Co-operatives – a heterogeneous category

Co-operatives – a heterogeneous category

As a previous blog commented, Cooperantics was lucky enough to get a ticket to the Rebellious Media Conference in London last autumn, headline speaker Noam Chomsky amongst a lot of other illustrious participants.

After hearing the recording of the Q&A session on the published DVD, I had some further thoughts on Noam Chomsky’s reply to my question: Can the co-operative business model succeed where the capitalist business model has so evidently failed?

 His answer was as ever, thoughtful and informed. He said that yes, of course the co-operative business model can succeed, and has a long history of success, in Britain and other countries around the world. However he qualified this by describing co-operatives as a ‘very heterogeneous category’. He went on to explain that there are co-operatives where the participants really run it and there are co-operatives and worker owned enterprises where control is handed over to management. Referring to Mondragon, Chomsky described it as ‘worker owned but not worker managed’.. ‘they pick professional managers who act like professional managers’ and ‘they are investing overseas to exploit super cheap labour, not the kind of thing we’d like a progressive institution to do’.

 Noam Chomsky was accompanied on the platform by Michael Albert, a leading authority on political economy, U.S. economic policies, and the media. Michael Albert primarily focuses on matters of movement-building, strategy and vision, creating alternative media, and developing and advocating his participatory economics vision (“Parecon”).

Michael Albert had recently attended a meeting in Argentina with representatives of 50 occupied factories. At the start of the meeting there was a go round where people were telling their stories. At the start the mood was upbeat, but by the 4th or 5th person the mood became maudlin and by the 7th person people were crying. ‘I never thought I’d say anything like this’ said the 7th person to speak ‘but we took over workplace, we equalised wages, we instituted democracy but now many months later it feels the way it felt before, it’s alienating – maybe Margaret Thatcher was right there is no alternative’

 Michael Albert said that their mistake was to keep the old divisions of labour, which over time distorted their intention to be different, to be humane. This left them so demoralised they thought change really wasn’t possible.

 He concluded that yes, co-ops can be an important part of a project to change society but only if there is an understanding – not just a desire, but the understanding – that will cause the co-op to be a truly exemplary institution.

 I was sad to hear about the situation in the Argentinian co-ops, because they are so frequently used as an example of what can happen when working people take control – and I wonder if it is truly the case that in all instances they have retained the old divisions of labour?  But what a great answer and it is one we know already – it’s not enough to have the right legal structure, the right market conditions and the financial & human resources in place.

 For a co-operative to be a ‘truly exemplary institution’ there must be an understanding of how to work together within the legal structure and an understanding by managers that their role is a function like any other and does not confer any special status. Members also need to understand the rights and responsibilities of membership as well as how to work as a team, how to take decisions and delegate, how to hold management accountable, and lastly but most importantly, how to ensure participation and thereby commitment.

Book review: For All the People by John Curl

‘For All The People’ by John Curl

Uncovering the hidden history of cooperation, cooperative movements, and communalism in America

PM Press, PO Box 23912, Oakland CA 94623

John Curl is a professional woodworker and a 30-year member of Heartwood Cooperative Workshop in Berkeley, California

For all the People is a magnificent, comprehensive and detailed history of co-operatives and collectives of all kinds in the USA. It covers so much ground, and in so much detail, that it’s hard to summarise in a short review, so I’ll highlight those details that particularly spoke to me.

The book starts with a look at the co-operative cultural patterns of indigenous peoples before the arrival of the Plymouth Pilgrims in 1620 and goes on to describe in detail how the co-operative movement has thrived and foundered, thrived and foundered again and again under different circumstances throughout four centuries of US history.

The concept of a federation of north American states was inspired by indigenous peoples of the Americas

It was the League of the Iroquois which inspired the concept of a federation of colonies. The first person to propose that the colonies unify as the Iroquois had done and speak with one voice was Canassatego an Onondaga Iroquois chief, at an Indian British conference in Pennsylvania in 1744.

The political system of the indigenous peoples of the Americas was an inspiration for Tom Paine

Tom Paine experienced indigenous democracy at first hand as secretary in negotiations between the rebels and the Iroquois in 1711. He studied the Iroquoian language and used indigenous society as a model in his writings.

Role of co-operatives in supporting working people as labour relations changed from skilled artisan to waged labour in the early 19th century.

As in the UK, capitalist industrialisation in the early 19th century forced a change on working people from being autonomous skilled artisans – with a range of strategies for survival and self-expression – to becoming wages slaves, reliant on only one source of income to feed their families and live their lives. Co-operatives became an important means of support, providing support for striking workers to co-operative warehouses, and co-operative stores.

Curl describes how in 1794, Baltimore shoemakers formed the United Journeymen Cordwainers and demanded the standard piece work rate be raised to 6 shillings. Their demand rejected, they went on strike, taking with them over half the city’s workers. They organised the first co-operative ‘manufactory’ in the United States, a large workshop open to all journeymen boycotting the masters’ shops. Soon some of the masters began paying the higher rates and the workers returned to their shops. It seems that the co-operative model was often used in this way, supporting the workers while they were on strike and abandoned once the strike was successful.

In the early 19th century customers of country stores often paid their bills by trading produce, livestock or artisanal products for merchandise. Robert Owen’s store at New Harmony was the earliest prototypical co-operative store, which did business based on labour notes redeemable in the store. Community members received supplies, clothing and groceries on credit, which they redeemed with time credits for work performed.

Secret Co-operatives

The Knights of Labor was established in secret in 1869 by members of a Philadelphia taliloring cutting local trade union, blacklisted for striking. Its’ aims were ‘to secure to the workers the full enjoyment of the wealth they create, to harmonise the interests of labor and capital’ . One of their first principles was co-operation. When they went public in 1878, ‘we will endeavour to associate our own labors, to establish co-operative institutions, such as will tend to supersede the wage system, by the introduction of a co-operative industrial system”

The Knights of Labor called for public ownership of railroads and other commercial transport, of the telegraph and telephones, water systems and utilities; for an 8-hour day, equal pay for equal work, abolition of contract, convict and child labour. They were one of the first organisations to include white and black in the same union and the first to include women – KOL had 50,000 women members at its peak, including many housewives, whom the Knights of Labor recognised as workers.

The early1880s was a time of industrial expansion, machinery was being introduced on unprecedented scale and an increase in unskilled & semi skilled labour, cuthtroat competition, and wages forced down. At the same time the USA was experiencing the peak of immigration from northern Europe, and the beginnings of immigration from southern & eastern Europe, bringing 5 million immigrants, mostly unskilled. When industrial capitalism forced these immigrants into wage slavery, they organised production and mutual aid co-operatives.

By the middle of 1886 there were between 185 and 200 Knight co-operatives across the US, concentrated in the east and mid west. More than half were mines, foundries, mills and factories making barrels, clothes, shoes and soap, as well as co-operative printers, laundries, furniture makers, potters, lumberjacks; factories making nails,boxes, underwear, brooms, pipe and stoves.

Co-operative development

The KOL general co-operative board published forms of constitutions and bye laws that could be modified to suit any form of co-operative, and numerous articles on the nuts and bolts of different kinds of co-operation.

However, as usual, capitalists and competitors hit the Knights co-operatives hard, making it difficult for them to obtain credit, supplies and markets.

Solidarity co-operatives

In 1886, New York City’s district assembly 49 – one of the most radical of the Knights assemblies, established an extraordinary group of co-operatives.  A committee on co-operation, chosen by the whole district, managed all the enterprises. They offered non-interest bearing shares for purchase to individuals and labour organisations that were redeemable after one year. Investors could not determine which co-operative their funds would be used for. No profits went to shareholders, but stock was to be bought back by the co-operatives from profits.  Shareholders had no control over management. Of the net profits after salaries and debt payments, 50% went to expanding the co-operative chain, 25% insurance and 25% to a fund for buying land.

Solidarity Co-operatives in 1887:

  • Solidarity fancy leather goods factory
  • Plumbers co-operative association
  • The Leader publishing association
  • The Concord Co-operative printing company
  • Solidarity cigar company
  • Solidarity co-operative and distributive store
  • Solidarity KOL watch case company

The book goes on to discuss the influence of Rochdale and George Jacob Holyoake, and to survey the role of co-operatives during the Civil War, the abolition of  slavery, the First International,  the First World War, the great depression, the New Deal and the second World War. There are numerous fascinating histories of individual co-operatives such as: The Get Even Quick Cattle Company, the Troy Lauundry Womens Cooperative and Nashoba, Tennessee, one of many communes established after the abolition of slavery.

It also looks at the Berkeley Co-op, Bay Warehouse Collective and the Heartwood Cooperative Woodshop,  with which the author was very much involved, and reviews co-operatives and the counterculture of the 60s and 70s. It also looks at early and 20th century Communalist movements and ends with a survey of the infrastructure of the co-operative movement in the US today.

Why do worker co-operatives fail?

John Curl asks why so many worker co-operatives fail. He points out that the majority of all new businesses fail in their first year and that start ups are advised not to expect a profit for two years. He also points out that most enterprises are increasingly based on costly technology and that most co-ops start out under capitalised.

However one of the points that most clearly comes across throughout the whole book is the consistent opposition from corporate interests and the politicians that serve them. For example, the Sherman Anti Trust Act of 1890, declared illegal any combination or conspiracy to restrain interstate commerce. The Act aimed to outlaw the Trusts which controlled most of US industry in the wake of the Civil War. It supposedly favoured small business by curbing monopoly, but made no distinction between conspiratorial practices of big business and co-operative practices of small producers. It outlawed co-operatives engaged in interstate commerce and unions organising interstate strikes. The Sherman Act made numerous co-operatives illegal and was used to break strikes 12 times in the decade, but never once to break a Trust.

Curl concludes by describing how the system has failed dismally to provide a decent life, basic services or jobs for vast numbers of north Americans. He says that the corporations still fear worker co-operatives, for the same reasons they have used their power to put them down throughout history.

It’s clear that there has been consistent and significant opposition to the cooperative idea, throughout US history, however I believe that this is a result largely of historical circumstances which resulted in a political system located to the right of the political spectrum, which views worker organisation of any kind with fear and suspicion.

I also believe it is time to review the traditional focus of co-operatives – both in the US and the UK – on just one stakeholder group: consumer, employee, or community. A more sustainable way forward might be to explore the potential of the multistakeholder model, a model that takes into account the needs and concerns of employees and customers, as well as other stakeholders, such as suppliers, the wider community, the environment. A co-operative enterprise supported by all its stakeholders might perhaps have a better chance of surviving the slings and arrows of a competitive and individualistic society. The co-operative I work for – Somerset Co-operative Services – has developed such a model, which can be downloaded for review at:

There is a current of opinion growing and manifesting itself everywhere that not only have our political systems failed us, but also there are serious flaws in a business model that is legally obliged to look no further than the interests of shareholders. Surely one of the problems associated with capitalism is its primary focus on one stakeholder, namely the investor? As Noam Chomsky said in a recent interview, US CEOs and senior managers are caught in an institutional contradiction, they are obliged by law to maximise short term profit, i.e. to benefit the investors at the risk of ignoring other issues, such as  climate change. (see

For all the People is an important and timely book – read it to see where co-operatives have succeeded, how they have supported and inspired working people to action and where and how they have failed. We can learn much from this history and we need to look back and learn in order to look forward and act.

‘I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country’

Thomas Jefferson 1816


A co-op is a co-op by any other name .. or is it?

Yesterday’s excellent article by Peter Couchman, CEO of the Plunkett Foundation, got me thinking again about what it means to be a co-operative.

People sometimes say they want to set up a co-operative because they like the sound of it – sharing and caring and all that – however there’s a bit more to it than that, and it helps if they can get a clear idea at the outset of what a co-operative – and what it isn’t.

The International Co-operative Alliance – the world wide umbrella body for co-operatives – defines a co-operative as:

‘.. an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.’

Where the key words are: autonomous, voluntarily, economic, social, cultural, democratic control and enterprise.

Nevertheless there are a lot of myths about co-operatives, and perhaps because there is no legal definition of a co-operative (at least in the UK) that’s only to be expected. The most frequent myths I come across are:

Myth 1 – Everyone gets equal pay in co-operatives.

Not true. While most co-operatives would subscribe to equal pay for equal work, and while some co-operatives do have an “equal pay for all” policy (Suma Wholefoods is the most famous example. All Suma workers are paid the same daily net wage plus allowances and overtime or time in lieu to reduce hours imbalances). However many co-operatives have pay scales and pay differentials. Some cooperatives follow the example of the Mondragon co-operative in the Basque country, and limit the differentials between managerial staff and shop floor workers pay.

Myth 2 – All co-operatives rotate jobs

Not true. Some co-operatives encourage some job rotation – again, Suma is a good example. They call it multi-skilling and say “It allows us to use labour and skills more efficiently to cope with the troughs and peaks of business. It enables Suma members to cope with high work loads. It keeps people fresher and enthusiastic for longer and it allows recuperation from stress”. However job rotation needs to be well-managed and co-operatives should be aware of the costs of job rotation. If you are learning a new job, you will not be up to speed for some time, and nor will the person teaching you. This is a cost which needs to be built into budgets and projections.

Myth 3 – In a co-operative, everyone is involved in all decision-making.

Not true. If they were they would not survive. Co-operative members have to learn to trust one another and delegate power to take decisions to sub-groups or individuals. Of course those individuals are answerable to the whole co-operative for the quality of their decisions.

Myth 4 – You can set up a co-operative for other people.

Not true. However well-intentioned, people who seek to set up worker co-operatives for others eventually recognise that it is simply not sustainable. The concept of “self help” is a central one for co-operatives, and if the members do not genuinely take ownership of the co-operative, eventually it will fail, or degenerate into a private enterprise. It may take a few years, but it will fail. Co-operatives are owned and controlled by their members. Control is the key word here. How can the members control it if someone else (even a well-intentioned person) is pulling the strings?

Myth 5 – A co-operative is a sort of voluntary organisation, or charity

Well, perhaps just ignorance, rather than a myth, but it is still not true. A cooperative is a business. Trading in a commercial market place. It may need grant funding to get going, but it must eventually be commercially viable. If it depends on grant funding it is a voluntary organisation or a charity, not a co-operative.

Since there is no legal definition of a co-operative in the UK, the only way we can assess whether or not an organisation is a co-operative is by comparing it to the ICA definition of a co-operative and Co-operative Principles.

As we can see above, the definition agreed by the ICA in 1995 emphasises the entrepreneurial and autonomous nature of a co-operative – so Lambeth Council could never be a Co-operative Council, no matter how well intentioned, not to mention that the aim seems to be the Council setting up worker co-operatives for the workforce. As anyone in co-operative development circles could tell them, it won’t work. A key co-operative value is self-help – co-operators do it for themselves!

Co-operativesUK is doing excellent work promoting the concept of co-operative behaviour as a way of opening the door to increased understanding of the nature of the co-operative business model. However I think one of the most effective ways  of getting more clarity is to have the co-operative business model defined in UK law, based on the ICA definition and Co-operative Principles.