Humanizing the Economy

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* Book: Humanizing the Economy. Co-operatives in the Age of Capital. by John Restakis. New Society Publishers, 2010



"At the close of the twentieth century, corporate capitalism extended its reach over the globe. While its defenders argue that globalization is the only way forward for modern, democratic societies, the spread of this system is failing to meet even the most basic needs of billions of individuals around the world. Moreover, the entrenchment of this free market system is undermining the foundations of healthy societies, caring communities, and personal well-being.

Humanizing the Economy shows how co-operative models for economic and social development can create a more equitable, just, and humane future. With over 800 million members in 85 countries and a long history linking economics to social values, the co-operative movement is the most powerful grassroots movement in the world. Its future as an alternative to corporate capitalism is explored through a wide range of real-world examples including:

  • Emilia Romagna's co-operative economy in Northern Italy
  • Argentina’s recovered factory movement
  • Japan’s consumer and health co-operatives

Highlighting the hopes and struggles of everyday people seeking to make their world a better place, Humanizing the Economy is essential reading for anyone who cares about the reform of economics, globalization, and social justice." (


From the introduction in chapter 1:

"Alternatives do exist. The effort to construct economic systems with a more human face has been attempted since the dawn of the industrial age. And the impact of these attempts on capitalism has been decisive in making our own market system more humane. For the task has been not only to construct a more humane alternative to the free market model, but also to humanize the model we do have.

The effort to socialize economics through the creation of collective models of production and exchange has been at the centre of a reform movement stretching back for two and a half centuries. All these efforts, embodying the idea of socialism in some form, reflect the attempt to transcend the self- regulating market by consciously subordinating it to the needs of society through democratic means.

This book argues that the most enduring and the most promising of these efforts is the use of co-operation as a model for economic and social exchange and the use of reciprocity as the basis for both economic and social reform. The following chapters will attempt to show why this is true, how the co-operative experience is being played out in both advanced industrial societies and in developing ones and in what ways the co-operative movement world wide is succeeding - and failing - in its quest to construct a humane alternative to free market capitalism."

The history of the first Rochdale cooperative shop

John Restakis (ch. 2):

“How to start? (William) King advocated the establishment of a shop. Since people have to go to a shop every day to buy food and necessities, why not go to one they owned? The surplus from the co-operative shop would then go toward building the co-operative community that is the ultimate aim. Ever the pragmatist, King proposed that capital be accumulated partly through weekly subscriptions (as in the friendly societies) and partly through the surplus generated from running the shop. Work can then be found for other members until all are employed. Finally, the co-op can afford to pay sickness benefits, pensions, and schooling for the children; it can purchase land, build housing and keep unemployed workers in employment growing food. Eventually, a whole new society-within-society will emerge independent of both capitalists and welfare. The Owenite vision of a co-operative community is thus achieved gradually, from the patient accumulation of capital that comes from using the market in the interests of workers.

King’s great achievement was not merely to present a vision of the future (at this time there was a surplus of utopian visions to choose from), but much more importantly a way to translate this vision into a reality. What was needed to make such a plan work? Unromantically, and at the most basic level, there was a need for rules on how such a co-operative shop should be run: no credit; the selection of three people to act as trustees; a weekly accounting of the business; acceptance as members only people that can be trusted; and the very wise advice that meetings be held in a room, not a pub, otherwise members will be tempted to drink the surpluses before they are earned. On this basis, (save the last - insofar as the directors, showing remarkable restraint, would meet in the committee room of the Weaver’s Arms) a group of weavers and cobblers in the old industrial town of Rochdale created the seed from which the modern co-operative movement would grow.

Much has been written about Rochdale and the name has now acquired a semi-mythical status in the co-operative corpus. All movements need their symbols and Rochdale is one. But it marks a milestone in the movement for economic democracy because the Rochdale story shifts the focus from the creation of socialized communities as the means to reform society to the transformation of market relations in the service of social ends.

With the guidance of King’s rules for co-operation, Rochdale helped transform economics by formalizing reciprocity as an economic principle. When it proved successful, the model became the blueprint for the largest, most durable and most successful mass movement for economic reform in history. It was here that the modern conception of the co-operative as a democratically controlled enterprise took form. Its beginnings were memorably (and very humorously) recorded by George Jacob Holyoake.

At the close of the year 1843, on one of those damp, dark, dense, dismal, disagreeable days, which no Frenchman can be got to admire - such days as occur towards November, when the daylight is all used up, and the sun has given up all attempt at shining, either in disgust or despair - a few poor weavers out of employ, and nearly out of food and quite out of heart with the social state, met together to discover what they could do to better their industrial condition. Manufacturers had capital, and shopkeepers the advantage of stock; how could they succeed without either? Should they avail themselves of the poor law? that were dependence; of emigration? that seemed like transportation for the crime of having been born poor. What should they do? They would commence the battle of life on their own account. They would, as far as they were concerned, supersede tradesmen, millowners, and capitalists: without experience, or knowledge, or funds, they would turn merchants and manufacturers.

And so it was. The small shop, stocked with a tiny inventory of butter, flour, oatmeal, sugar and a few candles opened just before Christmas on 21 December 1844 for two days a week. It had a founding capital of 28 pounds sterling collected from its members on a subscription of two pence a week. It took the 28 founding members four months to pool the money. But despite these humble beginnings there was no dampening the reformist fervour of the society’s founders. Included in the charter, along with the mission to open a shop and to build homes, was the following modest aim: "That, as soon as practicable, this Society shall proceed to arrange the powers of production, distribution, education, and government; or, in other words, to establish a self-supporting home-colony of united interests, or assist other societies in establishing such colonies." Not to neglect the moral side of things, the proposition followed: “That, for the promotion of sobriety, a Temperance Hotel be opened in one of the Society's houses as soon as convenient." It was a grand vision, founded on a two pence subscription. And while the rearrangement of the national means of production, distribution and government had to wait a while longer, ten years later the British co-operative movement had grown to nearly 1,000 co-operatives. The original shop still stands preserved as a museum at 31 Toad Lane.

Located on the boundary of Lancashire and Yorkshire, Rochdale had a long history of activism and labour unrest. It was a tough political town. In 1808, a bitter strike resulted in the stationing of regular troops in the town, which remained there until 1846. In particular, Rochdale handloom weavers were a highly politicized group, born troublemakers, that could be counted on to lead the strikes and be key activists in organizing the community. Reform meetings often attracted ten thousand or more people. Rochdale’s woolen and cotton industries brought it within the influence of other textile districts like the West Riding of Yorkshire and South East Lancashire, both areas of social unrest, and seedbeds of various reform movements. The strategic importance of Rochdale was attested by the fact that a major effort to organize a National Trade Union took place here, and the town played a central role in both the Chartist movement and the Ten Hours movement. The town became an important centre for Owenite activity. In the midst of this tumultuous reform atmosphere there were concerted attempts at co-operation.

The 1840s were a grim time in Rochdale. Economic depression had hit the weaving town particularly hard. Hunger and privation among workers and their families left them vulnerable to disease and of those hardest hit five-sixths had scarcely any blankets to keep them warm, while over a hundred families had no blankets at all. Starvation was in the air. In 1837 for example, an average of one hundred eighty animals were killed weekly to provide for the town’s food needs. In 1841 this number was down to sixty-five, a reduction of caloric intake of nearly sixty percent. The conditions of most weavers from the 1820s to the 1840s and beyond were commonly referred to as “indescribable.” But described they were.

Here is an account from the evidence gathered by the Select Committee on Emigration (1827) of conditions in Lancashire where in the space of 20 years industrialization had driven weavers from relative prosperity to the edge of starvation:

- “Mrs. Hutton and myself, in visiting the poor, were asked by a person almost starving to go into a house. We there found on one side of the fire a very old man, apparently dying, on the other side a young man about eighteen with a child on his knee, whose mother had just died and been buried. We were going away from that house, when the woman said, “Sir, you have not seen all.” We went upstairs, and, under some rags, we found another young man, the widower; and on turning down the rags, which he was unable to remove himself, we found another man who was dying, and who did die in the course of the day. I have no doubt that the family were actually starving at the time …”

In Rochdale, the economic backdrop to the crisis was the crumbling of the town’s industrial heart. The new factory system had turned once proud and independent artisans into dependent outworkers for large manufacturers. Employers succeeded in ratcheting down wages while simultaneously defeating attempts to introduce a minimum wage. By the 1840s automation was putting handloomers out of business and the industries of cotton manufacturing and machine making were supplied by imported, cheap labour, composed mostly of desperate Irish workers fleeing famine back home only to face the hatred of the local townsfolk. The hat industry that used the felt produced in the town was in decline. Making matters worse, the cotton factories had to compete with imported cloth produced at a fraction of the cost with slave labour in the United States. Globalization then, as now, was linking the fates of workers half a world apart. These then, were the material conditions that immediately preceded the establishment of the Rochdale Society of Equitable Pioneers in 1844.

But the factors that gave rise to the co-operative movement at this time and in this place extend far beyond immediate economic hardship; the deeper roots of the movement arose from the human qualities that made up the unique character of the weaver communities from which it sprang. Understanding this is more than a simple appreciation of historical conditions. It goes to the heart of what gave the co-operative movement its galvanizing power during the latter part of the 1800s and its continuing relevance to the conditions of globalizing capital today.

The weavers that led the Lancashire Radicalism of 1816-20 were a product of the clash between two conflicting ideologies and ways of life. One was the rising swell of industrial laissez faire capitalism which we have already described. The other was the disappearance of an ancient way of life that was characterized by the artisan tradition and the weaver communities that this tradition had woven; a deep social egalitarianism, a spirit of independence, an immense pride in personal skill and a profoundly interdependent community life in which fate’s fortunes were shared by all – in good times and bad. The sufferings of the weavers that resulted from the rise of industrial exploitation were those of the whole community. The deliberate erosion of trade union protections by the state, the loss of status and self-worth that came with deskilling and factory production, and the flood of unskilled labour that employers used to depress wages gave their resistance a particular moral force. The Owenite frame in which they voiced their protest appealed to essential rights and elementary notions of human fellowship rather than merely economic or sectarian interests. They demanded betterment as a whole community and Owen’s ideas provided them the framework that would at one stroke recast the social architecture along lines that they already recognized. Their dreams, which also incorporated the political demands of Chartism, land reform and free trade unions, were centered on the protection of human dignity. They envisioned a mutually supportive community of independent small producers, exchanging their products without the manipulations of middlemen, free of the control of masters. At its heart, this is still the vision that speaks to the aspirations of millions caught in the exploitative web of capitalism today. It is very simply a vision that asserts the primacy of human and social values over those of commerce. And it was precisely these values that were unraveling as industrial capital consolidated its control in the middle decades of the 19th century."

History of Cooperativism

John Restakis (ch. 2):

"Stages of Co-operation:

The co-operative model, and the movement more generally, has always been in a state of evolution, adapting and transforming according to the conditions and contexts in which it finds itself. In its first stage, lasting from 1817-1840, co-operation was at the heart of a visionary social impulse. Philosophers and activists struggled to develop the co-operative ideal of the good society and to put this ideal into practice. It was a period when many were persuaded that co-operation was the gateway to a new millennium, a kind of paradise on earth. To this end, hundreds of co-operative communities were established in a grand social experiment spanning countries and continents to discover a model for a just and humane society. Robert Owen was one of these pioneers and his own efforts to create a functioning co-operative community became the model for others that followed in the United Kingdom, France and other parts of Europe, and the United States. Most of these efforts failed. The second stage of the movement was marked by a shift from the ideal to the pragmatic and by the successful application of the co-operative idea directly to the market by groups like the Rochdale Society of Pioneers. This was in the period between 1844 and the turn of the century. It was at this time that large segments of England’s working and artisan classes felt the impacts of the international commercial systems that were to form the first wave of a globalization process that has today become the dominant reality of world markets. Then, just as today, capital sought the cheapest means of producing goods through automation and by locating production in low cost areas, close to cheap labor and resources. The effect of this process on the textile industry in England was profound and the displacement of skilled weavers by machine production, along with the destruction of craft traditions, was the spark that ignited the start of the consumer co-op movement at Rochdale. Prior to World War I the Raiffeissen movement in Germany also took root, creating the co-operative credit societies that became a model for credit unions that spread around the globe.

The third stage of the movement was the period from World War I to the 1960s when the co-op model took root in countries the world over and expanded to fuel the creation of thousands of co-operatives in every sector of national economies. In the Netherlands and Scandinavia large sections of agriculture were transformed through co-operative forms of production that to this day maintain a major share of agricultural production. In France industrial worker co-operatives finally established a bridgehead in manufacturing and a sizeable consumer co-op movement also arose. In Italy the co-operative movement developed a unique capacity to bridge sectors and to transform the manner in which the mainstream capitalist economy functioned across entire regions of the country. It was at this time too that the credit unions, consumer co-ops and agricultural marketing co-operatives took root in the United States, English Canada, and Quebec.

In most countries, the consumer co-op remained the most influential form of the model, followed by agricultural co-ops, credit unions, and worker co-ops. As the co-operative movements grew, however, and the co-op form became more and more adapted to the market realities of specific industries, the original vision of a co-operative community and the creation of a co-operative commonwealth became marginalized by the main currents of co-operative development. Co-op success in practical terms seemed to come with the sacrifice of the unifying and comprehensive vision of co-operation as a medium for a just economy on a societal scale. In many places, co-operative culture and practice reflected more and more the conventional attitudes and practices of firms in the industries where co-operatives operated. Instead of challenging and changing mainstream practice, many co-ops ended up borrowing from it. The regeneration of co-operative culture inside these organizations was stifled by the termination of co-op education programs, a mainstay of co-operative principles. In many industrialized nations, the co-operative movement entered a phase of conservatism.

Thousands of co-operatives were also created in countries like the Ukraine, Poland and Hungary before state socialism extinguished their autonomy and usurped the co-op model for state purposes. With the rise of centralized socialism in the USSR, Eastern Europe, Asia and parts of Africa, co-operatives became the instrument of choice to implement state policies for production and economic development. Voluntary co-operation was replaced by mandated co-operation. And so it came about that centralized socialism became far more damaging to the integrity of the co-op idea and the realization of its potential than capitalism itself. To this day co-operatives in many of these countries signify little more in the minds of the populace than instruments of state coercion. It is a tragedy of economic and human misuse whose negative effects are still being felt. During the 1960s and after, the dominance of the consumer co-operatives was being challenged by the ascendance of new co-op forms such as producer co-ops, and the vision of a new world order of a co-operative commonwealth was gradually receding. In Canada, a new openness to social intervention on the part of the state resulted in the creation of a co-op housing movement through the skillful and determined lobbying on the part of Canadian co-ops and their allies in the labour and social justice movements. The co-operative movement experienced a new wave of growth as popular attitudes in the West become more open to alternative ways of viewing and being in the world. The rise of the New Left rejected orthodox socialist ideas and pushed for the creation of more democratic and inclusive alternatives in politics, economics, culture and social life. National co-operative movements became more diverse. In Canada and the US co-ops sprung up like mushrooms to open the way to whole new industries in health food, organics and housing, and the original ideal of the co-operative community was recast in the form of communes, co-operative farms and the rise of the environmental movement. It was an era of experimentation and new divides opened up within the traditional co-operative movement that were both generational and attitudinal. At an institutional level, the lack of attention to new and emerging forms of the co-operative model slowed the development of co-operative theory and its relevance to changing times.

Beginning in the eighties a new stage emerged for the co-operative movement. It builds on the visionary roots of its founders, while moving beyond the industrial and retail models that had conditioned the growth of co-operatives as an alternative for the organization of enterprises. In the West, with the retreat of many governments from the support of public services that followed in the cost-cutting and privatization decades of the eighties and nineties, co-operatives arose to fill the gaps in human and social services. The provision of social care emerged as one of the fastest growing areas for new co-op development all across industrialized societies.

But the most significant feature of the current stage of the co-op movement’s evolution is the rediscovery and reinvention of co-operatives in developing countries, often as a direct response to the destabilizing effects of globalization. Today, the co-operative vision is contending at a global level with factors that in many ways mirror the conditions of the early co-operatives of newly industrialized England. Like then, a single worldview in the form of the free market doctrine has come to dominate both the theory and practice of economics and public policy. Like then, individuals, communities and entire nations are subjected to the narrow interests of tiny elites with catastrophic consequences to individual lives, the environment and the well-being of societies. And like then, the effects of globalization are forcing communities and nations to seek alternatives that can make the market work for the many, not just the few. With the global economy in crisis and the old financial order in disarray, with the free market idea in disrepute and with the corruption bred by the absence of democratic institutions in the political and the economic arenas, viable alternatives to the free market myth have never been more urgently needed than they are now."

Rebirth of the Social Economy

John Restakis (ch. 6):

"Social economy, like the term “civil society” has only recently come into prominence after a long period of neglect. Originally, social economy refered to the theoretical approach first developed by the utopian socialists – especially the early founders of the co-operative tradition – Owen, Fourier, Saint Simon and Proudhon. The term was first applied to the early co-operatives that arose from their work by economists like Charles Gide and Léon Walrus and sociologists like Frédéric Le Play.

Like their co-operative antecedents, social economy organizations are those that pursue their goals, whether economic or social, on the basis that individuals’ contributions will be reciprocated and the benefits shared. Reciprocity is the economic principle that defines both the activities and the aims of these organizations - whether they are co-operatives, voluntary associations, or conventional non-profits. Their primary purpose is the promotion of collective benefit. Their social product is not just the particular goods or services that they produce, but human solidarity - the predisposition of people in a society to work together around mutual goals. Another name for this is social capital. And, as opposed to the capitalist principle of capital control over labour, reciprocity is the means by which a social interest - whether it takes the form of labour, or citizen groups, or consumers – can exercise control over capital. As a sub division of civil society, the use of reciprocity for economic purposes is what distinguishes the social economy from the private and public sectors.

With the rise of interest in civil society and the social economy, the market view of society as composed of two sectors - the private and the public – is once again being challenged. From the start, the notion of social economy was a reaction against the narrow reading of economics as a dimension divorced from society. The social economy entailed an enlargement of classical economics to include the social relations that accompany and underlie the creation and distribution of wealth and to situate economic behaviour within the wider compass of social reality. This is the larger frame in which the social economy has its original meaning. Current efforts to highlight civil society and the social economy as countervailing forces to the market view are a continuation of the historical struggle to reclaim the social dimension of economics. What this means and how it is being realized in the context of social care and the changing role of the state is where we now turn our attention."