1922 Encyclopædia Britannica/Coöperation

COÖPERATION (see ). The term “coöperation” covered in 1921 a large number of forms of economic organization which had little resemblance except that of name. In considering their development since about 1907, it is necessary to deal with each type separately. Coöperative organizations may be conveniently classified under four main heads:—consumers' coöperation, industrial producers' coöperation, coöperative credit and banking, agricultural coöperation.

Consumers' Coöperation.—The British coöperative movement, though it contains producers' societies, is in fact almost synonymous with consumers' coöperation. Of 1,459 societies affiliated to the Coöperative Union in 1919, 1,357 were consumers' societies and 95 producers' societies; the membership of the consumers' societies was 4,131,477 and their trade over £314,000,000, while in the producers' societies the membership was 39,331 and the trade £7,000,000.

The growth of the movement between 1906 and 1920 was very remarkable. The membership of retail societies rose from 2,250,000 to over 4,000,000, their capital from £33,000,000 to nearly £80,000,000, and their sales from £63,000,000 to £198,000,000. The significance of these figures is not merely that this vast industrial system has been built up and managed by the working classes of the United Kingdom, but also that in 1921 between one-third and one-fourth of the population of the United Kingdom consumed commodities manufactured or distributed under this coöperative industrial system, a system which eliminates profit-making and implies democratic control of industry

by the community of consumers. And it was now no longer true to say that the movement flourished mainly in the industrial districts of the North and Midlands; London, for instance, which for long had the reputation of being a “coöperative desert,” had become an active centre of coöperation, and the London Coöperative Society, recently formed by an amalgamation of two important societies, was in 1921 the largest coöperative society in the kingdom and had a membership of nearly 100,000 and annual sales of nearly £3,500,000.

But if the expansion of the distributive side of the movement in the local societies had been great, the growth of production and manufacture by consumers' societies was even more remarkable. Nearly all the retail consumers' societies are federated in the English, Scottish, and Irish wholesale societies for the purposes of manufacture and wholesale supply. The value of the goods supplied by these three wholesale societies to their members amounted in 1919 to over £115,000,000. The outstanding feature in the history of 1910-20 was the way in which the wholesale societies, particularly the English C.W.S., proved that the system of consumers' coöperation can be adapted to control the various branches of industrial production. The English C.W.S. is one of the most important and varied industrial businesses in the world. Its employees number about 40,000; in 1919, apart from its activities as a wholesale supplier and distributor, it produced or manufactured for its members commodities valued at over £25,000,000. It was in 1921 the largest flour miller in the United Kingdom and probably the largest timber importer at the Manchester docks. Its factories are to be found in every large industrial centre in England. It produces boots and shoes, textiles and clothing, furniture, metals and hardware, soap and candles, tobacco and groceries.

Coöperative industry, based upon a democratic organization of consumers, spread in the decade 1910-20 from town to town and from industry to industry throughout the economic system of Great Britain, but perhaps one of its most interesting and important developments was in the sphere of international trade. In one sense the coöperative movement, as a large importer of food, raw materials, and manufactured goods, had always

in foreign trade, but as an importer there was nothing to distinguish its activities from those of the ordinary private trader or joint-stock company. But the C.W.S. has shown since the war what great possibilities there are in the movement for conducting international exchange of goods on a non-profit-making, coöperative basis. Coöperative international trade implies, of course, that there should be a direct exchange of goods between the organized coöperative movements of the several countries and that profit-making should be eliminated by the payment of dividend upon purchase. The machinery for such trade already exists, for no fewer than 19 European countries possess coöperative wholesale societies, and these wholesale societies can organize international trade with one another on a strictly coöperative basis.

The facts and figures given above show the tremendous growth of the coöperative movement. The increase in its membership and the great extension in the area of its operations have brought new problems and created new tendencies. Up to the end of the

19th century the movement was content to proceed on its way of steady development in a certain amount of obscurity. This is no longer the case: coöperators have begun to claim the place to which their numbers and operations entitle them in the economic life of their country. These claims can be stated shortly as follows: Consumers' coöperation is a system which ensures a democratic control of industry by the community organized as consumers. Every consumer can join a society and every member has one vote and can, if he cares to do so, exercise an equal power of control over the conduct of industry. The dividend on purchase ensures that commodities are supplied to consumers at cost price and that, therefore, profit is eliminated. Under coöperation production and the various spheres of industry from banking to insurance, from the production of raw materials to the distribution of manufactured articles across the counter of the shop or store, are all carried on for use and not for profit. This system has already shown that it can adapt itself to one economic sphere after another and there is no reason to suppose that the scope and range of coöperative industry are not capable of almost indefinite extension. The movement, with its 4 million members, already represents from 12 to 15 million consumers or more than one-quarter of the population, and consumers' coöperation is now, in fact, an alternative to the ordinary capitalist system of controlling industry.

These claims and ideals are being put forward and are undoubtedly having an effect upon the development of the movement. They are not held consciously by the vast mass of the 4 million members, but they are slowly penetrating the movement, largely owing to the educational work of the societies and the Coöperative Union and also of a very active and influential coöperative organization, the Women's Coöperative Guild, which has a membership of nearly 50,000 women members of coöperative societies.

The increase in coöperative activity and in the consciousness among coöperators of the importance and capacities of their movement are partly the effects of the war. It might have been expected that the dislocation in the economic life of the country and the difficulties of food supply would have had an adverse effect upon a working-class movement like the coöperative movement. The facts show that the reverse was the case. The membership of retail societies, for instance, rose from 3,054,000 in 1914 to 4,131,000 in 1919, an increase of 35%, while the increase from 1909 to 1914 was only 24%. This increased rate of growth was partly due to the rise in prices and the popular irritation against “profiteering,” for the elimination of profit-making and the dividend on purchase tend to keep prices down in the coöperative store and make “profiteering” impossible.

Reference has also been made above to the way in which circumstances connected with the war led to an extension of the productive and distributive activities of the C.W.S. But the war had another effect upon British coöperators: rightly or wrongly there grew up in the movement a widespread conviction that it was being victimized in the interests of private traders. Definite complaints were made of unfair treatment of coöperative societies and their staffs by military service tribunals and of discrimination against coöperative organizations in the allocation of Government-controlled supplies. The decision of the British Government to tax coöperative societies by means of the Corporation Profits Tax brought the dissatisfaction of coöperators to a head. The argument was freely used that the movement, in order to protect itself against political action, must “enter politics.” In 1917 the whole question was discussed at the Coöperative Congress, and a resolution was passed that the movement should enter politics and nominate candidates in constituencies as an independent unit, but that it might work with other organizations having similar aims and objects. Several coöperative candidates stood in the general election of 1918 and one was elected. The Coöperative party was still in its infancy in 1921 and any estimate of its future was impossible. One feature of the tendency which it represented must, however, be noted. There was a considerable body of feeling in the movement which held that the Coöperative party should unite with

the Labour party and trades union movement to form a “Labour and Coöperative Political Alliance.” On the other hand a large number of coöperators were not prepared to accept this proposal. The whole scheme for such an alliance was in 1921 still under discussion in the movement.

Another problem which has assumed great importance in recent years for coöperators is their relations to their employees. In 1919 the consumers' societies employed about 175,000 persons, of whom about four-sevenths were employed in distribution and three-sevenths in production; the wages and salaries paid to these employees amounted to about £20,000,000 a year. The relations between the movement and its employees have been complicated until recent years by a misunderstanding as to the nature of consumers' coöperation. Coöperators themselves did not distinguish clearly between the control of industry by the community organized as consumers for use and not for profit (consumers' coöperation) and the control of industry by the workers or producers in self-governing workshops or factories in which the profits were divided among the workers (producers' coöperation). Hence arose a certain school within the consumers' movement which held that the employees of consumers' societies should share in the “profits,” although the dividend on purchase eliminates “profits” in the sense in which a joint stock company or a self-governing workshop makes a profit. The illogicality of this position was, however, gradually realized, and in 1921 very few societies paid the bonus on wages by which the coöperative employee was given a “share in profits.”

The coöperative employee was therefore recognized to be merely a wage-earning employee of the democracy of consumers. But the movement, as a large employer of labour, was brought face to face with many new problems. As an employer it stood in a peculiar position. It was composed mainly of the manual wage-earning class, and a very large number of its members were naturally trade unionists. It always professed to pay good wages and to give the best possible conditions of employment. But it was competing with the businesses and factories of the ordinary capitalist type, and competition was so severe that coöperative trade and industry would soon be killed out if wages and conditions of employment within the movement were such as to raise the cost of production substantially above that of its rivals. Most people agree that on the whole the conditions of the coöperative employee compared very favourably with those of employees of private firms and companies, although there were still societies in which wages, etc., were bad. The movement had, however, increasing difficulties with organized labour. Up to 1920 large numbers of coöperative employees were organized in a special trade union, the Amalgamated Union of Coöperative Employees (membership in 1920, 90,000). This union was founded in 1891, and it throws some light upon its original relations with the coöperative employer that in the original rules there was no provision for strikes. But this happy situation could not and did not continue. The presence of large numbers of trade unionists within the movement means that any demand for increased wages will probably receive some support within a society. There is no doubt that organized labour to some extent took advantage of this fact: a demand for increased wages or shorter hours was often first made upon coöperative societies, with the intention that, when the coöperators had given way, labour could then go to non-coöperative employers and demand that they should pay the same wages or give the same conditions as coöperators.

These facts and conditions gradually led to strained relations between the movement and its organized employees. As a whole the movement stood as strongly for trade union recognition and for the payment of trade union rates of wages as the trade unions themselves, indeed several societies insisted that their employees should be members of their unions. There had also been for long in existence joint machinery of the movement and the unions for settling industrial disputes by conciliation and arbitration; but for various reasons this machinery did not work satisfactorily, and in 1911 the Amalgamated Union of Coöperative Employees began a more militant policy and made provision for a strike

fund. Since that time there have been several strikes against coöperative societies. The whole question of the relation between the coöperative democracy and its employees has been raised by these events, and in 1921 it remained unsettled. It was complicated by the demand among certain sections of labour for workers' control of industry. Many coöperators believed that the workers should be given some share in control, i.e. that they should share with the consumer in the determination of rates of wages and conditions of employment. On the other hand it is obvious that the whole principle of consumers' coöperation, control of industry by the community of consumers for the use of the community, is inconsistent with the complete control either of individual factories and workshops or of whole industries by the organized workers, the principle of producers' coöperation, syndicalism, and guild socialism.

Industrial Producers' Coöperation.—The typical example of producers' coöperation is the workers' society in which the workers own and manage the factory and divide the profits of the enterprise among themselves. But many distinct types of industrial organization are ordinarily included under the term producers' or workers' coöperation, types differing as widely from one another as the ordinary business or joint stock company which gives its employees a share in the profits, and the self-governing workshop. Here we shall deal only with producers' coöperation in the strict sense, i.e. societies or enterprises in which the instruments of production are owned and control exercised by the workers or producers.

There was little change in the position of producers' coöperation during 1910-20. There was no marked extension in the number of enterprises or in the sphere of their operations either in Great Britain or abroad. Thus the number of productive societies in the Coöperative Union actually declined from 108 in 1913 to 95 in 1919, while the number of members rose from 34,662 to 39,331. It is true that their annual sales during the period rose from £3,710,234 to £7,047,147, but the rise in prices would more than account for this increase. The history of the workers' society from 1907 to 1921 is, in fact, a repetition of its previous history. This form of industrial organization is liable to peculiar difficulties. A small self-governing workshop is easily started and a small workers' coöperative society easily formed. But the problem of internal wganization and discipline is extremely difficult, if full democratic control is exercised by the workers. Hence in Britain, France and Italy workers' societies are continually coming into existence, but, with a few exceptions, their lives are short. And, since the larger and more highly organized the enterprise the more acute become the difficulties of organization, control, and discipline, the workers' society, where successful, has practically always remained a small and simple industrial unit. These facts account for the lack of development in producers' coöperation and its failure hitherto to adapt itself to the large-scale, complex organization of modern industry.

Coöperative Credit and Banking.—If the consumers' coöperative movements of the world owe their origin to the British movement, Germany can claim to be the pioneer of coöperative credit and banking. Two well-known types of credit societies are distinguished in Germany, the Schulze-Delitzsch and the Raiffeisen. Apart from their differences in constitution and structure, these two types are characteristic of a difference in function which runs through the whole of coöperative credit in every country. The Schulze-Delitzsch bank supplies credit or loans to the small industrialist in towns; the Raiffeisen bank supplies credit to farmers and agriculturists. This distinction of function is fundamental, and therefore it is not surprising that the history of the spread and development of urban and rural coöperative credit has not followed the same course.

Agricultural Coöperation.—Voluntary association among farmers, peasants, or agriculturists can and does take place for many different objects. In addition to the rural coöperative bank or credit society, already dealt with, the chief forms of agricultural coöperative organization may be classified as follows: (1) societies or associations for coöperative supply of the instruments and means of production; (2) societies or associations for coöperative production, e.g. creameries, dairies; (3) societies or associations for coöperative marketing; (4) societies or associations having a variety of miscellaneous coöperative objects, e.g. coöperative insurance. It should be noted, however, that there is no rigid separation of function in the societies actually existing: a single society may and often does perform two distinct functions; it may for instance, as in the case of a dairy, perform both the function of production and that of marketing.

There was a great and widespread development of agricultural coöperation in Europe, and indeed throughout the world, during 1905-20. Unlike consumers' coöperation, however, there was very little uniformity in the development of agricultural coöperation in the various nations. As was pointed out above, in one country the whole of agricultural coöperation will centre in the organization of agricultural coöperative credit, while in another country, like Denmark, a no less highly developed system of agricultural coöperation will exist with little or no organization of coöperative credit. But this lack of uniformity is not confined to agricultural banking; it will be found that in one country agricultural coöperation has developed principally along the lines of coöperative supply, in another of coöperative production, and in another of coöperative marketing. It is not possible, therefore, to give a general account of the progress of agricultural coöperation which would be applicable to every country in which it has proved successful; all that is possible is to show the range of its development and to give one or two typical examples.

(L. W.*)