Voluntary Cooperatives

Niels Peter Ammitzboell, Ph.D., political scientist and education specialist, Switzerland(*)

In a time of internationalism and globalization, Switzerland, Hungary and the other European countries find themselves faced with the task of maintaining a certain degree of political and economic independence and self-reliance. Dependence upon political and economic decisions that are made far away, and over which there is little possibility of influence, leads to great risks. Indeed, in certain circumstances, such dependence can lead to incalculable suffering for the population and great damage to the country, as illustrated by the lectures presented at this conference about the dark times between 1945 and 1989 in Hungary. Political and economic concepts, created by international bureaucracies that plan in terms of a global division of labor, are destructive to many countries. In contrast, a national economy -- a web of large, medium, and small businesses -- provides flexibility. Independence in the basic production of foodstuffs can quickly acquire existential importance.
How, under the present conditions, can such independence be maintained? There is no simple recipe. Only you, honored guests, can determine how it can be done in Hungary. One possibility is voluntary cooperatives, which over the past century have survived -- and thrived -- in Switzerland. I would like to briefly address this topic in order to provide a springboard for discussion about it.
The fundamental principle underlying cooperatives is that of mutual economic self-help. In times of economic crisis, those who are affected by the crisis voluntarily join together in solidarity in order to overcome it. It is important to note that the matter at hand is the solution of a concrete, clearly defined problem. Only those who see a value in communal action participate. In other words, only those who wish to join are asked to help. The cooperative, however, is open to all persons able to use its services. All members have equal rights, and each member has a voice in decision-making. The cooperative, in other words, is democratically governed. Economic activities, moreover, are directed not by the desire for the greatest possible profit, but by the social and ethical principles of mutual self-help, freedom, personal accountability and solidarity.
The beginning of the modern cooperative movement lay in the early workers' movement in England. In Germany, Switzerland, Austria, and Hungary, the driving force behind the movement was the ideas of Raiffeisen and Schulze-Delitzsch. By 1881, there were already 357 cooperatives in Hungary. The cooperative movement continued to develop until the end of the Second World War, with the Hangya (Ants) being just one example.
The cooperative movement, however, is in no way connected to the workers' movement. Indeed, the basic conception of human nature that is at the heart of the cooperative movement is diametrically opposed to that which underlies Marxism. In a cooperative, people voluntarily join together. In contrast, in a decree dated 28 March 1918, the Bolsheviks nationalized the Russian food cooperatives and made membership mandatory for all citizens. Cooperatives were tied to the socialist economy, and in the process their fundamental principle was destroyed. This Soviet-style bastardization of the cooperative movement could never function according to the principles of classical cooperatives: democracy; voluntary membership; mutual self-help and solidarity; and independence and autonomy of the cooperatives themselves. For this reason, the Soviets were never really economically successful. After 1947 this violent Soviet-style cooperatization also took place in the central and eastern European states within the Soviet sphere of influence. In the process, existing cooperatives in these countries were completely integrated into the state-controlled planned economy.
Voluntary cooperatives, in contrast, function within the framework of the market economy. At the same time, however, they present a humanistic counter-model to the uncontrolled, often unscrupulous pursuit of profits that frequently characterizes the market economy. The cooperative movement is an organic element of the social market economy and has contributed significantly to the amelioration of social problems in Europe.
When, for example, the price of bread rose and the urban population began to have difficulty buying enough groceries with limited incomes, bread associations and bakeries were founded, which, over time, became food cooperatives. Similarly, when industrialization led to a shortage of suitable living space in the cities, building cooperatives were founded. In the trade and industrial sectors, cooperatives primarily focused on product distribution.
In many places agricultural cooperatives were the most sophisticated of all -- in Switzerland, Germany, and Denmark, for example. Around 1880 European agriculture was in crisis, and the necessary transition from grain production to milk and meat production would in many places not have been possible without cooperatives. Local and regional mutual aid societies were founded to address almost every problem that individual farmers could not solve on their own. These societies were not production cooperatives; rather, they were purchasing and delivery cooperatives for buying fertilizer and feed; and pricing and distribution cooperatives for cheese, milk, and butter, beef cattle, fruit, and wine. As agriculture became more mechanized, cooperatives were also founded for the communal ownership and use of machines and tools. Over the years, rural consumer cooperatives played an important role in many places.
An enormously important factor in the success of the cooperative movement was self-financing. A lack of access to credit is often one of the primary problems for small and medium-sized businesses. Savings and loan associations based on the systems developed by Raiffeisen and Schulze-Delitzsch sprang up in many regions. The savings of rural residents were securely invested and farmers were able to obtain business loans at favorable rates. Over time, these loans became available to all rural residents. Most loan associations were run by volunteers, and their ability to successfully manage large sums over decades, and in towns of only a few hundred people, was remarkable.
The tightly woven net of cooperatives proved relatively impervious to crises, cushioned their members from the consequences of economic downturns, and made it possible for small and medium-sized operations to survive, and even prosper, during a time of structural change in the economy. The cooperatives became an important support for the middle class. This is socially, politically, and economically valuable; indeed, it is indispensable for a functioning community. The elimination of want, and confidence that support will be available during downturns, provides a sense of security, while the self-reliant solution of common problems strengthens the sense of community and connectedness. Communal decision-making, and the taking on of positions of responsibility in a cooperative, are the basis of true democratic culture.
And today? In Switzerland, cooperatives continue to be an important part of daily life. Cooperative meetings are still important social occasions, as are, for example, the meetings of the Residents' Association of the building where my wife and I lived until a short time ago. The Raiffeisen Bank in my community is still independent, and much more secure than the big Swiss banks. And the residents of my community buy their groceries at a food co-op that distributes the high-quality products of area farmers. Some cooperatives have started to have problems in the face of the ever-increasing rise of large corporations, neo-liberalism, and the internationalization of the economy. To some degree, cooperatives are trying keep up with these trends. They try to adapt, to manage themselves more like corporations, and they end up acting in ways that increasingly distance them from their members. They will lose their competitive edge, however, if their members no longer perceive and recognize the special nature of cooperatives and lose the deeper meaning of cooperative action.
In my country, cooperatives have worked. Perhaps they can also work here in Hungary, which is what I would like to put to the floor for discussion.
Here in Hungary, voluntary cooperatives have not been free to develop for nearly 60 years. Since 1947, they have been violently destroyed by Marxist socialism. Even after 1989, in a climate of so-called neo-liberalism and globalization, the will seems to have been lacking to create a social framework that would allow the revitalization of the Hungarian cooperative movement. Such a movement, which would promote the economic interests of the middle class, would be of great benefit of the Hungarian population. Small and medium-sized businesses lack access to loans at favorable interest rates, and access to the domestic market is seriously hindered by the sale of indigenous businesses to foreign chain stores. Hungary's entrance into the European Union is also placing the agricultural economy under unbearable pressure. Enormous capital investments will be required to ensure that Hungarian products conform to EU norms so that they can continue to be sold at all. The cessation of production in many agricultural concerns is a looming threat.
Every country would be well advised to keep the production of its basic goods and services in its own hands. Even if in today's European and global context the social and political framework for voluntary cooperatives remains unfavorable, the decisive factor will be whether groups of people can see the value of common action. Where this is the case, they will look for possibilities. If something of the socialist cooperatives remains intact, perhaps they can be transformed into truly living cooperatives. Where contact between city and country remains intact, it may be possible to build upon it. The main question is whether or not it will be possible to finance loans at favorable interest rates.
What opportunities exist here in Hungary can only, honored guests, be determined by you. We in Switzerland are facing essentially the same questions as you are here in Hungary, and we too still need to develop solutions. But the fundamental principles and the conception of human nature underlying the cooperative movement remain as valid now as ever. Whatever form one might imagine for organizations dedicated to the abolition of the social problems that are growing once again even in Europe, the principles of freedom, mutual self-help, and personal accountability will play an important role.

* Lecture delivered at the international conference Emlékezet és remény -- Reflections on the Past and Hope for the Future, Budapest, 20--22 February 2004. Organised by the National Pedagogical Workshop, Dr. Karoly Baranyi, Director