The Co-operative Movement: An Introduction

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Co-operative Culture
The Co-operative Movement: An Introduction
An Historical Perspective
Origins of the Co-operative Movement
Sheffield Co-operative Development Group
CWS 150 Years - A Sheffield Perspective
The Co-operative Party
Co-operation v Charity
CWS/Co-operative Group

Note: Since this article was last revised in 2011 The Co-operative Group has had to respond to a time of making huge losses. The Co-op has had to sell its Farms and Pharmacy and has lost control of the Bank and Travel. A new rule book has been adopted which has radically altered the way that the Co-op is structured.

To read the new rule book go to: http://www.co-operative.coop/PageFiles/350358825/Co-operative-Group-Registered-Rules.pdf

There is an alternative to Capitalism

Privatisation of resources, businesses and services, benefit the privileged few and reduce everything to the building of private empires of wealth and political power. Everyone else being pawns in the games of the private profiteers. Life is too precious for that.

The Co-operative Commonwealth

I do not claim to reveal a panacea in this subject of how we can all live together to create a social and physical environment which is conducive to health and well-being. It would be foolish to do so. But I can reflect upon the great work (with both its successes and failures) of the Co-operative Movement.

It had its origins in the time when people were being forced by poverty to move from the countryside to the towns to seek work in manufacturing and mining. These people were taken advantage of by the privateers of their day, the owners of the factories and the mines.

It was at this time that people were forced to seek an alternative for their very survival. The collectivist approach stirred in the minds of men. People clubbed together and formed co-operatives, and were sometimes inspired by benign and learned men like Dr. William King of Brighton. This was the beginning of a precarious and often unsuccessful Co-operative Movement. The organisation was patchy and insecure, but this nascent movement organised a number of Congresses.

The co-operative movement at this time was not cohesive, it was not until the Rochdale Equitable Pioneers Co-operative Society was formed that the Co- operative Movement began to make some headway. An experienced co-operator who chaired the Rochdale Board, Charles Howarth, had evangelical zeal and was practical. Experience had taught him what worked and what did not work, he had been involved in a previous co-operative in Rochdale which had failed. With the success of the Rochdale Equitable Pioneers Society, Charles Howarth and other members were being asked to help other communities to set up co- operatives. And these new co-operatives were teaching others still, so that co- operative societies were springing up everywhere and had the benefit of guidance which meant that they were less likely to make the mistakes that earlier co-op’s had made.

It is this sense of solidarity, mutual support and co-operation between all these disparate enterprises which make the Movement what it is. But values and principles which the whole Movement could agree to were needed to unify the Movement. Co-operation cannot work in isolation. The Rochdale Equitable Pioneers Society established principles for the Movement. The Values & Principles of the International Movement in the 21 st century are adapted for the modern world and agreed by all bona fide co-operatives, but they have their origins in the Principles first established in Rochdale.

The Rochdale Principles

  1. Open membership
  2. Democratic control (one man one vote)
  3. Distribution of surplus in proportion to trade
  4. Payment of limited interest on capital
  5. Political and religious neutrality
  6. Cash trading
  7. Promotion of education

Experience and practicality over the ensuing years necessitated some changes. For example, political neutrality is impossible when the Conservative Party exists to support the very anathema of co-operation, i.e. the private sector driven by personal aggrandisement and competition – the individualist philosophy. The Movement needed a political party which would be an advocate of co-operation, in due course the Co-operative Party was born, and found an ally in the Labour Party.

Cash trading is no longer numbered amongst the Co-operative Principles. (See appendix for the modern day co-operative Values & Principles).

A constant and very central principle for the Co-operative movement is the promotion of education. The early co-operatives had reading rooms before the advent of the public library. Lectures and classes were organised for the members. Many working class people in areas of depravation owe much to the co-operative movement for their educational development. Moreover, an educated membership was necessary for the continuance and development of the co-operative, after all, co-operatives are member run and member owned for the benefit of the members and the wider co-operative commonwealth. The directors and activists of the co-operative society are elected from the membership by the members. An aware and educated membership has always been very important, it is indeed the very foundation of the co-operative movement.

The dream of The Co-operative Commonwealth is the common ownership and control of the engines of society for the collective wellbeing of all people and a sustainable environment. This vision is so different from the world as it is, although the Co-operative movement has been making steady progress for two centuries, steady progress with setbacks from time to time. But the world is still Capitalist, there is a long way to go.

The Co-operative Group

The Co-op or as its businesses are now branded ‘The Co-operative’ is, of course, a co-operative. This means that it is guided by the Values and Principles of the Movement.

In capitalism, profits go to speculators who buy and sell shares on the stock market. The profits, in other words, go into private individuals pockets. The businesses are answerable only to a moneyed elite, their only purpose, profit maximisation. The Co-operative is completely different. Any surplus which the Co-operative makes is directed into fulfilling the purposes of the Co-operative Movement, guided by its Values and Principles and steered through a representative democracy, every member can play a part.

A percentage of the surplus is returned to the members, staff and communities in dividend or share of the profits as it is known.

Questions to ask when you trade with a business:

  • What is the purpose of this business?
  • For who’s benefit is this business operating?

If it is not a co-operative the answer to these questions will probably be; for private wealth accumulation.

A co-operative is a business which has intrinsic value, trades fairly and employs trading surplus to further the objective of collective well-being.

The Co-operative Movement

In 1844, in Rochdale, a group of people came together to set up a co-operative. There was a community need for a store to provide basic provisions. Up until then, working people were being sold poor quality food at unfair prices. People were being exploited both as employees and as consumers.

A few enlightened people came to the conclusion that community ownership of food and general provisions would give the customers control of the quality of the produce, ensure that trade was fair and return any surplus which the business made to the community.

But first, business premises and stock were needed. And that is when the co- operative launched its share offer. The minimum shareholding for membership was a one pound share. This was well out of reach for most of the working people in the Rochdale of 1844.

People started to pay for their share in instalments. There would have been some well meaning people who could afford to buy their one pound share in one go. Suffice to say, the share offer raised £28 and with that, the store (a disused warehouse) at; 31 Toad Lane, Rochdale was opened on the 21 st December 1844.

That co-operative enterprise lead to the present day Co-operative Group with an annual turnover of £14 billion. But the minimum shareholding for membership is still a one pound share.

With the success of the Rochdale Co-op, other groups of workers formed co-ops all over the country. So successful were they that the capitalists began to feel threatened. The co-ops were beginning to find that the banks and insurance companies were refusing to do business with them, and wholesalers were trying to squeeze them out of business.

In 1863 the Co-operative Wholesale Society (CWS) was established, followed by the Co-operative Insurance Society (CIS) and the Co-operative Bank. No longer were the co-ops dependent on the whims of private business interests for the provision of wholesale, insurance and banking.

The movement, however, needed to be supported and defended and so the Co- operative Union was founded in 1869 to play a similar role to that performed by the TUC for the trade union movement. Since then it has advised retail societies on financial, legal, labour and taxation matters and provided education and training through the Co-operative College (an integral part of the Co-operative Union). The Co-operative Union organises an annual meeting – Co-operative Congress – at which all co-operative societies affiliated to the Co-operative Union may be represented. In 2003 the Co-operative Union changed its name to Co- operatives UK after including as members non-retailing co-operatives such as credit unions, agricultural, housing, worker and service co-operatives.

The Co-op Party

By the time of the First World War it became clear that the movement needed political representation. Legislation was weighted against co-ops and the capitalist institutions were only too eager to put them down.

The Co-operative Party was formed in 1917 as the political arm of the Co- operative Union and is still responsible to the co-operative movement. The founding conference, attended by more than 900 delegates who represented more than 500 co-op societies, was held at Westminster Central Hall. Ten years later the Co-operative Party and the Labour Party signed a formal agreement which enabled local Co-operative parties to affiliate to constituency Labour parties. At elections the two parties work together to return Labour or Labour/Co- operative candidates to the UK parliament, the European parliament or local councils and assemblies. There are currently 28 Labour/Co-operative MPs in the House of Commons, and 14 Labour/Co-operative peers in the House of Lords. In 1900 there were 1,439 co-operative societies. Today there are 19, Peter Marks, chief executive of United Co-operatives, has spoken of a day when there might be one single co-operative society in Britain. Whether or not that ever happens we have yet to see, but it is true that co-operative societies co-operate with each other. They have formed a trading group which allows them to buy wholesale jointly in order to keep prices down.

Co-operatives grew from small groups of people meeting a collective need: economic necessity coupled with the values of community. In time, in response to differing pressures, the co-operatives in the retail sector merged and became larger. People working together in this way had created a climate by which they could fulfil their educational, social and economic needs. I still have my grandparents’ share book. They joined Brightside and Carbrook Co-operative Society (later Sheffield Co-operative Society) in 1922. My grandfather was a manual worker at Tinsley Park Coke Ovens and they lived through some rough times, especially 1926. The twice yearly ‘divi’ really meant something and at times they would not have been able to manage without it. At other times they did not draw it out and left it there for a rainy day. The last entry in the share book is 1971. As a child I remember quoting my grandmother’s divi number when I ran an errand.

The most outstanding thing about co-operation is its ability to adapt, to fulfil all kinds of common need. Who would have thought that today we’d have a phone co-op, credit unions, renewable energy co-op’s, housing co-ops, football supporters’ trusts, care co-ops, public houses and council’s leisure services run as a co-op’s. The list grows because as needs arise, the co-operative model can be adapted to meet them. We are approaching a time when all our goods and services can be supplied by co-ops. We will indeed be living in the co-operative commonwealth.

What the Labour Party lost when it abandoned its old clause 4, the Co-operative Party can put back through co-operative common ownership. All this is anathema to the Tories. They despise it. The co-operative movement suffered badly during 18 hostile years of Tory government when a culture of demutualisation began. At one point the existence of the CWS, the pillar of British co-operation, was threatened by the Regan debacle, or Lancia affair.

Since Labour came to power in 1997 the co-operative movement has received a good deal of support in the Commons, mainly through private members’ bills supported by the government and the Co-operative Party, and some good pieces of legislation have been enacted to support and strengthen the movement. These include the Industrial & Provident Societies Act, the Employee Share Scheme Act, and the Community Interest Companies Act.

We should be aware of the advantages the movement has gained during Labour’s time in government. And what we stand to lose with the Tories, with their recipe of mono-cultural capitalism. We should see the Tories talk about co- operation for what it is, a distraction which will do the Co-operative Movement no good at all. The Tories exist to support the private sector, and private vested interests.

Workers co-ops are represented by ICOM (Industrial Common Ownership Movement) which is now incorporated into Co-operatives UK. We have many of them in Sheffield. Help and advice for those seeking to set up a co-operative is always available from Co-operatives U.K. or The Co-operative Group (through the Co-operative Enterprise Hub).

Culture and ethos

The co-operative movement is not only a collection of businesses, it is a culture, an ethos, which carries the seeds of radicalism. This is the same radicalism which transformed the social horrors of the industrial revolution to the relative comfort of the 20th century. It is also the radicalism that seeks to deliver us from the market fundamentalism of Thatcherism. It is a firm and integral part of the Labour Movement and has been since its earliest days.

The co-operative movement is internationalist and is not content to rest upon its past achievements of delivering good, honest, fairly traded food to its members and customers. That battle is largely won. It is in the international context that the work must go on. That is why the co-operative movement has been a leading player in making the Fairtrade Mark products mainstream in supermarkets. The Co-op has led by example, being a member of the ‘Ethical Trading Initiative’ and converting all its own label coffee, tea and other hot beverages and block chocolate to fairtrade.

The Co-operative Group have made it a priority to source their own label products ethically. ‘Ethical trade directs its efforts at improving basic human rights and safe workplace standards for employees of supplying producers and manufacturers.’ These standards are verified by continual monitoring which includes visits from representatives of the co-operative movement. Other Co-op labelled products carry the Fairtrade mark. This guarantees the producers a fair price for their produce.

Being membership-based organisations which recognise the cultural and educational dimension, co-ops organise events all over the country to help foster an understanding of these international issues. They play a major role in campaigns such as Fairtrade Fortnight, Make Your Town Fairtrade and Make Your School Fairtrade.

It is not only trading issues which concern the Movement but the whole environmental spectrum which affects us all. For example, events have been organised throughout the country to help members and the public at large to understand the implications of climate change. Partnerships with The Co- operative Group have included Friends of the Earth, Climate Care, the Woodland Trust, Oxfam, The Transition Towns Network, the Federation of City farms & Community Gardens, The W.E.A.,& The Equality Trust.

The Co-operative Movement is going through a big change at the moment, after a period when large sections of it became dispirited and moribund. In the Co- operative Group, for example, real dividends have been restored, providing twice yearly payments to members based on their trade with Co-op Group businesses in areas such as banking, insurance, funerals, pharmacy, food and travel. In the last four years the co-operative movement has become stronger and more focused on its values. There are now 19 consumer owned co-operatives in the UK (including the Phone Co-op). Sheffield Co-op, Leeds Co-op, United Co-ops, Lothian Borders & Angus Co-op and Plymouth & South West are now all part of the Co-operative Group.

Furthermore, The Co-operative Group has bought Somerfield.

After further legislation which allows different types of mutual and co-operative organisations to merge, Co-operative Financial Services (The Co-operative Bank, CIS, and Smile) have merged with Britannia Building Society. All of this has necessitated a constitutional review to renew the membership structure and area and regional boundaries, and to accommodate the enlarged Society.

The Co-operative Review of 2009 includes some impressive figures for the Movement. ‘Over 4,820 jointly-owned, democratically controlled, enterprising businesses, owned by more than 11.3 million people, 1 in 5 of the British population, creating and sustaining more than 205,800 jobs, contributing £28.9 billion in turnover and £9.7 billion in assets to the UK economy, building wealth for the many not the few...’

The Co-operative Group has Values and Principles committees which guide the society to fulfil the co-op values and principles in the best way possible. Yet, as with any democratic membership organisation, it functions best with a large, active and well-informed membership.

Of course, co-operative societies would not be able to function if they failed to make a profit or surplus. The co-operative in the market place is pitched against some of the most ruthless players in the commercial world. The Co-operative Group’s re-branding exercise will emphasise to the shopping public the unique nature of a co-operative. With a renewed membership, and societies merging into a more cohesive movement, this is a decisive moment in a co-operative renaissance.

For Further Information

Statement on the Co-operative Identity

Definition

A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Values

Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co- operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

Principles

The co-operative principles are guidelines by which co-operatives put their values into practice.

1st Principle: Voluntary and Open Membership

Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

2nd Principle: Democratic Member Contro

Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and cooperatives at other levels are also organised in a democratic manner.

3rd Principle: Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of hat capital is usually the common property of the co- operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.

4th Principle: Autonomy and Independence

Co-operatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

5th Principle: Education, Training and Information

Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation.

6th Principle: Co-operation among Co-operatives

Co-operatives serve their members most effectively and strengthen the co- operative movement by working together through local, national, regional and international structures.

7th Principle: Concern for Community

Co-operatives work for the sustainable development of their communities through policies approved by their members.


More information about the values and principles can be found at: www.ica.coop

Notes

Capitalism: An economic and political system in which a country’s trade and industry are controlled by private owners for profit.

Co-operation: People working together collectively for mutual benefit. (See statement on the Co-operative Identity).

Clause 4 part IV: of the Labour Party constitution 1918 – 1995.

‘To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service.’

Peter Marks: was chief executive of United Co-operatives until its merger with the Co-operative Group in 2007 when he became chief executive of The Co-operative Group.

The Lancia Affair: An attempt to demutualise the Co-operative Wholesale Society for private gain.

See The Hidden Alternative. Ed. Anthony Webster, Linda Shaw et al. Chapter Two. Pub. Manchester University Press.

Further reading

Co-op: the peoples business Johnston Birchall. Manchester University Press. 1994

New Views of Society. Robert Owen for the 21 st Century. Ed. Richard Bickle & Molly Scott Cato. Scottish Left Review Press

Building Co-operation - A Business History of the Co-operative Group, 1863 - 2013

John F. Wilson, Anthony Webster and Rachael Vorberg-Rugh. Oxford University Press.


Steve Thompson

2005 revised 2009, 2011 and 2015

steve@sheffield.coop