Portugal was a pioneer in state-led cooperative development. In 1867, the parliament passed legislation encouraging workers to organize their own collective businesses. In the view of the ruling elite, this would prevent the emergence of a class cleavage between labor and capital, contributing to the stability of the liberal economic and political order. Combining the historical method with John Kingdon’s multiple-streams approach to policy formulation, this article examines the complex array of domestic and external factors that shaped this policy intervention. Additionally, the study explores the impact of the policy on the involved stakeholders. Far from fulfilling the expectations of its promoters, the law on cooperatives seems to have only marginally stimulated the growth of the sector. Moreover, the government’s support to cooperatives seems to have undermined the legitimacy of the model in the eyes of a labor movement that was starting to see its interests as opposed to those of the ruling class.
