Cooperative Movement

I INTRODUCTION

Cooperative Movement, a tradition of economic action and business enterprise, characterized by the absence of the profit motive and involving, as its primary function, the distribution of goods and services. Traditionally, it is a movement of consumers who unite on the basis of their mutual interest in reducing living expenses and benefiting from the ownership and control of production facilities and of accommodations shared by all. Some cooperatives, however, serve the interests of people functioning as producers, not as consumers. Producers’ cooperatives include associations of workers who cooperatively own and operate factories or farms. Producers also form associations for the purposes of economically purchasing supplies and of profitable marketing their produce. Such associations have been important elements of the cooperative movement, especially among farmers. Should social changes result from the operation of consumer or producer cooperatives, they are usually regarded as by-products of an economic motivation.

One of the first attempts by consumers to eliminate the intermediate step in distribution occurred in 1761 when a group of British weavers obtained oatmeal and weavers’ reeds through its own distributive agency. In 1795 an association comprising 1,400 residents of Hull, England, established a flour mill to meet the needs of its members. Interest in cooperative effort mounted rapidly in Great Britain during the third decade of the 19th century, largely as a result of depressed economic and social conditions in industrial areas.

II THE ROCHDALE SOCIETY

In modern form, cooperatives date from 1844, when a group of 28 impoverished weavers of Rochdale, England, founded a mutual-aid society, called the Rochdale Society of Equitable Pioneers. As its initial project, the society organized a grocery store, a venture that rapidly prospered. The principles developed for the guidance of this enterprise and others organized by the Rochdale Society have served, with modifications in emphasis, as the basic code of the consumer cooperative movement since that time. Briefly summarized, these principles, popularly known as the Rochdale principles, are as follows: (1) democratic control, with each member entitled to only one vote, regardless of the number of his or her total shares; (2) membership open to all, irrespective of race, creed, class, occupation, or political affiliation; (3) payment of limited interest on invested capital; (4) distribution of net profits, usually called savings or earnings, to cooperative members in proportion to the amount of their patronage. The Rochdale Society developed a number of supplemental principles, which are generally observed in contemporary consumer cooperatives. According to these, part of cooperative earnings are utilized to expand operations; non-members may become members by letting their share of net profits be applied towards their initial share stock; goods and services are sold for cash at prevailing market prices; reserve funds are regularly accumulated for the purpose of covering depreciation and meeting possible emergencies; and educational activities, designed to increase and inform the cooperative membership, are systematically sponsored and conducted. Other supplemental principles hold that labour must be fairly treated and that cooperatives should work together.

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The successful example of cooperative business provided by the Rochdale Society, which also established between 1850 and 1855 a flour mill, a shoe factory, and a textile plant, was quickly emulated throughout the country. By 1863 more than 400 British cooperative associations, modelled after the Rochdale Society, were in operation. Thereafter the English movement grew steadily, becoming the model for similar movements worldwide. By the mid-20th century, it comprised almost 2,400 associations of all types. The Cooperative Wholesale Society is the largest distributive agency in England.

III WORLD COOPERATIVE MOVEMENT

Notable among the European countries in which consumer cooperation received early popular support were France, Germany, Belgium, Austria, Italy, Denmark, Finland, Norway, and Sweden. The Swedish movement, which became remarkably successful in both the distributive and manufacturing fields, is a significant force in the Swedish economy, which is often called “the middle way” to indicate its position between individual free enterprise and socialism.

Following the establishment of Fascist dictatorships in Italy and Germany, the cooperative movements of these countries were systematically destroyed. The same fate befell the movements in countries occupied by Italy and Germany before and during World War II. Considerable progress has been made in rehabilitating cooperatives since the end of the war, and they have become an important part of the economic life of countries in Eastern Europe, Africa, Asia, Australia, and the Americas.

World membership in the International Cooperative Alliance (ICA), which was formed in 1895, gives some idea of the size of the cooperative movement today. In the mid-1980s the ICA recorded a membership of about 355 million individuals. Affiliated organizations existed in some 70 countries, comprising societies of various types, including consumer, agricultural, fishery, productive and artisanal, building and housing, and credit cooperatives. The greatest concentration of membership was in Europe; next in rank was Asia. Through the alliance, mutual trading and financial relations are facilitated between cooperative organizations in various countries engaged in wholesaling, marketing, production, banking, and insurance.

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The policy of the ICA has two principal aims: It seeks to link the cooperative movements in various countries so that they form one expanding the economic system, and it seeks to create a world environment favourable to cooperation by removing causes of economic strife and obstacles to mutual understanding and permanent peace. The ICA is the largest non-governmental organization with a voice in the United Nations.

IV RECENT DEVELOPMENTS

Numerous types of cooperative have emerged in recent years. One of the most important is the housing cooperative (known as housing associations in Great Britain). Housing cooperatives buy houses or flats and individuals can buy shares in the cooperative which entitle them to live in a property. The ownership of the property rests with the cooperative, and maintenance costs are usually shared by all. The increase in the number of housing associations has been particularly large in Great Britain, as local councils have sold off their housing.

Cooperatives for all manner of other goods and services have developed, from electric power cooperatives to funeral service providers. Another growth area has been the formation of marketing cooperatives, whereby relatively small producers pool their produce by selling it through a cooperative. By pooling marketing, transport, and some production costs, the cooperative members can often obtain higher prices and reduce costs. A final growth area has been the credit union, whereby savings are pooled and members are allowed to borrow at low-interest rates. Such cooperatives have played an important role in financing local initiatives in many developing countries.


Contributed By:
Peter Abell

Credited images: Yesstyle