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Response to Natalia Fernandez on the history of cooperativism (3), by Pat Conaty

photo of Michel Bauwens

Michel Bauwens
20th July 2013


As a reminder, Natalia’s key thesis (see the article published on the 16th) is:

- 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.

Robin Murray responded on the 18th.

Here is the contribution of Pat Conaty, co-author of the landmark book, The Resilience Imperative, which focuses on ‘cooperative transitions’:

“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!”

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