The co-operative advantage: a rich and varied contribution to social enterprise
The Guardian, by Rory Ridley-Duff
As it’s the UN International Year of Co-operatives, let’s look at how co-operative values can improve management practices.
The launch of the UN International Year of Co-operatives provides a fresh opportunity to consider the rich and varied history that has contributed to the growth of social enterprise. This short article pinpoints the enduring role of co-operative values and principles to the improvement of management practices.
The popular story of the co-operative movement, propagated recently in a TV campaign by The Co-operative Group, is that a revolution occurred when the first co-operative retail society was formed by the Rochdale Pioneers near Manchester in England. While this is an interesting story, and one worth telling, it is also misleading.
The co-operative movement worldwide has a much longer and more varied history than the one put forward by The Co-operative Group. Recently, I visited Haworth in West Yorkshire. As I walked down its delightful cobbled streets, there was a building etched with the words Haworth Industrial Cooperative Society. Intrigued, I did a search and uncovered information in the UK’s national archive.
Haworth’s co-operative society was one of 39 that formed from 1722 onwards in West Yorkshire, and which eventually came together when the Yorkshire Co-operative Society was formed in 1986. Sixteen of the co-operatives listed have "industrial" in their title and driving around the villages and towns near Haworth indicates why. The region was the heartland of co-operativism, where societies of artisans and weavers built a textile industry in the 18th century.
By the early 1800s, industrialisation had introduced the factory. Weavers, trade unionists and Chartists from Manchester to Hull, many at the centre of an embryonic co-operative movement, had to find new options for survival and development of cooperative ideals. Sixty of them formed The Rochdale Friendly Cooperative Society in 1830 and (like hundreds of others societies across the UK) continued to experiment with co-operative models.
Robert Owen highlighted the need for education, but he was ambivalent about democratic organisation and surplus sharing. The Rochdale Pioneers’ place in history was their realisation that the co-operative ideology of Owen, and his commitment to education, needed to be married with their own knowledge on democratic self-management and surplus sharing among co-operative members.
Establishing the core principles of open membership, member education, democratic self-management and surplus sharing represents the legacy of the Rochdale Pioneers to the international co-operative economy.
The International Co-operative Alliance spread these principles, making an argument that a cooperative advantage derives from ending the economic and social costs associated with the exclusion of producers and customers from enterprise management. Instead, co-operative enterprises act as an institution through which producers and consumers gain a political voice, and can build the individual and collective capital needed to secure independence. This vision of socialised enterprise unsettles those who prefer private and state ownership of the economy.
In the UK and US, private investors ("carpetbaggers") infiltrated co-operative financial institutions throughout the 1980s and 1990s, secured their demutualisation and accelerated the conditions that led to recent global financial crises.
Governments, particularly in Africa and Asia, introduced laws and used their political power to bypass democratic controls in co-operatives to secure political appointments and end their tradition of autonomy.
The co-operative model, based on member control, can never be taken for granted. Threats to democratic self-management and the equitable distribution of surpluses can develop in a variety of ways. If unchecked, they can damage the reputation of the co-operative movement – and, indeed, have done.
Despite this, the ICA has successfully weathered two world worlds and numerous financial crises and recessions, and continues to put up strong resistance to both investorled capitalism and state-led socialism. After recent financial crises, it now looks surprisingly fresh and healthy (both intellectually and financially). New examples of producer, worker and consumer co-operatives show the enduring value of developing a co-operative economy.
From Japan’s fishing co-operatives to the Emilia Romagna region in Italy, from the Mondragon Corporacion Cooperativa to the energy and plywood co-operatives of the USA, from the Irish credit unions to the Canadian social economy, established examples are everywhere waiting to be studied.
In the past 20 years, co-operative entrepreneurship has been developing in rapidly growing economies. Tens of thousands of village co-operatives have emerged in China. Industrial and agricultural cooperative movements are spreading rapidly throughout South America. In the co-operative homeland of the UK, both employee-owned and consumer-owned enterprises are growing again in number and size, while the state and private sectors decline.
It is for these reasons that Sheffield Hallam University (and other universities) are committing more resources to co-operative and social enterprise studies. The UN International Year of Co-operatives provides welcome opportunity to improve both political and management education of this field.