What is Cooperativism?
Cooperativism is a type of organization based on the independent and voluntary association of persons defined as “cooperation vis.” Producer cooperatives are owned by their members and are often run democratically.
Definition and Origins :
The cooperative movement, also known as collaborative, was founded in the late 18th century as an alternative to capitalism. It has continued to this day as a struggle for social justice and equality, focusing on the environment (Corina, 1994; Jones, 1894).
As a result of its founding in the United Kingdom in 1844, the Rochdale Society of Equitable Pioneers became one of the world’s first successful cooperatives, tackling poverty by selling food to its members and becoming one of the world’s first successful cooperatives.
As a result, cooperative attempts to restructure working relations to create a more democratically governed organization to benefit members and a broader social good mutually. Examples of this include improving health by growing and selling organic produce, providing support to the local community through a daycare cooperative or a credit union, and so forth. The second aspect of cooperativism is an attempt to restructure working relations into a more democratically administered organization to benefit members and the greater social good mutually.
Others emphasized equality and individual freedom. Still, they all worked against restricting or eliminating the supremacy of a dominating type of capitalist organization, whether it be a publicly traded firm, a privately held enterprise, or even a state-owned enterprise.
A vision of work organization in which owners and employees lived and worked together in mutual collaboration – a way of life that was supposed to have existed before the industrial revolution – was promoted by the cooperative movement as a means of achieving economic and social equality. The joint movement was founded in the United States in 1848. To paraphrase Beatrice Potter (1891: 7) and speak from the perspective of cooperative theorists:
There was no permanent and insurmountable barrier between employers and employees when it came to the workplace. A large proportion of the manufacturer’s manufacturing operations took place within the confines of his residence; he [sic] had complete control over both the means of production and the product he produced; and he and his family, as well as the journeyman and apprentices, shared in the fruits of their labor.
Potter believes that this form of work organization was destroyed when machines and mechanical power separated the producer from their means of subsistence. In contrast, the new state of work organization under capitalism resulted in a society based solely on financial relationships: ‘To employers, who rarely visited their factories, the labor of man, woman, and child appeared as a commodity to be bought at the cheapest rate, and consumed, like coke and cigarettes,’ Potter writes (1891: 10).
According to the cooperatives, returning to a more cooperative economy would aid in alleviating the alienation that employees had experienced as a result of their employment. Furthermore, early collective founders, such as Robert Owen, believed that a community of cooperatives would be a means of putting into practice the idealized work structure of interdependency and equality by providing fair pay and a reliable return on investment (Campbell, Keen, Norman and Oakeshott, 1977).
Other cooperative founders, such as Leon Walras, regarded cooperatives as a method for laborers to break their reliance on wage-based work by becoming property owners rather than renters rather than tenants becoming property owners (Cirillo, 1984). Alternately, as the French trade union delegation to the 1876 Centennial Exposition in Philadelphia remarked in response to US unionization efforts: ‘They ought instead to get underway in creating producers’ cooperatives capable of opposing those who render them slaves to capital’ (Foner, 1976: 284). If you want to read a more in-depth study of this, see Luhman, 2006.
In contrast to the dominant capitalist economic entity, which economists refer to as a capital-managed business, Cooperative economics challenges the dominant harmonious economic entity, known as the dominant cooperative economic entity (CMF). The profits, or residual claimant, of an organization are determined by the ownership of capital assets, which are held in the form of a capital management fund (CMF). In other words, the capital owners can exert direct or indirect control over the industrial process (Dow, 1993).
A labor-managed firm (LMF) is an organization in which workers develop the legal right of a residual claimant via the efforts of those who execute the work in a cooperative organization (cooperative) (i.e., the members of the firm). Individual equity (in which case the residuals are the property of the individual member) or social property (in which case the residuals are the property of the cooperative) are the two ways in which members of an LMF own the cooperative (where the residuals are the property of the collective of members). The power to exercise direct or indirect control over the manufacturing process is thus available to members (Doucouliagos, 1995a; Ellerman, 1992).
Generally speaking, most EMFs subscribe to a set of principles that serve as a guide for their company’s policies and procedures. The fact that they distinguish themselves from CMFs is due to these concepts. As stated by the General, Municipal, Boilermakers, and Allied Trades Union (1986: 1), the following are some of the basic principles:
Members are welcome to join at any time and are not subject to any form of discrimination in their membership.
Forms of democratic governance in which each member has one vote, regardless of whether or not they have invested in capital or labor.
Unlike capital, labor does not hire money; on the contrary, wealth does not hire work.
A predetermined rate of interest is paid; however, the rate is subject to fluctuation.
Each member receives a share of any economic excess that is generated. In the first instance, profits should be used to expand the business, with the balance and any leftover quantity being distributed to members in an equitable manner; and
The cooperative is aware of its social duties and operates following those responsibilities. Members, as well as members of the general public, are educated on collaborative concepts and methods.
All cooperatives are supposed to collaborate to best serve the interests of their members and the areas in which they operate.
Beyond these core principles, there are specific responsibilities for cooperative management, which often comprise a General Assembly of members and a Board of Directors who is chosen or elected by the members. In the Basque region of Spain, Mondragón is one of the most well-known cooperatives in the world, and it is headquartered there. As a result of its founding in 1956, Mondragón has grown to include a diverse range of cooperatives in four primary sectors: industrial (for example, automotive components and construction), retail (food distribution), finance (banking and insurance, as well as social welfare), and knowledge (education and research) (training and research).
Mondragón’s Cooperative Congress consists of 650 members drawn from the numerous cooperatives, according to its website, www.mcc.es [accessed 31 January 2012]. To accomplish this, the Cooperative Congress must “define the strategic parameters by which the Corporation is to be administered through the planning and coordination of its business units” (see www.mcc.es [accessed 31 January 2012])—assigned by the Congress to implement the strategy and policies agreed upon, a Standing Committee, while a General Council is tasked to implement the goals and objectives approved upon by the Congress as well as to coordinate policy across all of the cooperatives.
Comments from Scholars and theorists:
Local management foundations have several advantages, according to those who believe in cooperative principles, including: (2) the ability to reduce worker alienation from the means of production (Kohák, 1972); (3) the ability to increase worker identification with the interests of capital, which has the effect of increasing economic efficiency (Hansmann, 1996); and (4) the ability to reduce worker alienation from the means of production (Hansmann, 1996).
Control of production and net income (profit) is held by individuals outside of the working community in [capital-managed enterprises]. In contrast, control of production and net income (profit) is owned by individuals within or within the active community in economic democracy, producer’s cooperative, and labor management systems.
It is important to note that the operational objectives of CMFs and LMFs are unique from one another. A profit maximization objective guides the operations of commercial mortgage funds (CMFs) to increase profits equal to increasing income minus labor and other expenditures. In contrast to EMFs, which aim to maximize net revenue, the purpose of maximizing net income per worker is to maximize net income per worker, which is defined as revenue less other costs divided by the number of members.
A common thread running through the activities of LMFs is the need for job security, the creation of new jobs, the upgrading of skills through training and education, and the development of technology that is both socially and environmentally acceptable. The longer the tenure of the members, the more likely it is that the higher level of operating expenditures will be recouped by the organization (Prychitko and Vanek, 1996).
Working-class EMFs, according to Luhman (2005), not only meet the social justice needs of workers, but they are also considered to be the embodiment of organizational democracy in the workplace because workers have property rights and, as a result, have control over their working environment, a claim first made by Ben Ward in his investigation of Yugoslavian LMFs in 1958.
Following this theory, democratic practices (such as the rule of law and the protection of minority’s rights and elected representation and accountability) are thought to emerge spontaneously due to the management and operation of local government funds. However, this theory has been challenged (EMFs). Cooperatives are organizations that are established on the premise of mutual assistance.
For example, in contrast to someone who is constantly concerned about their job security, a normal worker-citizen who has practiced or lived in economic democracy for the majority of their life will develop into a significantly more mature and incorruptible factor in democratic decision-making over the course of their life.
The year 2006 is an excellent year to start thinking about what you want to do with your life (Prychitko & Vanek, 1996, page xix). This optimism has prompted several decades of research into LMFs, including studies of their efficiency when compared to capital-managed enterprises (e.g., Doucouliagos, 1995b), as well as studies of their development and survival within the larger population of commercial firms (e.g., Doucouliagos, 1995c) (e.g., Russell, 1993).
SOURCE:
Cooperativism. (2013). In A. L. Cunliffe, & J. T. Luhman, SAGE key concepts: Key concepts in organization theory. Sage UK. Credo Reference: https://go.openathens.net/redirector/adler.edu?url=https%3A%2F%2Fsearch.credoreference.com%2Fcontent%2Fentry%2Fsageukot%2Fcooperativism%2F0%3FinstitutionId%3D4074
