Production vs Consumer Cooperativism

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= debate between Natalia Fernandez of lasindias.net and Robin Murray/Pat Conaty, experts on the history of cooperativism in the UK

Discussion

Natalia Fernandez

Key thesis:

- By severing cooperativism from its communal origins and and focusing on consumption, British cooperativism … caused lasting damage to the transformative capacity of cooperativism, which we should not repeat today in the debate between the economy of the commons and collaborative consumption.

Excerpted from Natalia Fernández:

(version without links)

“A “School of Sharing Economics,” or a “School of Economics of the Commons?” A “School of the economic theory of collaborative consumption,” or a “School of the economic theory of the commons?” You could argue that, really, they’re two sides of the same thing: the emerging forms of capital (the commons) and consumption of the P2P mode of production. But they open two different worlds.

One of the narratives that has done the most damage to the mutualist tradition is making the starting point for the History of Cooperativism the birth of modern consumer cooperativism, the famous “Rochdale Pioneers” of 1844. This overlooks pre-existing and very widespread communally-based social organizations which, at that time, had already been around (in some cases) for fifty years, and had become agrarian and worker cooperatives. This narrative, which continues to be the official line of the International Cooperative Alliance, and which we still find on Wikipedia, diverges from cooperativism of the commons.

It wasn’t an innocent narrative or simply erroneous. In the early continental cooperative world, mutualism, cooperativism, and later, Catholic social doctrine, located the key to the “social problem” in production, and were able to offer a continuity between the resistance to the deamortization of the communal carried out by the liberals and the alternatives to flourishing industrial capitalism. However, in Great Britain, it was Anglican Liberals and Social Christians who, following the Owenite tradition, led the birth of the First British Co-operative Congress. For them, focusing on consumption was a way to confront the growing radicalization of the workers’ movement and “contamination” by “continental ideas.” That’s why they attribute the origins of cooperativism to Robert Owens, a liberal philanthropist, and date the birth of cooperativism to the Rochdale Pioneers (consumer cooperativism).

In 1895, after many difficulties caused by their interest in including traditional capitalist businesses, Neal, Wolff and Holyoyake managed to pull off the first assembly of the International Cooperative Alliance. It goes without saying that attendees were mostly British: along with Great Britain, most delegates came from Australia, India and Ireland, it was considered a great success to include German Christian cooperativism and its circle of influence. In other words, there was a clear Social Chrisian hegemony. That’s why they made an “apolitical” approach one of the bases of the movement, which left out most of European cooperativism, which was tied to the Catholic parties, the socialist parties, or libertarian syndicalism.

Without a doubt, it was a political masterstroke… for the English Social Christians. However, the damage is visible today: cooperativism, broadly speaking, does not recognize itself in the commons… even though the commons is the primary value of its origins and the primary path to its future.

Will we make the same mistakes?

Today, we face a similar dilemma. The tradition of Anglo-Saxon social criticism understands economic democracy as a sort of “consumer democracy” and from that point of view, “collaborative consumption,” the “sharing economy,” would be the defining center of the evolution of the mode of production beyond industrial capitalism.

But, in the end, a mutual insurance company doesn’t transform economic relationships if it isn’t part of, and subject to, a broader democratic community where most of the weight necessarily falls on worker co-ops. A good part of the insurers in Europe and the U.S. are mutuals, which is to say, consumer co-ops… but most of the members don’t even know they are part of a cooperative structure.

A similar thing is happening with the practices of the “sharing economy.” Collaborative consumption is not part of the transition towards a P2P mode of production if it’s not within the framework of the development of the communal, and P2P production, just as consumer cooperativism doesn’t generate a democratic economy if it’s not part of a cooperative industrial community.

By severing cooperativism from its communal origins and and focusing on consumption, British cooperativism and the ICA caused lasting damage to the transformative capacity of cooperativism, which we should not repeat today in the debate between the economy of the commons and collaborative consumption. That’s why, when we talk about developing an economic and social theory that explains and drives the transition away from the forms of production in which we live, we should not repeat the mistake. Let’s build a “Somewhere School for the Economics of Commons“ that serves whoever wants to learn to do, and caters to whoever wants to research.” (http://english.lasindias.com/production-not-consumption-economics-of-the-commons-not-sharing-economics/)


Robin Murray

Personal contribution via email:

"First, I don’t know when the concept of consumer co-operation first appears, but what strikes me about Rochdale and the early retail societies is that they started a shop as a way into much wider vision of an alternative economy. Before Rochdale, there had been all sorts of experiments – of Owenite communities, of what we might now call production co-operatives, as well as collaborative purchasing. The Owenite alternatives were examples of commoning – but they didn’t last. Some of the first Rochdalers were Owenites and had been involved in Owenite schemes. But one of the reasons they persuaded their Chartist and Trade Union friends to have another go at joint purchasing, was that it could be got going on a small scale without the kind of capital needed by the Owenite projects – and that if it worked – it would open up a path to co-operative production, land-holding, housing, education, and so on.

And the great point about Rochdale is that it was one of these innumerable experiments that worked. It did just what those early pioneers had hoped. Starting small (oatmeal and bacon) they were able to grow bit by bit according to their own resources. The profits made were mostly distributed as dividends, but many of these dividends were kept in the co-ops as savings, and this provided the capital to expand the number of stores, the products offered in the stores, as well as production for the stores . Within a decade the societies were also buying land, establishing their own farms, and building a remarkable quantity of housing. Once the joint wholesale Society (CWS) was established in 1863, it was a short step to the extraordinary expansion of production. By the end of the century the CWS had something like 180 factories, and its great driving force, J.T.W.Mitchell had a vision of creating an entire alternative economy to that of capitalism, with its own production, finance, insurance, shops, libraries, funeral services and so on. What a vision it was.

One of the great arguments was whether there should be a measure of worker ownership in the production units (and indeed in the shops). Mitchell argued that the surplus should be channelled to the workers and their families at the point of purchase – in this sense it was ‘consumer’ oriented. This included surpluses generated at the wholesale level. I suspect that to him and those favouring that position this was more ‘universal’ in terms of the Co-operative Commonwealth. Those who argued against this favoured a co-partnership model, that was mid way between self governing workshops and the retail societies. The argument was not one about consumption versus production. Both parties were deeply into co-operative production. It was rather about the way in which surplus realised in the co-operative economy was distributed and controlled.

The self-governing workshops were another strand of co-operation that run alongside the growth of the Rochdale model. Many failed, but by no means all. And the CWS did buy from them. But they didn’t have the same power of internal accumulation that the Rochdale model had stumbled upon. By 1880 there were only 15 productive societies still standing. They expanded in number in the following twenty years, but remained a limited part of the movement – not so much through ideology as through their survivability.

This then is the first point. The so called consumer co-operatives were deeply involved in production. The second point is that retail/wholesale should not be counterposed to manufacturing. Both depend on each other. For the Rochdalers, the shops were the platform for launching backwards into manufacturing and farming. For the co-operative workshops they developed their own wholesalers to find outlets in addition to those available through co-operative distribution. This is one of the thing I have learn from our fair trade ventures. They work in the sphere of distribution and in some cases retailing, but their purpose is to provide outlets for producer co-operatives of small farmers. Co-operative systems are about integrating not separating these spheres.

Third, retailing/wholesaling is itself production. It requires labour, capital, land, organisation, accounting. The history of 19th century English, Scottish and Welsh retail co-operation is a history of working people completing outpacing their private rivals in this sphere of the economy. The question is why were they able to do this in a way that the workshops of shoe makers, weavers, metal trades, printers, building and wood workers were not.

In my view it was because in retail and distribution the distributed system of retail connected together by ideology and common institutions (in the Ostrom sense) was one that private capital did not have the channels of information and communication to exert capitalist control at a national level. The co-operative retailers were then able to source (and produce) their primary inputs at a scale that non other retailer could match. You could say that it was an organisational innovation that made the CWS and the retail societies one of the largest ‘corporations’ in the world by the 1890s. The small worker owned shoemakers could not establish such an advantage in their sphere.

Last is the question of class. Robert Owen was a manufacturer and his projects were archetypal ‘commons’ projects, centred round self production. Interestingly the Christian Socialists mentioned by Natalia were the great protagonists of self governing workshops and of worker co-operatives more generally. The Rochdale pioneers and the main organisers were industrial and mining workers . J.T.W.Mitchell was the son of a very poor single mum, who worked at various jobs in the textile trade, and was formed by Congregationalism. Holyoake could be said to be middle class, but he was the scribe of the movement not its progenitor. The English movement was very different in this case from the German co-operative banking movements, which were not only initiated by middle class philanthropists, but often were administered locally by the pastor and schoolmaster, and what would later have been termed ‘rich peasants’ (the Irish credit unions collapsed by the early 1930s because they had a different rural class base).

I think we should approach this issue as an emergent system – and understand what emerged and why it worked. I don’t think it can be reduced to a battle between consumerism versus productionism either ideologically or above all in practice."


Pat Conaty

"I think Robin's analysis and the short paper he sent you is very clear and concise about the tension between worker co-ops and consumer co-ops. The problem from the beginning of the Co-op movement, mainly from the 1820s has been the issue of finding the ways forward. It is not either or, but both and.

Owenite experiments in the England, Wales, Scotland, Ireland and the USA as Robin explained virtually all failed but they were so ambitious. This was a real strength from a vision perspective but in practice proved to be a weakness in terms of building a viable road towards Commonwealth.

Owen took his philosophical inspiration from William Godwin as did another key brilliant Irish Co-operative visionary and contemporary of Owen, William Thompson. The Co-op stores established in the 1820s were seeking to raise funds and capital to invest in Co-operative communities.

Owen was born working class in Wales (in Newtown a few miles from where I live), made money as a successful factory manager in Manchester, saw early the horrors of free-market capitalism and set up his Lanarkshire model factory in Scotland to try to persuade the ruling class to educate working people, humanise conditions and go another road towards the New Age of industry. He saw that this selling of a humanistic model was falling on deaf ears so he set out with his own money to invest in co-operative Socialism. He coined this term in about 1818. He took from Godwin the englightenment view of Rousseau and Helvetius that you can only combat evil by education on the one hand and on the other hand by changing the institutional framework. For Godwin decentralising politics to the local parish level was a sine qua non.

The uniqueness of Owen's root and branch approach is that he sought ways to bring land, capital and knowledge into common ownership. He articulated a 'social science' (one of the first to use this term) and he opposed hypocrisy. That is why he had little time for religion as it did not practice what it preached. He saw his social science in action as a 'rational religion.'

He was not a philanthropist. His experiments showed this. His vision of decentralised villages of Co-operation and Unity was promoted as a federated system and gave rise to the more ambitious thinking of the Chartists for Co-operative Land Societies and the co-operative Garden City movement in the early 20th century in England, Wales and Belgium. Owen sought to decommodify land, decommodity capital, decommoditfy marriage and develop forms of co-operative endeavour that connected virtuously both producers and consumers, not separate them via competition and by creating scarcity artificially.

The way forward though as Robin explained proved easier to do in a partial way to meet different needs. Rochdale pioneers with their promulgation in 1844 of a set of seven commandments on how co-operators need to behave was a key innovation. They learned this the hard way as their Co-op in the 1830s failed because of a poor legal structure and lack of education and solidarity among members. The Rochdale quarterly purchase dividend encouraged as a material incentive loyal custom and acted as a magnet to attract new members. Education was key to expansion, not marketing, though branding and quality trademarks did evolve and become important as well.

The Rochdale pioneers innovated a robust and replicable and incredibly productive form of commonly owned business. Other experiments to develop this success from a producer co-op starting point was fraught with failure for decades. The seven Co-op principles continue to be the guide for member behaviour and member education for all Co-op of every type internationally.

The reason for the failures of worker co-ops again and again for decades across Europe and in North America turned out to be a key practical lesson in evolutionary economics. As Robin points out, the Germans in the 1850s, a decade after the Rochdale pioneers, happened upon a way to develop credit unions as Co-op banks. These were different than earlier co-op banking ideas. The Owenites and the Proudhonian mutualists in France favoured interest free approaches. The Owenite experiments developed Labour exchanges with Labour notes for money. Similarly and in the USA Josiah Warren, a colleague of Owen, developed the Time Store with Time bank money in hours. Warren's model in the US Mid West was more successful than those of Owen which failed quickly in the early 1830s.

Other earlier mutual savings and credit experiments like the British and Irish building societies saved money in Pubs collectively from the 1770s, and drew lots to secure capital by rotation to buy land and to self-build houses. These systems guaranteed everyone in these terminating building societies a house. No interest was charged.

However the German credit unions incentivised savings by paying a dividend on shares. This material incentive approach took off while the earlier interest-free model tended to fade and to be eclipsed by the end of the 19th century. However JAK co-op banks in Sweden and Denmark have held onto to the interest free system, remarkably.

The practical issue for worker co-ops was access to capital from a source that was trustworthy and thus would be co-operative in form. Building these finance institutions took time. But there was also a need for the mutual finance providers to work out how to pool the risk in business ventures. Credit unions grew as a way to meet household needs, not as a way to meet worker co-op needs for investment.

It really was not until the late 1950s that a Co-operative financing system was developed that could indicate a viable formula to capitalise worker Co-operatives successfully and autonomously. This was the innovation of Arizmendi and the Mondragon movement's creation of the Caja Laboral Popular bank and a system of Group Self-employment to pool risks and create internal capital accounts for each worker member. This methodology showed precisely how really low-cost and patient working capital can be provided.

I could cite other examples of evolutionary economic innovation in the Co-op economy movement. For example, the British Tenant Co-opartnership model for housing co-ops that developed from 1900 to 1914 was a good model to create Tenant Ownership fusion but really it was the Swedes that went on to develop this system from the British lead and they did this in the 1920s onward by ingeniously setting up specialist Tenant Savings Banks that were mutually owned, an innovation missing in the first British prototype and that proved to be essential to take Co-op housing to over 20% of housing tenure today in Sweden and to similar high percentage levels in Norway and in Denmark.

Also it was the Scandinavians who pioneered energy services Co-ops that the Americans examined and then replicated profoundly from 1935 onwards to bring electricity comprehensively to all areas of rural America. There are now some 48 million members of rural Electricity co-ops as a result in the USA.

Co-production in relation to Consumer Supported Agriculture (CSAs) was an innovation of housewives in Japan forming Seikatsu Co-op buying clubs from the mid 1960s. Then in the 1990s it was adapted and introduced into New England in the USA and has since spread to other countries.

The key point I am making is that Commoning solutions are damn difficult and their evolutionary economic emergence has been a tug of war against political economy hegemony of increasing oligopolistic control of the means of production otherwise.

Because each type of Co-op is really hard to establish, to grow and to develop, those closely involved in diverse areas of co-op provision readily become compartmentalised in their thinking and lose sight of the transformatiive mission and how to link things up.

But Co-operative Commonwealth as the original Owenite socialistic vision does reappear at times like these. This is the hope for the future but only, only if we learn the lessons of the past.

Any attempts to reinvent the Co-op wheel is wasting precious time. We need to crowd connect globally this vital learning of a rich and longstanding vernacular culture of co-operative communards!" (personal contribution via email)


Bibliography on the History of Cooperativism

Pat Conaty:

"Just some additional comments about background sources for my commentary and some other observations on viable Co-operative and relatively new, mutual structures for Commoners. The radical Owenite movement I mentioned influenced by Godwin and the link up with the Chartist movement and the early Co-op movement is covered well in the history by Gregory Claeys, Citizens and Saints - Politics and Anti-Politics in early British Socialism.

For a full picture of the twists and turns of the history of the Co-op movement in the UK from the 1770s and right up to the mid-1990s with some earlier links to Ireland (before independence), see Johnston Birchall, The Co-op: the People's Business.

For the US history of Co-ops and the twists and turns, see John Curl, For All the People - Uncovering the Hidden History of Cooperation, Cooperative movements and Communalism in America.

What these three books evidence again and again is that the Co-operative Commonwealth vision and indeed the battles to secure this vision rise and fall again and again historically with tough times like the present when austerity bites hard. However when it bites too hard, you can get the swing in the opposite direction. So timing and leadership are important if some day this peaceful vision for a peaceful political economy is to be ever secured and consolidated.

Curl's analysis of the 1930s in the USA is compelling as he shows the progressive swing leading up to the mid 1930s and then a swing back the other way. Government on the one hand provided public investment to help grow the Co-op sector during the Great Depression under FDR, but at the same time directed resources away from those in the Co-op sector advancing the Co-operative Commonwealth vision and practices. Thus the very strategies that could have led to a peaceful Commons outcome was thwarted and consistently so.

As Birchall shows also in the 1920s -30s, it was Mussolini, Hitler, Stalin and Franco who jailed, killed, bombed and crushed these Co-operative peacemakers right across Europe.

Unearthing this forgotten history as these social economic historians do is crucially important as the size of these progressive Co-op forces was historically significant.

In Europe and in North America we have strong Co-op sector good practice to build upon. What is fascinating at present and spreading internationally as a new tendency is the Multi-Stakeholder Co-op phenomenon. Known as either Social Co-ops or Solidarity Co-ops It has its roots in Northern Italy but it has spread to Spain, Portugal, France (still rather small there), Poland, Hungary and Quebec in Canada. Our colleague John Restakis has a wonderful chapter in his book Humanising the Economy on this movement. Mike Lewis and I also have a section on the Italian Social Co-ops in our book.

The key strategic point that I would emphasise here is that the Social Co-ops in Italy and the similar Quebec Solidarity Co-ops both unite and give political voice in a collaborative way to Commoners. Their strategic mission and indeed legal obligation by statute is the pursuit of the General Interest of Citizens and the securing of the Common Good, namely as I see it and as many of them demonstrate, the practical ways to build commonwealth and well being.


In Quebec there are now 500 Solidarity Co-ops and the unusual nature of this stakeholder Co-op (as opposed to traditional worker or consumer co-ops) is leading since 2008 to a mentality shift in Quebec. I heard last week from a Canadian co-op leader in Montreal that more than 9 out of 10 of new Co-ops formed in the past couple of years in Quebec province, are Solidarity Co-ops. That is a salient change in karma, it would appear."