Owen and The Co-Operative Movement

Robert Owen and the Co-operative Movement

We must examine one other unorthodox explanation of dis­tribution before returning to the main stream of classical eco­nomic thought. Those who advocate co-operative democracy as the most desirable program of social reform are seldom very specific in their description of the operation of the existing eco­nomic system. Vague generalizations and implications provide the principal sources for a review of their ideas. Robert Owen (1771-1858) believed that the existence of profit was an unjust addition to the cost of goods. The just price of an article was its cost of production, consequently the process of exchange which allowed producers to charge more than the cost of production, and to lay claim to the excess because of their ownership of prop­erty, created a system which was not only unjust but unworkable. He pointed out that the wages paid represented the income with which the articles produced had to be purchased. If the price was increased above the cost of production to allow for profit an economic crisis would ensue when laborers could no longer buy back the articles they produced. Thus the combination of private property, profit, and rent made for an inequitable system of dis­tribution. Owen disagreed with the other authorities of his time that this seeming injustice would disappear if competition were free and perfect. A different system of exchange was necessary in order to assure to the worker his right to consume what he pro­duced. To achieve this end it was necessary to eliminate profit and suppress the desire to buy cheaply and sell dearly.

Owen's ideas of co-operative association and his plans for co­operative communities sprang naturally from his ideas concerning economic processes. Since money was the instrument which made profit possible, Owen advocated the replacement of money by labor notes as a first step in the elimination of profit alto­gether. He gave practical expression to his ideas in the organiza­tion of the National Equitable Labour Exchange. In this plan those producing articles for exchange would be given labor notes equivalent to the labor time expended in production. The price of the article in exchange would be an equivalent number of labor notes. Thus through a co-operative association articles would be exchanged for their labor equivalents and profit would be eliminated. The history of the Exchange has already been described above. It is sufficient to note that like other of Owen's experiments it failed in short order. Nevertheless the idea of a co-operative association continued to live; and, embodied in the Consumers' Co-operative Movement, it continues to challenge the basic principles of modern economy.

In 1844, in the village of Rochdale in Lancashire, England, the poverty and insecurity among a group of textile workers caused the formation of a co-operative society as a means of im­proving their lot. A previous co-operative venture had already failed in Rochdale, but the new society was organized on dif­ferent principles. The missionary zeal accompanying the co­operative idea is attested by the fact that a follower of Robert Owen, a man named Holyoake, was the guiding light in the second Rochdale enterprise. The success of this second co-opera­tive was so notable that the principles upon which it was founded have been adopted as the basis of consumers' co-operatives every­where.

The Rochdale Society of Equitable Pioneers, for such the new society was named, began as a small retail store. Its original capi­tal of £28 was secured through small subscriptions from those planning to participate in the store's activities. The intention of the founders of the store was to provide goods of high quality at the lowest possible price, by eliminating profit. Ultimately they planned to establish a self-supporting community. Although the latter aim has never been achieved, the value of the co-operative store has been clearly demonstrated by the rapid spread and con­tinued existence of consumers' co-operatives in England, on the Continent, and in America. The success of the Rochdale Equi­table Pioneers as compared to previous societies has been at­tributed to the new principles which they followed. Briefly stated, these were: capital investment would receive a return of no more than 5%; prices at the store would be the prevailing prices in the area; the surplus over and above the amount necessary to pay interest on capital would be returned to those who purchased at the store in proportion to their purchases; membership would be open to all who would pay a small entrance fee (1 shilling or 25 cents) and agree to purchase a £1 share ($5), which could be paid out of purchase savings. Control of the society was democratic, each shareholder being entitled to one vote regardless of the number of shares he possessed. Although the co-operative movement has grown tremendously since these early beginnings, little change has taken place in co-operative principles. A minor variation has occurred with the development of producers' co­operatives. Emphasis in these ventures is upon the rights of employees. Consumers' co-operatives have also allowed employees to participate in the earnings of the co-operative. In the last half century the kind and type of co-operative society has increased notably. Housing, credit, shipping, restaurants, clothing, books, are now produced and distributed through various types of co­operative enterprises. Failures have been frequent. In general the causes of failures could be traced to inexperienced manage­ment and the power of malicious competitive practices of private enterprises which sought to destroy the co-operative.

The ultimate goals of the co-operative movement are far-reach­ing. James Warbasse, the outstanding advocate of co-operation in America, says: "A co-operative society is a voluntary associa­tion in which the people organize democratically to supply their needs through mutual action, and in which the motive of produc­tion and distribution is service, not profit. In the Co-operative Movement the ultimate tendency is toward the creation of a social structure capable of supplanting both profit-making industry and the compulsory political state." These goals were implicit in the first articles written by the Rochdale Equitable Pioneers setting forth their aims. They were to start a store, build houses, commence manufacturing giving employment to those without work, purchase farms, establish a hotel ("for the promotion of sobriety"), "and as soon as practicable the Society shall proceed to arrange the powers of production, distribution, education, and government; or, in other words, to establish a self-supporting home-colony of united interests, or to assist other Societies in establishing such Colonies."