Part II -- Consideration of Co-operative Principles, Section 2 (1966)

     This document has been made available in electronic
     format by the International Co-operative Alliance (ICA)  
     (Source: Report of the 23rd ICA Congress at Vienna,
          5-8 September, 1966, pp. 160-180)

                         September, 1986

          Part II. Consideration of Co-operative Principles

4.   Disposal of Surplus (Savings)

     The group of problems to be discussed under the above
heading is complementary to that considered in the preceding
section. After the question of fair remuneration of capital in
relation to the other factors of production has been dealt with,
there remain the problems involved in the equitable sharing among
the members of a co-operative of any surplus or saving resulting
from its activities. There are two main questions for solution:
first, to find the proper balance between the interests of the
individual members and those of the society as a whole; second,
to do justice as between one individual member and another. The
discussion of these questions has been much confused in the past
through misconceptions springing from analogies mistakenly drawn
between the financial benefits derived by members from their co-
operative society and the profits distributed by joint-stock
companies to the holders of their ordinary (equity) shares and,
as a consequence, through the use of ambiguous terms. The
Commission therefore feels obliged, at the risk of traversing
what is to many very familiar ground, to clear the air by
restating certain fundamentals.

     The economic benefits conferred by co-operative societies
on their members are of various kinds and become available
according to circumstances in a variety of ways. They may take
the form of money, goods or services. They may be immediate,
short-term or long-term. Some may be enjoyed collectively; others
can only be enjoyed individually. In deciding in what forms and
in what proportions or amounts the surplus or savings shall be
allocated or divided, the members as a body have, and ought to
have, absolute discretion.

    In reaching their decisions, however, there are two sets of
considerations which, if they hope to prosper, they dare not
neglect. On the one hand, there are considerations of business
prudence; on the other considerations of equity. If they neglect
the former, they will run into economic and financial
difficulties. If they neglect the latter, they will provoke
resentment and disunity in their society. In some countries a
conspicuous economic benefit of a prosperous co-operative is a
money payment or patronage refund it makes to its members
periodically after its accounts have been balanced, audited and
approved, along with the proposed allocations and divisions, by
its general meeting. These payments are frequently called
`dividend', and this is the first occasion of confusion, because
the same term is used in company practice to denote payments to
shareholders from profits. From this confusion arises another,
namely, that the payment of a money dividend is an object, even
the principal object, of a co-operative society, just as it is
of a company. Despite all that has been done in the past to
educate the public and the mass of co-operative members, to say
nothing of politicians and tax-collectors, to understand that the
sums distributed by co-operatives are yielded by a different type
of economic organisation and result from a different series of
transactions from company profits, the errors persist, first,
that the principle of `dividend on transactions' implies an
obligation on a co-operative to make a periodical distribution
of its earnings, and second, that the rate of dividend is the
most reliable index of its efficiency.

     The fallacy is exploded by three well-known facts. The first
is that co-operative societies can - and many agricultural supply
societies, for example, do - adopt a policy of allowing their
members to purchase at prices so near to cost that no margin
remains large enough to be worth distributing, especially if the
second and third facts play a role of any importance. The second
fact is that business prudence sometimes counsels a society to
place to reserve or capitalise the whole or greater part of its
net earnings, notably when its own position is in any degree
difficult or the general economic outlook is uncertain or if it
is contemplating a new departure requiring all its financial
resources. The capitalisation of surpluses, especially by unions
and federations, has always been a powerful factor in co-
operative commercial and industrial development. The third fact 
is that societies often devote a portion of their net surplus or
savings to the provision of services for the common enjoyment of
their members, as being more useful to them than individuals. The
overriding consideration throughout is that whatever is to be
done with a society's net surplus or savings is determined by
democratic decision by the members according to their judgement
of what is just and expedient. Moreover, the amount which is
subject to their decision is not profit in the ordinary
commercial sense.

     Here the Commission would recall that the questions whether
to divide or not, and, if there is division, what shall be the
method, have been constantly present to the minds of Co-operators
throughout the Movement's history. Theoretically, in the pre-
Rochdale Co-operative Movement of Great Britain, the net savings
or surplus of co-operative societies were to be kept indivisible
and added to the societies' capital in order to assist their
development into self-supporting communities. Practically,
division of net surplus amongst the members was widespread
without any uniformity of method. Equal division, division
according to capital contributions, division according to
purchases were all practised. The Rochdale Pioneers, when faced
by the same question, decided in the light of their experiences
and after much reflection and discussion, that there should be
division, for the cogent reason that in order to gain the support
of any considerable number of members, their society must offer
them some immediate or short-term advantages. The British wage-
earners' economic position in the "hungry" 1840s needed relief
there and then. It would not permit them to make sacrifices for
a distant community ideal. The Pioneers' decisions to divide and
to divide in proportion to purchases were really dependent on a
previous decision as to price policy. They chose to retail goods
at current market prices, at this would administratively be
easier and simpler than sale at cost prices - costs and expenses
were difficult or impossible to forecast accurately - and return
to the members periodically in proportion to their purchases what
they had paid over the counter in excess of the cost of procuring
the goods they bought. The experience of over a century proved
the practical wisdom of their decision, but it is significant
that those who adopted Rochdale methods in several other
countries tended to modify them, once again in the direction of
conferring an immediate benefit on the member, by adopting an
"active" price policy of slightly under-selling the market with
the further consequence of lower rates of dividend on purchases.

    Before passing to the discussion of these questions, it
should be noted that a number of customs and conventions have
grown up around the dividend system and these have more or less
profoundly modified its practical application. One is a tendency
to stabilise or even standardise the rate of dividend. On the one
hand, the members in time come to reckon with a constant rate for
the purpose of their personal or household economy, the managers
tend to budget for a constant rate and include it in their
calculation of prices, thus in effect turning the system upside
down. In either case, the correspondence between the dividend
rate and the trading results of a given balancing period may be
broken, and the danger arises that a society, in order to
maintain the regular rate, will pay a dividend in excess of its
earnings and draw on reserves or development funds in order to
do so. This temptation increases with the pressure of
competition, but it is one which should at all times be
strenuously resisted in the interests of sound management.

     Co-operative societies have also to face the reactions of
their competitors to the power of dividend to attract custom and
buttress the loyalty of members to the co-operative store,
whether they are purchasing consumption or production goods. This
reaction takes the obvious forms of discounts, rebates, premiums,
etc., which, if they represent cash or its equivalent, may appear
more advantageous than a dividend for which the member must wait
until the year's or half-year's end. Not seldom co-operatives
have felt obliged to make some concession to offset these
inducements, as, for example, by giving their members the choice
of receiving discount at the time of purchasing or waiting for
the dividend ultimately declared. No breach of principle is
apparent here, if the rate of discount does not exceed the rate
of dividend or patronage refund.

     The Commission took note of the tendency for the role and
importance of dividend in the economy of Co-operation to change
with altered economic and social conditions, particularly in the
countries of advanced industrial development. In these countries
today, where competition is fierce, dividend rates display a
downward trend, the combined result of diminishing trade margins
in the branches in which co-operatives traditionally engage and
of rising costs due to labour's increasing demands and to
inflationary factors. The importance of dividend also declines
in the estimation of the membership as increased earnings, full
employment and state welfare services bring about greater
security and higher standards of comfort, and with that, the
power of dividend to induce constant and `loyal' purchasing over
the whole range of commodities societies supply. Recent
researches tend to confirm that the rate of dividend now
exercises less influence on purchases of consumer goods, compared
with their quality and presentation. The role of dividend in the
self-financing of co-operatives is also liable to change. Members
leave their dividends to accumulate in their capital accounts
with their societies to a lesser extent than formerly, unless the
societies adopt special measures to promote self-financing in new
ways, designed to bring in additional cmpital for special new
ventures or to enable the society to retain part of members'
dividends as capital for long period, e.g. as int he family
savings account system of the Swedish Consumers' Co-operative.
Parallel changes are to be seen in the social, educational and
recreational services traditionally provided by co-operatives out
of their net earnings, as they are replaced by more comprehensive
and effective state welfare and educational systems. This does
not necessarily mean that the advantages of collective over
individual expenditure are ceasing to be significant in co-
operative economy but that the purposes for which allocations are
made must change with the times, as new habits and modes of
living open up fresh possibilities, notably in the cultural
field. Nevertheless, all these differences imply no more than
changes in the pattern of disposal of surplus; the elements
remain unchanged. They still are: provision for the society's
stability and development; provision for collective services;
dividend to members according to transactions. In those parts of
the globe where free market economies prevail and commodities are
bought and sold by co-operatives to and for their members at
market prices or prices varying according to market conditions,
savings will be made and accounts will show surpluses, if
societies are successful. Under these conditions there seems no
need to depart from the principle, already observed for over a
century as the most equitable and convenient, of distribution on
the basis of transactions.

5.   Politics and Religion
     The topics discussed in this section may appear at first
sight to lie to a large extent on the fringe of the Co-operative
Movement's proper concerns. The Movement's action has hitherto
been, and, many believe, must always be, centred in the economic
and educational spheres. For the better performance of these
tasks, prudent co-operative leadership has constantly tried, as
far as possible, to concentrate the attention of the Movement on
them and avoid the risks of disunity and dissipation of energy
incurred when issues of no obvious relevance, on which people are
bound sooner or later to disagree, are imported into the
consideration of Co-operative affairs. The strong feeling that
this treacherous ground must be avoided at all costs found
expression in the formula "Political and Religious Neutrality"
employed in the Report adopted by the ICA Congress of 1937. The
Report not only gives Neutrality the authority of a principle,
but also imparts a wider significance to the term by linking it
with race and nationality, as well as politics and religion. In
the present Report, even where race and nationality are not
specifically mentioned, they may be assumed to be covered by
politics, for both are capable of erupting into political
conflict in more than one region of the globe.

     It is the term `Neutrality' itself which is increasingly
called in question by Co-operators more or less everywhere. It
was never a good term, because it carried overtones of passivity
and indifference which did not harmonise with the facts or the
practice of Co-operative Organisations which were not, and had
no intention of being, indifferent or inactive where the
interests of the Movement were involved. The term is to-day
almost completely misleading and its use has been abandoned in
favour of `independence' by many Co-operators. But to reject the
term is not necessarily to abandon all the underlying ideas, and
the Commission will attempt in the paragraphs which follow to
bring out, as far as possible in a positive manner, certain
considerations of significance for the formulation of co-
operative policy in regard to politics and religion under
contemporary conditions.

     To begin with, there are considerations which may be called
internal, because they concern the relations of a co-operative
with its members. They have already been touched upon in this
Report under the head of Membership. There should be no
discrimination either among applicants for membership or among
actual members, on religious or political grounds. No one should
be obliged to subscribe to any doctrinal declaration. This leaves
the member entirely free to hold whatever belief or opinion he
chooses or to adhere to any religious or political organisation
which attracts his sympathy and loyalty. On its side, the society
will not compromise its freedom to carry out its proper co-
operative tasks through subservience to any political party or
religious organisation and will abstain from taking up attitudes
on purely party-political or religious issues. Such a policy
would not appear to involve any great formal difficulties in its

     No firm line of demarcation can be drawn between internal
and external considerations. They merge into one another. The
external considerations are obviously those which spring from the
relations of the co-operative unit, or the Co-operative Movement
as a whole with the external social and political system.
Economic interests and doctrines play an important, often a
dominating, role in the shaping of political policy and the
choice of its objectives. Co-operation, as a movement with an
economic doctrine of its own and representing well-defined
economic interests, cannot avoid involvement in affairs of
government, which, whether they are or are not the subject of
party conflict, are in their nature political. The action
developed by the International Co-operative Alliance and a large
number of its affiliated Organisations to promote the greater
enlightenment of consumers and more effective protection of their
interests include efforts to influence the legislative and
administrative measures of governments, as well as the opinions,
attitudes and policies of the national Co-operative Movements.
Or again, it is inconceivable that at a period when the
productivity and prosperity of agriculture are objects of such
greater concern to governments, agricultural co-operative
Movements should deny themselves the privilege, even if they do
not regard it as a duty, of expressing the views of their
members, giving government the benefit of their experience when
it is considering farming policy and rural welfare, warning it
against mistakes and complaining if the results are

     Much inevitably depends on the manner and methods by which
the Co-operative Movement seeks to intervene in a given political
situation. On the one hand, Co-operative Organisations need to
choose the methods which promise to be most effective. These
range from private representations to government departments and
deputations to Ministers to lobbying in parliament, agitation
among the public or alliances, temporary or permanent, with
political parties. On the other hand, they have to consider which
methods will secure the maximum of consent and support among
their members and entail the minimum risk of division. Those co-
operative organisations are not necessarily the most powerful or
influential which take part in election campaigns and seek
representation in parliament. Those which are content to work on
the administrative level and have earned the confidence of
government because of the wisdom and objectivity of their advice,
may play an even greater role in shaping policy and determining
final decisions. From the point of view of keeping the members'
loyalty and support, those organisations which adopt a consistent
policy of non-partisanship, that is to say, independence of party
and entanglements and intervention based exclusively on co-
operative interests and co-operative principles, are obviously
on safer ground. The overriding consideration is that any
weakening of a co-operative's unity impairs its power to act
effectively, not merely in the political field, but in all the
other fields as well. Yet  in these days, it is not always safe
to abstain from taking up attitudes or engaging in action on
political issues which have any bearing on the Movement's
interests or prospects. To declare neutrality, as has been well
said, is to express a political point of view in any case. It is
inconsistent with the aims and spirit of the Co-operative
Movement that its leaders and members will endeavour to act, in
political as in other matters, so as to promote unity and reduce
conflict by seeking at all times the highest common measure of

     This consideration is of the utmost importance if the Co-
operative Movement is to make its most effective contribution to
the solution of those great human problems, which although they
cannot be resolved without governmental and inter-governmental
action of more than one kind, transcend politics and even
religions. Great world issues - such as the avoidance of war,
disarmament and the consolidation of the bases of peace through
the extension of international collaboration in every sphere; the
deliverance of the under-privileged half of mankind from hunger,
want, squalor and ignorance: the assertion and maintenance of
human rights to individual freedom, equal citizenship and
personal development - are not questions on which Co-operators
can profess neutrality or indifference. The Movement's philosophy
and its practice, the whole trend of its growth and extension,
are carrying it onward towards an era of international
integration of which the International Co-operative Alliance is
the precursor and, in a sense, the progenitor.

     The present generation of Co-operators, moving about the
world to a greater extent than the previous one, is learning from
its own experience that co-operative brotherhood transcends all
limitations. It is of the utmost significance that in congress
after congress of the International Co-operative Alliance, the
delegations of the national movements, whatever their social,
economic or political background, will make every possible
concession and strain every resource of language and phraseology
in order to secure unanimous agreement on resolutions about
international peace. In this way the practice of the Alliance
illustrates the statement in its rules that Co-operation "is
neutral ground on which people holding the most varied opinions
and professing the most diverse creeds may meet and act in
common". Just as peace is not simply the absence or cessation of
war, so the attitude of Co-operators to political questions is
not simply the negative one of abstention, but the positive
reflection of their resolve to meet and work together on common

     It will be clear from the foregoing that the Commission
feels that it cannot follow the Report of 1937 in giving the same
absolute authority to Neutrality as a principle. Neutrality in
certain circumstances is a right and proper policy. There should
be freedom at all levels of the co-operative structure for the
individual members, primary societies, secondary organisations
and international institutions, to take to political questions
the attitudes which are necessary or most appropriate to their
circumstances at any given time or place. This freedom includes
independence of alliances or engagements which may impair the
performance of their basic task in the economic and educational
fields. It is also subject to the primary need of promoting at
all levels that unity amongst co-operators which is indispensable
to the successful fulfillment of the Movement's mission.

6.   Business Practices

     Under this heading the Commission considered two important
groups of problems which, if not of equal interest to all types
of co-operative association, are of special concern to all those
engaged in trade, whether in consumers' or producers' interests.

     In respect of both the Rochdale Pioneers made strict rules
for themselves. They decided to practice cash payments in buying
as well as selling. They also decided to deal in goods of the
highest standards of purity, and, when selling them, to give full
weight and measure. The Report of 1937, while it made no
reference to the second rule, declared that the first was a
principle to be closely adhered to for both financial and moral
reasons. In the judgement of the Commission these rules are
applications to particular problems, within a limited field, of
considerations which need under present-day conditions to receive
a broader formulation and are capable of considerably wider
application. Although neither has the universal validity of a
principle, they are nevertheless so important as guides to
business policy as to require discussion in this report.

     To begin with, it should be borne in mind that the term
`cash trading' has never meant simply that goods have to be paid
for at the moment they are handed over the counter or delivered
at store or domicile. General trade practice has always permitted
a little latitude. A few days' delay in payment is not held to
conflict with the cash rule especially if payments are
regularised so as to be conterminous with the receipt of wages
or salaries, weekly, fortnightly or monthly. And, if consumers'
co-operatives find themselves obliged to conform more or less to
what is considered sound practice in retail trade in general, the
same is also true, say, of agricultural marketing or industrial
producers societies, which allow their customers whatever trade
terms are usual in a given market. Cash trading and its
alternative, credit trading, in one form or another, require to
be considered together in the light of what common sense
indicates as financially sound. Despite the strictness of the
Rochdale rule, it is not possible to say that either is at all
times entirely good or entirely bad. Each stands or falls in
relation to the whole set of circumstances in which it is

     The Rochdale Pioneers had good reasons for adopting their
rule of cash payment. Experience of earlier co-operative
enterprise had shown them that unregulated, indiscriminate credit
to members could be a mortal disease to young co-operatives. So
long as their range of commodities was virtually limited to
foodstuffs of daily consumption, in which the turnover was rapid,
they could well dispense with credit. Apart from safeguarding the
liquidity and financial stability of their society, they desired
to help their members to emancipate themselves from debt, mainly
to shopkeepers. When wages are low and employment irregular, the
retailer is the working-class consumer's nearest source of credit
after his savings are exhausted. The position of the small
agriculturist living on subsistence level or even below, is very
similar and leads to similar results chief among them a debt-
servitude which may be lifelong. The remedy, though applied in
different ways and through different forms of organisation, is
fundamentally the same, a financial discipline which encourages
and assists thrift, while making unregulated and unsecured credit
difficult or impossible. People who consciously suffered under
a burden of debt could be roused to make the effort involved in
changing their buying habits, if liberation were brought within
their reach by co-operative enterprise.

     It would be different with a later generation, born and
brought up under more comfortable and easy conditions. Higher
earnings, greater spending power, greater family possessions in
savings and real property, rising standards of comfort, a rise
in the social scale, a widening range of goods and services on
which money could be spent - all played their part in creating
among the public a mentality easily accessible to the suggestion
of the salesman to buy now and pay later, dividing the total due
into periodic installments within the customer's earning capacity.
Under these conditions co-operative societies, whether consumers'
co-operatives extending their assortment of commodities from food
to clothing, ironmongery and furniture, or agricultural societies
extending their business into, say, machinery, were forced to
face the fact that they could not secure or retain their members'
custom without providing facilities for payment equal to those
offered by their competitors. The traditional rules were breached
and the breaches were widened. Even the rule in the agricultural
co-operative movement of granting credit for production rather
than for consumption was no longer applicable in those newly
developing countries in which the cultivator had to receive
credit in order to subsist and work until his crops were
harvested and marketed. The private merchants and producers made
him advances on the security of his growing crop; unless a co-
operative could do the same it was hardly in business at all.

    The crux of the question is how far, if at all, the grant of
credit should be combined with the purchase or sale of
commodities. Credit is a service which entails costs like any
other. Members of a co-operative society purchasing on credit
receive a service which, unless a special charge is made, they
obtain at the expense of the cash-paying member. This is
inequitable, and the costs may also be difficult to calculate
when they are incurred in innumerable tiny transactions. The
general practice of consumers' co-operatives is, therefore, to
require purchases of good and small household articles to be made
for cash, all the more because the commodities are, for all
practical purposes, consumed immediately. For larger and more
durable articles it is possible and usual to make special
arrangements, including the payment of an appropriate interest
to cover extra costs and risks.

     Here again, the question of combining credit with trade
arises in another form. Are members of the sales staff competent
to judge credit-worthiness and allow credit? The answer must be:
not by any means always, unless they undergo special training.
The alternative is set up a special credit union or credit
department, operating alongside of the selling departments, to
take the responsibility of extending credit, and so enabling the
trading departments to work to all intents and purposes on a cash
basis. It would seem that unless special care is taken to
separate credit from trade, societies are li_ble to incur costs
of which they may be for a long time unaware. Societies are
naturally anxious to increase their volume of trade, but an
increase obtained by extending credit at too high a cost cannot
be regarded as sound business. A further factor is the heavy
drain credit, when it is extended for six or eight months, may
make on the capital resources of an agricultural trading society.
The capital employed for members' credit is not available to the
society for its development. It is inevitable therefore that,
where no co-operative credit organisation already exists, co-
operators think of creating one especially in order to relieve
the burden on the trading societies.

     When the problem of credit is considered from the standpoint
of the members, the outstanding fact is that they are exposed all
the time to the blandishments of sales people of all types,
offering all kinds of commodities on what are called `easy terms'
which may turn out to be impossibly hard. The evil results of
yielding to the temptation to overspend and the usurious
practices of many credit-selling enterprises are notorious and
have been the subject of preventive and restrictive legislation
in a number of countries. The problems of Co-operatives which
desire to avoid placing themselves and their members at a
disadvantage by not providing credit facilities is to provide
credit on fair terms for them without joining in the competition
to induce them to spend more than prudent household or farm
management would permit at any given time. It may be plausibly
argued that, with managed economies less liable to booms and
slumps, and with full employment, the practice of splitting large
items of expenditure, such as furnishing a home, into monthly
installments related to the buyer's present and prospective
income, is a much less risky practice than it was, both for the
consumer and a co-operative society. It is even argued that such
a practice is justified in order that consumers may enjoy the
rapid rise in the standard of comfort which modern technical and
economic progress has made possible. Nevertheless the fact
remains that the system of cash payments has its economic merits
and advantages for both co-operators and their societies and
that, at times, it is a mistake to forfeit them for the sake of
the convenience of credit buying. Co-operatives have a
responsibility towards themselves and their members to decide
carefully when, and in what manner, it would be permissible to
rely on credit, especially in regard to articles of consumption.

     The important thing is to hold the balance fairly and, for
co-operative societies especially, to look at the question of
cash or credit policy, not only from the standpoint of their own
business advantage, but also from the standpoint of the true
economic and moral interests, short-term and long-term, of their
members. Moreover, societies will be failing in their educational
duty if they do not take pains to instruct their members in the
issues involved, so that they make intelligent decisions which
will later justify themselves by their consequences, in terms of
both co-operation and good household or farm management.

     The reasons why the Rochdale Pioneers found it necessary to
emphasise their determination to sell goods which really were
what they professed to be and not to cheat in weighing and
measuring are well-enough known to economic and social
historians. There were adulteration of food and other
malpractices common in distribution business int he first half
of the 19th century in Europe, and by no means unknown to our own
time. But the idea underlying the Rochdale rule has to be
expressed in a much broader context today and in the future. It
is that co-operative institutions, in all their activities
especially where they have to deal with the general public,
should be characterised by a high sense of moral and social
rectitude. When there is scarcely any branch of commercial
activity in which co-operatives of one type or another may not
now be found, co-operative institutions should be able to justify
their existence, not only by the advantages they yield to their
members, but also by their sense of responsibility and their high
standards of probity in all that they undertake. The temptation
to copy the doubtful practices of competitors should be resisted,
even when societies appear to suffer financially because of them.
Adulteration, said one 19th century publicists, was an aspect of
competition. It is to the honour of the Rochdale Pioneers that
they began to shift the area of competition from fraud and
adulteration to purity and good quality, some years before the
state intervened to set minimum standards and to punish those who
failed to observe them. More than one co-operator, versed in the
economic and social problems of the newly-developing regions, has
emphasised that a similar role could be played by the Co-
operative Movement in countries where the government has not yet
been able to deal effectively with adulteration. Just as consumer
co-operatives can set standards of purity in foodstuffs, so it
is possible for agricultural societies to counteract dishonest
trading by supplying farmers with goods and chemical fertilisers
of good quality.

     The conferences on the protection and enlightenment of
consumers, convened during the past eight years by the
International Co-operative Alliance, have given plenty of
evidence that governments cannot be relied upon always to give
adequate protection to consumers or even effectively to enforce
their own legislation. The rise of consumers' secretariat is
proof of consumers' suspicion of and discontent with the manner
in which they are sometimes treated by the manufacturers and
sellers of new products or old products, made or preserved by new
processes, which do not justify in use the claims made on their
packages or by those who advertise or sell them. The relatively
slow processes of protective legislation mean that it nearly
always lags considerably behind the inventiveness of
manufacturers and technical innovators in making new marketable
products. There is therefore still need of an organisation like
the Co-operative Movement which can, not only agitate and
protest, but supply economically practicable alternative products
which are genuine and reliable. No less than the Rochdale
Pioneers, the Movement today is capable of shifting the ground
of the competitive struggle and of leading trade into a newly and
socially reputable paths. But if it is to do so, the ethics of
co-operative business  must be invariably high, higher and never
lower than the law requires, and publicly known to be so.

7.   Education
     It is no mere coincidence that so many eminent pioneers and
leaders of Co-operation have been also great popular educators.
The effort to reshape the economic system on the basis of Co-
operative principles requires a different discipline from those
of either individual or governmental enterprises. Co-operation
as a form of mutual aid appeals to other motives than man's
selfish or self-regarding impulses or obedience to duly-
constituted authority. Collective self-discipline is not a wild
or self-propagating but a cultivated growth. Co-operation
requires of those who would practise it effectively the
acceptance of new ideas, new standards of conduct, new habits of
thought and behaviour, based on the superior values of co-
operative association. No co-operative institution, therefore,
can be indifferent, in its own interest and for its own survival,
to the need for educating its members in appropriate ways.

     For the purposes of Co-operation, however, education needs
to be defined in a very broad sense which includes academic
education of more than one kind but much besides. It includes
both what people learn and how they learn it. Every phase of
experience, which adds to people's knowledge, develops their
faculties and skill, widens their outlook, trains them to work
harmoniously and effectively with their fellows and inspires them
to fulfil their responsibilities as men or women and citizens,
can have educational significance for Co-operation. Less and less
in the contemporary world can education be limited to what is
learnt in schools and colleges at special periods of people's
lives. The Co-operative concept is of education as a life-long

     All persons engaged in Co-operation need to participate in
this process of education and re-education. For the present
discussion they can be divided into three groups. There are,
first, the members, those in whose interests co-operatives are
established and who, because of their democratic constitution,
collectively exercise supreme authority over them. There are, in
the second place, the office-holders, whether they are members'
elected representatives or professionals employed by the co-
operatives. The education which both these groups require
consists mainly of knowledge of technical skill, and a training
and behaviour. The knowledge must be as accurate, as systematic
and as up to date as they have time and capacity to absorb. It
will include not only knowledge of the special forms of co-
operation in which they are engaged but also knowledge of the
economic and social environment in which their societies operate.

     In respect of the elected officers it will include a great
deal of business knowledge; in respect of the professional
employees, it will include all that will make them at least as
competent as those engaged on the corresponding levels of the
private and public sectors of economy. The employees will also
need the best available training in the appropriate techniques,
that is obvious. It is not so obvious and therefore needs
emphasis, that the democratic processes of co-operation need
technical skill quite as much as the economic, and that the
members and their representatives need to be trained to use these
processes skilfully and effectively to their society's advantage.
Without drawing hard and fast lines, it may be said that the
education of the members forms part of adult education and is
carried on today in a decentralised manner by methods of
discussion and various kinds of group work, whereas the education
of employees and officials for careers in the Co-operative
Movement is carried on in technical training institutions and
universities. The establishment by national co-operative
organisations of central co-operative colleges and training
schools is today, it is gratifying to note, becoming normal. The
number of universities with special institutes or departments for
co-operative studies and research is also on the increase.

     The third group consists of people who are potentially,
rather than actually co-operators - the greater public still
outside the Movement's membership. More and more, with the
passage of time, the Co-operative Movement will be obliged, if
it is to make headway, to keep the public better informed than
in the past about its aims, its organisation and methods, its
achievements and its plans for the future. Further, when it has
a point of view justified by its own experience, which needs to
be put in the interests of the whole body of consumers or
producers on an issue of public policy, it should speak out with
clarity and force. The battle for the acceptance of co-operative
ideas has to be fought in the intellectual, as well as the
economic field.

     In view of the Commission, education of appropriate kinds
for the different groups of persons who make up all but the very
simplest of co-operative societies is a necessary responsibility
of co-operative institutions. It by no means follows that they
all have to provide every kind of education they require. The
expansion of national systems of public instruction can and will
take some of co-operators' educational burdens off their
shoulders. Nevertheless, it will not relieve the Co-operative
Movement of the educational responsibility it alone can discharge
of educating people in the ideals of co-operation and the proper
methods of applying its principles in given circumstances. it
cannot devolve this function on any other institution. Of course,
the many thousands of small co-operative societies in remote
neighbourhoods have few resources for educational work. It is,
therefore, the duty of the secondary organisations, more
particularly the unions and federations which undertake
promotional and supervisory functions, to provide all kinds of
assistance - publications and audio-visual aids as well as
technical guidance - which will ensure that there is in every
locality a nucleus of alert, reasonably well-informed co-
operators with an outlook extending beyond the area of their
primary society.

     The Commission would emphasise the fact, of which co-
operative educationist have become increasingly aware in recent
years, that the movement's educational standards must be
constantly rising if they are to match those of the outside
world. The structural changes which the Movement in many
countries is now being obliged to make, with all the
concentration and construction of larger-scale operating units
they entail, demand at the highest level personnel with
experience in and training for management and administration
equal to the best employed elsewhere. This problem of education
is plainly insoluble apart from problems of recruitment,
remuneration and promotion, but its emergence is evidence that
the time has come, if it is not overdue, when the Co-operative
Movement has to regard its educational activity much more
seriously than it has often done in the past. It should define
its educational problems in much broader and more comprehensive
terms and provide in its budget sufficient funds for a well-
planned educational programme.

     As one example, the Commission would refer to the idea of
the co-operation of co-operative organisations discussed in a
latter passage of this report. More and more this co-operation
will have to be organised and carried on across national
frontiers and from continent to continent. It is a fundamental
task of the International Co-operative Alliance to promote and
assist its extension, while serving itself as an instrument of
collaboration for an increasing number of purposes. It should be
self-evident that training for this kind of international co-
operation is something which will inevitably outrun the capacity
of the national co-operative schools to provide. Training for
international co-operation must be established on an
international basis. The Commission would therefore point out
that the idea of setting up, under the auspices of the
International Co-operative Alliance  and in close association
with its Secretariat, a co-operative education centre and
training institute, is already an old project of which the
Authorities of the Alliance have more than once signified their
approval. Such an institute, with an international staff
recruited from the most eminent co-operative educators of the
world, is needed to produce leaders capable of spearheading the
accelerated development of co-operation on the international
level now within the Movement's reach. The time has gone by for
small beginnings. The Alliance's resources are too small to
permit it to undertake this task alone. The national
institutions, especially those powerful organisations now
operating in the field of trade and finance, should joint
together and come to its assistance, not least in the interests
of their own future development.

     The Commission has no hesitation in accepting Education as
a Principle of Co-operation - as the principle, in fact, which
makes possible the effective observance and application of the
rest. For the Principles of Co-operation are more than verbal
formulae, more than articles in a rule book, to be literally
interpreted. In the last analysis the Principles embody the
spirit of Co-operation, which has to be awakened and renewed in
every fresh generation that takes over the work of the Movement
from its predecessors. That awakening and renewal depend, more
than anything, upon the care and assiduity with which each
generation keeps the torch of education aflame.