Posts Tagged ‘‘Endurance and Endeavour: Russian History 1812-1986’’

Co-Operatives in Pre-Revolutionary Russia and Potential in Modern Britain

March 16, 2014

Co-operative pic

The co-operative movement and store was a major part of working class life during the 19th and much of the 20th century. My parents used to shop at the Co-Op, and receive the books of Green Shield Stamps, a form of the enterprises early profit-sharing. They were also a very strong part of lower-class life in Russia in the years shortly before the 1917 Revolution. The historian J.N. Westwood describes just how popular they were in his book Endurance and Endeavour: Russian History 1812-1886, 3rd Edition, (Oxford: OUP 1987)

In contrast to its attitude towards trade unions, the administration did little to hinder, and even encouraged, the co-operative movement which flourished after 1905. Producers’ co-operatives in the form of artels were already part of Russian tradition; what was new was the sudden popularity of marketing and purchasing co-operatives. There was also a blossoming of the savings bank movement. by 1918 the co-operatives’ membership was equivalent to about one-third of the total population. The biggest co-operative retail store was Moscow’s Kooperatsiya, which had 210,000 members. There was a co-operative wholesale union, (Tsentrosoyuz), and in 1911 a People’s Bank had been founded. The latter, the Moscow Narodny Bank, was 85 per cent owned by the co-operative movement. All this does not mean that Russia in 1914 was well on the road to socialism, but it does suggest that Russians, and especially rural Russians, had not become as individualistic as some commentators assumed. (p. 179).

Westwood also gives this description of the artels, the co-operatives formed by artisan craftsmen.

The elite among them [industrial workers] were the specialists, who often grouped themselves into a co-operative (artel), whose elected leader would seek short-term contracts in such trades as house-painting or stonemasonry.

Artels were also important in industry. They were formed by workers who capitalized themselves by paying an entrance fee. Because the members knew and trusted each other, and cherished the reputation of their group, the artels were noted for their reliability and good workmanship. In a sense the artel member was a privileged member of the proletariat, but he was found only in small-scale enterprises. The bulk of Russia’s industrial workers worked in factories. (p. 177.)

The authors of Socialist Enterprise: Reclaiming the Economy (Nottingham: Spokesman 1986), Diana Gilhespy, Ken Jones, Tony Manwaring, Henry Neuberger, and Adam Sharples also examines and considers the role co-ops played in British industry from the late 1950s to the 1980s. They state:

Workers’ co-ops are often held up as a pure form of industrial democracy. The ideal model of co-ops is one in which working people, given training and the experience of self-management, can extend their control over the work-place to strategic decisions made in the enterprise. They are owned and controlled by worker members on a one-member, one vote-basis, and not by shareholders or the state. Profitability is not the overriding objective because it is enough that the co-operative covers the costs and funds future investment. (p. 50).

They note, however, that co-ops have not always been successful. Many have failed, while others have only survived by cutting workers pay and conditions. They also note the various different forms of co-ops, such as those set up by the Quaker and Christian Socialist, Scott Bader, in 1958, which is really a form of benevolent paternalism, with the actual management structure little different from conventional, capitalist enterprises.

They then consider the problems and positive aspects of many of the small co-operatives set up in the 1970s. They describe them thus:

Many very small companies have been set up as co-ops from scratch. In the 1970s’s many people were attracted to the idea of co-ops, and over 200 sprang up as a result. Many of the people involved were middle-class, well-educated, under 35 and few had children. Typical ventures were left printers, bookshops, wholefoods suppliers, and builders’ collectives. Most are struggling financially, operating in labour-intensive sectors where the profit margin is low. They are heavily dependent on funds from local authorities, ICOF (the Movement’s funding branch) and on members’ own savings. In general, unions have played no part in their establishment and running. They often survive through low pay, unpaid overtime, and poor working conditions often close to sweated labour. An impressive degree of workers’ control is practised – with equal pay, job rotation, and sharing of responsibilities for running the firm. The members often have personal access to professional help and other resources. Their youth and background mean that questions of pay and job security are less important to them. (P. 51).

The also examine the workers’ co-operatives that were founded by employees trying to save their jobs in firms threatened with closure, in particular those at Fakenham, Meriden, Scottish Daily News and Kirkby Manufacturing. The movement here was expanded by the 1974 Labour government under Tony Benn as the Secretary of State for Industry. It was Benn, who financed the Meriden, Scottish Daily News and Kirkby Manufacturing.

These, they acknowledge, were a failure, stating:

In economic terms these co-ops have been failures. Heavily undercapitalised and in a bad market position, they were handicapped from the start. Co-op ownership could not reverse the decline of firms which capitalists had failed to run at a profit. As a result, they were forced to choose between reducing wages and accepting the very redundancies they sought to avert. Meriden only managed to prolong its life because the workforce accepted redundancies and the re-introduction of wage differentials. Such fundamental compromises have reduced workers’ control to little more than a formality.

In no case does the seem to have been any strong initial feelings in favour of the co-operative principle. most of the workers were not asserting their right to self-management. They were willing to negotiate about any proposals to save their jobs. Had it been possible to persuade new capitalists to move in, the worker’s would have agreed. Working people often have neither the confidence, sills nor financial resources to want to take on the risks involved in ownership. Faced with financial pressure, many co-ops have had to turn to middle-class managers to bail them out. (pp. 51-2).

Those founded after the mid-70s, often with the help of Labour local authorities, were much more successful. The authors go on to say

The most impressive phase in the growth of co-ops has been the most recent: there are now thirty times more workers’ co-ops than in the mid 1970s. Co-ops have had a better record of survival than other small businesses, reflecting th4e greater commitment of their members. This growth clearly reflects the increase in unemployment, which has forced many to new ways of working. The most important factor, however, has been the support provided by Labour local authorities. The range of new co-ops is extremely varied: for example, City Limits, London’s successful weekly listings magazine; Pallion Business Services in Sunderland, set up and run by a group of physically handicapped people, provides office and business services; MONS a Sheffield-based engineering co-op, has developed and produced a dehumidifier.

The kind of support Labour councils provide has been sensitive to the particular problems co-ops face. Above all, advice and management help is provide through over 70 local co-operative development agencies, reflecting co-ops’ need for assistance on starting up, product development, marketing, training and legal questions. In addition, investment finance is given through enterprise boards, the development agencies themselves, and new revolving loan funds: £7 million was given in 1985-86 alone. Co-ops are also being helped with premises, planning applications, and in liaising with local trade unions. (p. 52).

They conclude that co-ops cannot be developed from above, particularly in large and medium sized firms, and that shop stewards and employees are faced with a sharp learning curve regarding management. For some this can be too difficult, and the employees will find the experience of attempting to run a co-op dispiriting. However, they note that many co-operatives have weather the recession better than capitalist firms, and that establishing a co-op should be an option open for workers to decide for themselves.

Clearly co-operatives have a strong tradition right across Europe, from Britain to Russia. Although they can have severe problems, nevertheless they can be very successful and provide another way of developing a socialist economy, if only in part.