have emerged, seeking to remove the profit motive from the right to a roof. However, current laws require a minimum of 15 founders to establish a cooperative—a bureaucratic barrier that many believe is designed to favor traditional developers.

Iceland stands at a crossroads. With a 90% unionization rate, the DNA of collective action remains intact. The "one for all" system that liberated the island a century ago lies dormant, waiting for legal reform and a shift in narrative that will allow cooperativism to once again become the engine of innovation and resilience that the 21st century demands.