Wednesday, December 3, 2014

The Cooperative Movement



Co-operative Directions
By Murray D. Lincoln
The Antioch Review, Vol. 4, No. 4 (Winter, 1944), pp. 607-616

THE CO-OPERATIVE MOVEMENT has firmly established itself on the main street of the American business community. It has, in the past decade, achieved a stature which clearly indicates its place and potential force in the pattern of national economics.

While present co-operative influence in our economy offers no total solution to the limitations of capitalism, co-operatives have clearly indicated their ability to meet certain of these limitations. They have augmented the real income of urban and rural members. They have demonstrated an effective challenge to monopoly. They have created durable and intelligent functional groups. And they have emphasized self-help rather than greater dependence upon state aids. In an economy which promises to solve more of its problems on the state level, cooperatives will be distinguished not only for their self-reliance, but for their practical devotion to genuinely free competition and enterprise.

The past several years have found mounting endorsement of cooperatives in many important segments of American life. Indeed, current attacks on certain types of farm co-operatives by the National Tax Equality Association give additional evidence of increasing public awareness of co-operative institutions.

Co-operatives, then, have come of age. There is every indication that they will continue to grow in both size and influence. What directions may such growth and development take? Some trends are already clearly indicated while others are admittedly conjectural.

GENERAL DIRECTIONS

The co-operative movement in America is predominantly a rural phenomenon. Agriculture accounts for all important producer-marketing activity (annual volume over three billion dollars) and for three-fourths of the nation's consumer co-operative activity. Conservative estimates indicate that one out of four farmers participate in one or more farm co-operative enterprises.

Farm co-operatives (other than service types) fall into three general categories. They include:
  • groups which perform marketing services alone; 
  • groups which perform purchasing services alone; and 
  • general purpose organizations which provide both marketing and purchasing services.

Producer-marketing co-operatives, representing approximately one-third of our farm co-operative organizations, are moving consistently in the direction of general purpose co-operatives. Indications further suggest that they, along with other marketing organizations, will process more raw products for ultimate consumption. The strictly purchasing type of co-operative, in turn, appears to be directing interest toward marketing services, so that the over-all farm co-operative end is toward the general purpose organization.

General purpose co-operatives performing both marketing and purchasing services represent approximately one-half of our farm co-operative organizations. The spectacular purchasing volume of this group has not only attracted wide attention but its entrance into production of farm supplies has been cause for concern in many American business circles.

There is no clearly defined pattern of emphasis on either purchasing or marketing in this group but seventeen such organizations had cooperative purchasing volumes of over two million dollars in 1943. The convenience and efficiency of integrating marketing and purchasing operations through one co-operative organization suggests that such associations will dominate the farm co-operative scene of the future. Indeed, in twenty-five years such organizations may represent the strongest and most vocal agricultural voice in the nation.

Co-operative marketing  of farm products faces its most promising era. The relative simplicity and low cost of quick-freezing and dehydration will influence the marketing operations of all co-operatives in the period ahead. These new processes make possible decentralized on-the-spot preparation of foodstuffs for the ultimate consumer. Co-operative exploitation in this field will bring wider margins to the farmer. Still greater gains may be realized when farm co-operatives  relate their output to growing co-operative consumer demands in our cities. Such relationships may benefit both farmer and consumer. The city consumer will become more and more familiar with the word "co-operative" on the packaged foods he buys in the future.

Farm purchasing co-operatives have clearly indicated their usefulness to members and will expand, both in areas of service and in ownership of production facilities. Towards greater self-sufficiency farmers have through their regional organizations secured ownership of a number of factories. While there is no indication that co-operatively owned production units are more efficient than old-line firms, substantial savings have been effected in distribution. The entrance of farm co-operatives into the manufacture of tractors and farm implements is a fundamental step toward the solution of a vital problem.

Co-operative farmers have long realized the disproportion between manufacturing costs and sales price in this field. Co-operative production of farm machinery should, as it has in other areas, influence the costs downward. The path of monopoly in farm factors of production will be challenged increasingly by co-operatives. Farmers have already indicated their determination and ability to produce for themselves. The ownership, for example, of a tractor factory in Indiana by a number of strongly financed regionals both here and in Canada suggests a pattern which can have tremendous implications for American agriculture.

If present signs are significant, we may expect purchasing c o-operatives to move into still another important field of member service. Recognizing that he spends as much as fifty per cent of his income for food, clothing, and other consumer needs, the farmer is showing increased interest in this phase o f consumer co-operation. While some few purchasing associations already provide general consumer services, most do not. The ramifications of such a development are many. Farm co-operatives offering complete consumer services may attract many urban members. Not only can this strengthen the enterprise but it may facilitate rural-urban relationships.

Farmers will then be encouraging urban co-operative development, which development may in turn provide a more direct and profitable outlet for raw and processed food products. In some cases, certainly, the farmer will choose to limit membership to his occupational group. It remains to be seen how the over-all trend will develop. But farmer interest in more directly meeting his consumer needs is already established and the next decade should witness considerable enterprise in this field.

Urban consumer co-operatives.

In our cities, co-operative development has been limited by a number of factors. Keen competition in the retail field has kept margins low and exploitation at a minimum. Successful invasion of the anonymity and heterogeneity of cities by the co-operative philosophy has been a slow and uphill task for organizers. Progress, however, is constant and current signs are more promising than at any other time in the past twenty-five years. We can reasonably expect urban membership and volume to double in the next ten years. Organization techniques are reaching a new level of realism and effectiveness. Broad endorsement of consumer co-operation by labor union groups is "softening" resistance in many urban centers.

Greater responsibility for organization is being taken by regional wholesale units in the East and Middle West. Streamlined techniques for financing from the "top down" are receiving attention in some sections of the country. Methods of advertising and publicity are approaching competitive quality. Physical plant and equipment, likewise, are more nearly meeting the high standards of competitors.

The attitude today is no longer one of waiting until the public spirit moves. It is one of aggressive and intelligent organization, limited only by the availability of competent staff organizers. Realistic appraisal of present co-operative groups is giving the cue to a more effective education of similar groups. New housing units, publc and private, have lent themselves with particular ease to co-operative organization. The postwar trend toward suburban housing units is a promising field for co-operative penetration.

With a myriad of services offered by consumer associations the food co-operative continues to receive major emphasis. While co-operative production of strictly consumer items represents less than seven per cent of total co-operative manufacture, we may reasonably anticipate expansion of consumer production in the next few years. Such a trend will be augmented by the increasing consumer interest of our farm groups.

Urban consumer development is the number one co-operative problem today. Progress is being made but at few points do we find the spontaneous and natural enthusiasm which so often characterized the rural development. Expansion will take place but it will require tireless and intelligent organizational effort.

Service co-operatives.
Because of their specialized functions, service co-operatives too often receive less attention than their more glamorous associates. These units do, however, play an important role in the over-all co-operative picture. From barbering to burials, these enterprises serve several million rural and  urban Americans. By their almost infinite variety they indicate that co-operatives can adapt themselves to a wide range of consumer experiences.

Co-operatively sponsored insurance now services nearly a score of states. Expansion in all lines is indicated with special emphasis on the extension of health protection. Rural electric co-operatives are growing likewise and have already established a sound basis for the trend toward public ownership of such utilities. Credit unions servicing over three million members have deposits of more than one quarter billion dollars. The small decline in loans and membership during the war is not significant in the long-run development of this enterprise. It is hoped that the future will indicate methods of relating this important service more directly to other areas of consumer co-operation.

The efficiency and quality of service which these service c o-operatives are displaying will doubtless stimulate the trend towards greater public control and ownership in these fields.

OPERATIONAL DIRECTIONS


Three operational areas, including finance, personnel, and national integration, appear to merit special if brief attention. These trends relate themselves to the rural-urban co-operative pattern as a whole.

Finance directions.
Financial stability of co-operative organizations on both local and regional levels is generally the best in their histories. Member equity in ratio to capital structure is at a new high. While warborn
prosperity has made this possible in many cases it also reflects the determination of most organizations to prepare for possible slumps ahead.

While much of this capitalization has resulted from plowing savings back into the various organizations, a considerable amount has come from member subscription. This appears to indicate a rising level of confidence by members in their own institutions. With the existence of strong and well-financed regionals which provide technical assistance to local associations, co-operatives are reaching a new level of business stability.

Few large co-operatives, however, have yet been able to meet all of their credit demands. Short and long term credit requirements are being met largely by commercial and government co-operative banks. It is in this field that a promising direction is indicated. In process of organization is the National Co-operative Finance Association. At the outset this institution will meet credit demands of its affiliates by providing discount services. In the long run it may provide banking services for the movement as a whole through a local, regional, and central bank structure. Cooperatives today are paying for credit they are clearly able to provide themselves. Such credit bears strategic relation to the safety, stability, and financial independence of the co-operative movement.

Personnel Directions.
In the formative years most co-operatives were long-hour and low-pay institutions. Skilled personnel was difficult to attract under these conditions. Familiarity with and devotion to the cooperative philosophy was too often the first requisite of employment. While such conditions still prevail in many areas, the over-all personnel picture is improving.

War pressures on labor supply plus the improved f inancial structure of most co-operatives probably account for increased attention to the general personnel problem. Most regional organizations now employ personnel officers. The national League has put into operation a Personnel Committee. Job instruction and job relations are receiving greater staff attention. Regional and national training programs for employees have improved in quality. Greater emphasis is given to techniques and less to ideologies. Wage levels for employees have generally advanced to meet higher wartime l iving costs. Hiring of technically skilled staffs is becoming more commonplace. And the movement as a whole is gradually outgrowing the conviction that top employees must take half their salaries "in the good of the cause." Such an attitude plus the reluctance of cooperatives to pay for the services of technically skilled personnel has generally retarded co-operative development.

The entire field of labor relations is opening up for co-operatives. This area will present many practical problems in the future. Co-operative commitment to broad social goals will constantly influence its relation to the employee. Co-operatives in the long run have the responsibility of not being merely "good" employers; they must be "better" employers.

National integration.
There exists in co-operative circles today certain pressures toward the integration of all co-operatives into a functional national movement. This implies an organization of sufficient size and scope to integrate the operations of the wide range of producer, marketing, consumer, and service co-operatives. From a practical point of view such a national organization has much to recommend it. There is no present indication, however, that such an organization will develop in the near future. It will take considerable time and effort.

If European and Scandinavian precedents were to apply here in America we might ultimately expect a strong federation of consumer co-operatives-with marketing co-operatives relating themselves to, but not becoming a part of, such a federation. But even this situation cannot be accurately forecast. Co-operative integration in America is still too much in process to predict what national directions it will take. There is as yet no clearly defined national consumers' movement. Farm groups with basic loyalties on the producer-marketing side are dominant factors in American co-operation. Their strong purchasing programs have related specifically to their own producer interests (i.e. the purchase and production of producer supplies). As earlier stated, these groups are gradually turning their attention to the consumer aspects of farmers' own needs.

When and if the activities of these strong co-operative groups should reach a balance between consumer and producer interest, we may expect the greatest possible national integration. But whether this should or should not happen, we may anticipate a growing number of economic and operating relationships between these two groups. The fact that the urban consumer movement today is not yet strong enough to provide marketing co-operatives with general outlets for their products is in itself a curb on national integration. The hope is that with (i) the emergence of a stronger urban consumer development, (2) with farm marketing groups relating their products directly to such groups, and (3) with the growing number of economic relationships which appear likely between the two groups--we may some day find ourselves woven into an effective pattern of friendly and purposeful relationships. National integration is a goal we strive for. We cannot help reaching it if our basic co-operative groups will consider first the areas in which they may serve each other effectively. In the long run their differences w ill merge into a vital pattern of service, both to themselves and to the American community.

SOCIAL-POLITICAL DIRECTIONS

Social directions.
We have in the preceding discussion considered principally the economic and structural aspects of the co-operative move ment. As co-operation in America grows and expands, so will its moral force contribute to the changing social f abric of our national community. Co-operatives have brought meaningful integration to thousands of American communities. They have brought dynamic group relationships into the vacuum of twentieth century individualism. They have given to individuals the sense of belonging, the values of participation and the fact of ownership. They have related millions of citizens to the social and economic world about them. And they have brought Christian idealism into practical focus with daily living.

We seek here in America to maintain the fact and values of democracy. But democracy is not a static quantity which perpetuates itself. It is a process demanding constant and effective participation. The man on the street must be able to relate his voice as a citizen to the very halls of Congress. Today, our danger lies in the fact that too many have too little understanding of this vital two-way relationship. The problems we face and the decisions we as a nation must make in the near future will severely test the quality and strength of American democracy. The existence of thousands of co-operative organizations throughout America with informed members who both know and practice democracy, will serve us well in the period ahead.

Wherever co-operatives operate they are providing, at least in part, the fundamental grassroots organization which America needs today. They are providing practical education. They are building a more responsible and moral citizenry. And they are relating those citizens to their local and national communities as well.

The total influence of  these co-operative "by-products" is admittedly small in terms of the over-all national community. But as the movement grows, and as it invades our great urban areas, we may expect to find less and less of the helpless and apathetic individualism we see there today. The strong cohesive forces of co-operation have yet to demonstrate themselves in an American emergency. But in the stormy political and
military chaos that is Europe today, we are learning that co-operative structures-in spite of invasion and suppression--still stand strong and ready to assist in the reintegration of people and nations. The whirlwinds
of war and political upheaval have not destroyed them.

Political directions. 
Co-operatives traditionally maintain strict neutrality in the political sphere and there is no present indication that such a policy will change. This does not preclude, however, united co-operative action in legislative matters relating to co-operative welfare. The current National Association of Co-operatives, for example, has been organized in defense against possible legislative changes which would affect farm co-operatives adversely. Co-operatives must, at any moment, be prepared to enter the legislative arena on their own behalf. In the current field of political pressure the National Council of Farm Co-operatives is our strongest co-operative voice in Washington. This organization, composed of a wide variety of farm co-operatives, primarily reflects farm producer interests. Regardless of increased consumer activities in the farm co-operative field this organization is likely to continue its emphasis on producer problems. And if current expansion of farm cooperatives continues we may expect this organization or its counterpart eventually to present one of the strongest and most effective agricultural voices in the nation.

A new political direction for co-operatives, however, is indicated. Pressure for adequate consumer co-operative representation in Washington is growing. Not only will such an organization represent the
co-operatives, but it will tend to represent the broad interests of all consumers as well. Such an organization is needed today. The Co-operative League through its office and staff in Washington is equipped to perform some of these services, but genuinely effective consumer representation will come only when it has the backing of a great consumer movement.

INTERNATIONAL DIRECTIONS

Before this war national federations of co-operative societies in forty countries throughout the world were united in the International Cooperative Alliance. This organization brought together over one hundred thousand societies and a hundred million members. With the successful conclusion of the war we will make another effort at world peace. The continuation and expansion of these co-operative relationships can augment the common understanding and friendly relationships necessary for such peace.

International co-operative trade among the many countries in Europe before the war was an important factor in continental commerce. Cooperative imports from the United States involved upwards of thirty million dollars annually. American co-operatives, coming out of this war the strongest in their histories, are making plans to relate at least part of their production to this form of international trade. At the outset, petroleum will represent the principal factor of trade.

It is further hoped that raw and processed foodstuffs may be exchanged. As co-operative production increases, especially in the machinery and farm supply field, it may be possible to relate part of such goods to foreign co-operatives. Multilateral trade agreements are indicated. Under such a plan American co-operatives might, for example, ship processed foodstuffs to Britain, Britain sending shoes to Brazil, with Brazil in turn shipping coffee to our own co-operative organizations. Delegates to the Conference on International Co-operative Reconstruction held in Washington in 1944 recommended the establishment of an International Co-operative Trading and Manufacturing Association which would facilitate the exchange of food and petroleum.

Farm supply commodities were to be added as soon as possible. Whether such an organization will actually emerge and operate is not clear at this time. American co-operatives, however, can be expected to turn increasing attention toward international co-operative exchange in the future. Bulwark for democracy and wholesome force in the American social and economic community co-operatives will contribute substantially to the redefinition of democracy in this country and its re-establishment in the world.