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Current Concerns  >  2011  >  No 11, 26 July 2011  >  About the Nature of Cooperatives [printversion]

About the Nature of Cooperatives

by Helmut Faust*

Cooperation for economic purposes

We have seen that the inherent principle of a cooperative goes back to the very old and rather simple concept of cooperation: If an individual is too weak to achieve an economic or any other goal, he associates with others. Common needs or interests bring about collaboration in terms of organization.

Voluntariness

People unite voluntarily to form a cooperative; they can only confess to their cooperative ties on an autonomous basis, i.e. the right to govern themselves. Besides the idea of community this principle of voluntariness is an essential feature of the cooperative.

Open membership

The fundamental principle of “leaving the door open” to all possible cooperative members can be recognized by their economic freedom; “open membership” is also an expression of socio-political aspirations of the cooperative. Anyone who wants to act cooperatively and considers his cooperation a contribution to the promotion and dissemination of the cooperative idea should be allowed to join a cooperative; nobody of good will can be denied membership.

The social component

Even though cooperatives should not only be a means of eliminating or easing poverty and could basically include all social classes and status groups, they were and still are economically weak elements to a large extent; industrial and rural workers and the so-called SME circles, farmers, craftsmen and small traders have sought to overcome economic weakness and strengthen their market position through the cooperative union. Yes, we may say that the economic activities of cooperatives – in favor of inferior or underdeveloped economic areas – and their rootedness in a broad range of status groups among the population emphasize the social dimension of the cooperative economy.

The personal element

Cooperatives have occasionally been called the “joint-stock companies of the ordinary people”. However, this is an attempt to illustrate them, which by no means describes the essence of the cooperative. If we compare only some features of a joint-stock company with a cooperative, the differences become immediately obvious. Even though a joint-stock company is the coalition of many individual forces whose aim is a certain business goal, they represent a union of capital. In contrast, the prevailing element of cooperatives is a personal one. The upholders of a cooperative are the economically active people, not their deposited capital. In this sense, we should consider the principle of equality anchoring in the statutory requirement which determines that any member in the cooperative’s general assembly has only one vote, regardless of his amount of shares or deposited capital.

Equal votes and a membership which is linked to a person are the special features of cooperative organization. They are based on the personal foundations of the cooperative and guarantee that economically weaker members are not less involved in decisions than stronger ones, and that the cooperation can never be ruled by other – particularly capitalist – interests which are directed against members.

Democratic administration

Given the principles of voluntariness and equality it becomes clear that the cooperative realizes the economic democracy. This is also reflected in the way members are allowed to participate in the decision-making process, the cooperative’s organizational structure and way of administration.

Not only can every member directly participate in steering the cooperative but also decide on the future of their cooperative.

Self-governing and administration, i.e. the free and independent management of communal affairs by their members, have been realized; they have become the fundamental principle of cooperatives.

(Translation Current Concerns)

*The text is an excerpt from the final chapter of a book, which was published by Helmut Faust in 1958 (first edition) and 1977 in the present edition (Verlag Knapp) but is now out of print. It entitled: “Geschichte der Genossenschaftsbewegung” (history of the cooperative movement). It describes the origin and dawn of the cooperative movements in Great Britain, France and Germany and their further development in the German-speaking world.