The objective of this thesis is to investigate the feasibility and main dilemmas confronted by producer cooperatives in Northeast Brazil, whose members are handicraft or factory workers. For these purposes, the relevant literature is examined, including works in the socialist tradition, both utopian and scientific, and the economics of cooperation. This literature identifies the tendency towards degeneration, financial and entrepreneurial problems, and market instability, as important characteristics of producer cooperatives, and this diagnosis is confirmed in the case-studies. The research examines the way that producer cooperatives have developed in Northeast Brazil, showing that this depends upon the labour process, which in the case-studies varies from handicraft to manufacturing processes. These cooperatives were created, inter-alia, to relieve poverty. Although receiving support, not only from government agencies to promote cooperativism but also from international donor institutions, severe obstacles to their formation and continued survival are observed in all the case-studies. The research also reveals that formal independence of the cooperative labour relation, often a statutory institutional requirement, disguises the real labour relation which is proper to the piece-rate system. This relationship, together with subcontracting, constitute the major characteristics of the producer cooperatives in Northeast Brazil.