Chapter 3 - Economy (1986)


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    This document has been made available in electronic format
         by the International Co-operative Alliance ICA 
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                         May, 1986

          (Source:  Co-operative Principles, Today & 
               Tomorrow by W.P. Watkins, pp.36-53)
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                         Chapter Three

                            Economy
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The power which Co-operators derive from Association is exercised
mainly in the economic field and for economic ends. Economic
advantage is the motive which attracts to the Co-operative
Movement the great majority of its adherents and its economic
performance sets the standard by which they judge its value to
them. Unless their membership of a Co-operative society enables
them to effect savings which they would not otherwise be able to
make or yields them an income in money or provides a service
which they would not otherwise receive, there is scarcely any
advantage in their being co-operators, whatever moral or social
benefits co-operation may offer. Usually there must be very
compelling economic reasons for the majority of people to take
the trouble to form, join or run Co-operative societies at all.
In this sense, it is true (although not the whole truth) that Co-
operation is the offspring of poverty and distress.

Co-operative organisations and their operations must therefore
inevitably be subject to what may be called the economic test.
This takes the form of a double comparison which may be expressed
in a two-fold question: does Co-operation provide the same
benefits for less cost than other systems or does it provide
greater benefits for an equal cost? The comparison of Co-
operation with alternative systems, that is, ordinary profit
enterprise or government-organised services, is thus made in
respect of another comparison, that is, between benefits and
costs. Nature offers man very little for nothing. Certainly there
is no economic growth or social progress, even in the most
favourable of climates, without labour and thought. The
measurement of results against efforts and sacrifices required
to obtain them is a very far-reaching principle in human life and
extends beyond the sphere commonly called economic. We speak by
analogy of the economy of means by which an artist or poet
achieves his effects. By a further analogy, Co-operation, as an
art of association, yields its material and social advantages
only to those who meet its demands for effort, sacrifice and
self-discipline.

The essence of Co-operative Economy is the assumption by an
association of the functions of ownership, organisation and risk-
bearing usually discharged by an individual, partnership or
company of entrepreneurs. This runs counter in several ways to
the system of specialisation on which modern economic development
is based. In particular, it implies that groups of people,
lacking specialised training or experience, can enter into
commerce, industry, banking or insurance and hold their chosen
ground alongside enterprises directed and managed by business
people with years of technical training. Thus consumers set up
retail stores, industrial wage-earners their own factories,
farmers their own warehouses and processing plants, would-be
borrowers their own banks, tenants their own housing societies
and so on. To adapt the words of Dr. Samuel Johnson, the wonder
is not that they do it well, but that they do it at all.
Obviously, although the functions of the entrepreneur are assumed
by a society, some are in fact exercised in co-operatives of any
size by delegation and are delegated to an increasing degree as
co-operative undertakings grow in magnitude and complexity. Even
so, this does not dispose of the extraordinary, even astonishing,
fact that, in the final analysis, the specialist manager or
director or administrator is accountable to the lay-membership,
subject to its authority and bound by its decisions.

We accordingly return to the reasons, alluded to in an earlier
paragraph, for which producers and consumers associate in order
to play an unaccustomed role as entrepreneurs. Modern economic
life is permeated by division of labour and the exchange of goods
and services through markets. Historically, Co-operation
originated in the market economy. The Co-operative ideas was
discovered, applied and propagated 100 to 150 years ago by people
who found themselves unfavourably placed, either as buyers or as
sellers, in the market economy. These are, notably, the ultimate
consumers and the producers of primary products. Today the most
widely extended and powerful Co-operative Movements are precisely
those engaged in the related fields of marketing and
distribution, i.e. the consumers' and agricultural co-operative
movements. But the other branches of co-operation are also, to
a greater or lesser degree, concerned with markets of particular
kinds, e.g. for land, houses and dwellings; for services, such
as electric power or medical care.

Applying the Principle of Association, those who find themselves
in a situation of permanent disadvantage in the market buy their
requirements or sell their products collectively in order to
bring about a fall or rise in prices in their favour. The object
of the associated consumers (or other buyers) is in the long run
to obtain their requirements at prices which represent real
costs, not inflated prices. The object of the associated
producers likewise is to obtain their products prices which
correspond to their full market value and yield them a reasonable
livelihood. The widening price-spread today between what the
final consumers pay and what the farmers receive for many food
products indicates that those aims are by no means necessarily
inconsistent with each other. The determining factors which
impelled action in either case were originally - and still are
today in all the newly-developing regions - not so much beckoning
advantages as driving forces: hunger, squalor, exploitation and
deprivation, coupled with the conviction that none of these evils
is really necessary or irremediable.

Co-operators have never been happy about the virtues of the
market economy, as a mechanism for exchange, ascribed to it by
classical economists. Their experience teaches them otherwise.
They regard the market mechanism as no more than a rough and
ready and, at times, highly unreliable indicator of society's
real needs. This is a serious fault in an economic system in
which production must necessarily be undertaken in anticipation
and on estimates of future demand. The demand to which the market
responds is, in any case, not social need but the demand which
is called by economists `effective' because backed by ability to
pay. Moreover, market price is falsified as an indicator when it
results from excessive differences in bargaining power or
position between buyers on the one hand and sellers on the other,
so that one is able to exploit the relative weakness of the
other. Every housewife who has had to pay rising prices when war
is threatened and shortages are anticipated, or the fisherman and
farmer who are faced with marketing a superabundant catch or
crop, understand this very well. But special crises apart, the
play of the market can keep certain classes of consumers and
producers in a position of permanent inferiority in bargaining
power, so long at any rate as they do not find a remedy in co-
operation. Finally, it is notorious that market price is
continually subject to attempts, more or less successful, to
manipulate or regulate it, particularly through the control of
prices, limitation of supplies and the division of markets by
larger or smaller combinations of enterprises (cartels or trusts)
which may suppress mutual competition to the point of oligopoly
or monopoly. The constant abuse of bargaining power sooner or
later provokes, as the American economist Galbraith has
described, the emergence of countervailing forces tending to
restore equilibrium and among these co-operative organisations
can often be included.

Successful Co-operative organisations tends, other things being
equal, to strengthen the position and increase the bargaining or
competitive power of its participants in a given market,
sometimes to the extent of permitting them effectively to
influence or even regulate prices. It can also enable them to by-
pass a market through the integration of successive stages of
production or distribution under unified direction, as in many
of the consumers' wholesales or farmers' supply federations. But
it should and often does go further than this. The fact that, in
a Co-operative society, a group of people requiring economic
services for their own purpose, be that housekeeping or running
a farm or workshop, replaces the ordinary entrepreneur trading
for profit, allows play to a different set of aims and motives,
besides resulting in different business policies. Without
endorsing all that Charles Gide wrote in a celebrated passage in
praise of the reconciliation of conflicting economic interests
effected by Co-operative organisations, it may be observed that
in a consumers' Co-operative society the old battle of wits
between housewife and retailer no longer has any meaning. This
different concept of Economy underlies certain practices of the
Rochdale Pioneers which were radical departures from the trading
methods of their day. Take, for example, the rule laying down
that the Society should distribute pure goods and deliver just
weight. To do anything else would be, from the consumers' stand
point, false economy, nor is there any need for either the legal
rule of `caveat emptor' or for government inspection backed by
penalties to deter the retailer from profiteering at the expense
of the consumers' ignorance or lack of acumen. The Principle of
Economy, applied through Co-operation, enables the consumers' or
users' interests in the value of commodities in use to play an
important, sometimes dominating role. Housing co-operatives offer
brilliant illustrations of the same tendency. If they came into
existence primarily to check rent exploitation under the modern
urban conditions, they have developed by setting new and higher
standards of dwelling accommodation and ancillary services, not
for their own members alone, but for the community at large. It
is no accident, but a natural consequence of the Co-operative
Concept of Economy, that housing co-operatives construct the best
low-cost dwellings in Europe and, perhaps, in the United States
also.

Again, to add an example from agriculture, one of the greatest
benefits conferred by Co-operation on farmers anywhere is the
control it gives them over the quality of farm requirements, with
the assurance that they get what they pay for in seeds that
germinate, fertilisers that enrich the soil and fodder that
nourishes their livestock. This interest in the quality of
products is not confined to the co-operatively organised
consumers or buyers. Again and again, co-operative marketing
provides direct incentives to producers to seek higher returns
through improved qualities. The evolution and results of the Co-
operative marketing of butter, bacon and eggs in Denmark furnish
classic examples which bring students and inquirers from all over
the world and need no description here. A simple example from the
very beginning of co-operative promotion in China may be,
however, of interest. In the 1930s, when Dr. J.B. Tayler was
encouraging co-operative marketing among the farmers in the
region of Tientsin, he had hard work to persuade them not to try
to cheat the merchants by adding stones and gravel when baling
their cotton for sale. They reluctantly consented to send clean
bales as an experiment, but the higher prices the merchants paid
when they knew the weights were not falsified finally convinced
them. The appearance in recent years of non-trading consumers'
associations testing various types of commodity and deciding
which of a number of competing products is the `best buy' gives
evidence that the idea of value for money is by no means dead or
dormant in our contemporary `affluent' society.

This may be the appropriate moment to examine in the light of the
Principle of Economy the Rochdale Rule of cash payments, the
observance of which under present day conditions has been sharply
challenged, and indeed abandoned, in certain important branches
of co-operative retailing in some countries during the last
generation. With every respect for the 1930-1937 ICA Committee
Report, the system of cash payments is not a Principle in itself,
but it is one of the most effective applications which the
Rochdale Pioneers gave to the Principle of Economy. They
recognised that it was the simplest, safest and cheapest system
for both the co-operative and the member. For the society, it
simplifies accounting, tends to keep costs down, minimises risks,
avoids the accumulation of bad and doubtful debts and helps to
conserve capital for development. For the member, it exerts a
healthy influence on the domestic budget by reducing or avoiding
temptations to overspend and by reinforcing habits of thrift.
Credit trading by consumers' retail societies seems fundamentally
inconsistent with co-operative ideas of Economy. That does not
mean there is no place in contemporary co-operative economics for
consumer credit. There is, if only to enable wage-earners to
enjoy the rapid rise in their standards of comfort that technical
progress continually makes possible. There is also an appropriate
form of co-operation - the credit union - to provide it. It is,
however, the mixture of retailing with what is essentially
banking that is unsound from the standpoint of the Principle of
Economy, because it prevents the real efficiency of co-operative
merchandising from being clearly seen and judged.

It can be speciously argued, of course, that to grant credit is
necessary in order to attract and not repel custom; that credit
trading by increasing turnover tends to reduce the cost ratio;
and that, as in any case it is the prevailing custom of the trade
in dry goods and consumer durables, the co-operative movement
must concede to it or lose ground. This line of argument is
unacceptable for several reasons. If the Rochdale Pioneers had
been content to copy their competitors they would never have made
a success, not of cash trading alone, but of their society's
business. Nor would they have helped a single household to
liberate itself from debt. So far from doing as their competitors
do, consumers' co-operatives should constantly aim at offering
consumers something demonstrably better. Even in the field of
credit itself, consumers' co-operatives could and should, by
correlation with credit unions as in the United States, offer
their members credit at rates of interest almost ridiculously low
compared with those in ordinary instalment or hire-purchase
transactions. Above all, they should abstain from competitive
pressure on their members to contract credit obligations to such
an extent that they have too little income left, after meeting
their periodic repayments, to pay on the nail when a suitable
chance occurs to buy something for cash.

There is probably little room for disagreement about the
unsoundness of unregulated open credit, on the one hand, or the
legitimacy of credit, repayable in instalments, for the large
consumer durables such as furniture, kitchen equipment and
television sets, on the other. What is more open to dispute is
the provision of credit in the intermediate field of current
expenditure on dry-goods, particularly drapery, clothing,
household utensils and so on.

What is decisive in this connection is how much the standard of
living of the working classes has risen since the days of the
Rochdale Pioneers. For them, as for their original members, cash
payments were an indispensable safety measure. It may well be so
today in some of the less developed countries. Where co-operative
storekeeping is still in its pioneer stage and co-operative
education at a low standard, it would be advantageous to operate
a strict cash payments system to diminish the risk of failure.

This would be all the easier if credit unions were available. Co-
operative credit unions are spreading all over the world and can
be organised alongside consumers' stores. They have the great
advantage of encouraging saving by their membership as well as
imposing a discipline on their loan business. Thoughtless or
reckless borrowing is restrained because the purpose of every
loan has to be approved by the authorities of the union before
the member can draw any cash. A desirable separation of trading
from banking functions could also be achieved in countries of
advanced economic development by the introduction of a credit
union system.

A similar result can be obtained in countries like Great Britain
where the consumer co-operatives are supported by a Co-operative
Bank of national dimensions. In some British societies there is
an arrangement whereby, if a member buys on credit, it is the Co-
operative Bank and not the co-operative society which finances
the debt and receives the repayment. The society is thus able to
economise its capital (for which it should have a dozen better
uses than lending to members) and the system ought to become the
general rule throughout the country.

The argument that the consumers' co-operative must conform to
credit-trading competitors fails entirely to account for the
striking success of firms doing an enormous and expanding trade
for cash in, for example, ready-made clothes, with precisely the
public for which the consumers' societies should cater and whose
support it should have attracted and held from the beginning. Too
many concessions to credit trading, coupled with the absence of
a satisfactory co-operative alternative, signify not the need to
revise Rochdale Principles but rather what Fourier once called
`a lack of genius' on the part of contemporary co-operators.

In the period of relative tranquillity before the First World
War, the British and certain European Consumers' co-operative
Movements differed notably in the respective ways in which they
displayed their economic advantages. Whereas the British were
inclined to pursue a policy of high dividends on purchases even
if this entailed charging higher than market places, the
continentals tended to charge lower than market prices, even if
this meant lower dividends on purchases. In the disturbed
conditions which prevailed after the Second World War, purchasing
power shrank, prices rose, profit margins narrowed and dividends
dwindled. The cost of keeping record of members' purchases became
increasingly burdensome.

With the return of more settled conditions, the distributive
revolution brought new forms of competition, together with higher
wages and salaries and greater spending power. Lower dividends
were less powerful attractions to customers. When for a time it
was the fashion among retailers to give trading stamps to their
customers with the goods they bought, a number of co-operatives
joined in and worked their own forms of stamp scheme. The stamps
were saved by the customer (or member) who, having saved a given
quantity, could tender them for goods, obtain cash or have the
value credited to his or her share account. This system was given
a co-operative gloss by being called `dividend' stamps but all
that it had to do with dividend was that it replaced it. The
original and only genuine dividend was a share of a surplus or
profit, if one was made in an accounting period, but the stamps
were given before it was known whether there would be a surplus
or not. It was, in short, a bribe and a cost.

The disappearance or diminished importance of the dividend on
purchases has led some societies in Great Britain to seek other
means of emphasising the difference between their members and
those purchasers who are simply customers. Various schemes such
as special offers and discounts, the benefit of which is reserved
exclusively for members, have been introduced. In Switzerland for
many years past, consumer co-operatives have countered the
competition of private traders in the form of rebates or
discounts by offering members the choice of an immediate discount
at the time of purchase or waiting for the dividend at the end
of the business year. In Germany, the Dortmund Society books a
whole theatre or opera house for a performance reserved
exclusively for its members. In Canada a number of co-operatives
work on the `direct charge' system which enables them to
undersell their competitors. Yet there is still something to be
said for a dividend system, if there is a surplus, as evidence
of a co-operative superiority. Surely in these days of computers
it should be possible to restore a genuine dividend system based
on a cheap method of recording members' purchases. Social
dividends have also been advocated as substitutes for cash
dividends and correspond to some of the ways in which the ICA
Commission indicated that surplus can be employed consistently
with Principle. At the wholesale level Sweden and Switzerland
notably do without dividends to member societies and capitalise
all surpluses for purposes of development.

Returning from that digression we take up again the point made
in an earlier paragraph that the co-operative system permits
other motives than profit and gain through investment to play an
essential role in economic organisation. This is to be seen not
only in the trading practice of co-operative societies, but also
in the processes by which Co-operative Movements develop. Since
the primary objective of co-operatives of all kinds is to promote
the economy of their members, their effectiveness and efficiency
are judged by the services and other benefits rendered to their
members, not simply by their profitability as enterprises.
Similar considerations govern the expansion of co-operative
movements both horizontally and vertically. In most consumers'
co-operative movements, for example, may be seen emerging a kind
of normal order or scheme of priorities according to which new
services are initiated, based on the relative urgency of various
wants. Most consumers' co-operatives begin by distributing food
or, if not, food soon becomes their most important line of
business. Food is a primary want and, among foods, bread (or
rice) may take priority over all other foodstuffs when members'
incomes are too low to allow a very liberal diet. Bread,
groceries and provisions, meat, milk, vegetables and fruit,
cleaning materials and other daily household requisites,
including oil and hard fuel; footwear and clothing; drapery and
furniture - this is generally the order of priority which is, of
course, not absolute but liable to slight variations according
to circumstances, technical difficulties to be overcome and the
financial resources available.

This scheme of development is reflected in the relative
importance of the distributive turnover or productive output of
the different categories of goods, as well as in the time-order
in which ventures into new fields are made. The overwhelming
importance hitherto of foodstuffs in the business volume of
consumers' co-operative movements, almost without exception, is
thus accounted for. A modifying factor may be seen operating in
Sweden and some other countries where the policy of the consumer
co-operative movement has been influenced by the Swedish example.
In these countries, entry into production and to some extent
distribution may be conditioned by opportunities of rendering
service, not to the co-operative membership alone but to whole
community of consumers, by breaking into a market controlled by
a cartel or ring of suppliers and bringing about through
effective competition (lower prices, a superior product or both
together) a considerable fall in prices. The determining factor
is whether scope is given for competition by the excessive prices
the cartel forces the public to pay for the article or services
supplied.

The interaction between member and society which is fundamental
in co-operative economic organisation gives rise to another
noteworthy feature to which Albert Thomas, first Director of the
International Labour Office, called attention in a passage of his
report to the International Labour Conference of 1932. He wrote:
`The structure of the co-operative economic system, based as it
is on a very large number of small economic units which are like
antennae through which it can sense the requirements and
possibilities of every day life, has a sort of sensory apparatus
comparable to that of a living body. That apparatus does not
simply transmit information step by step to the central organs
which translate it in to reasoned actions. It even, up to a
certain point, permits automatic reactions, defensive or
compensatory reflexes, which prevent maladjustment and avoid
dangerous error. Thus, for example, the centralisation of
statistics, often on the basis of standardised book-keeping,
provides the great Co-operative federations with detailed
information and comprehensive surveys; and they can thus learn
lessons of which they can at once take advantage in order to
correct their methods, remedy omissions, prevent wastage, get rid
of unnecessary machinery, avoid maladjustment in management and
reduce excessive overhead charges'.

The sensory apparatus described by Albert Thomas works, of
course, in two directions. The experience of co-operative
organisations of the markets in which they operate is conveyed
back to their members and enlightens them in the conduct of their
own economic affairs. The most conspicuous examples come very
probably from the agricultural co-operative movements, many of
which not only transmit to their farmer-members new ideas on the
handling of stock or crops, but give cogent reasons for adopting
them and provide the material or financial means of carrying them
out. Only too often, and much more so before the rise of
agricultural co-operation, the typical farmer knows little or
nothing about the market for which his produce is ultimately
destined. It is screened from his view by the host of middlemen
to whom he directly sells, none of whom has any interest in
enlightening him.

What co-operation taught the Danish farmer about the British
market, to which his butter, bacon and eggs began to be exported
in the last quarter of the 19th century, made him ready to accept
and carry out revolutionary changes in cropping and treating
livestock, including the breeding of an entirely new type of pig
which yielded bacon conforming to British taste. Similar
enlightened is being spread today wherever co-operative marketing
is successful - in Africa among the growers of coffee, cocoa and
palm oil, in Asia and Oceania among copra producers - not only
in agriculture; in artisanal industry closer contact with the
market is weaning craftsmen away from traditional products and
designs to experiment with new things more attractive to the
present-day buyer. It is worthy of note that co-operation thereby
benefits consumes as well as the producers for whom it may have
been primarily intended.

The purpose of Albert Thomas in the passage already quoted was
to point out that the co-operative movement is by nature disposed
to economic planning. He wrote his report at the depth of the
depression in the 1930s when there was widespread concern to find
palliatives or remedies for the alternate booms and slumps of the
market economy and the continual lack of equilibrium between
demand and supply, needs and purchasing power, saving and
investment, which resulted in bankruptcy, insecurity and
unemployment for millions. Laisser faire as a policy was assumed
to be dead. The ideas of John Maynard Keynes reinforced the
inclination towards `managed' economies. Governments were more
and more expected, not only to rescue the casualties of economic
depression but also to find means of forestalling or averting
these crises. In contrast to the economic chaos of the West there
stood out the regulated economy of the USSR in which development
was promoted and the national product apportioned under the
control of a central planning authority. Albert Thomas's thesis
was that, in the co-operative movement, reasoned organisation
replaced the so-called `laws' of an individualistic economy of
which private profit supplied the motive power, and that its
basic principles demanded a policy of systematic planning. He
wanted the member-governments of the International Labour
Organisation to study the constitution and working methods of the
co-operative movement in order to learn how a planned economy
could take account of fundamental economic needs.

The member-governments might have learned more had the co-
operative movement been full value in practice for the bold
claims Albert Thomas put forward. But even if what he asserted
related more to the movement's potential than to its actual
performance, examples enough can be produced to show that co-
operation is an influence making for order and discipline, in
contrast to the Gadarene rushes after profit and flights away
from losses characteristic of the unregulated market economy. In
short, co-operation implies planning and the consistent
application of its Principle of Economy tends towards planning
on a steadily increasing scale. Taking first the demand side of
the market, we may note the consumers' co-operative whose members
accept to a greater or lesser extent the self-discipline demanded
by loyal and consistent purchasing from its stores and cease to
purchase indiscriminately in all kinds of shops. By doing so they
permit their society to estimate and forecast their recurrent
requirements of different commodities more narrowly than is
possible for a business with a fluctuating clientele.

The society tends to constitute an organised market the demands
of which are known. By so doing it fulfils an essential
requirements of a modern economy - an assured rather than a
speculative guide to production. Because of the federal structure
described in Chapter Two the same advantages are enjoyed by the
Wholesales which purchase and manufacture for the consumers'
societies. Their accumulating data enables them to establish
statistically normal rates of expansion, learn how to estimate
future needs with accuracy and lay their plans for new trading
departments and factories accordingly. In another sphere, the
societies can acquire, through the exchange of experience, a
stock of ideas and practical rules which they can apply almost
automatically to given situations. These account for the reflex
actions mentioned by Albert Thomas. Discipline is reinforced by
the auditing powers exercised in many countries by co-operative
unions. What has been aptly called `union discipline' has been
built up by generations of painstaking supervision and staff
training.

Passing over to the supply side of the market, we may again note
that order and discipline are prerequisites and also results of
successful agricultural co-operation. Producer co-operators
accept a parallel of self-discipline to that of consumer co-
operators when they cease to do their own selling and hand over
the disposal of their produce to a co-operative. It is commonly
the practice to reinforce this self-discipline by requiring the
producer-members formally to contract to supply to the co-
operative for processing and sale the whole of their output of
a given commodity, except the small quantity retained for their
own use at home or on the farm.

This is the well-known `binding rule' which gives the co-
operative command of bulk, maximises its bargaining power and
enables it to secure additional advantages under the general head
of orderly marketing. First, the commodity may be standardised,
uniformity of quality being attained by such means as payments
to members of a dairy society on the basis of the fat-content of
the milk they supply for butter-making. Second, where uniformity
is out of the question, the society often grades its members'
produce, thus enabling higher prices to be received for better
qualities instead of a low price for an undifferentiated
consignment. Third, there is the regulation of supplies to the
market. If the co-operative has adequate warehouse accommodation,
the farmers, instead of rushing to market their crops as soon as
harvested and so depressing prices against their own interest,
deliver them to their co-operative which stores and, if
necessary, processes them, releasing them to the market by
instalments spread over the whole crop-year. Prices are steadied
thereby, the fall at the beginning and the rise at the end of
each crop-year, as supplies grow short, being minimised. The
producer-member is paid, of course, a reasonable advance on
delivery of his crop and sometimes receives interim payments and
a final instalment when the trading results for the whole crop-
year are known. If there is an unsold surplus the society or the
federation to which it is affiliated would normally carry that
forward into the following year or longer and it may often help
to even out supplies if years of deficient harvests follow years
of abundance. The classic examples are, of course, the operations
of the famous grain-growers' elevator societies and their
federations - the pools - which handle and market the greater
part of Canada's wheat production.

Nor did Albert Thomas fail to point out that such orderly
marketing could be, and is, carried forward into the field of
inter-co-operative trade. `The planning system on which co-
operative activity is organised,' he told the International
Labour Conference, `is extended and completed by the endeavours
which are made to link up consumers' co-operative societies and
agricultural selling co-operative societies in a more or less
organised whole, thus ensuring that the former receive a uniform
and regular supply of goods and that the latter can count on a
steady market, the requirements of which can be foreseen.' This
thesis was reaffirmed 11 years later by a resolution of the Hot
Springs Conference which was the precursor of the present Food
and Agriculture Organisation of the United Nations.

Efforts to integrate the orderly marketing of the agricultural
co-operative movement with the orderly distribution of the
consumers' co-operative movement are constantly being made and
will continue to be made, for the obvious reason that no more
economical method of handling farm produce on its journey from
the land to the larder has yet been devised. Admittedly, the
practical and psychological difficulties in the way of its
realisation are stubborn and sometimes baffling. Yet the idea is
not Utopian. In respect, for example, of Danish butter it was
realised for a long time. In addition co-operative supplies of
pork products, sausages, delicatessen items and canned goods from
Denmark are imported into Britain by the Co-operative Wholesale
Society and subsequently retailed by its affiliated consumers'
societies.

A similar pattern can and must, with time and purposeful effort,
be worked out for a number of other food products now being
handled by producers' as well as consumers' co-operative
organisations, although their operations still wait to be
coordinated in unbroken chains of co-operatively controlled
processes. Parallel to these chains and complementary to them,
others must be constructed in order to bring the co-operative
products of the highly industrialised countries within the reach
of co-operators of regions beginning their modern economic
development.

These are the objectives towards which the economic planning of
the co-operative movement necessarily leads. Their attainment
depends on the growth of the Movement's economic power, first
through the increasing magnitude and strength of its several
branches and, second, through their closer and more effective
integration. The pace of the advance can be quickened by the
general adoption and enforcement by the directorates of all co-
operative trading organisations of a simple policy rule, namely
that given equality of prices and conditions, a co-operative
market or source of supply shall invariably be preferred. But
above all, those practical operations need to be guided and
inspired by a concept of co-operation as a whole derived from the
Principle of Unity considered in a previous chapter. With its aid
co-operators may yet come within sight of the consummation of the
application of their Principle of Economy, namely the
international organisation of exchange to which trade is no more
than the first step.

Co-operative economic organisation needs time in which to implant
itself and reveal all its inherent virtues. The movement is thus
exposed in more than one way to the risk of frustration. Its
dynamic power may decline through losing the vision of its
ultimate aims and ideals. Its short-term or adventitious economic
benefits, which are by-products, may be mistaken for its true
long-term objectives. The exaggerated importance frequently
attached to its dividend (patronage refund) system and the
debasement of this system into a custom-catching device is a
notable example of this danger. But time also reveals an even
greater danger in the tendency pointed out again and again by
George Russell, the great Irish Co-operator, for the antagonists
in any struggle to acquire each other's characteristics. If co-
operative movements have achieved success in imposing some of
their own standards on ordinary trade, they have themselves often
become commercialised in spirit. Co-operation may become
assimilated to the profit economy and so lose its power to reform
or correct a system which can (and often does) achieve its
purpose by producing not only wealth, but what John Ruskin called
`illth'.

Naturally, the full economic value of co-operative principles
only becomes evident in so far as co-operatives are technically
on an equal footing with profit enterprise. Yet to seek or
achieve technical parity is not of itself enough. If co-operation
is to conserve its dynamic power to recover it when temporarily
lost, the movement must go back for inspiration to its first
Principles and reinterpret them in a manner opposite to human
society in its present situation. For it is only through
Association that men and women can master the spirit of lucre and
relegate it to its proper place in human affairs.

Though wealth in the narrower, material sense of the term and the
power it gives are objectives of co-operative Economy, it is not
because of any value the Movement may attach to them as ends in
themselves, but because their proper use promotes higher
standards of human life to which co-operation's other Principles
also contribute. The economic test is not the only one which Co-
operation has to pass. It will be ultimately judged by its
contributions to the achievement of satisfaction and security for
the exploited, deprived and depressed peoples of the world.