1. The cooperative movement began in 1844 when weavers in Rochdale, England formed a cooperative store to sell food items they could not afford. They established the Rochdale Principles which became the basis for modern cooperatives.
2. Over time, the International Cooperative Alliance refined the principles in 1937, 1966, and 1995. The 1995 version defined cooperatives and established seven principles around open membership, democratic control, member economic participation, autonomy, education, cooperation among cooperatives, and community concern.
3. The seven principles guide cooperative organizations globally by addressing their internal dynamics and external relationships.
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Evolution of Cooperative Principles
1. The Evolution of
Cooperative Principles
Rockdale
Pioneers ICA ICA ICA
14 4 6 7
Principles Principles Principles Principles
1844 1937 1966 1995
Lecture presentation for
Cooperative Basic Course
By: Jo B. Bitonio
June 2012
2. Cooperatives were borne out of
the free market economy and the many
failures and injustices it has generated.
The very first documented cooperative
was in fact a reaction to the abuses of
capitalism and it can be traced back to
1844 in Rochdale, England where a
group of 28 weavers (27 males and 1
female) formed the Rochdale Society
of Equitable Pioneers October
24,1844.
Source: http://en.wikipedia.org/wiki/Rochdale_Society_of_Equitable_P
3. As the mechanization of the industrial Revolution was forcing more and
more skilled workers into poverty, these tradesmen decided to band
together to open their own store selling food items they could not
otherwise afford. With lessons from prior failed attempts at co-
operation in mind, they designed the now famous Rockdale Principles,
and over a period of four months they struggled to pool one pound
sterling per person for a total of 28 pounds of capital.
On 21 December 1844, they opened their store with a very meager
selection of butter, sugar, flour, oatmeal and a few candles. Within
three months, they expanded their selection to include tea and tobacco,
and they were soon known for providing high quality, unadulterated
goods.
Source: http://en.wikipedia.org/wiki/Rochdale_Society_of_Equitable_P
4. Little did the Rochdale Pioneers know in 1844 that their
humble efforts to help themselves would have such
impact. From the little shop which still stands on Toad
Lane, the modern cooperative began its journey.
One of the lessons learned from the Rochdale Pioneers is
that "helping people help themselves" is a strong and most
enduring form of economic development. The world has
certainly changed a great deal in 150 years, but the need for
cooperation among people remains.
http://www.cooperativegrocer.coop/articles/2004-01-09/co
5. In 1844,1845, and 1854 the Society published a
series of "practices," which were the basis for
what became known decades later as the
Rochdale Principles:
Open membership.
Democratic control (one man, one vote).
Distribution of surplus in proportion to
trade.
Payment of limited interest on capital.
Political and religious neutrality.
Cash trading
Promotion of education
6. Cooperative societies had 1. Voting is by members on
existed before Rochdale has failed. a democratic (one
It was to the credit of Rochdale member, one vote) basis.
Pioneers that they formulated a 2. Membership is open.
method that was capable of being 3. Equity is provided by
standardized and became a “code members.
of conduct” for succeeding 4. Equity ownership share of
cooperatives. The principles which individual members is
they codified were as timely as limited.
ever and are still the standards 5. Net income is distributed
with which present cooperative to members as patronage
principles are based: refund on a cost basis.
7. 6. Dividends on equity capital are limited.
7. Exchange of goods and services at market prices.
8. Duty to educate.
9. Cash trading only.
10. No unusual risk assumption.
11. Political and religious neutrality.
12. Equity in membership (no discrimination by
gender)
8. When the International
Cooperative Alliance (ICA) was The 1937 review
founded in 1895 it took upon itself affirmed four vital
that task of refining the principles:
cooperative principles and the
2.open membership;
further consolidation and
expansion of the Cooperative 3.democratic control;
Movement. The Alliance 4.dividend paid
periodically reviewed the according to business
cooperative principles laid down in done; and
Rochdale and made two formal 5.limited interest on
declarations of principles, the first
capital
in 1937
9. The 1966 review declared six essential principles:
• voluntary membership;
• democracy;
• limited interest on share capital;
• distribution of surplus;
• provision for education; and
• cooperation among cooperatives.
10. The third and final review was done in
September 1995, at ICA’s 100th anniversary meeting
produced the most comprehensive statement to date
on the cooperative identity. The statement defines
cooperatives, identifies shared values of cooperators
worldwide and refines, restates and expands the
1966 principles. These principles are intended to
guide cooperative organizations at the beginning of
the 21st century.
11. The Statement of identity defines:
A cooperative as “an autonomous
association of persons united voluntarily to meet
their common economic, social and cultural needs
and aspirations through a jointly owned and
democratically- controlled enterprise.”
12. The statement emphasizes important characteristics of
cooperative enterprise which are:
a) Autonomy: the cooperative is as independent of
government and private enterprise as possible;
b) Association of persons: the definition deliberately does read
an association of individuals. The term person embraces any
legal definition of “person” which includes companies as well
as individuals;
c) Voluntary: members are free to join and leave at will, within
the purposes and resources of the cooperative;.
13. d) Meet needs: the central purpose of the cooperative is to
meet member needs, which can be purely economic, social
and cultural;
e) Joint ownership and democratic control:
f) The members own the cooperative on a mutual basis.
Decisions are made democratically by the members and
are not controlled by capital or by government; and
g) Enterprise: the cooperative is an organized entity that
typically functions in the marketplace and engages in the
exchange of goods and services.
14. Seven Principles are listed in the
1995 ICA Statement as shown in
Figure 9 on page 54. They are:
Voluntary and Open Membership;
Democratic Member Control;
Member Economic Participation;
Autonomy and Independence;
Education and Training and
Information; Co-operation Among
Cooperatives and Concern for
Community. The first three
principles essentially address the
internal dynamics typical of any
co-operative; the last four affect
both the internal operation and
external relationships of co-
operative principles.
15. 1. Voluntary and Open Membership
Cooperatives are voluntary organizations, open to all persons able to use
their services and willing to accept the responsibilities of membership
without gender, social, racial, political or religious discrimination.
2. Democratic Member Control
Cooperatives are democratic organizations controlled by their
members, who actively participate in setting their policies and making
decisions. Men and women serving as elected representatives are
accountable to the membership. In primary cooperatives, members have
equal voting rights (one member, one vote) and cooperatives at other levels
are also organized in a democratic manner.
16. 3. Member Economic Participation
Cooperatives contribute equitably to, and democratically control, the capital
of their cooperative. At least part of that capital is usually the common
property of the cooperative. Members allocate surpluses for any of the
following purposes; developing their cooperative, possibly by setting up
reserves, part of which would at least be indivisible; benefiting members in
proportion to their transactions with the cooperative; and supporting other
activities approved by the membership.
4. Education, Training and Information
Cooperatives provide education and training for their members, elected
representatives, managers and employees so they can contribute effectively to
the development of their cooperatives. They inform the general public –
particularly young people and opinion leaders-about the nature and
benefits of cooperation.
17. 5. Autonomy and Independence
Cooperatives are autonomous, self-help organizations controlled by their
members. If they enter into agreements with other organizations, including
governments, they do so on terms to ensure democratic control by their
members and maintain their cooperative autonomy.
6. Cooperative among Cooperatives
Cooperatives service their members most efficiently and strengthen the
cooperative movement by working together through local, national and
international structures.
7. Concern for Community
Cooperatives have a special responsibility to ensure that the development of
communities- economically, socially and culturally- is sustained. They have a
responsibility to work steadily for the environmental protection of their
communities.
18. Reference:
International Cooperative Alliance. Cooperatives
Principles Alive: The ICA’s Seven Principles of
Cooperative Identity in the Experience of
Cooperatives in Metro Manila. Union of Metro
Manila Cooperatives, Manila, Philippines, 2003.