Friday, 4 January 2013


Cooperative Alternatives.

At the moment, January 2013, we live in a world of capitalist enterprise, in which most people are poor, and where less than 1% of the global population controls most of the global wealth.
1226 people are multi-billionaires, with $4.6 trillion
11million people have access to $42 trillion out of the total annual GDP of $60trillion.
And 7 billion people survive on less than $10 a day, of which 1.5 billion survive on less than $1 a day, and 1 billion die of hunger!
The present global society is not fair nor equitable nor equal nor just.
It is elitist.  A plutocracy managing a capitalist economy for their own benefit.   The owners and shareholders get maximum bonuses.The workers with minimum wages, and maximum prices for the consumers.
Many years of capitalism has enriched a minority. Yes, it has led to the creation of technological innovations that have totally changed ways of life!
However, if there is to be the creation of a fair and just global society, the wealth will have to be redistributed leading to  a transformation of elitist capitalism.
Instead of describing how this elitist capitalist society functions, it is time to begin to look at alternative systems, and to make alternative choices.
As we have witnessed in the USA during December 2012, it is no good standing at the top of the ‘fiscal cliff’ hoping that no one falls off. Serious efforts must be made by voters and politicians to alter the criteria of ‘tax and spend’.
The very wealthiest must stop complaining about the possibilities of personal taxation, and make efforts to support the poor with social benefits. Or even provide regular employment and a living wage!

If  7 billion people are to thrive on a living wage of say $10 an hour, the wealth of the elite plutocracy must be shared.  The wealth of the world should be managed in cooperation, and the enterprises could be organized as cooperatives in which the efforts of all are equally rewarded.
There are many cooperative enterprises across the world, particularly in agriculture, and retail e.g. Cooperative Wholesale Society, UK; Euro-Coop; Lega-Coop, Italy;  Coop, Switzerland;  MIGROS  Switzerland; Coop-City in New York; Best Western Hotels; Italian Social Coops; AMUL in India; FELDA in Malaysia, along with many others as listed by the International Cooperative Alliance:  
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The ICA in their most recent report, 2012, declared that up to 1 billion people are actively involved in cooperatives, with the largest 300 cooperatives generating $1.6 trillion.
But this does not alter the fact that most of the wealth generated by capitalist enterprises, $60 trillion GDP 2011, has greatly enriched a minority, 11 million people out of 7 billion. Cooperative enterprises have not been so successful, and their presence has been ignored. The University of Wisconsin has reported that over the last few years, cooperatives in the USA have declined due to the running battles between capitalists and socialists where the arguments centre on whether business is for the enrichment of the few or the social benefits of the many?

From the mid-nineteenth century, mutual organisations in  Europe tried to  embrace the ideas of cooperation and sharing, and taxes and social enterprises  as economic enterprises: firstly amongst trades people, and later in cooperative stores, educational institutes, financial institutions and industrial enterprises. The common thread of ‘mutuality’ (enacted in different ways, and subject to the constraints of various systems of national law) is the principle that an enterprise or association should be owned and controlled by the people it serves, and share any surpluses on the basis of each members' cooperative contribution (as a producer, labourer or consumer) rather than their capacity to invest financial capital.
The cooperative movement has been fueled globally by ideas of economic democracy, a socioeconomic philosophy that suggests an expansion of decision-making power from a small minority of corporate shareholders to a larger majority of public stakeholders.
A cooperative is a legal entity owned and democratically controlled by its members. Members often have a close association with the enterprise as producers or consumers of its products or services, or as its employees.
In some countries, e.g. Finland and Sweden, there are specific forms of incorporation for cooperatives. Cooperatives may take the form of companies limited by shares or by guarantee, partnerships or unincorporated associations. In the UK they may also use the industrial and provident society structure, according to the Industrial and Providence Act 1965.  In the USA, cooperatives are often organized as non-capital stock corporations under state-specific cooperative laws.  Cooperatives often share their earnings with the membership as dividends, which are divided among the members according to their participation in the enterprise, such as patronage, instead of according to the value of their capital shareholdings (as is done by a joint stock company). Cooperatives are typically based on the cooperative values of "self-help, self-responsibility, democracy and equality, equity and solidarity".
If there are to be fair shares of resources and wealth, the future is to be ‘Cooperative’! We will need to  return to the ideas of cooperative socialism . The Rochdale Principles are a set of ideals for the operation of cooperatives. They were first set out by the Rochdale Society of Equitable Pioneers in Rochdale, England, in 1844, and have formed the basis for the principles on which co-operatives around the world operate to this day. The Rochdale Principles focus on  co-operative economics.
The original Rochdale Principles were officially adopted by the International Co-operative Alliance (ICA) in 1937 as the Rochdale Principles of Co-operation. Updated versions of the principles were adopted by the ICA in 1966 as the Co-operative Principles and in 1995 as part of the Statement on the Co-operative Identity:
1.  The first of the Rochdale Principles states that co-operative societies must have an open and voluntary membership. According to the ICA's Statement on the Co-operative Identity, "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."
2. The second principle states that co-operative societies must have democratic member control. According to the ICA's Statement on the Co-operative Identity, “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 co-operatives at other levels are also organised in a democratic manner.”
3. Member economic participation is one of the defining features of co-operative societies, and constitutes the third Rochdale Principle in the ICA's Statement on the Co-operative Identity. According to the ICA, co-operatives are enterprises in which “Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that 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.” Co-operatives are a form of social enterprise.”
4. The fourth of the Rochdale Principles states that co-operative societies must be autonomous and independent. According to the ICA's Statement on the Co-operative Identity, “Co-operatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, 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.”
5. The fifth principle states that co-operative societies must provide education and training to their members and the public. According to the ICA's Statement on the Co-operative Identity, “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.”  Indeed organising  a cooperative enterprise can be complicated, requiring knowledge of the law, accounting procedures, business planning, marketing strategies, community investment, working  a democracy, resolving differences by negotiation, writing papers and proposals, working with officials, serving on boards of directors, recording minutes of meetings, and decisions. A wide range of new skills and knowledge are to be learnt.
The sixth of the Rochdale Principles states that co-operatives cooperate with each other. According to the ICA's Statement on the Co-operative Identity, “Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.”
The seventh of the Rochdale Principles states that co-operative societies must have concern for their communities. According to the ICA's Statement on the Co-operative Identity, “Co-operatives work for the sustainable development of their communities through policies approved by their members.”
These seven Rochdale principles are bought into play in creating a cooperative venture, whether it be a grocers shop or dairy or corn farm or wheat farm or market garden, a credit union or utility provision. . These seven principles help make a ‘cooperative’ different from a ‘capitalist’ enterprise: with its members working together, and decisions being made together. A cooperative is not focused on making the maximum profit. It is concerned with providing affordable products to local members.  
Marvin Schaars [1978] concludes that “If I were to name the principles, not practices if you please, which I feel any organization must include in its set-up to be a true cooperative, be it a grocery store company, a rural electric cooperative or a cooperative milk plant, I would list only three. These I call the "hard-core" underlying principles of cooperation. They are: . Services at cost to member-patrons;  Democratic control by member-patrons; Limited returns on equity capital.

The legal definition of a cooperative varies greatly.  
It is correct that there are many different types of cooperatives.
A Retailers' cooperative  is an organization which employs economies of scale on behalf of its members to receive discounts from manufacturers and to pool marketing. It is common for locally owned grocery stores, hardware stores and pharmacies to be cooperative businesses rather than individuals.
A workers cooperative or producers cooperative is a cooperative,  that is owned and democratically controlled by its "worker-owners".
A volunteer cooperative is a cooperative that is run by and for a network of volunteers, for the benefit of a defined membership or the general public, to achieve some goal such as a social service.
A consumers' cooperative is a business owned by its customers. The world's largest consumers' cooperative is the Co-operative Group in the United Kingdom, which offers a variety of retail and financial services. 
A housing cooperative is a legal mechanism for ownership of housing where residents either own shares (share capital co-op) reflecting their equity in the cooperative's real estate, or have membership and occupancy rights in a not-for-profit cooperative (non-share capital co-op), and they underwrite their housing through paying subscriptions or rent.
Members of a building cooperative (in Britain known as a self-build housing cooperative) pool resources to build housing, normally using a high proportion of their own labour. When the building is finished, each member is the sole owner of a homestead, and the cooperative may be dissolved. This collective effort was at the origin of many of Britain's building societies, which however, developed into "permanent" mutual savings and loan organisations, a term which persisted in some of their names (such as the former Leeds Permanent)
A utility cooperative is a type of consumers' cooperative that is tasked with the delivery of a public utility such as electricity, water or telecommunications services to its members. In the case of electricity, cooperatives are generally either generation and transmission (G&T) co-ops that create and send power via the transmission grid or local distribution co-ops that gather electricity from a variety of sources and send it along to homes and businesses.
Agricultural cooperatives or farmers' cooperatives are cooperatives where farmers pool their resources for mutual economic benefit. Agricultural cooperatives are broadly divided into agricultural service cooperatives, which provide various services to their individual farming members, and agricultural production cooperatives, where production resources such as land or machinery are pooled and members farm jointly.  Agricultural supply cooperatives aggregate purchases, storage, and distribution of farm inputs for their members. By taking advantage of volume discounts and utilizing other economies of scale, supply cooperatives bring down members' costs. Supply cooperatives may provide seeds, fertilizers, chemicals, fuel, and farm machinery. Some supply cooperatives also operate machinery pools that provide mechanical field services (e.g., plowing, harvesting) to their members. Agricultural marketing cooperatives provide the services involved in moving a product from the point of production to the point of consumption. Agricultural marketing includes a series of inter-connected activities involving planning production, growing and harvesting, grading, packing, transport, storage, food processing, distribution and sale. Agricultural marketing cooperatives are often formed to promote specific commodities.                                                                                                                                Credit unions are cooperative financial institutions that are owned and controlled by their members. Credit unions provide the same financial services as banks but are considered not-for-profit organizations and adhere to cooperative principles.  The UK Co-operative Group includes both an insurance provider CIS and the Co-operative Bank, both noted for promoting ethical investment.                                                                                                       Cooperative wholesale society.  According to cooperative economist Charles Gide, the aim of a cooperative wholesale society is to arrange “bulk purchases, and, if possible, organise production.”                                                                                                    Cooperative union.   A second common form of cooperative federation is a cooperative union, whose objective (according to Gide) is “to develop the spirit of solidarity among societies and... in a word, to exercise the functions of a government whose authority, it is needless to say, is purely moral.”   Co-operatives UK and the International Cooperative Alliance are examples of such arrangements.

Cooperative political movements.  In some countries with a strong cooperative sector, such as the UK, cooperatives may find it advantageous to form political groupings to represent their interests. The British Cooperative Party, the Canadian Cooperative Commonwealth Federation and United Farmers of Alberta are prime examples of such arrangements.

Schaars  [1978] proposed that ‘a cooperative is a business, voluntarily owned  and controlled by its member-patrons and operated for them and by them on a non-profit or a cost basis.
According to Gide, [1904] ‘a cooperative is a group of persons pursuing common economic, social, and educational aims by means of a business’.
Legislators have wrestled with the problem of  profit or social ends for many years. Yet no definite conclusions are in sight. Even co-op scholars and researchers differ among themselves concerning the definition of a "true cooperative."  Nevertheless, there is general agreement with Schaars's conclusion that a "true"cooperative is one which provides; (1) service at cost, (2) democratic control by member-patrons and (3) limited returns on equity capital.
It is significant that, at this time, share-owning capitalist enterprises are normal in USA, Europe, Russia, Australia, Brazil, China, India, Japan, and across the world. All these enterprises have share-holders. If they are successful, the profits are paid to the shareholders. If the principal shareholders are family investors [such as the Gates family, or Apple, or Tata or Branson or Buffet, and the rest of the Forbes 500,] they will receive the dividends and bonuses agreed by the Board of Directors, and reap the maximum profits. We have to remember that the success of such capitalist enterprises depends upon paying the workers low wages and charging maximum prices to the consumers: that is, capitalist exploitation. Whatever problems there are in defining a cooperative, it is most important that cooperative enterprises are owned and controlled by members, patrons, workers, consumers as well as investors. The benefits and profits of the cooperative enterprise are shared by all those involved, not just the elite investors.
I would suggest that a ‘true cooperative’ provides services and products at prices agreed by the democratic votes of member-patrons in the light of the democratically agreed returns on equity capital. Every one with an interest in the operation of the cooperative enterprise is involved in making decisions about practices, products  profits, and benefits.

The United Nations has declared 2012  the Year of the Cooperative.
The United Nations Year of the Cooperative will express:  "Cooperative Enterprises Build A Better World" and highlight the key aspects of cooperative enterprises which allow them to fulfill this rule.
Cooperative enterprises build a better world.
Cooperative enterprises are member owned, member serving and member driven
Cooperatives empower people
Cooperatives improve livelihoods and strengthen the economy
Cooperatives enable sustainable development
Cooperatives promote rural development
Cooperatives balance both social and economic demands
Cooperatives promote democratic principles
Cooperatives and gender: a pathway out of poverty
Cooperatives: a sustainable business model for youth

Marvin Schaars: Cooperatives, Principles and Practices 1978
Frank Groves: Philosophy of Cooperation 1985

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