Edgar Hardcastle

The failure of the co-operative movement

Source: Socialist Standard, May 1927.
Transcription: Socialist Party of Great Britain.
HTML Markup: Adam Buick
Copyleft: Creative Commons (Attribute & No Derivatives) 2007 conference "Be it resolved that all material created and published by the Party shall be licensed under the Creative Commons Attribution-NoDerivs copyright licence".

In many minds the co-operative movement as it exists to-day is associated with Socialism and the struggle to overthrow the Capitalist system of society. In continental countries it is customary for the trade unions, the co-operatives, and the "Labour" parties to work in very close contact and it is vaguely understood that their joint aim is "Socialism." In fact, their unity is only possible, because the so-called Labour Parties are actually concerned not with the abolition, but only with the reform of Capitalism.

When English co-operators speak in this strain they have some apparent justification in the fact that Robert Owen, whom they usually claim as the pioneer of co-operative principles, did during part of his life actively preach to the workers the necessity of finding means of escape from Capitalism. Owen lived in an age when machine production in factories was first making its brutal way in England. A new era was opening, an era of amazing profits for the fortunate few and of almost incredible suffering for the masses. He saw that the workers were helplessly enslaved to the owners of the land and the factories, and he thought that he had discovered a way out. If to labour in another man's factory or on another man's land meant hideous poverty for the labourer, then surely the remedy lay in securing land and machinery for the labourers to work themselves. So far it was sound enough, but Owen soon had to realise two things. The first was that the then ruling class had no need to solve the poverty problems of the workers, and certainly did not intend to give up freely their own right to own and to live by owning. The second was that at that time when the workers were uneducated, voteless and unorganised, it was unthinkable that they could hope to obtain possession of the wealth of the country against the opposition of their political rulers. In due course, therefore, Owen announced his solution.

He proposed that small groups of workers should aim at establishing self-supporting "villages of industry" in which there should be no employer, no master—little oases in the desert of Capitalism. They were to own the "land and means of production in common," and it was anticipated that the idea would spread, until finally the workers would all have achieved their emancipation.

The initial difficulty, of obtaining the necessary capital, was to be overcome by the formation of "union shops" which would buy goods wholesale and sell them to the members at retail prices. A surplus would accumulate in the hands of the society which would otherwise have gone into the pockets of shopkeepers. Then, in due course the fund would be used for the setting up of "villages of industry."

Between 1825 and 1834 some 400 or 500 of such shops were started, but the whole movement turned out a failure. They failed chiefly because enthusiasm waned with time, and there was no other attraction to secure the continued loyalty of the members once they lost faith in the ultimate end. In addition it was difficult, if not impossible, owing to the existing law for a body of workers to secure protection for their funds.

In 1826 one such store was formed in Brighton, and it is suggested in the cooperative "People's Year Book" (1926, p. 13) that 1926 should on that account be celebrated as the centenary Year of the movement. The writer in the Year Book says of the Brighton cooperative store that in it "the co-operative movement had definitely started on the lines still followed more or less closely by every consumer's co-operative society now existing in the world." In his opinion, however, even so early as that, the pioneer co-operators at Brighton and elsewhere had already lost their interest in the more ambitious and far-reaching plans of Robert Owen : "The schemes of Owen were as much unlike the aims of the first co-operative societies as chalk is unlike cheese."

But whatever may have been their intentions the shops founded by the early co-operators in England did not prosper, and it was a renewed effort in 1844 at Rochdale which contained the novel feature which was to lead to the modern developments.

The Rochdale innovation was the "dividend on purchases." This provided a permanent inducement to members to remain loyal irrespective of their views on the desirability of reforming society. Great and growing numbers of workers have thus been drawn into the co-operative movement until to-day it is claimed that in Great Britain there are nearly 5,000,000 members, with £140,000,000 share and loan capital and an annual surplus of over £21,000,000.

In face of these imposing figures, and in view of the continued expansion of the movement, how can we seriously speak of co-operation as a failure?

It is a failure because it has not, will not, and cannot, solve the basic economic problems of the working-class. Owen saw, even if he failed to realise all its implications, that the dominance of capital was the root evil. He sought a means of escape, but although the modern co-operators praise him, they have long ago abandoned the intention of carrying on the work he planned.

"Union shops" were to be a means to an end. The co-operative movement has made "divi-hunting" an end in itself. The funds accumulated in the shops were to be used for the foundation of societies in which all the members would co-operate in working their own property held in common and share the proceeds on a footing of equality. The modern movement accumulates funds for the purpose of making further profit out of the employment of wage-workers.

The one, Utopian though it was, aimed at abolishing the wages systems, private ownership and profit-making. The other merely aims at redirecting the stream of profits from the private trader to the cooperative members. It has not and cannot solve the poverty problem either of its members or of its employees.

The basic fallacy in the co-operative idea is a wrong explanation of rent, interest and profit. Yet the position is simplicity itself to all who have missed or have won through the haze of mystery shed by the professional economists. Because the means of production—land, factories, steamships, etc.—are privately owned, the workers who wish to operate these instruments must first enter into a one-sided bargain; one-sided because the goad of semi-starvation forces their hand. They bargain to produce wealth for the owners of capital and receive as the price of the energies they sell wages or salaries which, over the whole field of Capitalism, are only a small proportion of the values they produce. What the Capitalists get is a property-income, something which arises from their monopoly and not from their services, and which varies according to the size of their capital. Rent, interest and profit, if the terms are cleared of some looseness which surrounds their common use, are merely names for this income which goes to the owners of property because they are owners.

Co-operators want to eliminate the middleman and redirect the flow of profit—but what is profit? Profit is the child of private ownership and is obtained by the exploitation of the workers. Co-operative "divi." is derived from the exploitation of the cooperative employees. The relation between the latter and the societies is precisely the same as that between other workers and their employers.

Owen wanted to eliminate capitalist ownership. The extent to which this could be done by the co-operative movement is illustrated not by the fact that it has five-million members, who with their families make up perhaps a third of the population, but by the contrast between the numbers it employs and the total number of wage-earners. It employed in 1924 about 200,000 persons out of about 16 million workers in Great Britain. Its employees were only 4.16 per cent. of the whole number of its members, and that percentage was actually less than the 1914 figure of 4.85 per cent. Its capital looks large, but against the great mass of capital in the hands of the Capitalist class it is insignificant.

The co-operative movement has all the trappings but none of the substance of success. Its members are still wage-earners, still exploited by the Capitalist class and still, therefore, poor; its employees are in the same condition. If the societies as at present constituted extend until they cover the whole working-class that will still be true.

It has made no inroads into the Capitalist system, and it could not if it would. As the Scottish Co-operator pointed out (23.8.23.) the movement was then weaker than it had been before the war, "weaker financially and weaker administratively." It does not challenge the Capitalist class or the principles of Capitalism. As Mr. J. A. R. Marriott, M.P., said at the Jubilee celebrations of the Oxford Co-operative Society (Oxford Chronicle, Oct. 13th, 1922): "If he thought the co-operative movement a menace to the private trader he would certainly not be there. But there was plenty of room for both to live and flourish." This is true inside Capitalism, but under Socialism there will be room neither for private, nor co-operative, nor municipal, nor State Capitalism to continue the exploitation of the workers.

Co-operation has solved no working-class problems and discovered no new principle. It does not abolish profits and interest: it only "defines the rights of capital" (Cooperative News, July 10th, 1926). "It says to the capital-owner . . . 'we pay you interest and our obligation to you ends with that.' " Sir Thomas Allen (C.W.S. Director) wants to see "those who had capital, those who had labour, and those who had intellect and organising power" to "work in a real co-operative way . . . " (Cooperative News, July 3rd, 1926).

It has disputes with the employees, strikes and lockouts, sometimes pays less than its private Capitalist rivals (see Co-operative News, 18.8.23.), and has even been known to call in a Capitalist Labour minister in a Capitalist Government to settle its differences with its employees.

When trade is slack it sacks members of its staff, introduces all the familiar speeding-up and wage-reducing devices of its competitors, and in short, behaves like any other joint-stock Capitalist concern, that is, it behaves as it must, being a Capitalist organisation inside a Capitalist system of society.

Some there are within its ranks who look further, but these are learning by hard experience that they are, if anything, less able than Robert Owen to achieve the object which he set before him. "The Rochdale pioneers desired to solve the land and housing problems of their generation. . . . Co-operators now realise that these problems can only be solved by Parliament. They have entered politics to realise the ideals of the pioneers" (Daily Herald, April 24th, 1921). This is part of a speech by Mr. Barnes, Co-operative M.P., in which he explained why a Co-operative Party was formed and was necessary.

Co-operation has not and cannot emancipate the working-class. Only Socialism will do that. The workers cannot escape from the effects of Capitalism by joining cooperative societies. Neither can they escape Capitalism by retiring into Owen's "villages of industry." They must obtain for society as a whole the ownership of the means of production and distribution which are now the property of the Capitalist class. For this they must organise in the Socialist Party for the purpose of controlling the machinery of government. Once possessed of power they can then reorganise society on a Socialist basis of common ownership. Owen's ultimate aims can only be achieved bv Socialist methods.