Co-operative Principles
So, what makes a mutual distinctive? Last time I showed mutuals are primarily about organised people, not organised money. The members jointly own the wealth that accumulates within a mutual.
In 1844, the founders of the Rochdale Retail Co-operative adopted a set of principles. The International Co-operative Alliance adopted them with adaptations in 1937, last reviewed in 1995.
There are seven principles. Other types of organisations may embody some or all of them but the expectation is all seven apply to mutuals.
Voluntary and open membership
If you wish to join a co-operative they must permit you to do so without reference to your sex, sexuality, race, religion or anything else. Co-ops can impose certain conditions of membership such as residence in a geographical area or fees.
Democratic member control
The rule is one member, one vote, which should come as no surprise. This applies to the lowest level, eg your local branch. Representatives sent to higher levels also follow one member, one vote.
Perhaps we do not appreciate how radical this principle was, especially when combined with the first. Co-operatives were among the first organisations where women were able to take on leadership positions.
Member economic participation
Control of the co-operative’s assets are always in the hands of the members. They belong to the membership and not to a company or individuals. So, co-operatives limit the assets that can be removed from ownership by the co-op. De-mutualisation of co-operative assets must be difficult if not impossible.
However, it is possible to distribute surpluses among the members. This is known as a dividend (or divi) when applied in retail co-ops. In its best days the divi was a significant contribution to the income of many households.
Autonomy and independence
Co-ops and mutuals belong to their members. They can work in partnership with non-mutuals but cannot enter into agreements that compromise the members’ ownership of their mutual.
Converting co-operative assets to shares for example, may be attractive on the surface. In practice it means assets owned in common now belong to individuals. Those individuals who control the most shares effectively own the company. Within mutuals it is the common bond between the members that empowers the members.
Education, training, and information
So, it is crucial that members understand co-operative principles, to preserve co-operation and to empower the membership to new co-operative ventures. The first retail co-op in Rochdale had a library and meeting room above the shop, still preserved in the co-operative museum on the site today.
Cooperation among cooperatives
Co-ops collaborate with other co-ops. This ensures that mutual assets remain mutual.
Concern for community
We can understand this in various ways. There is a community among the members. If the co-op has a geographical common bond, its members support their neighbourhood. In the earliest days, one of the concerns was adulteration of food. Co-ops have always upheld the quality of their contribution to the economy.
I am somewhat sceptical about the ethical stance taken by the co-operative bank. Whilst co-ops are ethical, there is a danger that we confuse a generalised ethical stance with economic mutuality. Ethics do not substitute for mutuality. Do you agree?
It does sound as if the UK co-operative movement is in severe trouble and it seems they have breached a number of these principles. I think the key is education because it is too easy to forget principles or fail to understand them. Commitment to education has fallen away as members no longer attend meetings. Perhaps education could be promoted online but without people meeting and learning together, it is hard to see how understanding can be shared effectively. What do you think?