Joint Project on Participatory Democracy

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This document has been made available in electronic format
     by the International Co-operative Alliance ICA
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                      January 1996


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        Joint Project on Participatory Democracy
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by Masayuki Yamagishi, Lou Hammond Ketilson, Per-Olof Jonsson, Iain
Macdonald, Loris Ferini*


Background and Focus

I remember being at the ICA Stockholm Congress in 1988 and hearing Chairman
Marcus talk about basic values. Two of the four key words in his proposal
struck me: 'democracy' and 'participation'. They started me thinking. I was
also reminded of Dr Laidlaw's report for the ICA Moscow Congress in 1980,
in which he warned of an ideological crisis in the movement.

Those words - democracy and participation - would not go away. They began
burrowing deep into my mind, like seeds taking root. Jack Craig, in Canada,
and Per-Olof Jonsson, in Sweden, watered those seeds. The support of Ivano
Barberini in Italy, Graham Melmoth in the UK and Roland Svensson in Sweden
kept the plants (democracy and participation) growing.

The project came into focus in 1992, at the ICA Tokyo Congress where Sven
Ake Book proposed five basic values. Our project settled on the second
value: participatory democracy.

Historically, co-ops have fulfilled the socioeconomic needs inherent in
their relationship with society, and they have enjoyed success in many
countries. But expanding business has intensified competition with private
sector companies, pushing co-op management to focus even more narrowly on
competition. This bias towards economic activities tends to reduce the
differences between co-ops and private corporations and, hence dilute the
character of co-ops as a social entity. Co-ops have not been using
participatory democracy well enough to cultivate their human resources.
This ignores the co-operative identity, thus causing an identity crisis.
That is why we chose to emphasise this key concept: participatory
democracy.

The five countries in this study: Japan, the United Kingdom, Italy, Canada
and Sweden, are not the only ones with successful consumer co-operatives
nor, for that matter, the most unique. Our study is not intended to be the
end of the road ... rather the early stages of a journey ... to learn more
about member participation in co-operatives and to share experiences with
one another.

The title of our book, Making Membership Meaningful, is a simple way to
summarise what these five sets of organisations have in common. In their
own ways the Directors and managers accept the fact that co-operatives are
both business organisations and associations of people. They have developed
programs that members find meaningful in the 1990s and their co-operative
uniqueness shows. It appears that the good business practices of being
efficient and effective are enhanced by involving members and making
membership meaningful!

The co-operatives studied in these five countries are in very different
cultural and social settings. The movements also have a different
tradition. In the UK and Sweden the roots go back to the last century. In
Japan, Canada and Italy the movements are younger. The UK and Sweden have
enjoyed substantial market share and have had a period of decline, while
market share in Japan, Italy and Atlantic Canada is increasing.

Our book gives you the details of these organisations, but we now present a
very brief overview:

Japan

The Japanese Consumer co-operative movement is the most dynamic movement in
the industrialised countries today. Although the roots of the movement go
back to the early part of this century and the impressive pioneering work
of Toyohiko Kagawa, most of the current co-operatives started in the 1940s
and have made impressive gains during the 1970s and 80s. The retail
industry is highly regulated in Japan, land prices are high and direct
buying of food has become popular. Many members' groups (hans) have food
delivered each week. This comes directly from the warehouse and one member
takes delivery of the food for the group and passes in the next week's
orders. This, combined with an integrated network of stores, has enabled
consumer co-operatives to be very competitive.

The organisations are premised on women having spare time to attend han
group meetings and be involved in the participatory structures. But, Japan
is changing. Women are returning to, or staying in, the workforce in
increasing numbers. This trend is recognised by leaders and Co-op Kanagawa,
one of the largest consumer co-operatives in Japan, is responding to the
changes by innovating new ways to involve members and keep membership
meaningful. Co-op Kanagawa is an organisation with 150 stores, 950,000
members and sales of 160 billion yen (USD 1.5 billion).

They are doing the following:
1) They conduct frequent systematic member surveys, studying the everyday
comments of members, and analyzing change in their external environment.

2) They have worked to set up 'venues for participation' responding to the
new needs of members. There are eight fields of activity: peace, lifestyle
and household accounts, the environment, welfare, culture, health,
international exchange, and labour. Each area has an action program on
which expansion of activities is based.

3) The structure of the members' organisation was changed to adhere more
closely to their course of seeing members in the context of community and
lifestyle rather than merely from a commercial viewpoint.

4) Users' Discussion Meetings are held for each store. For a long time,
they have been promoting members' participation in Co-op brand product
policy, supply policy, and product development. But now they have also
inaugurated a system with the aim of adapting the content of such
participation to the current scale of the organisation and of promoting
members' participation in business policy-making and policy at associated
companies.

Scotland

The birthplace of consumer co-operation is undergoing a renewal process and
rediscovering its membership. The CWS Retail operation in Scotland has
reactivated its membership base and is again involving members in
meaningful ways. Our report focuses on Oban & Lochaber in Western Scotland.

The experience of Oban & Lochaber shows that co-operation, in both a
trading and a democratic sense, can be revitalised given certain
conditions. Although the area is essentially rural, it does contain within
it some problems of urban deprivation. It reflects the recessionary
difficulties experienced throughout Britain, both in general and in its
effects on the Co-operative Movement. It emphasised the importance of
membership involvement in showing how, despite geographical difficulties,
members can become more involved in the running of their Co-operative
Society. It also shows there are limitations to that involvement which must
be explained and understood through a comprehensive training programme.
Increasing involvement brings its own difficulties; particularly for
management, which is why their understanding is also crucial.

As a result of work in the Oban & Lochaber area and elsewhere, and through
discussion with member groups throughout Britain, the following are
examples of proposals put forward as ways of advancing participatory
democracy:

1) Membership groups should have the physical support of their Co-operative
Society, preferably as the exclusive use of premises within an operating
base, i.e. the shop.

2) Staff should be deliberately encouraged to be actively involved in all
aspects of the democratic structure, and staff training should reflect this
emphasis.

3) Managers should have targets for membership recruitment and a direct
responsibility for the promotion of membership.
4) Co-operative, ethical and environmental policies should be highlighted
at all times, especially in shops.

5) Representative committees should have meaningful budgets to promote
their own activities.

6) Senior management should give serious consideration to the participation
of employees in policy making, i.e. a clear commitment to industrial
democracy.

7) More emphasis should be put on the international nature of the Movement
both at local and national levels.

8)  A less centralised democratic structure should be developed.

Italy

Consumer co-operatives have grown rapidly in Italy since World War II. From
1982 to 1993 the membership has doubled and sales have increased five fold.
They are increasing market share and competing successfully with the chain
stores.  These co-operatives see involving members as good business and
have long had a focus on their social objectives, as well as their
financial objectives.

Membership of the European Economic Community is changing the retail
environment for these co-operatives as large multinational discounters move
into urban areas. This is a concern for management and is being addressed
by involving members and keeping membership meaningful. They have spelled
out basic member responsibilities.

Responsibility towards members, consumers, employees, and society: from the
small community with only one co-operative sales outlet to the more complex
relations in large cities. They have a commitment to improve the quality of
life for the citizens through positive action.

Responsibility towards the environment, the social institutions, their
heritage and the ideals of the democratic approach.

Participatory democracy is highlighted in the social report which all local
co-operatives undertake, and is reported annually. Members are not only
informed on how the social objectives are being met but also in
establishing performance standards for the coming year. Objectives,
policies and guidelines are established for each of the co-ops' five major
stakeholder groups: members, consumers, employees, the local community and
the co-operative movement. An annual audit is performed to measure success
in achieving stated objectives, and each co-op's audit is compiled into a
comprehensive Co-operative Social Report for the entire system. The report
is used both as an informational tool, and a means for programming and
planning.

Canada

In North America co-operatives began and gained strength amongst farmers.
The Consumer co-operative movement made inroads into the urban market place
in the 1950s, but most have fallen by the wayside with the onslaught of
large shopping malls and the current trend to discount chains. Atlantic
Canada is an exception. This has long been a depressed region in Canada
with high unemployment rates. Co-operatives took root during the 1930s with
the Antigonish movement and food co-operatives are now dominant in the
Co-op Atlantic federation. They have over 20% of the food market, are
continuing to form new co-operative associations, increase market share and
are doing it in a different way from its sister movements around the world.

'Each member store is an autonomous co-operative association with a
separate Board of Directors and its own membership activity.' While most
co-ops follow a conventional model, the direct charge model is important in
urban centres and accounts for 45% of Co-op Atlantic's volume in groceries.
Co-op Atlantic members also practise co-operation between co-operatives at
the local level, where several consumer co-operatives have provided
leadership in developing local Co-operative Development Councils which
stimulate economic and social initiatives to address local needs and
improve the local quality of life.

The second largest consumer co-operative in North America is Calgary
Co-operative Association, which has over 30% of the food market share in
the city of Calgary, operates 14 shopping centres and has a long history of
involving member volunteers. Two recent initiatives include the development
of neighbourhood-focused member advisory groups called Community Councils,
and a change in bylaws allowing for employee representation on the Board of
Directors.

The largest agricultural co-operative in Canada, Saskatchewan Wheat Pool,
has the most extensive delegate structure to implement participatory
democracy in North America. Saskatchewan Wheat Pool is now under intense
financial pressure as global competition challenges the domestic market.
Given this international environment, the Pool has recognised that there is
a need to access public capital through selling shares to non-members while
preserving the democratic control structure. Recognition of the critical
importance of member involvement has resulted in a major initiative focused
on local committee renewal.

Sweden

The case of Sweden might be said to highlight revitalising the ambitions of
a movement that is carrying out its activities in what has been called a
post-industrial and a mass society. Consumer co-operatives started in
Sweden in the mid 1800s and have a long proud history of breaking
monopolies and defending the rights and interests of consumers. As a
result, the consumer co-operative movement developed into the foremost
retailer by the 1960s, with an average of 20% of the retail market, among
other things based on extensive ownership of manufacturing facilities.

The Swedish movement was the inspiration for other movements, showing what
could be if consumers co-operated and supported their co-operatives. But
circumstances changed dramatically. By the 1980s the consumer co-operatives
faced a stagnating market share and suffered reduced earnings. Various
measures were undertaken, but nothing helped. Towards the 1990s the
economic situation worsened and it was considered necessary to introduce
more dramatic changes. Survival was at stake. Most of the industries have
been sold, as well as parts of the movement like the petroleum facilities.
Pork-butcher and mill industries, however, were kept in order to secure the
daily delivery of fresh food to their own shops. The distribution of tasks
between the union KF and the consumer co-operative societies were basically
changed. KF more directly entered the retail business, while the societies
concentrated on member and consumer issues. It is anticipated that some 80%
of the total consumer co-operative turnover in the retail sector will be in
the hands of KF.

In Sweden they approach the efficiency of the co-operative as a whole by
continuing to promote economic efficiency, democratic efficiency and
consumer policy efficiency. All three must be properly considered for
balanced consumer co-operative development in the long term

For the time being, economic efficiency, in other words economic benefits
for the members, has been given the first priority. In addition to this
'user' aspect of membership, however, a range of measures are renewed to
revitalise the other aspects of membership: democratic member participation
and participation in wider consumer issues. The ambition is to combine
participation within mainly three member roles - the user, the owner and
the consumer - into a meaningful co-operative whole of participation.

In Sweden, as in other post industrial countries, we increasingly faced the
question, are consumer needs still strong enough to encourage meaningful
participation. We think they are.

Final Report of the Joint Project

Now I would like to outline the findings in our final report.

Firstly, how shall we solve the difficulties we are facing?
We carefully examined what kind of environment we are living in. All
co-operators are aware of the problems facing society today: the
North-South problem; environmental destruction; conflicts and disputes
around the world. When the Cold War ended, we hoped we could begin solving
the world's problems. But new ones keep showing up.

If we do nothing but react to developments in the market and society, the
movement could disappear. We may seem like idealists, but it takes a
realist to see the urgent need for positive action now.

Secondly, the basic values in co-operatives and participatory democracy

This Congress will adopt a Statement on the Co-operative Identity
containing principles defined as 'the guidelines by which co-ops put their
values into practice'. Although some people consider participatory
democracy an idealistic principle, we believe it is the most concrete,
easily applied of these guidelines.

Thirdly, the co-operatives'  position in society.

We believe co-ops are destined to play a leading role to realise a new
society that is not yet visible but lies just over the horizon.

You may ask why co-ops are destined to lead the way. Why not other
organisations or movements? Because the public sector will not show the
way. Although democracy can be found in public life, many democratic
political systems around the world are still struggle for legitimacy, or
only just maintain the status quo. They are not in a position to define a
new society.

Nor is the private sector going to lead the way toward a new society.
Laissez faire, by definition, has no goal. And the profit motive alone
cannot lead society to a brighter future.

Thus, it is up to the social sector, where co-ops are the single largest
force today. Hence, we believe it is our task to strive for the creation of
this new society.

Fourthly,  is co-operative identity and participatory democracy.

We believe that the co-operative identity will be established by developing
human resources with participatory democracy directed toward realising the
vision of the ideal co-op as well as the vision of the new society.

The participants in this project share a vision of the new society as a
peaceful community where people, society, and nature are in harmony. The
vision of the ideal co-op is to realise the values and principles in the
ICA Statement on the Co-operative Identity. The peaceful society we aim at
is needed by all people, and participatory democracy is essential to it.
Co-operative activities can help draw out the latent energy of members and
reveal the needs of people in the citizen's community. The entire process
will enhance the co-operative identity while it strengthens individual
citizens.

The final part of the essential elements contains themes and concrete
examples for making participatory democracy work. We examined reality. We
looked at successful co-ops, large and small, to find out what they were
doing right. The members of the Project then defined the main items
important to participatory democracy. The different aspects of developing
and using participatory democracy seemed to fall into the five categories,
which are thoroughly examined in the book.

We found a wide variety of techniques and approaches in each category, and
certain ideas and techniques appeared in various forms around the world. We
found that wherever participatory democracy was working, co-ops were
fulfilling the needs of their members.

Conclusions

So this report, on an idealistic theme, is full of concrete ways to put
participatory democracy to work in real-life co-ops, concrete ways of using
the attractive force of ideals to focus the power of our human resources.

In closing, we would like to reiterate that our research project has
demonstrated that making membership meaningful makes good business sense,
as well as contributing to co-operative development. What we report today
is not a prescription for practice, rather an attempt to provide
information and recommendations we hope will stimulate debate and be useful
for co-operative leaders.

If our findings can help even a few co-ops renew themselves, we will be
pleased. But if the results are accepted widely, if we develop a consensus
throughout the co-operative community on a vision for the new society and
for the new co-op - if we can do all this, we will be able to generate such
enthusiasm that our organisations will blossom and flourish with activity,
all members striving for a common goal, a co-operative future.

*Members Ferini(Italian National Consumer Co-ops), Jonsson (Swedish
Co-operative Institute), Ketilson (Centre for the Study of Co-operatives,
Canada), Macdonald (Co-operative Wholesale Society, UK) and Yamagishi
(Co-op kanagawa, Japan), spoke to the ICA's Centennial Congress on behalf
of the International Joint Project for Participatory Democracy.