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Historically, worker cooperatives rose to prominence during the industrial revolution as part of the labour movement. As employment moved to industrial areas and job sectors declined, workers began organizing and controlling businesses for themselves. Most early worker co-ops did not adhere to clear cooperative structures or ideologies. Starting in the 1830s, worker cooperatives were formed by hat makers, bakers, and garment workers.
Since there is no coherent legislation regarding worker cooperatives across the United States, much less Federal laws, most worker cooperatives make use of traditional consumer cooperative law and try to fine-tune it for their purposes. In some cases the members (workers) of the cooperative in fact "own" the enterprise by buying a share that represents a fraction of the market value of the cooperative. In 1946 American industrialist L.A.M. Phelan helped workers at the Taylor Company organize Tekni-Craft, one of America's first worker cooperatives, to take over his company's manufacturing and distribution rights.
When the current cooperative movement resurfaced in the 1960s it developed mostly on a new system of "collective ownership" where par value shares were issued as symbolic of egalitarian voting rights. Once brought in as a member, after a period of time on probation usually so the new candidate can be evaluated, he or she was given power to manage the coop, without "ownership" in the traditional sense. In the UK this system is known as common ownership.
Some of these early cooperatives still exist and most new worker cooperatives follow their lead and develop a relationship to capital that is more radical than the previous system of equity share ownership.
In Britain this type of cooperative was traditionally known as a producer cooperative, and, while it was overshadowed by the consumer and agricultural types, made up a small section of its own within the national apex body, the Cooperative Union. The 'new wave' of worker cooperatives that took off in Britain in the mid-1970s created the Industrial Common Ownership Movement (ICOM) as a separate federation. Buoyed up by the alternative and ecological movements and by the political drive to create jobs, the sector peaked at around 2,000 enterprises. However the growth rate slowed, the sector contracted, and in 2001 ICOM merged with the Co-operative Union (which was the federal body for consumer cooperatives) to create Co-operatives UK, thus reunifying the cooperative sector.
-==-= assist in the understanding of the origins of worker co-operatives. It is limited to North America for simplicity’s sake, though worker co-operatives are found throughout the world. In North America, there were two periods during which the number of worker co-operatives grew most notably. These are the later half of the nineteenth century, and the period after 1970. This is not to imply worker co-ops did not exist or were stagnant before or between these two time periods.
The Late 19th Century The origins of worker co-operatives in North America are tied to the early labour movement. Steven Leiken writes, “…Over the course of the nineteenth century wage-earning men and women established thousands of co-operative stores, workshops, and factories. …Indeed co-operation rested at the heart of the labour movement’s social reform” (Leiken, 93). For many of the working class, co-operatives were a viable alternative to capitalist systems of wage labour. The members of a worker co-op could be independent in their ability to control their employment through the democratic co-op structure, at the same time as they supported, and were supported by, the larger labour movement. Most early worker co-ops did not form clear co-operative ideologies or structures. Co-operation was based on the larger, and rather vague, labour ideology of “working class republicanism.” Prevalent social notions also influenced how worker co-operatives were structured and managed. Women workers were often denied membership rights, and skilled workers sometimes had power over the unskilled. From the 1830s on bakers, garment workers, hat makers, and molders formed worker co-operatives.
In the United States, the civil war and subsequent economic down turn destroyed many of the early worker co-ops, but the post civil war labour movement rejuvenated worker co-operation. The Rochdale method of consumer co-operation became well known and imitated in North America. Many workers used co-op stores to raise capital to fund worker co-operatives. Groups of labourers that formed worker co-ops included: shoemakers, molders, miners, carpenters, machinists, clothing workers, cigar makers and printers.
During the 1870s and 1880s the Knights of Labour, an industrial union, organised many worker co-ops across the continent. Leaders encouraged members to buy shares in worker co-ops and buy co-operatively produced goods. In Ontario, Canada, each local organisation was encouraged to have a “cooperative missionary” to encourage co-operative development. Though many of the strikes organised by the Knights were unsuccessful in bargaining with factory owners, strikes often resulted in successful co-operatives. When the Knights were unable to negotiate with factory owners they instead formed their own co-op factories, which were sometimes successful enough to put the capitalist factories out of business. For example, in 1888, factory workers who struck unsuccessfully at Gananoque (near Kingston, Ontario) moved to Merrickville and established their own co-operative factory with the assistance of the local Knights of Labour. Co-operative activity increased with the Knights of Labour; unfortunately, this also meant that co-operatives declined with the decline of the Knights of Labour in the late 1880s. Organisational deterioration in the Knights resulted in diminished co-operation among the working class. Co-operative ideology and practice devolved:
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The Industrial Revolution Gave Birth to the Cooperative Movement By Terry Appleby
(adapted slightly)
Every October cooperatives around the world celebrate the anniversary of the founding of the Rochdale Society of Equitable Pioneers. This anniversary honors the first cooperative to achieve sustained success. It was the Rochdale Pioneers who developed the formula for success that had eluded hundreds of earlier cooperative entities. This resulted in large part from a set of principles developed by the Society to govern its affairs. These principles were responses to political, economic, and social conditions of the time and drew on ideas and experiences which had percolated within English working-class movements for a century before.
This first known cooperative was founded by dockworkers and shipwrights in Woolrich, England as early as 1760. Workers at the shipyards, unable to obtain pure flour, organized a corn mill to meet their needs. The business was successful, but the concern failed when an arsonist alleged to have been a competitor of the cooperative mill burned it down. Other English cooperatives of the period included the first cooperative store, a form of buying club organized by weavers in Fenwick in 1769, and a tailors' cooperative, founded in 1777 in Birmingham. Prior to the founding of Rochdale in 1844, cooperative efforts were common in England, but most failed.
Rochdale is located in the north of England, in an area that for centuries was a center of textile manufacturing. The Industrial Revolution brought a shift from domestic, home-based industry to work in factories, changing systems that were centuries old. The new industrialization was exploitative and characterized by low wages and intense competition for jobs. (The growing population, child labor, and large numbers of immigrant Irish created a surplus of labor.) Fierce competition for markets forced firms to keep wages low and constantly cut costs. Market fluctuations made employment unreliable, and workers were turned out in times of low demand or high inventories. In many parts of the country, living conditions during the first four decades of the 1800s were extremely harsh for the working class people, especially in the textile centers. Thousands of families lived in squalor, without sufficient food, clothing, or adequate housing.
These conditions gave rise to labor and working class movements that drew great numbers of followers. As threats to the established order, these movements became the targets of restrictive legislation and bloody repression by the government.
According to G.D.H. Cole in his book "One Hundred Years of Cooperation," Rochdale was "second only to Manchester and Leeds as a center of working-class activity in the first half of the nineteenth century."
The modern cooperative movement evolved as a criticism of the emerging order. Although the ideal of cooperating for mutual benefit was not new, it gained renewed momentum through the utopian theories of Robert Owen. Owen envisioned a scheme of social reform that was pacific, constructive, educational, and non-political. He believed that a new social order could be achieved not through violent revolution, class movements, or political activity, but rather through a process of educational reform and the creation of utopian communities. Owen argued against the profit motive in favor of a system based on the value of labor and the intrinsic worth of people. He advanced the theory to ameliorate poverty centered on the formation of cooperative communities, each with 1,000 cooperators. Within these communities would be clean, spacious buildings, good food, employment, and shortened workdays. Owen believed that this type of social system would improve the morality of society, thus eradicating exploitation and the desire for the accumulation of wealth. For the founders of the Rochdale Society, the initial impetus for the creation of a business was not only the establishment of a food store, but also the ideal of forming a "Village of Cooperation," where members could live and work together in their own community and create a "New Moral Order" along the lines outlined by Owen.
The ideas of Owen and other theorists were the basis of a vigorous movement to establish cooperative societies throughout the 1820s and 30s. Several newspapers and magazines were devoted to the advancement of cooperatives. Dr. William King of Brighton, publisher of an influential newspaper called "The Cooperator" (1828-1830), estimated that the number of cooperative societies grew form nine in 1828 three hundred in 1830. Many of the cooperative societies integrated the ideas of Owen and Dr. King with ideas derived from the Chartist Movement (calling for universal male suffrage), the Trade Union Movement (the 10-hour day and restrictions on child labor), and other progressive movements.
Despite the rapid growth of cooperative businesses during the 1830s and 40s, none until Rochdale were able to achieve sustained success. Depressed economic conditions forced many cooperative ventures to sell on credit. Compounded by inefficient business management, this bankrupted many societies. In addition, rather than accumulate excess capital for the development of the business, societies took earnings from their undercapitalized enterprises and divided them among members. The Rochdale Society learned many lessons from the failures of earlier cooperatives and gleaned some important lessons from other progressive movements. By applying practical guidelines for the operation of the Society, the Rochdale founders provided for concrete benefits for members while remaining true to cooperative ideals.
First, the Society was open to voluntary membership. Although it was concerned with the rights of working people, it did not restrict membership on the basis of social class, politics, or other affiliations. Open membership would ensure class was not pitted against class, and encouraged men and women to work in concert for the good of all.
Second, the organization was democratic. The worth and needs of the individual member were more important than the value of the capital invested. This principle placed the value of the person above the worth of the capital. Democratic organizations advanced the ideals of equality, social ownership, and mutual aid.
Third, consideration was given to the nature of profit. The Society provided for the accumulation of capital through small subscriptions added by each member to a capital fund. Profits from the Society's business would be added to the fund for the benefit of the business and the rest divided among the members according to patronage. King envisioned the creation of cooperative communities through the formation of cooperative businesses. As the businesses became profitable, excess earnings would be used to hire members of the Society for other cooperative businesses, thus enlarging the whole cooperative community.
Fourth, education was valued by the Society as a means to improve character, society, and the health of the Society's enterprises.
Fifth, a fixed or limited rate of interest was to be paid on capital subscribed to the Society.
Sixth, the Society was to deal only in cash transactions, extending no credit.
Seventh, the Society would sell only pure, unadulterated goods.
And eighth, it would maintain religious and political neutrality.
Today the ideals of the Rochdale Pioneers are embodied in the seven Cooperative Principles adopted by the 1995 Congress of the International Cooperative Alliance. They are the model for a system that includes millions of cooperators throughout the world.
