The development of cooperation in

the world
4.1 THE RISE OF THE INTERNATIONAL
COOPERATIVE MOVEMENT
Very early on, in 1835, Robert Owen founded an Association of All Classes and All Nations designed to bring together all the
groups prac-
tising cooperation. The realization of this idea, however, came very
slowly indeed. An attempt was made in 1867 to organize a first interna-
tional meeting of cooperators in Paris, in concomitance with the
Exposition Universelle, but the French government would not allow it,
for fear of disorders. Other attempts were made, but the century had
practically run out before 200 delegates from 13 countries could meet
for a week in London, in August 1895, to emerge with the foundation of
the International Cooperative Alliance. Nine of the 13 countries were
European, and the other four (the USA, Argentina, Australia and India)
were permeated by European culture. The ICA, which soon evolved into
an association of cooperative federations (single cooperatives could not
join directly) acted mainly to defend the cooperative identity in its
congresses and publications – not without difficulty, given the wars that
set member nations in conflict with one another and the presence of
authoritarian regimes that opposed the very essence of cooperation, that
is, its profoundly democratic roots.
The ICA eventually had to grapple with the divisive question of
admission for organizations that were nominally cooperatives but actu -
ally state-run bodies under Soviet control. The difficult decision eventu-
ally made was not to expel them, but the ICA had to defend itself against
the attempts of the Soviet bloc representatives to dominate the associa-
tion. During the 1930s the number of member federations plunged with
the spread of dictatorship throughout Europe (not just the Soviet Union
but also Italy, Germany, a number of East European countries, Portugal nd Spain). The Alliance nevertheless had the courage, at
its Paris
Congress in 1937, to reaffirm the democratic principles of the move-
ment: ‘In whatever type of economic system, the cooperative movement
requires total independence of action as the foundation of its principles
and rejects any attempt to establish political control over its activity.

4.2 FRANCE
We saw that France was the first country where worker cooperatives
arose; in the second half of the nineteenth century these were joined by
consumer co-ops, farmers’ co-ops – still very strong today – and credit
unions, especially rural credit unions. In 1894 local and regional agri -
cultural credit unions formed a central organization, Crédit Agricole, which was flanked by cooperative banks and other mutual
banks. Since
then French credit cooperation has grown enormously, and in 2001 it
accounted for 57 per cent of the country’s total deposits and 37 per cent
of its lending. Crédit Agricole freed itself completely from government
controls in 1988 and obtained stock exchange listing for its holding
company – wholly owned at first by the regional credit unions, which
later sold part of their holdings but retained a majority stake – in order
to conduct major economic transactions (such as the acquisition of
Crédit Lyonnais) nationally and internationally. Today Crédit Agricole is
the largest banking group in France and one of the largest in the world,
and non-profit mutual insurance societies account for more than half of
the French insurance market.
Consumer cooperatives have not been equally successful. The process
of consolidation of small co-ops was completed after World War II, but
this was not accompanied by a strategy for modernization of the sales
network, which continues to consist mainly of small shops; the few coop-
erative hypermarkets founded never became profitable and had to be
severely downsized (they were eventually sold to private corporations).
The causes for this failure were many: the movement’s inability to
develop a rigorous management structure; the difficulties in relations
between local and national cooperative structures, with the local co-ops
showing little inclination to use central purchasing services; and the
undifferentiated structure for managing tiny outlets and hypermarkets. In
the 1990s the presence of consumer co-ops in France consisted mainly of
four regional cooperatives that arose from the progressive merging of
smaller units: Coop Atlantique, Coop Normandie Picardie, Coop Alsace
and Les coopérateurs de Champagne. In 2002 these four groups ran 15
hypermarkets, 75 supermarkets, 213 discount supermarkets and over 500
neighbourhood shops. They are multichannel companies, depending on
high quality and strong territorial roots, expressed in members’ involve-
ment in cultural and recreational activities

.3 FINLAND
Finland is the most ‘cooperative’ country in the world, outdoing even the
rest of Scandinavia. The movement began in the second half of the nine-
teenth century in farming and prospered, giving rise in 1899 to the
Confederation of Finnish Cooperatives, Pellervo (deriving from the
Finnish world for ‘field’), grouping 390 agricultural co-ops at first. The
founder members included university professors, industrialists and
bankers who believed that cooperatives would serve not only to spread
material well-being but also to increase popular self-esteem and mass
participation in the movement for economic and political liberation from
the Russian yoke. Two apostles of cooperation devoted their entire lives
to the movement: Hannes Gebhard, long the head of Pellervo, and his
wife Hedvig, who was also a member of the Finnish Parliament (she
would die in 1961 at the age of 96). In 1902 a cooperative bank,
Okobank, was founded. Consumer co-ops followed; the largest of these,
Sok, was founded in 1904 and now includes a large purchasing consor -
tium (Hankkija Maatalous Oy), forestry industry cooperatives
(Metsäliitto) and mutual insurance societies. Today cooperatives account
for nearly all agricultural activity, a third of lumbering and forestry, a
third of credit business, 40 per cent of retailing, 40 per cent of insurance
and more. The three pillars underpinning it are network structure, special
legislation and coordination provided by sector leader co-ops.

4.4 SWITZERLAND
In Switzerland too the cooperative movement had already achieved
some success by the mid-nineteenth century, and the first national coop-
erative conference in 1853 saw the participation of 34 consumer co-ops Agricultural, electricity, water, credit, housing and
worker cooperatives
would follow. The Swiss Union of Consumer Cooperatives, the coun-
try’s first really large cooperative organization, was founded in 1890, but
it was not until after World War II that the movement was coordinated,
with the institution of a single logo in 1960. In that year there were some
400 consumer co-ops with 3320 retail outlets, but a series of mergers
brought the number of co-ops down to 40, then 18, then 14. In 2001 the
final merger was completed, forming the new Coop society, which is
broadly diversified and controls 15 per cent of the Swiss market.
Together with retailer cooperatives in Belgium (Coloruyt), France
(Leclerc), Germany (Rewe) and Italy (Conad), in 2006 it founded the
first European co-op, Coopernic, which has 17 498 outlets and ¤100
billion in sales.
However, Coop is not the only Swiss consumer cooperative. There is
also Migros, larger still, whose origin was somewhat atypical. Migros was
founded as a public limited company in 1925 by Gottlieb Duttweiler, a
merchant with progressive ideas and a strong sense of social responsibil-
ity. In 1941 he transformed it into a cooperative. Today it is Switzerland’s
leading retail organization, the second largest cooperative in Europe (after
Crédit Agricole) and the seventh largest in the world, with 2 million
members and 80 000 employees. Mutual credit is also important, with 405
banks that together form the third-leading Swiss banking group, with 1.4
million members and 19 per cent of total bank deposits

4.5 GERMANY
The German cooperative movement, with its powerful base in mutual
credit, developed significantly up until World War I. It was closely
linked to the labour and socialist movement, but not to that alone. In
1913 Germany had over 35 000 co-ops with 6 million members. Their
expansion continued in the Weimar period, and by 1933 there were
50 000 co-ops with 9 million members. The Nazi regime put an end to
this, dismantling all of the movement’s central structures and subjecting
the co-ops to direct government control; membership plummeted. World
War II completed the job with the physical destruction of the move-
ment’s property. The movement had to start up from scratch after the
war. This new beginning adhered to the same principle that governed the
rest of the economy in West Germany, namely ‘decentralization’ in the
name of democracy, to underscore the difference from the centralism he Nazi dictatorship. At a time when the European
economy was
strengthening and emulating the American model of large corporations,
this formula was not likely to make the cooperative movement flourish.
Nevertheless, cooperative credit – perhaps the strongest of the move-
ment’s historical roots – succeeded in reorganizing, forming a single
central institute (Deutsche Genossenschaftsbank, or DG Bank) in 1949,
and in 1972 a single national organization, the Bundesverband der
Deutschen Volksbanken und Raiffeisenbanken (BVR). The base
remained the regional structures. Later some regional organizations
merged, and then themselves merged with DG Bank, in 2001 giving rise
to the Deutsche Zentral Genossenschaftsbank (DZ Bank). Only one
regional bank remained (the WGZ), and it has still not agreed to merge
with the rest. Today German cooperative banks number more than 1300,
with 14 500 branches and 15 million members, and account for 19 per
cent of German bank deposits and 12 per cent of lending.
4.6 SPAIN
Here too, the cooperative movement arose in the nineteenth century,
when a series of powerful regional organizations were created. A nation-
wide federation did not come into being until 1928. The Franco dicta-
torship overturned the balance that had been achieved. The movement
just barely survived, and then recovered only very partially, remaining
marginal with about 20 000 cooperatives and just 4 million members.
Spanish cooperation is known to the rest of the world not for its national
organization, but rather for the presence of a unique cooperative experi-
ence, Mondragòn (Williams, 2007). The foundation of the first cooper-
atives in the Basque town that lends its name to what is now a powerful
economic group stemmed from the activities of a priest, José Maria
Arizmendiarrieta, who was made chaplain and then parish priest of
Mondragòn in the 1940s. In 1943 he opened a vocational school for
young people, and 1956 saw the founding of the first co-op, Fagor,
which made stoves and radiators. It was the first of many, and by the end
of the 1960s the Mondragòn co-ops numbered 41. They were organized
and financed by a bank, Caja Laboral, that had been founded in 1959,
the same year that the collective insurance company Lagun-Aro was
activated. In 1969 a retailing society, Eroski, was formed. But unlike
those anywhere else, even though its field is retailing, Eroski is not a
consumer but a worker co-op.

4.7 USA
In the second half of the nineteenth century there was an extremely
intense American cooperative movement in all fields, including such
innovative industries as telephones, electricity and water supply . Many
states passed laws regulating cooperatives, and in the 1920s the federal
government also enacted legislation. Johns Hopkins University
published a history of cooperation in the USA in 1888, testifying to the
movement’s great early dynamism. A series of federations, institutes and
industry associations were formed. Shortly after World War II the
strongest sector was farmers’ cooperatives, with over 7 million
members, but they contracted along with the relative importance of
farming in the economy. Today US farmers’ co-ops still have 4 million
members and account for a third of US agricultural output.
In the credit sector, in contrast, US cooperation has scored success
after success, with 84 million members and some 10 000 credit unions
in 2005. The other two sectors in which the cooperative movement is
powerful are insurance, with 1000 mutual societies administering $80
billion in premiums, and electricity, with 900 co-ops serving 37 million
customers. Consumer cooperatives have retained only a niche role, such
as that of REI, which markets sporting goods and outdoor equipment
and gear, with 3 million members and 82 outlets

4.8 CANADA
Cooperatives started in Canada in the middle of the nineteenth century
first in the consumer and farmer sectors. Marketing cooperatives and
creameries were established in many areas of the country and grew
without interruptions; today they have become powerful corporations,
accounting for over 40 per cent of total farm cash receipts. The first
Credit Union was founded in 1900 by Alphonse Desjardins, the proto-
type of a large French speaking movement that has today, together with
its English speaking counterpart (the Canadian Cooperative Credit
Society), more than 10 million members. Insurance, housing and fish-
ery cooperatives are also strong, as well as health care and child care
cooperatives. In the field of retail cooperatives a remarkable example is
Mountain Equipment Co-op (MEC) established in 1971 by a small
group of outdoor enthusiasts in Vancouver for the sale of outdoor
equipment and apparel, which in 2006 had 2.3 million members and is
leader in the use of internet technologies as well as in the running of
sustainability and ethical programmes (Walzer and Merrett, 2000).
Canada has also developed multi-stakeholder cooperatives and worker-
shareholder cooperatives, formed after the rescuing of private enter-
prises by their employees. The two Canadian umbrella organizations –
the French speaking Desjardins Group and the English speaking
Canadian Cooperative Association born in 1909 (McPherson, 2009) –
beside the services they render to their member cooperatives and
second tier organizations, run programmes promoting cooperatives in he developing world. Today half of the Canadian
population is a
member of a cooperative, making Canada one of the most highly coop-
erative countries in the world.
4.9 JAPAN
When Japan opened up to the Western market economy in the nineteenth
century, it did so across the board, and the cooperative movement spread
from its beginning in the 1870s, patterned after European models. The
first legislation regulating cooperatives was enacted in 1900, and under it
the movement flourished, reaching a million members by 1912 and
nearly 3 million members in 1922, belonging to 191 federations. The
authoritarian governments that followed, like the European dictatorships,
impeded the cooperative movement, but the post-war resurgence was
dynamic indeed. Membership rose to 22 million in 1972 and 57 million
two decades later. The strongest sectors are agriculture, consumer co-ops
and insurance (with 14 million members). Farmers’ cooperatives were
the chosen instrument for applying government farm subsidies, perform-
ing a number of activities (supplying inputs, marketing of output, food
processing, finance, insurance, building, and other rural services, includ-
ing health and cultural services). So Japanese farmers’ cooperatives
became a power with over 10 million members and an enormous volume
of business. In fact, they dominate Japanese agriculture, with a market
share of 70 per cent at the end of the last century, and maintain social
cohesion in the countryside. Today Japanese farmers’ cooperatives must
cope with the liberalization imposed by international agreements.
On the consumer front, the Japanese Consumer Cooperatives Union
was formed in 1951 and began producing under its own brand in 1960.
It now has a market share of 5 per cent and is the third largest retailer in
a highly fragmented market. It has 572 co-ops with 22 million members
who are still highly active in running their organizations. Half of the co-
ops’ total turnover depends on an original system of ‘Han’ groups that
arrange for collective purchases and home delivery.
4.10 INDIA
In the developing world the country with the largest cooperative move-
ment is certainly India, and not only because the country itself is so
44 Cooperative enterprise

large. The movement originated in 1904 at the initiative of the British

government, which enacted a law on cooperative credit societies that
was extended to all cooperatives in 1912. In 1922 there were already
over 50 000 co-ops in India, with 2 million members, and in 1929 the
National Cooperative Union of India was formed, its member units
present almost exclusively in the countryside. Among other things,
cooperatives in India have been active in improving the conditions of
lower castes members (Williams, 2007).
With independence and the separation of India and Pakistan, the first
Indian governments embraced the idea of a thoroughly ‘cooperativized’
state, making the co-ops little more than an appendage to state economic
planning. While certainly not encouraging autonomy and membership
responsibility, imparting a top-down rather than a bottom-up orientation,
this did greatly swell the number of organizations and their membership.
There are now half a million cooperatives with 210 million members,
organized into 214 federations under the central aegis of the umbrella
organization NCUI. But it did not strengthen entrepreneurship, despite
the presence of co-ops in all the rural villages and their large market
shares: 37 per cent in fertilizer , 55 per cent in sugar, 50 per cent in
animal feed, 60 per cent in cotton retailing, 51 per cent in cooking oils,
55 per cent in textiles, 62 per cent in rural storage facilities, 95 per cent
in rubber, 46 per cent in rural credit, 28 per cent in wheat, 28 per cent
in rural retail trade and a marginal presence in the cities