The Seeds of Radicalism

Steve Thompson traces the history of the co-operative movement and argues that this is a decisive moment in its renaissance.

There is an alternative to capitalism, it’s called the co-operative commonwealth. It’s a way of living and trading with business which is run democratically for the benefit of the members and communities who use the services. These businesses are not run for the purpose of making wealthy people richer, as in the capitalist model.

So what is the co-operative commonwealth? And how did it all begin?

It is difficult to imagine what life was like for the textile workers in the early 19th century. Working conditions were appalling. Wages were poor, women and children were employed as even cheaper labour. Many employers owned the shops and demanded that the workers buy their provisions from these shops or face the sack. In some cases workers received payment in tokens which could only be redeemed at the works shops. Thus the employers profited from their workers twice.

To earn more the shopkeepers adulterated many items. Flour was mixed with broken rice, coffee with chicory, cocoa with brown earth and tea with dried leaves. False weights and measures were used as well – always the poor were the victims.

In Rochdale in 1844 a group of people decided to start a co-operative. It might seem obvious to us now with the benefit of a socialist tradition and clause four of the Labour Party constitution – “by the strength of our common endeavour we achieve more than we achieve alone”. He got a meeting together started to collect funds. Every family had to contribute a certain amount to the initial capital. These families became members and co-owners of the enterprise. They rented some premises in Toad Lane and bought a supply of flour, butter, sugar and oatmeal. The shop was up and running on 21 December 1844.


Common ownership had been tried before by workers in various places but what is special about the Rochdale Pioneers is that they established certain principles which would guide their enterprise:

  1. open and voluntary membership
  2. democratic control (one vote per person irrespective of shareholding)
  3. fixed and limited interest on share capital
  4. return of surplus to members pro rata to their purchases
  5. sale of pure and unadulterated goods
  6. provision of education (many shops had reading rooms and books were bought for the use of members).

Those principles, modified for today’s world, are still the bedrock of the international co-operative movement and agreed by the ICA (International Co-operative Alliance).

With the success of the Rochdale Co-op, other groups of workers formed co-ops all over the country. So successful were they that the capitalists began to feel threatened. The co-ops were beginning to find that the banks and insurance companies were refusing to do business with them, and wholesalers were trying to squeeze them out of business.

In 1863 the Co-operative Wholesale Society (CWS) was established, followed by the Co-operative Insurance Society (CIS) and the Co-operative Bank. No longer were the co-ops dependent on the whims of private business interests for the provision of wholesale, insurance and banking.

The movement, however, needed to be supported and defended and so the Co-operative Union was founded in 1869 to play a similar role to that performed by the TUC for the trade union movement. Since then it has advised retail societies on financial, legal, labour and taxation matters and provided education and training through the Co-operative College (an integral part of the Co-operative Union). The Co-operative Union organises an annual meeting – Co-operative Congress – at which all co-operative societies affiliated to the Co-operative Union may be represented. In 2003 the Co-operative Union changed its name to Co-operatives UK after including as members non-retailing co-operatives such as credit unions, agricultural, housing, worker and service co-operatives.

The co-operative sector in the UK now contributes an estimated £18 billion to the economy. There are over 1,500 co-operative businesses as well as 400 credit unions and several hundred housing co-operatives.

The Co-op Party

By the time of the First World War it became clear that the movement needed political representation. Legislation was weighted against co-ops and the capitalist institutions were only too eager to put them down.

The Co-operative Party was formed in 1917 as the political arm of the Co-operative Union and is still responsible to the co-operative movement. The founding conference, attended by more than 900 delegates who represented more than 500 co-op societies, was held at Westminster Central Hall. Ten years later the Co-operative Party and the Labour Party signed a formal agreement which enabled local Co-operative parties to affiliate to constituency Labour parties. At elections the two parties work together to return Labour or Labour/Co-operative candidates to the UK parliament, the European parliament or local councils and assemblies. There are currently 29 Labour/Co-operative MPs in the House of Commons, and 14 Labour/Co-operative peers in the House of Lords.

In 1900 there were 1,439 co-operative societies. Today there are 28. Peter Marks, chief executive of United Co-operatives, has spoken of a day when there might be one single co-operative society in Britain. Whether or not that ever happens we have yet to see, but it is true that co-operative societies co-operate with each other. They have formed a trading group which allows them to buy wholesale jointly in order to keep prices down. Through this they share the same logo.

Co-operatives grew from small groups of people meeting a collective need: economic necessity coupled with the values of community. In time, in response to differing pressures, the co-operatives in the retail sector merged and became larger. People working together in this way had created a climate by which they could fulfil their educational, social and economic needs.

I still have my grandparents’ share book. They joined Brightside and Carbrook Co-operative Society (later Sheffield Co-operative Society) in 1922. My grandfather was a manual worker at Tinsley Park Coke Ovens and they lived through some rough times, especially 1926. The twice yearly ‘divi’ really meant something and at times they would not have been able to manage without it. At other times they did not draw it out and left it there for a rainy day. The last entry in the share book is 1971. As a child I remember quoting my grandmother’s divi number when I ran an errand.

The most outstanding thing about co-operation is its ability to adapt, to fulfil all kinds of common need. Who would have thought that today we’d have a phone co-op, credit unions, opticians, wind turbine co-ops, housing co-ops, football supporters’ trusts, care co-ops, a sustainable bio-fuel filling station co-op, and Greenwich Council’s leisure services run as a co-op. The list grows because, as needs arise, the co-operative model can be adapted to meet them. We are approaching a time when all our goods and services can be supplied by co-ops. We will indeed be living in the co-operative commonwealth. We are talking here about common ownership, job creation, democratic control and community building.

What the Labour Party lost when it abandoned its old clause 4, the Co-operative Party can put back through co-operative common ownership. All this is anathema to the Tories. They despise it. The co-operative movement suffered badly during 18 hostile years of Tory government when a culture of demutualisation began. At one point the existence of the CWS, the pillar of British co-operation, was threatened by the Regan debacle, or Lancia affair.

Since Labour came to power in 1997 the co-operative movement has received a good deal of support in the Commons, mainly through private members’ bills supported by the government and the Co-operative Party, and some good pieces of legislation have been enacted to support and strengthen the movement. These include the Industrial & Provident Societies Act, the Employee Share Scheme Act, and the Community Interest Companies Act.

We should be aware of the advantages the movement has gained over the last few years. And what we stand to lose if the Tories get in again, with their recipe of monocultural capitalism. We should be aware of the common ownership models which are coming into being such as Community Development Trusts and Community Forums like the Sharrow Forum. Help and advice is always available through Co-operatives UK and at a local level the Sheffield Co-operative Development Group at Aizelwood’s Mill which supports workers’ co-ops.

Workers co-ops are represented by ICOM (Industrial Common Ownership Movement) which is now incorporated into Co-operatives UK. We have many of them in Sheffield.

Culture and ethos

The co-operative movement is not only a collection of businesses, it is a culture, an ethos, which carries the seeds of radicalism. This is the same radicalism which transformed the social horrors of the industrial revolution to the relative comfort of the 20th century. It is also the radicalism that seeks to deliver us from the market fundamentalism of Thatcherism. It is a firm and integral part of the Labour movement and has been since its earliest days.

The co-operative movement is internationalist and is not content to rest upon its past achievements of delivering good, honest, fairly traded food to its members and customers. That battle is largely won. It is in the international context that the work must go on. That is why the co-operative movement has been a leading player in making the Fairtrade Mark products mainstream in supermarkets. The co-op has led by example, being a member of the ‘Ethical Trading Initiative’ and converting all its own label coffee and block chocolate to fairtrade.

The Co-operative Group have made it a priority to source their own label products ethically. ‘Ethical trade directs its efforts at improving basic human rights and safe workplace standards for employees of supplying producers and manufacturers.’ These standards are verified by continual monitoring which includes visits from representatives of the co-operative movement. Other co-op labelled products carry the Fairtrade mark. This guarantees the producers a fair price for their produce.

Being membership-based organisations which recognise the cultural and educational dimension, co-ops organise events all over the country to help foster an understanding of these international issues. They play a major role in campaigns such as Fairtrade Week, Make Your Town Fairtrade and Make Your School Fairtrade.

It is not only trading issues which concern the movement but the whole environmental spectrum which affects us all. For example, meetings have been organised throughout the country to help members and the public at large understand the implications of climate change. These events have been organised by the Co-operative Group with the help of organisations such as Friends of the Earth, Climate Care, Moorcar Co-operative, the Woodland Trust, Traid and Oxfam.

The co-operative movement is going through a big change at the moment, after a period when large sections of it became dispirited and moribund. In the Co-operative Group, for example, real dividends have been restored, providing twice yearly payments to members based on their trade with co-op group businesses in areas such as banking, insurance, funerals, pharmacy, food and travel. Members also get a preferential rate of interest on their savings with the Co-op Society.

In the last four years the co-operative movement has become stronger and more focussed on its values. There are now 20 consumer owned co-operatives in the UK including the Phone Co-op. Sheffield Co-op, Leeds Co-op, United Co-ops, and Lothian and Borders Co-op are all now part of the Co-operative Group, while Plymouth and South West soon will be. Furthermore, the Co-operative Group has bought Somerfield.

After further legislation which allows different types of mutual and co-operative organisations to merge, Co-operative Financial Services (The Co-operative Bank, CIS, and Smile) have merged with Britannia Building Society.

All of this has necessitated a constitutional review to renew the membership structure and area and regional boundaries, and to accommodate the enlarged Society.

The Co-operative Review of 2009 includes some impressive figures for the Movement. ‘Over 4820 jointly-owned, democratically controlled, enterprising businesses, owned by more than 11.3 million people, 1 in 5 of the British population, creating and sustaining more than 205,800 jobs, contributing £28.9 billion in turnover and £9.7 billion in assets to the UK economy, building wealth for the many not the few.’

The Co-operative Group has Values and Principles committees which guide the society to fulfil the co-op values and principles in the best way possible. Yet, as with any democratic membership organisation, it functions best with a large, active and well-informed membership.

Of course, co-operative societies would not be able to function if they failed to make a profit or surplus. The co-operative in the market place is pitched against some of the most ruthless players in the commercial world. The Co-operative Group’s re-branding exercise will emphasise to the shopping public the unique nature of a co-operative. With a renewed membership, and societies merging into a more cohesive movement, this is a decisive moment in the co-operative renaissance.

Read more about Co-operatives UK and the Co-operative Values and Principles here.
Find out about the Co-operative Party, and Co-operative Party MPs, here.
For the latest news of the co-operative movement, read Co-operative News.

1 Comment

  1. David Connolly
    8 September 2009

    I’m grateful to Steve for his piece on the Co-operative Movement which, both commercially and democratically, is in a much better place today than it has been for atleast two generations.

    The movement is starting to attract a new generation of activists, middle aged ones but there’s nothing wrong with that. Its task now is to i) continue strengthening its trading performance – an endless challenge in the intensely competitive and mature markets that it operates in, and ii) broaden and deepen its network of active members beyond its formal democratic structures – a genuine prospect given enough investment, patience and a continuing measure of sensible leadership.

    But if all of this takes us a step towards the Co-operative Commonwealth it is only a very small one. The wider co-operative movement is patchy to say the least with worker co-ops, housing co-ops and credit unions all significantly underdeveloped in the UK when compared to most Western European countries. Moreover, the infrastructure to do the development struggles on a pittance – but that is another story.

    To its credit, several years ago the Co-op took a conscious decision and risk to bring Fairtrade into mainstream retailing and it has succeeded far beyond its original expectations. The statistics show that at least 700,000 people are the direct beneficiaries of Fairtrade and this figure is growing. Indeed, such has been the rate of growth that the Fairtrade monitoring system has struggled to keep up with the expansion.

    Fairtrade, with its guaranteed upfront payments plus a social premium, drives the market fundamentalists at the Institute of Economic Affairs up the wall – which is a pleasure to behold. It is a practical expression of support for the marginalised and a symbol that we do not accept the present distribution of wealth and power in the world.

    But of course, it only makes a small inroad into the system of inequality and offers only a indirect rebuke to the holders of economic power. We should recognise the Fairtrade achievement for what it is but also acknowledge its obvious limitations.

    For ourselves, we should also be concerned about the future of the Co-operative Party. This is the political wing of the consumer co-operative movement which has historically kept a low profile as a junior partner to the Labour Party. There are currently 29 Labour MP’s sponsored by the Co-op.

    In recent years however this profile has changed at Westminster where the Party now runs an effective parliamentary lobbying and representational role using its MP’s more effectively to press for legislative changes promoting Co-operation. But beyond Westminster its grassroots branches are generally struggling to survive though they are probably in a marginally better state that the average Labour Party branch at this time.

    The future challenge to the Co-operative Party could come from a number of sources. One would be the electoral collapse of the Labour Party and Labour’s possible disintegration as a serious political force which would leave the Co-operative Party stranded in a political no-man’s land.

    This would be compounded if a Conservative Government made true on Cameron’s promise in 2008 to promote co-operatives as a form of compassionate conservatism – and an opt-out from the state. He is attracted by the notion of self-help but not surprisingly he is less vocal about democracy, equity, equality and solidarity.

    This pincer movement would give renewed vigour to those voices within the Co-op who want to break the link with Labour (see the letters pages of ‘Co-operative News’) and thereby the historic connection of Co-operation to Socialism.

    I hope this doesn’t happen but after the next General Election we may be in a very different world and left wing co-operators should at least be talking about how to respond should the worst case scenario come into view.

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