Co-operative Movement in the World Context

Introduction

Man is a social animal. For him co-operation is a necessity rather than a

choice. World over the co-operative movement started in order to bring
people together for a ‘common cause’.

Primitive concept of Co-operation

Right from the don of civilization, the concept of co-operation has

existed. In a primitive society, a man’s life was simple with only a few
wants. As the civilization grew, instead of an individual, the villages
emerged with a large number of farmers and a few carpenters, cobblers,
goldsmiths, etc. Co-operation was in those days a means to lead a life
better. There was a mutual aid and collaboration among different
individuals and society. There is a mention of the co-operative movement
in the Rig Veda and also co-operative bodies managed the temples in
South India.

Modern concept of Co-operation

The modern concept of co-operation is altogether different from the

primitive one. It denotes a special method of doing business. It is an off-
shoot of the industrial revolution which is a name given to the series of
changes that came about in the method of production (18th Century) in
Europe, especially in Great Britain.

The end of 18th century, gave rise to capitalism. This resulted in

concentrating the tools of production in few hands, which gave them a
complete control over the labor class, which was although very large in
number, but was poor and weak.

Dishonesty, capitalization, rising rates and black marketing, was the rule
of the day to maximize profits. The workers were exploited and were
becoming poorer day by day. The Capitalist Class in its greed to make
more profits started exploiting the working class like payment of low
wages, increase in working of working hours, insecurity in employment
etc. This led to frustration and discontent among the working class. They
therefore looked about for an alternative to save themselves from the grip
of inhuman employers. Few learned people came forward to encourage
the labor class and one of them was Robert Oven. Social reformists like
Robert Owen and Dr. William King, gave a thought to the formulation of
a new philosophy. As a result the co-operative movement began on the
world stage.
Although Robert Oven was an industrialist he also lived a laborious life
with the rising exploitation and plight of workers there was a change in
Robert Oven’s thinking about the labor class, and in an attempt to
improve the condition he reduced working hours and rising wages in his
factory. He initiated labor colonies and helped them to produce various
things where by they could raise their income.

In an attempt to find out a solution against capitalism, Robert Oven and

his friend Charles Forea wanted to find an alternative to capitalism. They
were concentrating on an idea where instead of co-operation and
exploitation a policy of mutual co-operation and mutual help could be
used.

The new organization and the idea was no definite program, even then
unity, spontaneous co-operatives, control by general public and social
cause became the main principles of this alternative arrangement against
capitalism. A series of shops started by Robert Oven, could not really
succeed.

To study the co-operative movement in the world perspective, it would be

important to make a study in the countries of England and Germany,
because these are the two countries where the co-operative movement
started.

Rochdale Founders

England the birthplace of many new things was also responsible for
presenting the co-operative movement to the world as an alternative
philosophy to trade unionism, for fighting capitalistic exploitation.

In 1844, a group of 28 weavers met in the Chartist Hall and decided to

establish a co-operative store. The members of this store would purchase
the requirements collectively to economize on their expenditure, for they
knew that it would be difficult for them to get a raise in their wages. They
were greatly influenced by the writings of Robert Owen, Dr. William King
and William Thompson.

Thus Robert Oven’s dream of an alternative to capitalism was brought

into reality by the villages of Rochdale, 28 weavers came together and
established Rochdale equitable pioneers society 1844 contributing 1
pound each. Thus gathering a capital of 28 pounds and registered it
under the Friendly Society Act. It was a consumer co-operative. They
hired a place and started a shop and sold items of daily necessities such
as candles, tea, butter, soap etc in bulk and sold them to consumer at
reasonable prices. It opened with a legal amount under unfavorable
circumstances but slowly made good progress in the years to come. The
membership raised to 74 in 1 year and by 1888 it had 1123 members
with a capital of 3.4lakhs pound and declared 2.5lakh ponds as a profit.

Objective of Rochdale Model

1. To take up production and distribution of the commodities required

by the members.

2. To make available houses to its members to improve their living

conditions and to better their status.

3. To meet the clothing requirements of its members.

4. To arrange for education to its members.

5. To manufacture articles, so as to generate employment to its

members.

The rules and regulation followed on the transaction of the Rochdale

stored where:

Open Membership

Business on demonstration basis

Limited Interest on capital

Division of profits as per transactions by members

Cash payment

Supply of best quality goods

Educating Members

Religious Neutrality.

The Rochdale Pioneers of England framed the principles based on their

experience on a consumer co-operative store; popularly know as the
Rochdale Principles. These principles have been adopted in almost all
countries, which have same or other type of co-operatives.

Principles

Co-operative Principles govern the life activity of a co-operative

enterprise. The Principles are as follows:
1. There should be democratic control
2. All should be welcomed in it
3. Limited interest should be paid on capital
4. All trading should be made in cash
5. No politics should be allowed
6. Co-operation should be kept free from religion
7. There should be no faults in co-operation education

The co-operative movement in the world started in Germany. Intolerable

adverse conditions for the poor in the country led to the growth of a new
economic organization known as the “Co-operative Credit Society”. The
emergence of the co-operative credit movement in this country was the
result of an enormous amount of work done by two great men –
Reiffeisen & Schulze.

In the middle of the 19th century in Germany the life of an average

German was miserable both in the village and town. In rural areas the
Jews controlled and regulated the economic activities of many people
they purchased the excess surplus of the farmers by paying them very
low prices and sold their purchases at high prices. The economic
condition of the villagers went on deteriorating. They had to source
money from the Jews at exorbitant rates of interest.

Co-operative Movement in Denmark

Denmark is an agriculture country and the co-operative movement was

started spontaneously by the Danish people. These societies are self-
reliant and Danish government did not give any help to this movement. It
is free from any government control and therefore it is called co-operative
Denmark.

The main feature of the co-operative movement in Denmark was that

there are separate societies for different type of activities. There are
wholesale milk-eggs, exporting, bread manufacturing, building and
productive types of co-operative society. All the societies have their own
organization, which decides on their product price, dealing with the
public, companies, appointment of auditors etc.

Features of Milk Co-operative in Denmark

1. Formally Denmark was an agricultural country but shifted later to

dairy business at the beginning of 19th and has been a leading
producer of dairy products, since then.

2. Dairy business is of prime importance in the export of Denmark.

More than 70% of its products are exported. The farmers and people
 engaged in dairy business have formed their local co-operatives. They
not only collect milk but also process them and have an organization
at the district and state level.

3. The working of society is democratically based and the

representation of the society is given according to the milk supplied
by them.

4. The members have an agreement for supplying milk for a period of

15-20 yrs and cash payments are made to the proportion of milk
supplied.

5. The principles of government are followed by the dairy society of

Denmark.

International Co-operative Alliance

Definition: “A Co-operative is an autonomous association of persons united

to meet their common, economic, social, cultural needs and aspirations
through a jointly owned democratically controlled enterprise”.

The International co-operative Alliance had appointed commission under

the chairmanship of Shri D.G.Karve, which enunciated following
principles of Co-operation.

1) Open and Voluntary membership.

2) Democratic administration.

3) Self help and mutual help.

4) Principles of service.

5) Distribution of surplus.

6) Political and religious neutrality.

7) Principle of education.

8) Co-operation amongst co-operatives.

These Principles of co-operation were amended in the Manchester
Congress of the International Co-operative Alliance held in September
1995 as follows.

In the words of International Co-operative Alliance “Principles are

those practices, which are essential for the achievements of the purpose of
co-op movement. Thus principles give the way for organizing and
conducting the co-operative activity, which is the inherent and
indispensable corollary of the ideal or objective of the co-operative
movement”

Principles

1. Voluntary and opened membership:

The element of compulsion is absent, as stated by the ICA, the

membership of a co-operative society shall be voluntary and available
without artificial restrictions or any social, political, radical or religious
discrimination. This voluntary membership also means that a person is
free to joining as a member and also has a free will, to withdraw
whenever he wants.

Open membership implies that there shall be no restrictions on the

admission of members, open to all persons who are able to use their
services and willing to accept the responsibilities of members, without
gender, social, racial, political or religious discrimination. It seeks a
homogenous interest of the members who come together for a mutual
benefit.

This principle is undergoing changes with time. A little amount of

compulsion and restriction is imposed for the smooth working and speed
of the movement. The gates of membership cannot be kept open for
persons with vested interests e.g. Moneylender, as a member of credit
society.

A person can be compelled to join or withdraw, from such a co-

operative in larger interest.

2. Democratic member control:

Such a control is a cardinal principle of co-operation, which will

definitely have a healthy influence in the political and economic
structure in a country like India. It has been pointed out rightly that if
democracy is to be attained it will come not by voting, not by taxing nor
by a revolution but by putting into operation, the co-operative
democracy, beginning with a smaller scale and inter-expanding it on a
larger scale.

The main purpose of a co-operative is to promote and protect the

interests of the members and nobody can protect the interests, of a
person than he himself and therefore it becomes necessary that the
administration of co-operatives must be carried out democratically by the
members themselves.

According to the ICA co-operative society is a democratic organization

and their affairs shall be administered by the persons appointed/elected
in a manner or process agreed upon by the members and are
accountable to them.

The members will enjoy equal rights of voting and participation in the
decision making process. The principle of democratic control implies the
following:

A general body meeting of the members of the society is the supreme

authority in conducting affairs of society.

1 member – 1 votes irrespective of the individual share holding.

The rule of majority and control of board of management in

accordance with, the democratically expressed will, of the members.

The board of management elected through a process agreed by the

members and the board is accountable to the members.

3. Member Economic Participation:

Members contribute equally and also democratically to control capital of

their co-operatives. The capital is the common property of co-operatives.
Members usually receive limited compensation, if any on the capital
subscribed as a condition for membership. Members allot surplus for the
following purposes:

Development of infrastructure
Setting up of reserves
Allied activities relating to the co-operatives

4. Autonomy and Independence:

Co-operatives are autonomous self-help organization, controlled by their

members. If they enter into agreements with other organization,
including government or raising capital from external sources they do so
on terms that ensure democratic control by the members to maintain co-
operative autonomy.

5. Education, Training and Information:

The co-op education becomes a prime factor to make a co-operative

successful. According to the ICA – all the co-operative societies are
supposed to make provision for educating their members, officers and
employees and lastly the general public. The principle technique of co-
operative is both economic and democratic. There are 3 aspects of co-
operatives.

Education for its members

Since most members are poor and illiterate they are more or less
unaware about the principles and practices of co-operatives. Therefore,
for an active participation it is necessary to evolve a system, which will
educate these members and keep in formed about the decisions and
activities of the society.

Education for office bearers

The office bearers are the elected members of the co-operatives and as
they are interested with the responsibility to conduct the business on co-
operative lines, it is necessary for them to acquire the technical skill and
thorough knowledge of co-operatives. Right from the elementary level to
the advanced technique.

Education for prospective co-operative members

To bring in more participation from the general public it is necessary

that the people should have faith and for this it is the responsibility of
the office bearers, to keep the general public involved about the
principles, aims, achievements and future plans of the co-operative
movement.

Co-operatives also provide training for their members, elected

representatives, managers and employees so that they contribute
effectively to the development process. They also inform the general
public on the nature and benefits of the Co-operatives.

6. Co-operation among Co-operatives:

It’s a new concept that concentrates on developing and strengthening of

different co-operative sectors by making them inter dependent. Co-
operatives serve their members most effectively to strengthen their co-
operative movement by working together through Local, Regional,
National and International Structures.

7. Concern for community:

Co-operatives work for their sustainable development of communities

through various programs and policies approved by their members.

8. Values:

Co-operatives are based on the values of Self-help, Self-responsibility,

Democracy, Equality and Solidarity. In the tradition of their founders the
members believe in the ethical values of honesty, openness, social
responsibility and caring for others.

9. Limited interest on capital (No profit motive):

It is a unique principle where capital is treated as subsidiary where as

the prime and ultimate objective is service to members, the economic
outcome arising out of the operations of a society. The member will be
benefited in a manner where it would avoid one member gaining at the
expense of others. Capital is a factor of production and is also entitled a
fair rate of return. In co-operatives capital cannot dominate, rather it
serves in return for a limited interests as service being the supreme.

The motive of earning a profit is absent in co-operatives otherwise it will

mark the basic motive of co-operation i.e. service.

10. Equitable distribution of surplus:

A profit earned by a co-operative is to be distributed according to the

decision of members. A limited interests or dividend, can be paid in
proportion to their transactions with the society after making provisions
of business and social welfare activities.

In a joint stock company the surplus is distributed on the number of

shares held by an individual irrespective of their transactions with the
company, but in a co-operative the surplus is distributed on the basis of
the number of dealings with the society.

It is not obligatory to pay dividend out of surplus as the members may

divert the use of these funds for overall development of the society and
its members. It is not obligatory to pay dividends out of the members
entitled for logically it also means they are obliged to bear loses if any,
Usually any such loses are adjusted from the reserve funds.
11. Self help and Mutual help:

As the co-operative enterprise is meant for the economic weak, they come
together; form a co-operative, pool their resources, work together for
mutual benefit and the benefit is shared by all the participants.

Individually a person may not be capable to withstand the market forces

and exploitation, but together they can strengthen their position and
pursue their economic interests.