1

History of the cooperative movement

The history of the cooperative movement concerns the origins and history

of cooperatives. Although cooperative arrangements, such as mutual insurance,

and principles of cooperation existed long before, the cooperative movement

began with the application of cooperative principles to business organization.

Beginnings

The cooperative movement began in Europe in the 19th century, primarily in

Britain and France, although The Shore Porters Society claims to be one of the

world's first cooperatives, being established in Aberdeen in 1498 (although it has

since demutualized to become a private partnership).[1] The industrial

revolution and the increasing mechanism of the economy transformed society and

threatened the livelihoods of many workers. The concurrent labour and social

movements and the issues they attempted to address describe the climate at the

time.

The first documented consumer cooperative was founded in 1769,[2] in a barely

furnished cottage in Fenwick, East Ayrshire, when local weavers manhandled a

sack of oatmeal into John Walker's whitewashed front room and began selling the

contents at a discount, forming the Fenwick Weavers' Society.

In the decades that followed, several cooperatives or cooperative societies formed

including Lennoxtown Friendly Victualling Society, founded in 1812.[3]

By 1830, there were several hundred co-operatives.[4] Some were initially

successful, but most cooperatives founded in the early 19th century had failed by

1840.[5]However, Lockhurst Lane Industrial Co-operative Society (founded in

1832 and now Heart of England Co-operative Society), and Galashiels and Hawick

Co-operative Societies (1839 or earlier, merged with The Co-operative Group) still

trade today.[6][7]

It was not until 1844 when the Rochdale Society of Equitable Pioneers established

the ‘Rochdale Principles’ on which they ran their cooperative, that the basis for

development and growth of the modern cooperative movement was

established.[8]

Financially, credit unions were invented in Germany in the mid-19th century, first

by Franz Hermann Schulze-Delitzsch (1852, urban), then by Friedrich Wilhelm

Raiffeisen (1864, rural). While Schulze-Delitzsch is chronologically earlier,

Raiffeisen has proven more influential over time – see history of credit unions. In

Britain, the friendly society, building society, and mutual savings bank were earlier

forms of similar institutions.

2

Robert Owen

Robert Owen (1771–1858) is considered as the father of the cooperative

movement. A Welshman who made his fortune in the cotton trade, Owen believed

in putting his workers in a good environment with access to education for

themselves and their children. These ideas were put into effect successfully in

the cotton mills of New Lanark, Scotland. It was here that the first co-operative

store was opened. Spurred on by the success of this, he had the idea of forming

"villages of co-operation" where workers would drag themselves out of poverty by

growing their own food, making their own clothes and ultimately becoming self-

governing. He tried to form such communities in Orbiston in Scotland and in New

Harmony, Indiana in the United States of America, but both communities failed.

William King

Although Owen inspired the co-operative movement, others – such as Dr William

King (1786–1865) – took his ideas and made them more workable and practical.

King believed in starting small, and realized that the working classes would need

to set up co-operatives for themselves, so he saw his role as one of instruction. He

founded a monthly periodical called The Co-operator,[9] the first edition of which

appeared on 1 May 1828. This gave a mixture of co-operative philosophy and

practical advice about running a shop using cooperative principles. King advised

people not to cut themselves off from society, but rather to form a society within a

society, and to start with a shop because, "We must go to a shop every day to buy

food and necessaries - why then should we not go to our own shop?" He proposed

sensible rules, such as having a weekly account audit, having 3 trustees, and not

having meetings in pubs (to avoid the temptation of drinking profits).

The Rochdale Pioneers

The Rochdale Society of Equitable Pioneers was a group of 10 weavers and 20

others in Rochdale, England, that was formed in 1844.[2] As the mechanization of

the Industrial Revolution was forcing more and more skilled workers into poverty,

these tradesmen decided to band together to open their own store selling food

items they could not otherwise afford. With lessons from prior failed attempts at

co-operation in mind, they designed the now famous Rochdale Principles, and over

a period of four months they struggled to pool one pound sterling per person for a

total of 28 pounds of capital. On December 21, 1844, they opened their store with

a very meagre selection of butter, sugar, flour, oatmeal and a few candles. Within

three months, they expanded their selection to include tea and tobacco, and they

were soon known for providing high quality, unadulterated goods.

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The English CWS and Co-operative Group

The Rochdale Society of Equitable Pioneers was a group of 10 weavers and 20

others in Rochdale, England, that was formed in 1844.[2] As the mechanization of

the Industrial Revolution was forcing more and more skilled workers into poverty,

these tradesmen decided to band together to open their own store selling food

items they could not otherwise afford. With lessons from prior failed attempts at

co-operation in mind, they designed the now famous Rochdale Principles, and over

a period of four months they struggled to pool one pound sterling per person for a

total of 28 pounds of capital. On December 21, 1844, they opened their store with

a very meagre selection of butter, sugar, flour, oatmeal and a few candles. Within

three months, they expanded their selection to include tea and tobacco, and they

were soon known for providing high quality, unadulterated goods.

The English CWS and Co-operative Group

The Co-operative Group formed gradually over 140 years from the merger of

many independent retail societies, and their wholesale societies and federations.

In 1863, twenty years after the Rochdale Pioneers opened their co-operative, the

North of England Co-operative Society was launched by 300 individual co-ops

acrossYorkshire and Lancashire. By 1872, it had become known as the Co-

operative Wholesale Society (CWS). Through the 20th century, smaller societies

merged with CWS, such as the Scottish Co-operative Wholesale Society (1973)

and the South Suburban Co-operative Society (1984).

The old Co-operative building behind theGateshead Millennium Bridge in Newcastle

upon Tyne.

By the 1990s, CWS's share of the market had declined considerably and many

came to doubt the viability of co-operative model. CWS sold its factories

to Andrew Regan in 1994. Regan returned in 1997 with a £1.2 billion bid for CWS.

There were allegations of "carpet-bagging" - new members who joined simply to

make money from the sale - and more seriously fraud and commercial leaks. After

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a lengthy battle, Regan's bid was seen off and two senior CWS executives were

dismissed and imprisoned for fraud. Regan was cleared of charges. The episode

recharged CWS and its membership base. Tony Blair's Co-operative Commission,

chaired by John Monks, made major recommendations for the co-operative

movement, including the organisation and marketing of the retail societies. It was

in this climate that, in 2000, CWS merged with the UK's second largest

society, Co-operative Retail Services.

Its headquarters complex is situated on the north side of Manchester city centre

adjacent to the Manchester Victoria railway station. The complex is made up of

many different buildings with two notable tower blocks of New Century House and

the solar panel-clad CIS tower.

Other independent societies are part owners of the Group. Representatives of the

societies that part own the Group are elected to the Group's national board. The

Group manages The Co-operative brand and the Co-operative Retail Trading

Group (CRTG), which sources and promotes goods for food stores.[10] There is a

similar purchasing group (CTTG) for co-operative travel agents.

Co-operative Women's Guild

Alice Acland, the editor of the "Women's Corner" in the "Co-operative News"

publication, and Mary Lawrenson, a teacher, recognized the need for a separate

women's organization within the Cooperative Movement and began organizing a

"Woman's League for the Spread of Co-operation" in 1883. This League formally

met for the first time during the 1883 Co-operative Congress in Edinburgh in a

group of 50 women and established Acland as its organizing secretary. By 1884 it

had six different branches with 195 members, and the League was renamed the

Women's Cooperative Guild.[11]

The Guild organized around working women's issues and expanding the

Cooperative Movement. It continued to publish articles advocating for women's

involvement in the Cooperative Movement in the "Women's Corner," and later

through its own publications such as "The importance of women for the

cooperative movement." The Guild also opened the Sunderland cooperative store

in 1902, which catered to poor working class women. It engaged in many political

campaigns concerning women's health, women's suffrage and pacifism.[12] The

organization still exists today as the Co-operative Women's Guild and participates

in social justice activism.[13]

Other developments

An independently formulated co-operative model was developed in Germany, the

credit union, by Raiffeisen and Schultz-Delitsch. The model was carried abroad

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reaching the United States by 1910.[14] By the 1930s, a national association was

formed in the U.S. This organization began to develop international programs, and

by the 1970s, a World Council was formed.[15]

Co-operatives in the U.S. have a long history, including an early factory in the

1790s. By the 1880s, the Knights of Labor and the Grange both promoted

member-owned organizations.[16] Energy co-operatives were founded in the U.S.

during the Depression and the New Deal.[17] Diverse kinds of co-operatives were

founded and have continued to perform successfully in different areas, in

agriculture, wholesale purchasing, telephones, and in consumer food

buying.[18][19][20]

James Warbasse was an American doctor who became the first president of the

U.S. National Co-operative Business Association. He wrote extensively on co-

operative history and philosophy.[21] Benjamin Ward began an important effort in

co-operative economic theory in the 1950s, with Jaroslav Vanek developing a

general theory.[22]David Ellerman began a line of theoretical thinking beginning

with legal principles, developing especially the labor theory of property, and later

reaching a treatment which adjusts conventional economic theory to include co-

operative premises. At one point in the 1990s, he worked at the World Bank with

Noble laureate Joseph Stiglitz.[23]

Co-operatives today

Co-operative enterprises were formed successfully following Rochdale, and an

international association was formed in 1895.[24] Co-operative enterprises are

now widespread,[25] with one of the largest and most successful examples being

the industrial Mondragón Cooperative Corporation in the Basque country of Spain.

Mondragon Co-op was founded under the oppressive conditions of Fascist Franco

Spain after community-based democracy-building activities of a priest, Jose Maria

Arizmendiarrieta. They have become an extremely diverse network of co-operative

enterprises, a huge enterprise in Spain, and a multinational

concern.[26][27][28][29] Co-operatives were also successful

in Yugoslavia under Tito where Workers' Councils gained a significant role in

management.[30]

In many European countries, cooperative institutions have a predominant market

share in the retail banking[31] and insurance businesses. There are also concrete

proposals for the cooperative management of the common goods, such as the one

by Initiative 136 in Greece.

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An annual general meeting of a retail co-operative in England, 2005.

In the UK, co-operatives formed the Co-operative Party in the early 20th century

to represent members of co-ops in Parliament. The Co-operative Party now has a

permanent electoral pact with the Labour Party, and some Labour MPs are Co-

operative Party members. UK co-operatives retain a significant market share

in food retail, insurance, banking, funeral services, and the travel industry in many

parts of the country.

Denmark has had a strong cooperative movement.

In Germany, the rebuilding of the country after World War II created a legislative

opportunity in which politician Hans Boeckler significantly lobbied for the Co-

Determination ("Mitbestimmung") policies which were established, requiring large

companies to include a Workers' Council in the Board of Directors.[32] These

policies have had some influence on European Union policies.[33][34]

Co-operative banks have become very successful throughout Europe, and were

able to respond more effectively than most corporate banks during the 2008

mortgage-securities crisis.[35][36][37]

Renewable Energy co-operatives in Europe became important in the early

development of windpower in Denmark beginning in the 1970s.[38] Germany

followed in the early 1990s, first on a larger scale with wind co-ops, then with a

citizen's movement which challenged the reliance on nuclear power, organized,

challenged the energy monopolists there, and successfully created a successful co-

op social enterprise by 1999.[39][40] A citizen's group began operating wind

turbines and involving broad community ownership in the U.K. by

1995.[41] Deregulation of the electricity markets allowed energy co-operative

social entrepreneurs to begin to create alternatives to the monopolies in various

countries. In France, where an enormous percentage of the power is generated by

nuclear sources, this occurred after 2000.[42] In Spain, wind power was

developed by corporate-led efforts, and it took longer for a renewable energy-

focused social enterprise to get established.[43] Similar renewable energy co-ops

around Europe have organized in a network.[44]

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Asian societies have adapted the co-operative model, including some of the most

successful in the world.[45][46] Nevertheless, the crises generated by traditional

inequalities and the shareholder model continues to require civil society and

entrepreneurial responses, such as the Citizens Coalition for Economic Justice in

South Korea, the Seikatsu Club Consumer Co-operative in Japan, and the Self-

Employed Women's Association in India.[47][48][49] Other noteworthy efforts

include Sophon Suphapong's efforts as governor in Thailand with agricultural co-

ops and Antonio Yapsutco Fortich's contributions in the Philippines helping

formulate a co-operative strategy with sugar workers.[50][51]

The International Labor Organization, originally established in 1919, has a Co-

operative Division.[52]

Co-operatives were brought to Latin America and developed there by

1902.[53] Substantially independent efforts to develop employee-owned

enterprises or co-operatives have occurred as responses to crises, such as the

systemic IMF-based default in Argentina in 2001 [54] In Brazil, the World Social

Forum process lead to the articulation of Solidarity Economics, a modern, activist

formulation of co-operativism, with the MST landless worker's movement

demonstrating enormous courage and social entrepreneurship.[55][56] In

Venezuela, the late Hugo Chávez's administration began to incentivize co-

operatives, resulting in their rapid and extensive development there.[57][58]

The co-operative model has a long history in the U.S., including a factory in the

1790s, the Knights of Labor, and the Grange.[59] In Colorado, USA

the Meadowlark cooperative administers the only private free land program in the

United States, providing many services to its members who buy and sell together.

In New York City, several food co-operatives were founded around 2010, adding to

others, some existing since the 1970s.[60] The U.S. has some diverse worker co-

operatives, such as an organic bread factory co-op and an engineering

firm.[61] Some have already incorporated environmental and/or Fair Trade criteria

into their products, such as the aforementioned bread-maker, Organic Valley

foods, and Equal Exchange.[62]

Credit unions were established in the U.S. by 1908.[63] Their member-owned, co-

operative structure created stable governance structure, so that they were only

slightly affected by the 2008 mortgage securities crisis.[64]

Electrical co-operatives became an important economic strategy for U.S. rural

areas beginning in the 1930s, and continue to operate successfully through events

such as Hurricane Sandy in 2012.[65][66] However, the majority in the U.S.

demonstrate that co-operative values do not necessarily lead to a progressive

social and environmental consciousness, as many remain focuses on fossil fuel and

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nuclear fuels.[67] Nevertheless, new generation renewable power co-operatives

have begun to be organized.[68][69]

Agricultural co-operatives in the U.S. have had some mainstream success,

including Welch's, Ocean Spray, and Land O'Lakes.[70][71][72]

In the United States, a co-operative association was founded by 1920. Currently

there are over 29,000 co-operatives employing 2 million people with over $652

billion in annual revenue.[73] To address the need for an organization oriented to

newer and smaller co-ops, the U.S. Federation of Worker Co-operatives was

founded after 2000.

An alternative method of employee-ownership, the Employee Stock Ownership

Plan (ESOP), was developed in the U.S. by Louis Kelso and advocated by Senator

Russell Long to be incentivized in the ERISA law of 1974.[74] For example, a large

Southeastern US supermarket chain[75] a California manufacturer, and a

furniture-maker with earnings of more than $2 billion,[76] are employee-owned.

Employee-owned trusts have also been developed more or less independently, for

example at an established iron pipe company[77]

The Fair Trade certification movement established first in Holland in 1988 with an

international headquarters in Bonn nine years later requires member farmers to

have established a co-operative.[78][79][80]