Co-operative economics

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"The Hand That Will Rule The World—One Big Union"

Co-operative economics is a field of economics that incorporates socialist economics, co-operative studies, and political economy toward the study and management of co-operatives.[citation needed]


Notable theoreticians who have contributed to the field include Robert Owen,[1] Pierre-Joseph Proudhon, Charles Gide,[2] Beatrice and Sydney Webb,[3] J.T.W. Mitchell, Peter Kropotkin,[4] Paul Lambart,[5] Race Mathews,[6] David Griffiths,[7] and G.D.H. Cole.[8] Additional theorists include John Stuart Mill, Laurence Gronlund and modern theoretical work by Benjamin Ward,[9] Jaroslav Vanek,[10] David Ellerman,[11] and Anne Milford.[12] Additional modern thinkers include Joyce Rothschild,[13] Jessica Gordon Nembhard,[14] Corey Rosen et al.,[15] William Foote Whyte,[16] Gar Alperovitz,[17] Seymour Melman,[18] and David Schweickart.[19]

Co-operative federalism versus co-operative individualism

A major historical debate in co-operative economics has been between co-operative federalism and co-operative individualism. In an Owenite village of cooperation or a commune, the residents would be both the producers and consumers of its products. However, for a co-operative, the producers and consumers of its products become two different groups of people, and thus, there are two different sets of people who could be defined here as its 'users', but are generally referred to as the co-op's "members". As a result, we can define two different modes of co-operative organisation: consumers' cooperative, in which the consumers of a co-operative's goods and services are defined as its users (including food co-operatives, credit unions, etc.), producer co-operatives, in which the producers of a co-operatives goods and services are defined as its users. (Some consider worker co-operatives, which are owned and run exclusively by their worker owners as a third class, others view this as part of the producer category.) .

This in turn led to a debate between those who support Consumers' Co-operatives (known as the Co-operative Federalists) and those who favor Producers Co-operatives (pejoratively labelled ‘Individualist' co-operativists by the Federalists[20] ).[21]

Co-operative federalism

Co-operative Federalism is the school of thought favouring consumer co-operative societies. Historically, its proponents have included JTW Mitchell and Charles Gide, as well as Paul Lambart and Beatrice Webb. The co-operative federalists argue that consumers should form co-operative wholesale societies (Co-operative Federations in which all members are co-operators, the best historical example of which being CWS in the United Kingdom), and that these co-operative wholesale societies should undertake purchasing farms or factories. They argue that profits (or surpluses) from these co-operative wholesale societies should be paid as dividends to the member co-operators, rather than to their workers.[22]

Co-operative Individualism

Co-operative Individualism is the school of thought favouring workers' co-operative societies. The most notable proponents of this latter being, in Britain, the Christian Socialists, and later writers like Joseph Reeves, putting this forth as a path to State Socialism.[23] Where the Co-operative Federalists argue for federations in which consumer co-operators federate, and receive the monetary dividends, rather, in co-operative wholesale societies the profits (or surpluses) would be paid as dividends to their workers.[22] The Mondragón Co-operatives are an economic model commonly cited by Co-operative Individualists, and a lot of the Co-operative Individualist literature deals with these societies.

Please note that these two schools of thought are not necessarily in binary opposition a priori, and that hybrids between the two positions are possible.[22]

James Warbasse's work,[24] and more recently Johnston Birchall's,[25] provide perspectives on the breadth of co-operative development nationally and internationally. Benjamin Ward provided a formal treatment to begin an evaluation of "market syndicalism." Jaroslav Vanek wrote a comprehensive work in an attempt to address cooperativism in economic terms and a "labor-managed economy."[26] David Ellerman began by considering legal philosophic aspects of co-operatives, developing the "labor theory of property."[27] In 2007 he used the classical economic premise in formulating his argument deconstructing the myth of capital rights to ownership.[28] Anna Milford has constructed a detailed theoretical examination of co-operatives in controlled buyer markets (monopsony), and the implications for Fair Trade strategies.[29]

Other schools

Retailers' cooperatives

In addition to customer vs. worker ownership, retailers' cooperatives also utilize organizations of already constituted corporations as collective owners of the produce.

Socialism and left-wing anarchism

Socialists and left-anarchists, such as anarcho-communists and anarcho-syndicalists, view society as one big cooperative, and feel that goods produced by all should be distributed equitably to all members of the society, not necessarily through a market. All the members of a society are considered to be both producers and consumers. State socialists tend to favor government administration of the economy, while left-anarchists and libertarian socialists favor non-governmental coordination, either locally, or through labor unions and worker cooperatives.

Utopian socialists feel socialism can be achieved without class struggle and that cooperatives should only include those who voluntarily choose to participate in them. Some participants in the kibbutz movement and other intentional communities fall into this category.

Co-operative commonwealth

In some Co-operative economics literature, the aim is the achievement of a Co-operative Commonwealth; a society based on cooperative and socialist principles. Co-operative economists - Federalist, Individualist, and otherwise - have presented the extension of their economic model to its natural limits as a goal.

This ideal was widely supported in early-twentieth century U.S. and Canadian leftist circles. This ideal, and the language behind it, were central to the formation of the Co-operative Commonwealth Federation party in 1932, which became Canada's largest left-wing political party, and continues to this day as the New Democratic Party. They were also important to the economic principles of the Farmer-Labor Party of the United States, particularly in the FLP's Minnesota affiliate, where advocacy for a Co-operative Commonwealth formed the central theme of the Party's platform from 1934, until the Minnesota FLP merged with the state Democratic Party to form the Democratic–Farmer–Labor Party in 1944.

Co-operative Commonwealth ideas were also developed in Great Britain and Ireland from the 1880s by William Morris which also inspired the Guild socialist movement for associative democracy from 1906 right through the 1920s. Guild socialism thinkers included Bertrand Russell, R.H. Tawney and G.D.H. Cole.

See also


  1. Owen, Robert, "A New View of Society" (originally published in 1813/1814), in Gartrell, V.A. (ed.), "Report to the County of Lanark / A New View of Society", Ringwood: Penguin Books, 1970.
  2. Gide, Charles; as translated from French by the Co-operative Reference Library, Dublin, "Consumers' Co-Operative Societies", Manchester: The Co-Operative Union Limited, 1921
  3. Potter, Beatrice, "The Co-operative Movement in Great Britain", London: Swan Sonnenschein & Co., 1891.
  4. Mutual Aid: A Factor of Evolution (1902) (1998 paperback ed.). London: Freedom Press. ISBN 0-900384-36-0.<templatestyles src="Module:Citation/CS1/styles.css"></templatestyles>
  5. Lambert, Paul; as translated by Létarges, Joseph; and Flanagan, D.; “Studies in the Social Philosophy of Co-operation”, (originally published March 1959), Manchester: Co-operative Union, Ltd., 1963.
  6. Mathews, Race, "Building the society of equals : worker co-operatives and the A.L.P.", Melbourne: Victorian Fabian Society, 1983.
  7. Charles, Graeme, and Griffiths, David, “The Co-operative Formation Decision: Discussing the Co-operative Option”, Frankston: Co-operative Federation of Victoria Ltd., 2003 and 2004
  8. Cole, G.D.H., “The British Co-operative Movement in a Socialist Society: A Report for the Fabian Society”, London: George Allen & Unwin Ltd., 1951., and Cole, G.D.H., “A Century of Co-operation”, Oxford: George Allen & Unwin for The Co-operative Union Ltd., 1944.
  9. Ward, B., “The Firm in Illyria: Market Syndicalism,” The American Economic Review, 48:4, 1958, 566-589.
  10. Vanek, J. The Participatory Economy: An Evolutionary Hypothesis and a Strategy for Development. Ithaca, NY: Cornell University Press, 1971.
  11. Ellerman, D. (1992) Property and Contract in Economics: The Case for Economic Democracy.
  12. Milford, A. (2004) "Coffee, Cooperatives, and Competition." Chr. Michelsen Institute (at FLO)
  13. Rothschild, J., “Worker Cooperatives and Social Enterprise,” American Behavioral Scientist, 52:7, Mar. 2009, 1023-1041.
  14. Nembhard, J.G. and C. Haynes Jr., “Cooperative Economics- A Community Revitalization Strategy,” Review of Black Political Economics, Summer 1999, 47-71.
  15. Rosen, C. et al. (2005) Equity.
  16. Whyte, WF and KK Whyte, (1988) Making Mondragon
  17. Alperovitz, G. America Beyond Capitalism
  18. Melman, S. (2001) After Capitalism
  19. Schweickart, D. (2011) After Capitalism
  20. Lewis, p. 244.
  21. This analysis is based on a discussion by Gide, Charles; as translated from French by the Co-operative Reference Library, Dublin, "Consumers' CoOperative Societies", Manchester: The Cooperative Union Limited, 1921, pp. 192-203.
  22. 22.0 22.1 22.2 This analysis is based on a discussion by Gide, Charles, pp. 192-203.
  23. Reeves, Joseph, “A Century of Rochdale Cooperation 1844-1944”, London: Lawrence & Wishart, 1944.
  24. Warbasse, J. (1936) Cooperative Democracy
  25. Birchall, J. (1997) The International Co-operative Movement
  26. Vanek, J. (1970) General Theory of Labor-Managed Economies'.'
  27. Ellerman, D. (1989) The Democratic Worker-Owned Firm
  28. Ellerman, D. (2007) "On the Role of Capital in 'Capitalist' and Labor-Managed Firms," Review of Radical Political Economics
  29. Milford, A. (2004) "Coffee, Cooperatives, Competition: The Impact of Fair Trade," Chr Michelsen Institute

Further reading