Neoclassical economics is a school of economic thought that is dedicated to analysing capitalism – a fact that is reflected in its theoretical assumptions. Since co-operatives represent an alternative form of economic organisation to capitalism, they require an alternative economic theory. This chapter addresses some key economic questions. It presents a brief introduction to the theory and history of co-operative economic activity. The chapter explores how a system of production and distribution might work if we looked at society as a whole and considered all its members as playing a role on both the production and consumption sides of the economy. It considers the issue of exchange of goods between companies and nations and how this might be conceptualised from within a co-operative paradigm. Finally, it explores how a co-operative economy might have an impact on wider society, and the spillover effects that might arise if economic organisations operated according to co-operative principles.