Cooperatives are business enterprises that are owned and run by a group of individuals working for mutual benefit. The International Co-operative Alliance defines them as an independent group of people who collectively own and democratically control an organization that will meet the social, cultural and economic needs that are shared by all members. Cooperatives are owned and operated by the individuals who work there or by those who make use of the business’s services. These organizations are what the academic study of cooperative economics is all about.
Cooperation, the sharing of resources, and the organization of labor for mutual return is nothing new to human beings, however cooperatives (also known as co-ops or co-operatives) go a step further by organizing all of the shared goals and efforts of its members and defining the enterprise itself. For example, when looking at cooperative history, Europe shows itself as the site of the first cooperatives to exist in the context of industry.
Development of the Cooperative
Robert Owen (1771-1858) lived as a social activist and leader of the co-op movement.
The Fenwick Weavers’ Society was created to provide local workers with price-reduced oatmeal in 1761. The group, formed in Fenwick, East Ayrshire, Scotland, eventually began to offer savings and loans, education, and emigration services.
In 1810, Robert Own and his partners bought the New Lanark mill and instituted improved labor standards and quality of living, including the passing on of earnings to employees through a discount shop. After his success in New Lanark, Owen proceeded to share his concepts and expertise by writing, lecturing, and creating co-op communities in Hampshire, Indiana, and Glasgow. Although these attempts were not all successful, his ideas were passed on, thanks in part to The Cooperator, a newspaper formed by William King in 1828 to promulgate the concept of the cooperative.
The Rochdale Society of Equitable Pioneers, a group of weavers and artisans in Rochdale, England, founded a cooperative that is most often considered to be the first prosperous enterprise of its kind. It was from this success that the “Rochdale Principles” were created and used to guide the creation of more co-ops, including many modern cooperatives. After the success at Rochdale, more than 1,000 cooperatives were formed across the United Kingdom.
The Tolpuddle Martyrs’ (created in 1832) and other friendly societies also contributed to the advancement of labor and consumer groups.
Cooperatives at the end of the 20th Century began to utilize the paradigm of multiple stakeholders, and from 1994 to 2009, the EU revised its accounting systems for the purpose of recognizing the growing economic importance of cooperatives. Cooperative history has shown an enormous amount of change in the cooperative while leaving the basic themes intact.
The cooperative cause finds its roots in multiple influences and locations worldwide. The Western world has seen systems for sharing profits in use since 1795. One of the key ideas behind Friendly Societies based on mutuality and self-help has been the rejection of distinctions between ‘deserving’ and ‘undeserving’ poor that were defined in both civil and religious welfare institutions after radical revisions of the British Poor Laws in 1834.
Rather than adhere to the belief that an individual had to be a property owner to have a decision-making voice, Friendly Societies adhered to the principle of one member, one vote. In fact, since the middle of the 19th Century, universal suffrage and the advancement of democracy have been a core focus of many cooperative organizations. Before the rise of industrial factories and trade unions, consumer cooperatives and Friendly Societies were the most common organizational institutions, with more than 80% of British workers and 90% of Australian workers being members of at least one Friendly Society.
The concept of mutual operation and ownership of an enterprise or association has been embraced in various economic enterprises since the mid-nineteenth century. From trades-people to cooperative stores to financial and educational institutions, the commonality has been mutual ownership by those who are served by the association or enterprise, with surpluses shared based on members’ cooperative cooperation rather than their investment of capital. This is an important distinction, because in many other organizations, investment is tantamount to power and control. When asking the question, what is a cooperative?, a decided preference is seen towards reward for effort rather than investment.
Globally, economic democracy has been the driving force behind the cooperative movement. A socioeconomic philosophy that has drawn from and influenced many different approaches to advancing democratic principles, economic democracy proposes the shift of decision-making power from the few to the many, from corporate shareholders to public stakeholders. Marxism, Leninism, anarchism, and socialism are all tied to the basic principle of economic democracy, namely the expansion of responsibility and decision-making power to all those who contribute to an economic organization. Although the decline of the USSR aided the promulgation of socialist strategies, proponents of economic democracy have yet to establish a basic challenge to global neoliberals capitalism’s hegemony.